Quantifying customer value can turn the “what have you done for me lately” question into a productive conversation that results in higher renewal rates and higher sales of add-on products/services.
If you’re a customer success manager, it’s a familiar scenario. The time for renewal is fast approaching on one or more accounts. That dreaded question is right around the corner. “What have you done for me lately and why should I keep paying?
Can you imagine looking forward to that question? It’s not out of the realm of possibility you can answer it very succinctly and with metrics.
Understanding Your Economic Buyers and How They’re Measured
It’s easy to get hyper-focused on solving customer problems because that’s what customers focus on. Consider how the directors, VPs and C-level executives get measured (and compensated). They get measured on results, a.k.a. outcomes!
One of the biggest reasons the account manager role has been expanded and leveled up into the more strategic customer success manager is to focus on exactly that, making sure customers get measurable outcomes from your products and services beyond just the benefit to users.
It all but guarantees they’ll continue to renew, buy add-on products/services and serve as your best references to fuel marketing and sales.
The bottom line here is always start with the outcomes that are most important to your customers from the top down. In other words, find out THE BIG WHY behind the adoption of your product. It separates the real problems from the pretenders and gives you a clear path to the metrics that matter most!
JTBD – The Common Thread From Product Management to Customer Success
Product managers and customer success managers should be joined at the hip for a host of reasons. One of the biggest reasons, and it’s the common thread between the two roles, is the importance of user jobs and the expected outcomes that result from using your products.
A product manager’s mindset, and the whole point of building products and features, is to make users better at specific job tasks in ways that have measurable outcomes to the customer organization, both tactically and strategically.
When product managers excel in that arena, the job of customer success managers becomes a lot easier because the end game is clear. You know exactly what you’re measuring, why it’s critical to the success of the customer and how it’s measured. It allows customer success managers to focus everyone, including the customer, on resolving issues that impact those metrics the most.
When product management doesn’t excel in that arena, it puts the burden on customer success managers post adoption to figure out what to measure, why it’s critical and the metrics that matter most. Not fun!
The Importance of Customer Outcomes & Success Metrics
The best thing about a well-defined outcome is that it’s measurable. It can be easily quantified. This is where outcomes differ from benefits. Benefits can’t always be measured or quantified.
Some benefits are too broad or soft – efficiency, usability, having all your data in one place, actionable insights, etc. None of these benefits can be quantified unless they’re tied back to specific job tasks with full context around the WHAT and WHY questions.
When the time comes for customers to renew or buy additional products/services, you need something more than soft benefits to earn their business. This is a real struggle for customer success managers, especially when products and features weren’t designed with specific outcomes in mind.
Quantifying Your Value to the Customer – Think in Layers
Let’s say you have an account receivable application that helped a customer reduce their days sales outstanding (DSO) from 90 days to 65 days by prioritizing the call list for collection agents (the job). The obvious outcome and metric is the improved cash flow.
The mistake that’s made too often is stopping there. Improving cash flow by more than 25% is a great metric, but it’s only the first layer.
The next layer goes directly to why the customer cares so much about improved cash flow. In other words, you still need to uncover the outcomes that result from improved cash flow. Keep poking the bear!
- Did it reduce the customer’s cost of borrowing, which goes directly to bottom line profit?
- Will it fund other strategic initiatives that wouldn’t otherwise be possible?
This additional layer of strategic focus is a big part of the expanded customer success role and plays right into the strategic account planning process CSMs are now expected to do with their customers.
The New Customer Success Manager: Leading Strategically vs. Reacting Tactically – What It Means
The Bottom Line on JTBD and Customer Value
If product managers are consistently building products and features around specific user jobs and outcomes that can be quantified, it’s much easier for customer success managers to demonstrate the value back to customers, retain and grow those accounts.
When product management and customer success find their collective rhythm, you get what every organization strives for – keep current customers paying and new customers buying.
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by John Mansour on June 8, 2023.