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Use Benchmarking to Demonstrate Value and Slim down that Churn Rate

Benchmarking Churn
Benchmarking Churn

Okay, let’s all admit it.  Anyone who is over 30 years old has been on at least one diet or watched their weight at some point (for those of you who haven’t, I’m jealous and read on anyway).  

We benchmark ourselves against standards such as body mass index to determine where we should ideally be. Then, we measure ourselves regularly (or, um, not so regularly) on the scale to see how we're doing. When the number shows that we are doing well, we feel good and motivated by our success. If we have people cheering us on along the way, it is a lot easier to keep going.

If this approach - theoretically - works when dieting, why not use benchmarking with customers? They purchased your product specifically because it will deliver value and help them achieve their goals.

To show customers how well your product is performing, it is important to provide them the metrics. We are talking about benchmarks on how they are currently doing and where they should ideally be. Then, you want to be the “cheerleader” who makes using your product easier and more fun.

So what are the best practices with respect to metrics and benchmarking?  What should you do if you are currently not using data with your customers to demonstrate tangible business value?

Metrics, metrics, metrics:  Metrics are valuable, use them!

Use metrics to help your customers succeed and, as important, receive advanced warning when they don’t. This includes being able to:

  • Identify jeopardy accounts through hosted data resources​

  • Develop leading indicators of successes/challenges​

  • Build risk profiles to understand top indicators of defections

One of the keys to success is looking at your most and least successful customers. It is a valuable and insightful exercise to identify what each group does differently. You need to determine what set of metrics represent the healthy and unhealthy zone and then use metrics to assess positive and negative trends.  

Then, you can build a customer success process to proactively deal with customers when the data indicates they are heading for trouble.  

Here’s a tip: an effective way to determine key metrics is reviewing your customer journey map, which we talked about a few weeks ago. Define key entry and exit criteria for each phase in your journey. If a customer had to complete several activities before entering specific phases of a journey, and they have to accomplish several things before they can move forward, look at what those criteria may be and define metrics that would signify successful movement.

Benchmark Customers Against Best Practice, Benchmark against relevant peer group

Another important exercise is using objective data to give customers the ability to measure themselves against their peers. This helps to:

  • Provide metrics on how they perform​

  • Provide a gap analysis showing areas for opportunity​

  • Deliver recommendations/opportunities for improvement

It is also beneficial to build the practice of regularly reviewing metrics and benchmarking data with your customers into your CSM or Account Management processes.

Every QBR (Quarterly Business Review), Annual Renewal discussion, or other more proactive/strategic meetings should include a review of the metrics to show the customer their current status, and how those metrics compare to their relevant peer group. Then, you can make recommendations on what to do differently to improve their results and beat the benchmark, or continue to encourage the great progress being made.

Benchmarking is a valuable tool to drive and motivate the customer to perform the activities they need to complete to achieve the desired business values. It is important to create a correlation between the benchmark and the demonstrated value of the product.

The time is now to embrace the use of metrics and benchmark your customers to lose that extra churn your organization is carrying for customer success that is leaner, healthier and happier.

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