Eventful years like 2020 and 2021 have challenged the old traditions of Customer Success (CS). The businesses, approaches, trends, focus areas, etc have evolved over time and more so after 2021. The pandemic has pushed the CS space out of its cocoon and we’re seeing its growth like never before.
As we enter another year, Customer Success is poised to be more sophisticated. Let’s assume that a growing SaaS firm acquires more customers, hires more employees, and increased the number of all other key stakeholders. With such an increase, aligning everyone to one goal, using the old reactive approach just wouldn’t make sense. It becomes imperative for the company to be proactive.
Managing customer relationships is crucial. So identifying and understanding the key focus areas for your CS team is essential.
6 Focus areas for a Customer Success Team or a Customer Success Leader
“Price is what you pay, Value is what you get”Warren Buffet
The crux of this statement continues to hold value today and will continue to do so in years to come. For SaaS businesses, it should be the motto to live by.
‘VALUE’ is important. Yet, ‘VALUE Delivered’ is crucial. And, ‘VALUE Perceived’ is vital. Yes, you must ensure that the customers achieve their desired outcomes. Yet, you must see if they’re getting the value from your product. You need to emphasize their intention behind choosing your product. Show them (quantitatively) how they improved their position after using your offering.
No prizes here for guessing that the top area where a CS leader must focus area is Value. With that core point in mind, let’s take a look at the top 6 focus areas for a customer success leader.
Create a Value Framework
Understand Value. Your customers need to understand what value your product is adding. Similarly, you need to know exactly what value your product is offering. Create a Value Framework that explains clearly the points where there’s a value proposition. A Value Framework assists your customers to quantify how they can achieve their business goals and KPIs by using your product.
Explain to the CSM that it’s important to follow the Value Framework Model. Focus on the core value and research about the following factors.
- Customer’s intention behind purchasing the product.
- What does the customer care about?
- Some of the business goals that the customer wants to achieve.
- What is the ROI? How can you prove and quantify it?
- Apart from best practices, what other value-added services that you can offer?
Understand your customer’s objectives better than the customer itself. This should be a good starting point for value realization. An important factor to consider is that it sometimes requires creating value frameworks per industry you serve.
Another important factor to consider is about aligning your Value Framework according to the industry you serve. For example, if your firm belongs to an industry that sees ‘Business Outcomes’ as a KPI/metric, you invariably need to focus on that metric. This is crucial.
Additional Read: How to get your Executive sponsor to attend QBR
Net Revenue Retention (NRR)
If there’s one metric that every B2B SaaS firm must measure is this one- NRR. Maximising NRR should be the core focus area going forward. Net Revenue Retention takes into account,
- Revenue gained from renewals and upgrades, and
- Revenue lost due to churn and downgrades.
Hence, it paints a clear picture of how your business is performing at the end of a specific month with respect to the beginning of the month. NRR measures the performance literally at every stage of the customer journey.
- Onboarding -Identifies how many people churned out.
- Renewal – Identifies and measures the renewal rate.
- Expansion – Measures the percentage of expansion that happened with the existing customers.
|NRR = [(Revenue from renewals + Revenue from upgrades– Revenue lost due to churn and downgrades) / MRR at the beginning of the month]|
NRR is one of the top focus areas that as a CS leader you need to know. You should be ready to explain and back up your NRR. Don’t freak out as NRR is your friend!
What is your Use-case?
An American computer scientist named Ivar Jacobson introduced the idea of a ‘Use-case’ way back in 1986. A Use-case describes all the possible ways a user and a system would interact with each other for the user to achieve its goal.
Clearly define and understand what use-case is the customer looking to solve. Do not underestimate the importance of use cases. It makes no sense to just go from ROI to product features. You need an intermediate layer of use cases. An accurate customer use case covers all aspects of customer experience. A comprehensive analysis of how a customer journey would be is what differentiates a great organization from an average one. Every stage of the buyer/customer journey, be it customer onboarding, adoption, renewal, upsell, etc. must have a use case. If realized, it could add a great deal of value to your business. Thus, making it one of the top focus areas for you not to overlook.
A use-case document lets you understand the functionality of the whole system. This is kind of a blueprint detailing the requirements of the system. So the chances of committing mistakes in developing these use cases are real and must be avoided. Mistakes like multiple teams producing redundant codes, gaps in translation from designing to coding, etc. are a few examples.
QVRs (not QBRs anymore)
Nick Mehta is one of the most followed influencers in the CS Industry. In a recently conducted meeting, he opined that traditional QBRs (Quarterly Business Reviews) be replaced by Quarterly Value reviews (QVRs). Clearly, a proactive approach to delivering value is the way going forward. If you’re not delivering and proving value why have one in the first place? Really no one wants another meeting just because a quarter has gone by.
However only rebranding QBR won’t make much sense. Delivering value and proving that value should be the game. Value Assessments are the high-impact interactions with customers and especially Economic Buyers. Utilization of customer data as you track value delivered and also determine areas of opportunity.
Making customers (executive sponsors) attend these meetings is not a cakewalk. You’d have to demonstrate value to them. Customers can clearly see how and where they need to step up to support the “program.” Try the following practices so that they can see what you have to offer.
- Show them the value,
- Prove that you are truly listening to their concerns,
- Ensure that you are managing expectations clearly,
- You are creating strong relationships at scale with your clients.
‘Changes in Key Stakeholder/Sponsor’
Change is dreadful. It’s a nightmare for your Customer Success Manager when there’s a change in a key stakeholder/sponsor of your customer. Definitely, a tricky place to be in. Unfortunately, that’s the reality of every business. You might find yourself in a situation where you’d have to start building the relationship from scratch all over again. Highly likely it is that the new executive might be planning to introduce a new product that s/he might have been using.
The only way out is to show how your product is better than the others. ensure your product gets better with time. So when that happens, it becomes easier to get the new executive to trust you. Since you’ve already built the value framework where it’s possible for you to quantify the results, you know what needs to be done exactly. Introduce yourself to the sponsor at the earliest.
Measure CSM Performance
Measure your Customer Success Manager’s performance not on the number of accounts held, but on the “verified outcomes/value delivered”. It’s easier when said but a whole lot tough when it comes to execution. A complex job comprising different activities and working with different kinds of customers is what a CSM is expected to do.
Measuring such job performance is hard. Different SaaS firms apply different methods to do the same. An increase in retention rate, growth in the number of accounts held, referrals, etc are some of the means. However, a CSM is truly successful if his/her customer has solved the use case for which they subscribed to your product.
Suggested Reading: 10 Customer Success KPIs every SaaS company should track
Final Thoughts on key focus areas
Customer Success is a fast-growing industry. Many a time, outgrowing the technology itself! CS is now essential to not only SaaS companies but in my opinion to the non-SaaS companies as well.
Customer Success is making use of NLP, AI, Machine learning, etc that are the future of any business. Try leveraging technology for your product as well. Focus on value realization. Create a Value framework, define your uses cases clearly, track product adoption and demonstrate value to your customers. These are the sure-shot ways to improve customer retention and thus increase revenue for your business.
P.S. – The main image has been taken from pexels.com