By Irene Lefton, Customer Success Evangelist
Across the board, when I talk to business people and senior executives, everyone claims to know that you have to focus on your customers to be successful and most companies honestly believe that they do this. What I’ve discovered is that when priorities and budgets are set, most companies invest the majority of their efforts in acquiring customers, while the investment and effort to serve and retain existing customers is frequently an underserved afterthought.
That philosophy doesn’t work today. We have entered the age of the customer. Business is changing, and having a customer-centric focus has become essential for a few reasons that are covered here. Today, it’s not enough to set objectives to delight your customer or provide excellent customer and field service. You have to actually achieve those objectives. We have all personally experienced bad customer service and we know how it feels and how we react. It becomes even more complicated in business relationships where the impact of a bad customer experience is complex and can be harder to quantify and understand.
It Starts With Having “Good Fit” Customers
You have to have customers to be customer-centric. If no one buys your product or service; there is no business. It’s important to acquire good fit customers. Churning customers comes with a very high cost. If you have a habit of selling to customers that can’t be successful with your product, you are making a costly mistake. Often this happens because companies focus on acquiring new logos or building short term revenue. Instead, make the effort to think through your customer personas and focus on selling to “good fit” customers. Turning down business can be hard, but not acquiring bad fit customers can ensure that you have a strong customer base from which to grow. This is a recipe for success. Focusing on acquiring only good fit customers who are more likely to stay with you will drive your business growth over time.
We Live In A Subscription Economy Where Customers Are Transient
Many business models today are priced on a subscription basis, and when you have acquired a customer, they have the option to leave before you ever recover your costs. Be aware of this risk. Historically, for most customers, making a purchasing decision was a capital expense, and treated as sunk costs that were going to be depreciated over time. Maintenance and field service fees were a small percentage of the overall pricing model and they were a part of operating expenses. This allowed businesses to collect the majority of their money at the time of purchase, and resulted in customers making purchases and then choosing to live with them whether or not they added value or included bad customer experiences.
With today’s subscription-based pricing, customers are treating most purchases as operating expenses and therefore they don’t have the sunk costs that might encourage them to keep the product even if it is not meeting their needs. Keeping these subscription customers is a much bigger risk for companies. Budgets can change with market ups and downs and customers can easily terminate contracts. To mitigate this, you need to ensure that you are providing the best value including strong customer-centric service, and field service. That is the only way to preserve your revenue stream and make sure your customers continue to use your product and get value from it and continue to pay you on their subscription. Building a customer centric approach to business is the only guaranteed way to prevent customers from leaving. You need to cultivate “stickiness.”
Cultivating Customer Stickiness
In order to cultivate stickiness, and because of the risk of losing customers and losing money, it’s more important than ever to understand how satisfied your customers are, and how well they have adopted your product. With some products, like software, you can add telemetry to help you understand usage and adoption but with many other products and services this isn’t possible. It’s hard to know how your customers view the value they get from your product and services unless you ask them. Even when you have direct data on usage, or survey customers regularly, there is a need to engage with your customers to understand how they are using your product and what value they are getting.
One of the key things you can do is to map out your customer’s journey and recognize all the touchpoints or moments of truth you have with them. This exercise begins with your initial customer engagement or brand and marketing and continues through the sales process, into the deployment or initial use of your product and continues all the way to the potential renewal. By mapping and understanding this customer journey and all the engagements you have with your customers, you can ensure that you are relating to your customers in a consistent and positive way.
The Emergence Of Customer Success Teams
Customer Success (CS) teams have been appearing in businesses over the past seven years. These teams make sure that customers are getting value, and they can also be a conduit for providing information to customers, and providing feedback from customers to other departments. To be successful, the CS and field representatives who are on the front line of customer dealings need to be consistent in their messaging, well trained, good communicators, and be informed of updates and product changes. They also need to have good mechanisms to provide feedback to the appropriate groups within the company.
If you haven’t yet thought about forming a CS team, consider how you might do this. We have entered a new era, a time where providing good customer experience in the business world is a key differentiator and something that can cause a business to thrive or fail. Perhaps it’s time to take some concrete actions.
Irene Lefton is a Customer Success Evangelist and is working on her first book. You can connect with Irene on LinkedIn.