Revenue Growth is More Important than Happiness in Customer Success
When Customer Success was in its infancy, there was a struggle in defining the role. It was a lot of no’s: “we are not customer support” and “we are not sales”. There wasn’t (and still isn’t) a unified description, even within similar companies. While there are still a range of reasons why a company may create a customer success organization, there is a widely held focus on the idea of achieving and maintaining customer happiness.
Typing ‘happy customers’ into Google gets over one billion results, touting lists such as “8 things to make your customer happier” and “top 15 ways to make your customers happy”. Everyone wants to share a magic bullet (or in those instances, multiple bullets) to create a smiling face on the other side of the table or screen.
We need to stop focusing on this customer happiness metric.
We hear this idea of relying on prospects liking us or existing customers being happy to describe why someone will buy (or stay). Sellers quote why a deal is listed at 80% in their pipeline; Customer Success Managers (CSM’s) share it as the example of why the renewal is a done deal. Someone may enjoy eating a meal with you or sharing a laugh over cat memes, but that doesn’t mean they will sign a $100k+ contract with you. We need to stop conflating likeability and success.
Let me share a personal example. As a buyer of software, I worked with a provider I liked. The post-sales team was friendly, so I looked forward to our check in calls to engage, provide product feedback, and discuss use cases. While I enjoyed our time together, at the end of the year, I did not renew the contract. I was ‘happy’, but it didn’t end up mattering. The product couldn’t support our ever-evolving use case, which meant as a steward for my company and my team, I had to find another solution.
If happiness can no longer be our metric – then what should we use? We need to start focusing on two things: business impact and revenue growth.
Business impact:
Gainsight has coined the phrase “Customer Success = Customer Outcomes + Customer Experience”. This idea puts outcomes, or business impacts, front and center of the customer engagement strategy. As my illustration above shows, if your customer isn’t seeing business impact or value, they will not renew or grow.
Business impact can mean different things depending on why the company purchased your product or service. It may mean striving towards internal efficiency metrics (think: making a process more streamlined or providing visibility to information), impacting the bottom line (think: increasing revenue or minimizing existing expenses), or ensuring the company stays legally compliant.
In order to understand if you are providing business value, you need to understand what your customer needs. This isn’t quoting back industry jargon or creating generalities based on assumptions. This means asking direct questions and not stopping until you understand how their business works, how they expect your product to impact it, and how they are going to measure that impact. This can seem pedantic, but asking, “What does that mean to you? How do you define and measure that?” is critical.
For example, if you worked at a company that offers improved website performance as a key value offering, you may make the assumption that the goal of your customer is to improve page load time. In reality, it could be to minimize video buffering, focusing on image delivery speed, or maintaining uptime – all of which could also fall under the idea of improved website performance. Focusing on your definition rather than the customers could mean that you don’t build the strategy to help them achieve their specific goals.
Sometimes customers don’t actually know what they are looking for besides something ‘better’ or ‘different’. They’ve never been asked to quantify the pain they are feeling. If you encounter this, it is your job to use your knowledge and expertise to help your customer flush this out. You can offer examples from similar customers and understand if these are relevant, guiding the customer to a metric to evaluate your offering’s value.
Here’s another real life situation: if you learn that a company is looking to create efficiency by limiting the time they have an employee spend on a specific process, dig into the process as it is today, the amount of time spent today, expected changes in the process and the related time implications, and their hourly rate. With that knowledge, we will be able to calculate the actual impact of using your product.
If you don’t have these business outcomes or success criteria outlined, it becomes much harder upon renewal evaluation to justify why a company should continue to pay money for your offering. If you have identified these metrics in the customer’s language, then you can begin to tie your actions to create a plan to help achieve their goals.
Revenue growth:
Rather than evaluating customer happiness, seeing revenue growth provides key insight of your customer’s true feelings. The phrase ‘actions speak louder than words’ is certainly true here.
When you use revenue growth as a key internal metric, it acts as a lagging compilation of everything else hitting its KPIs (i.e.: it cannot be the only thing you metric around). A customer is only going to stay and grow with you if you consistently engage, add business value, are correctly aligned with decision makers, bring new products to market that meet their needs, and set realistic expectations. All of these elements working in conjunction give you the ability to grow a customer’s revenue with yours.
I regularly hear about Customer Success organizations that focus so much on customer advocacy and training. They shy away from any revenue related metrics. The biggest pushback I hear when I mention using a revenue metric is ‘my CSM team doesn’t sell (or doesn’t want to sell)’. As Daniel Pink says in his book To Sell is Human, everyone is in sales. While you may not have a revenue or growth quota (though I believe you should get compensated for the work you are doing), every interaction you have with a customer is an opportunity to add value.
Happiness is a component – who wants to buy or stay with a vendor they dread talking to – enjoying the conversation is not enough. Customer Success Managers are already doing the heavy lifting of maintaining the relationship – from strategy planning to business reviews to handling escalations.
Aligning to revenue does not mean you need to change your entire customer approach, push items your customer doesn’t need, or run into the end of the month crunch. Revenue is a component of the customer’s ongoing relationship with your organization. The output of how you manage the various components of the relationship is the customer’s propensity to stay and grow.
Next time you start to answer “because they are happy” to a question about a customer’s health, reframe your thinking to understand if you’ve seen the engagement, business impact and revenue growth to justify that response.