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5 Counter-Intuitive Principles of SaaS Customer Success

These surprising and unconventional changes in mindset are the key to breaking out of the SaaS/B2B customer retention doldrums.

Next month will mark 20 years since I began my career in enterprise software. And to honor the occasion, I am sharing the most important lessons I’ve gleaned during those two adventurous and fascinating decades working to transform the world’s most innovative companies.

These five principles represent a set of fundamental and somewhat counter-intuitive shifts in mindset that unlock the power to create the kind of deep bonding with customers that leads to extremely high customer retention, account expansion, and advocacy.


The Five Principles of Customer Success

1. Success not happiness

A strategy focused on customer happiness is not the key to long term renewal. Focus instead on understanding and driving the customer’s own definition of success.

Research shows that high levels of customer happiness or satisfaction do not consistently translate into high rates of renewal. A strategy of exceeding expectations on customer service may feel good, but on its own it is not enough to drive the degree of retention necessary to make your SaaS company highly successful over the long run. In addition to all your best efforts to craft a great customer experience, you must latch onto something that your customer organization can experience that is both highly valued and transcends the tenures and vicissitudes of its people.

The good news is that while organizations can’t exactly have emotional experiences in the way that people do, there is something that they continually experience quite exquisitely that is much more durable than happiness. Customers can experience success.

In fact, all companies and organizations are fundamentally wired to experience success. Success (and conversely failure) is the intrinsic experience of the organization. Obviously all organizations define success differently, and there are often multiple definitions, not to mention that these ideas tend to change over time. But the fundamental truth remains:

Success is the quintessential experience of the enterprise.

And focusing on your customer’s success has two other attributes that make this by far the most worthy object for your efforts…

First, it’s more durable. People in organizations come and go. Providing direct and visible leverage against the organization’s own vision of success spans the individual tenures of its people.

Second, it is much more under your control. Yes, that’s right. You have the opportunity to establish a more direct and demonstrable influence over your customers’ ability to achieve its goals than you will ever be able to maintain over the emotional experiences of its people.

This idea of focusing on your customer’s success may seem obvious. But before you think that you’ve got it nailed, consider this: how do you measure it? You see, it’s impossible to be truly intent on something, and applying your efforts to effectively drive it, if you are not measuring it.

But what we mostly measure in customer success actually aren’t metrics of the customer’s success at all, they are measures of our own success. Think about the major CS metrics: renewal, retention, churn, adoption, satisfaction, NPS, etc. Not one of these is a direct measurement of the customer’s success. In fact, what they really represent are kind of the opposite: the results your own company is getting from your customers.

But wait, you say, aren’t they at least indirect measures of customer success? After all, if a customer is successful won’t they renew, adopt, and be satisfied? There’s definitely some truth in that. The problem is that, even to the extent that’s true, these measures don’t tell you anything about the ‘why’. Looking at these metrics alone one can’t really tell why some customers succeed and others don’t. And for that reason you can’t use these metrics to do anything specific to impact the outcome.

In any case, they are all backward looking. In other words, whatever happened to produce these outcomes is now in the past, and often far in the past. So by the time we see the number it’s too late to do anything about it. It’s like looking at the stars: by the time the signal gets to you what you are really seeing is what they used to look like.

A true focus on your customer’s success involves figuring out what success really means to them, measuring it, and driving it. This approach is foundational not only to how you relate to customers, but in fact to everything else you do. That’s why your customer’s success — as they define it — must be the ultimate focus of your efforts. The true purpose of the Customer Success organization is to ‘own’ the customer’s success.


2. Behavior not technology

Technology does not transform organizations. Business process change transforms organizations, and technology makes it possible and scalable. Success is dependent on helping your customers change how they work.

This is a mantra I repeat constantly, and nearly everyone who works with me can recite it verbatim. Why? Because the enterprise is hard. All the incredible potential packed into your awesome technology bundle will remain locked up and unrealized until your customer changes the way they work. The mere act of provisioning their accounts, or getting people to login and use it, will not be not enough to make real change happen.

A lot of experience has taught me what I think everyone else already knew: it’s hard for organizations to change engrained habits and processes. Normally, they can’t do it without help. Therefore, as long as we are founded on the first principle, the job of customer success is clear: we must take responsibility for helping our customers make the necessary changes in behavior to achieve superior results. Otherwise, they will fail to realize the value from our solution that they envisioned when they signed up. And when that happens you can kiss the renewal goodbye.

This principle involves a fundamental change in orientation from the conventional mindset. We can no longer think about customer success merely in terms of implementing technology, training users, and driving adoption.

