Last month, I shared the first idea of my presentation at Customer SuccessCon: that sometimes ROI is not the best way to measure the success of Customer Success organizations. Today, I tackle the second idea: how to calculate the benefits (and from now on we are assuming that it does make sense to proceed with a ROI analysis).
Benefits may come in two ways:
- revenue (more of this)
- costs (less of that)
On the revenue side, you may want to look at retention, adoption, and referrals:
- For retention,whether customers stay with you as a vendor, look at renewals or its evil twin, churn. You can look at bookings or recognized revenue.
For bookings, compare $$ actually renewed vs. $$ up for renewal. It can get complicated as a customer may, say, drop one product but purchase another, or more of another, so make sure that you are crystal-clear in how you will compute bookings.
For recognized revenue, look at either annual or monthly recurring revenue (ARR/MRR). Bookings may jump quite a bit from month to month, but recognized revenue is quite stable.
- For adoption, whether customers grow over time, look at seats per account or MRR for continuing accounts
- For referrals, whether customers recommend your solution to others, look at revenue generated through client referrals. It can be difficult to pinpoint the one reason why customers buy from you, however.
On the cost side, look for benefits both within the customer success organization, and outside. The first two are inside the organization, the last two outside:
- Lower onboarding cost, as exemplified by the number of customers onboard per rep,
- Lower CSM cost, as shown in the number of customers/CSM
- Lower support cost, as shown by a lower incident rate, either overall or for new customers (who typically use support a lot if they are not properly onboard)
- Lower sales cost, as captured in higher productivity for sales reps and sales engineers
Most ROI analyses end up the bulk of the benefits in just one category — usually one that’s clearly identifiable right from the start. For instance, starting an onboarding program will boost adoption. Carving out a couple of headcount from a support team to work on customer success will pay back in terms of lower support load. Focus on the main category and don’t bother with others. Showing a slew of tiny benefits next to a large benefit may weaken your overall argument — and you likely don’t need it to make your decision, or your case.
ASP has opened its annual “Ten Best Support Websites” awards so you can get going with your application. There are awards for small, medium, and large companies so the field is even.
Even if you do not win, you receive the evaluations and comments from 5 judges so you can focus on winning next year. Find more information and the application form here
(Yes, I will be a judge again this year!)
I am delighted to have been asked to present on three different topics at the upcoming TSW conference in San Diego in May.
Two presentations will be with customers:
- one with OSIsoft called Blurring the Lines: Recruiting and Training Services Staff Members as One Big Family in which we will share a long-standing program of using support as a training farm
- the other with Cloudera entitled Turning Hard-Core Techies into Customer Conversationalists in which we will present Cloudera’s roll out of The Art of Complex Support to its team.
Many thanks to Cloudera and OSIsoft for partnering with me.
The third presentation will be a panel moderated by John Ragsdale on the topic of the social impacts on the customer experience. My co-panelists will be my colleagues and friends David Kay and Phil Verghis. We plan to have lots of fun.
Come listen to all three presentations, come by the booth, come to the conference. Register here.
Support organizations are (rightly) concerned about stress. Working with clients experiencing problems takes a lot out of us, but stress management is often considered a private activity, something we need to take care of at the individual level.
What if it was not? What if stress management was mostly a matter of how the team is managed? The Neuroscience of Trust, an article in the January-February issue of the Harvard Business Review, details how common-sense management actions can activate trust and decrease stress. The recipe is simple:
- Recognize high performance (both the slow-and-steady performers and the heroes).
- Induce “challenge stress”, not too much but just enough (think about challenging assignements).
- Give people discretion on how they work (we are often not so great at this in support by scripting interactions top much).
- Share information broadly.
- Facilitate social bonding (a nice place to sit and relax would be nice as a start)
- Show vulnerability
And if you can do all this, you will get:
- 74% less stress
- 50% more people planning to stay over the next year
- 13% fewer sick days
What do you do to provide a trust-based environment? Please share.