The great management consultant Peter Drucker is famously quoted as saying “What gets measured gets managed.”.
His point of course is that regular measurement and reporting keeps a business focused on using information to make decisions and help them improve their results.
Unfortunately, most organizations are unable to measure the value of their customer-focused efforts.
This inability to measure how a company’s efforts drives revenue out of the customer base is typical of organizations that have not yet fully figured out how to run the discipline of customer success.
On the other hand, businesses that have determined an intelligent approach to customer management - a prescriptive engagement model predicated on the patterns of its most successful customers - have the ability to measure and advance customer-focused efforts leading to smarter, faster revenue.
Through a disciplined and measurable practice of customer success, they are able to measure effective spend on retention and continue to move resource focus towards growth.
Revenue Retention Is an Optimization and Effectiveness Game
Revenue protection is expensive, time consuming and never goes away.
Yet companies demonstrate a distorted understanding of what this means.
They aim to be proactive at mitigating churn risk by monitoring customer health but then build expensive, reactive, “save” activities like 120-day renewal processes into their Customer Success engagement model.
Health scoring is not proactive when the customer is already sick and a reactive process to deal with it only adds more effort to the Customer Success Managers already full workload.
Companies become effective at customer retention when they proactively manage customers to repeatable success.
And they can only drive repeatable success when they regularly monitor and measure the customer’s desire path and know what the corresponding efforts to support that path are.
Customer retention must therefore be viewed as an optimization and effectiveness game.
Why A Results-Driven Customer Approach Is Important
A results-driven customer approach provides companies with the visibility into how effective they are at customer success.
When organizations have this insight, they are better able to discern what is and is not working at driving customer retention and expansion.
They can then use this information to continuously optimize how that success can be replicated more efficiently, freeing up time for the Customer Success organization to focus on proactive and strategic customer relationships and growth plans.
Without a full understanding of their customers and what the path to success looks like, businesses cannot help but wait to react to customer inquiries when asked for guidance.
Real-World Insights: Doubled Revenue in One Year
A customer of DesiredPath was struggling to get their customers through implementation and onboarding and was seeing increased churn as a result.
Their efforts were singularly focused on product training and usage, but they failed to recognize that their customers were having problems figuring out how to operationalize the new processes that were required internally to leverage the technology and drive adoption.
Basically, customers were sitting endlessly in implementation, and they did not want to let their professional services contacts go.
Not only was this expensive and ineffective for the professional services team, it also meant that the customer success team could not begin engaging with the customer.
Worse, customers were not getting the software out to the rest of their organization to adopt - a necessary requirement for retention and potential expansion.
During journey mapping, this gap became glaringly obvious.
What they realized was that there needed to be parallel tracks of engagement with the various stakeholders.
Professional services would work with the IT organization and administrators to configure and ready the solution, and customer success would start engaging with the business users right away to prepare them for the internal change that would occur as a result of the new way of doing business with the use of the technology.
Using the customer’s desire path, they outlined metrics for each stage of the journey that would allow them to measure the progress of their customers through the customer funnel.
They use these desire path metrics to measure and define a benchmark for successful adoption that proactively identifies whether customers are on-track, or not, to on-going usage.
And because they know what effort is required to drive adoption, they can clearly delineate between services required as part of customer success and which additional, white-glove services they can charge for.
As a result of defining their Intelligent Framework and the corresponding metrics, DesiredPath’s customer doubled their revenue within one year simply by knowing what efforts are required to drive success and how to measure them.
Bottom Line: Measure Your Progress to Smarter, Faster Revenue Growth
Companies must measure and optimize the value of customer-focused efforts to continually drive repeatable success.
Companies not using a results-driven approach ultimately have no way by which to validate the effectiveness of their Customer Success discipline and measure how the practice continues to improve at retaining customers.
By understanding its customer’s desire path – the patterns of repeatable success – an organization can define a proactive, results-driven approach to customer management.
A results-driven approach ultimately allows a company to measure how close its operations are to supporting the customer desire path and to use those gained insights to continuously improve operations and drive the most efficient revenue generation.