Customer Value – Do You Own It?Circle of Success, Part 3
Who owns your company’s Value Proposition? If you’re like most SaaS companies, it’s probably in Marketing’s court. And usually they’ve done a fine job encapsulating what your product does, for whom, and why it’s useful – but they’ve almost certainly done it thinking primarily about customer acquisition, rather than ongoing customer retention and loyalty. Now it’s your time to shine! In order for your Customer Success function to really serve your customers and your company, it’s critical that you own establishing and delivering Customer Value from the perspective of the people and businesses that are using, and hopefully will go on using, your application.
This post is the third in a series geared at laying the groundwork and providing the context for a relevant, scalable, value-generating Customer Success operation that’s honed to reduce churn, increase loyalty, and expand revenue. We started the series with a discussion of business objectives, and the outcomes (such as renewals, upsells, and trial conversions) that support those objectives. Then we covered how to develop hypotheses to help identify what leads up to those critical revenue events. In this post, we’ll look to our customers and talk about how to define the value we provide them, and why it matters.
What it Means to Own Customer Value
Even if Marketing has already crafted a value proposition that’s at the heart of a wildly successful customer acquisition process, it’s another thing entirely to fully own the value your customers are receiving after they’re on board. Here’s what the latter entails:
In the previous post in this series, we touched briefly on the importance of understanding what your customers are achieving by subscribing to and utilizing your application. But in order to know what they are achieving, we have to first be aware of what they are seeking to achieve. Why did they come? What did they think they’d be getting out of the deal? What’s the measuring stick (or sticks) they are using to decide whether or not to stick around? Actually write down, precisely and thoroughly, what your customers are looking to accomplish with your product, and how they can assess whether or not they have done so.
Here’s an example of what a Customer Value definition statement might look like for a fictitious human resources recruiting application:
Keep it up to date. Your company and product will evolve over time, and so will your industry’s best practices, your customers’ definition of value, and your competitive landscape. Make sure that your Customer Value statement is informed by and evolving at pace with all of those factors.
It’s not enough for you to understand Customer Value, or even for your Customer Success team to embody it. It’s your job to ensure that every single employee in your company, from front line to corner office, knows exactly what your customers are trying to achieve and how he or she can have an impact on that achievement.
Now that you’ve spelled it out and shouted it from the rooftops, it’s time to make sure it’s actually happening. You’re on the hook to recognize the need for and create any programs or services that are required to ensure that your customers are:
- Receiving the value your product is capable of providing
- Aware of the value they are receiving from your product
- Clear on how to obtain even more value from your product
You need to continuously analyze whether or not customers are receiving the value promised by your product. We’ll discuss this aspect in depth in the next post in this series regarding Customer Value Indicators.
Considerations to Keep in Mind
Whenever Possible, Quantify
Value that can be represented as numbers – preferably numbers with dollar signs in front of them – is by far the easiest to assess. And therefore it’s the easiest kind of value to defensibly deliver. Remember, your customer is a business. And that business’ job is to bring in more money and reduce costs. If your product can help them do one or the other or both of those core tasks, and you can demonstrate its ability to do so, then your product becomes critical to your customer’s business.
At a previous SaaS company, we worked hard to ensure that using our product made our customers feel good, and termed that effect “Emotional ROI”. It was a great selling point, and contributed to the best references and testimonials, but it was tricky to substantiate for our customers. Don’t get me wrong, “Emotional ROI” and other soft benefits can be powerful, and you should strive to provide them as well. But, while they make a great sidebar in a case study, they are inherently difficult to measure and prove. So don’t make them the central tenets of your Customer Value statement.
Value Is Your Job, Not Your Customers’
Never make the mistake of assuming that one of your customers’ goals is to understand or measure the value they are getting out of your application. That’s on you. And your customer will almost certainly look to you for that information at some point to assess the return on their investment and decide whether to continue with it or, better yet, to invest more deeply. You can help them (and provide additional value in the process!) by being proactive in delivering that information regularly and clearly. Before-and-after snapshots, year-over-year performance assessments, industry benchmarks… it’s critical that you systematize both the creation of these measuring tools and the programs to serve them up to your customers in a timely and digestible way. And don’t forget to leverage your application as a mechanism for consistently displaying its own value front and center. The more you can bake in and surface analysis to quantify how your customers are achieving their goals, the better.
Relationship as Value
Although your application is likely the primary means for your company to provide value to your customers, remember to consider your customer’s entire relationship with your company and any aspects outside of your product that deliver value. Do you offer guidance on best practices that transform the way your customers do business? Can your customers purchase services, such as premiere support or virtual administration, to help them better utilize your application and gain the value it promises? Is your customer conference the best training and networking event in your industry? Be sure you are tracking all such value-enhancing interactions, so that you can investigate and work to quantify both their impact for your customers and their correlation to revenue-related events for your business.
Challenges & Preventative Measures
When a customer churns because they aren’t getting or seeing enough value – and I’d argue that the vast majority of customer churn is at least partially value-related – there are only a handful of types of reasons. And there are definite steps that can be taken to avoid them. Maintaining focus on each of these checklist items through all aspects of the Customer Value ownership charter described above will help to reduce the frequency of Customer Value challenges and the rate of customer churn.
So we’ve defined customer value as the result of your customers achieving their goals by utilizing your application and interacting with your company. And we’ve outlined some important considerations for conceiving, quantifying, demonstrating, and enhancing that value. But how do we know whether or not our customers are, in fact, attaining it? Next time, we’ll take it back to science class as we seek out the signs and patterns that are Customer Value Indicators.
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