Customer success must expand its mandate to include helping the customer change they way they work.

Sitting back and saying it’s all on them to change is easy, but the results will not be compelling. This principle is the recognition that organizational change is hard, that there will not be enduring and transformative results without it, and therefore: an effective customer success strategy must include engaging with your customer to drive their business process change.


3. Bonding not relationships

The purpose of all activities in the company is to achieve bonding with the customer. Bonding occurs when you become integral to the customer’s success.

One of the most pervasive ideas in the customer success universe is that securing the renewal is dependent on establishing a strong relationship with the customer. It actually makes a certain amount of sense given the conventional approach to measuring customer success.

What else is a Customer Success Manager (CSM) to do? Without a clear and measurable link between their specific efforts and the actual results the customer realizes, and without a mandate to engage directly with the customer in driving process change, it is natural to fall back on building relationships. When things go wrong (and they always do) the hope is that the relationship will carry you through.

But it won’t. Certainly not year after year to the 4th and 5th and 6th renewal. Relationships are simply not enough — not in the enterprise.

Then what will be enough? Principles 1 and 2 provide the necessary background to comprehend a fundamentally different kind of relationship between provider and customer. It is different enough that I believe it requires the use of a different word.

Bonding” represents a deeper kind of relationship in which the provider so completely comprehends and internalizes its customers’ true success that it becomes an integral part of it. Achieving bonding requires a complete shift not only in how you view your relationship to the customer, but even in what it is you think you do for them. Let me explain…

It turns out that your customers don’t want your software. Not really. They want what it can do for them. And in the case of organizations, they want it to make them more successful. They must always have a very specific vision of how they will use your service to make them more successful. Bonding is what happens when you are able to establish that link between your product and their success.

“People don’t want to buy a quarter-inch drill. They want a quarter-inch hole!” — Theodore Levitt

Think about it: do you think they really want to sign up for a new service, and put time into learning it and configuring it and loading it with data, or hooking it up to their other systems? Do you think they want to spend time administering it? No, of course not. They don’t want your drill. They want a hole. Put another way, people hire your product to do a job for them. Bonding is understanding that job and making sure it gets done.

This is the most profound change in mindset of all of the five principles. Here are just a few examples of how this shifts your orientation…

  1. Bonding is not about offering the best product or the lowest cost. Both of these ideas focus on the wrong thing: the competitor. Bonding focuses on the customer.

  2. The conventional mindset emphasizes the economics of the market and of your own business. Bonding emphasizes the customer’s economics.

  3. Bonding shifts the attention away from your product and focuses it on the job your customer is hiring your product to do.

In fact, even the term “customer” is based on a transactional mindset. That’s why I prefer the term “client” in the context of the enterprise. A customer is simply someone who has transacted business with your company. By contrast, the word “client” speaks to a deeper bond. The original term denoted a person under the protection or patronage of another. That comes a lot closer to the idea of taking ownership of your customer’s success. Think of your clients as being under your protection. Their survival (success) is now, at least partially, your responsibility.

There’s much more to say about this. For now, understand that bonding is what happens when you truly own your customer’s success, measure it, and learn to drive it. It is the natural outcome of thinking in terms of the customer’s “jobs to be done” and their economics rather than in terms of your own objectives, products, and economics.

The ultimate result of bonding is a Total Customer Solution (TCS) that combines technology AND expertise to drive the needed organizational changes that lead to meaningful results. Bonding is the transformation from a transactional customer relationship to one that is characterized by high rates of long term renewal, significant account expansion, and advocacy.


4. Learning not teaching

Learning is the essential attribute of great customer success organizations. Focus first on understanding. Only then will you have the power to create bonding. 

All of the principles above require learning. Not just a little bit of learning, but a lot. In fact, I believe learning is the attribute that best predicts whether an organization will succeed in achieving bonding.

One of the tell-tale signs that a customer success program is not creating bonding is when its customer activities primarily revolve around training the customer. There’s an underlying mental model that says that the product/service itself produces the promised benefits as long as it is being used “correctly”, so it follows that the job of customer success must be to make sure that everyone is using it, and using it and correctly. In other words: achieve adoption and the benefits will flow.

This is why so many companies emphasize training in their customer success programs. And, this way of thinking seems to be validated by experience: whenever a customer is really successful we observe them actively utilizing the service with a high degree of skill. So naturally we conclude that the customer is successful because they are actively and effectively using the service.

But isn’t the opposite also possible? Could it be that some customers are great at using the service because they are successful? My experience is that customers and their users will engage with your service and learn to use it effectively only when they come to envision how it is essential to their success.

This reversal in thinking naturally drives a very different approach to customer success. In particular, the focus shifts from teaching to learning. In fact, every principle above is totally dependent on a learning approach.

  1. Principle 1, Success, is fundamentally about understanding the customer’s definition of success. Baked into the way most companies approach customer success is the assumption that they know what the customer needs and that the link to their customer’s success is already hard-wired into their product’s features. Learning is the only way out of this trap. You cannot help each customer succeed if you don’t really know what success means to them.

  2. Principle 2, Behavior, is the recognition that helping customers change their behavior is essential to their success. Every organization is different and nowhere is this more evident then in the unique way that they do things (their processes). Learning is essential to catalyzing change. You cannot help the customer change if you don’t understand how they do things, and more importantly, why they do it that way.

  3. Principle 3, Bonding, is entirely about shifting your focus to the world of the customer: their objectives, their resources and constraints, and their economics. It changes the relationship from customer to client, and leads to a solution mentality that combines your product and expertise. None of this happens without a deep investment in learning.

The problem is that most companies are simply not wired for learning to the degree that this mentality requires. That’s why it is essential to engineer learning into the very fiber of your organization and culture.

Ask yourself this question: Does your organization view customer success as a vital learning conduit to its customers? If your organization is wired for learning, then every team from marketing and sales to product and billing will be constantly asking for access to the CSMs to interview them and gain perspective about the customers. But this is rare in my experience.

And if nobody in the organization is eager to know what the CSMs have learned, then why should they invest their time and effort in deep learning about their customers? How would that knowledge be of any use? If the broader organization isn’t hungry for understanding the customers, then the CSMs won’t be either. The resulting posture is what we see all too often: a customer success program oriented to telling the customer things rather than learning from the customer.

Whereas bonding is the most important outcome of great customer success, learning is its most important input.

It is not overstating to say that learning is the essence of great customer success. The number of questions that CSMs ask is a much better metric of their effectiveness than the number of touch-points, suggestions, and trainings they provide. And this kind of learning simply doesn’t happen in a vacuum. A sincere and eager interest in the perspectives, goals, and challenges of the customer is something expressed throughout the entire organization. This kind of “learning organization” is what provides a vibrant environment for understanding and sharing.


5. Velocity not value

Creating value is not enough to establish long-term bonding. The focus must be on continually finding ways to add more value, to more people, along more dimensions, always expanding your leverage against the customer’s success.

Velocity is the final element. When we drive the customer’s success we create value. When we measure and materialize that impact to the customer we demonstrate that we are becoming integral to their success and bonding begins.

But value must be a dynamic thing. For example, in the beginning velocity is about getting to first value quickly. That’s what I mean by dynamic. It isn’t just about value but about a story of how value increases over a relevant time frame. Many understand that successful customer onboarding is heavily dependent on rapidly achieving a first demonstration of value (time to first value). But it doesn’t end there. For every renewal there must be a story about the increasing impact on the customer’s success.

As long as this process continues and the scope of value expands, bonding will be durable, and renewal will be a foregone conclusion. That’s what velocity means: the continual expansion of the integration with the customer to drive ever greater levels of customer success.

This principle is based on a simple truth that I actually learned quite early on. What I found is that value in and of itself is a powerful motivator during the sale and even during the first year. However, the impact of the benefits tends to wear off over time if they remain static.

The first time your point of contact POC bragged about the amazing results to the boss it was really impressive, and maybe even the second time. But organizations never come to the end of their challenges and needs, and eventually that same value you created is old news. From their perspective, an important need has been met, but just as quickly, they move on to the next one (or ten). The absolute magnitude of the impact may remain, but over time it appears progressively smaller in comparison to the company’s evolving challenges.

What’s more, in the mean time another five companies have come along to do it cooler, faster, cheaper, or better. In many cases perhaps all they offer is a different kind of benefit. But, at least that’s something new for your POC to brag about to the boss. And if you don’t have a compelling story about the expansion of your impact and relevance to their latest set of needs, the account is at risk.

But velocity is about more than just driving customer results “up and to the right”. It is what it means to be truly integral with your customer’s success. Your customer is on a journey and the relationship that they value most over the long run looks a lot more like a partner than a vendor.

If bonding is about becoming integral to your customer’s vision for their own success, then velocity is the expression of the dynamic nature of that relationship.

Each renewal is an opportunity to tell a new story: more benefits, to more people, along more dimensions, and on it goes. Client velocity is the characteristic pattern of SaaS companies driving phenomenal rates of renewal, expansion, and advocacy in the enterprise.

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