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Increase Customer Success with Equivalent Metrics

Success Chain

Developing equivalent metrics is essential for getting people to adopt your software! People and organizations are obsessed with data and metrics to “prove” results.

Countless hours and dollars are wasted, identifying and collecting data. Yet this potentially valuable information is typically ignored, misinterpreted, or worse yet, only used to justify previous (bad) decisions!

What is the point of having data and metrics if you don’t use them to make better decisions and take action?

Metrics Need to Change Behavior

The goal of data and metrics is to gather evidence, develop insights, and then take meaningful action that delivers a better result. Quite simply, there should be a direct link between receiving data and changing our behavior. Yet this rarely happens. And it needs to change.

A Better Approach: Equivalent Metrics Insights From Changes to Food Labeling

We all know that food labels are required to list calories and nutritional information. In the US, restaurant menus are required to list this information. The idea is that by giving consumers additional data, they can make better-informed choices and develop healthier eating behaviors. Yet, how many of us look at this information? Out of those of us who do look at it, how many of us make better, healthier choices because of it?

The reality is that even when metrics are clear, the implications and linked behaviors are not. This is the problem.

PACE Yourself with Equivalent Metrics!

A study from Loughborough University and reported in The Telegraph has shown initial evidence that changing the metrics and labels can have a positive impact on behavior change. The researchers found that labeling food with Physical Activity Calorie Equivalent (PACE) (equivalent metrics), that is, specifying the equivalent required activity to burn off the calories consumed in each food item, resulted in fewer calories being consumed.

More clearly, by clearly showing people how long they would need to walk, run, or swim to burn off the calories from each food option, people made healthier choices and consumed fewer calories!

Is this the Secret to Success?

Can it be this simple? Is the issue that the metrics we have used for years to show success to our users and customers are just meaningless? Do they not drive people to take better actions? Is the secret not coming up with more metrics, but rather sharing more meaningful equivalent metrics?

Perhaps the metrics we have relied on for years – with limited success – were just not understood by our audience. Maybe they need to be explained in more precise, meaningful, actionable terms to get people to make better choices and take the desired action.

Extra Effort to Process Meaningless Metrics

For example, before PACE, if you were thinking about having a can of Coke, you would see the number of calories per serving on the label. If you want to do something with this information, you need to do a lot of mental math. You would need to ask yourself things like:

  1. How many calories per serving?
  2. What is the number of servings in this container?
  3. How many actual calories will I consume if I drink this entire Coke?
  4. Is that a lot of calories?
  5. How many other calories am I consuming today?
  6. If I decide to drink this Coke, how will I work off (via exercise) these extra calories?
  7. How many miles will I need to walk/run/swim to get rid of them? ?And let’s be honest, how many of us know this off the top of our head?
  8. How much time will it take me to walk/run/swim these calories away?
  9. Do I want to put in this extra time getting rid of these calories?
  10. If I decide to drink this coke, will I devote the time to get rid of these calories, or am I OK with getting fat?
  11. How much time will I spend obsessing about my weight and getting mad at myself for consuming too many calories?
  12. Finally, am I going to drink this Coke, or will I find a healthier alternative?

When you consider how many of us suffer from time-poverty and already have too many things taking up our mental energy, you can see where having to do this mental math for everything we eat becomes exhausting.

Streamlined Thinking

Instead, with PACE labeling, our thought process is more like:

  1. I see from the label that this Coke contains 420 calories, and that means I will need to spend an extra 1 hour and 15 minutes walking or 42 minutes running to get rid of these extra calories.
  2. Do I want to spend this much extra time exercising, or do I want to find a healthier alternative?

Just from this shortlist, you can see the beauty and simplicity of PACE labeling.

The Magic of Equivalent Metrics to Drive Action

The beauty and simplicity of PACE is that it converts complex and arguably meaningless (at least to most people) data into a simple, easy to understand “equivalent.”

Equivalents are simply a great way to help people easily understand the implications of their actions, so they can quickly make better choices. Equivalents make life easier.

They eliminate a lot of required thinking. They remove a lot of guesswork. And who doesn’t want an easier life?

The Power of Impact ("Feel Good") Equivalent Metrics

Not all metrics and equivalents need to make it easier to decide which action to take. There is also tremendous power in highlight impact, or “Feel Good” equivalents, to help increase your commitment and satisfaction with previous decisions. This is especially important in the subscription economy when people will only continue to renew and recommend your product or service if they feel they are getting great value from it.

A Simple Example of Feel Good Equivalent Metrics

For example, a few years ago, we purchased solar panels for our home. They are up there now and have an estimated 20+ year useful life. This investment is a sunk cost for us, and even without any sort of metrics to show the impact they are having, we will not be uninstalling them any time soon. Still, the solar company has a monitoring site. It displays a real-time, searchable dashboard that shows us how many kilowatts it is producing and the total number of kilowatt-hours it has produced.

While it is nice to validate the system is working, these numbers are meaningless to me.

Example: Real-Time Solar Performance Metrics

However, the system also displays the “Environmental Savings.” These are a series of feel-good metrics that converts the number of kilowatts produced into meaningful equivalents like:

  • Miles not driven
  • Gasoline not used
  • Coal not burned
  • Crude oil not used
  • Mature trees grown
  • Pounds of garbage recycled

Real-Time Solar Performance Metrics

These equivalent metrics are significant to me. These not only make me feel good about my buying decision, but they also inspire me to advocate for the benefits of solar panels to others. They provide me with evidence I can share that might influence others to buy in the future.

So, what does all this mean for software buyers and sellers?

For example, a few years ago, we purchased solar panels for our home. They are up there now and have an estimated 20+ year useful life. This investment is a sunk cost for us, and even without any sort of metrics to show the impact they are having, we will not be uninstalling them any time soon. Still, the solar company has a monitoring site. It displays a real-time, searchable dashboard that shows us how many kilowatts it is producing and the total number of kilowatt-hours it has produced.

While it is nice to validate the system is working, these numbers are meaningless to me.

Example: Real-Time Solar Performance Metrics

However, the system also displays the “Environmental Savings.” These are a series of feel-good metrics that converts the number of kilowatts produced into meaningful equivalents like:

  • Miles not driven
  • Gasoline not used
  • Coal not burned
  • Crude oil not used
  • Mature trees grown
  • Pounds of garbage recycled

Real-Time Solar Performance Metrics

These equivalent metrics are significant to me. These not only make me feel good about my buying decision, but they also inspire me to advocate for the benefits of solar panels to others. They provide me with evidence I can share that might influence others to buy in the future.

So, what does all this mean for software buyers and sellers?

Yet So Many SaaS Vendors Still Get it Wrong!

Despite the value in having meaningful equivalent metrics, many software vendors are still just quickly pulling together raw data, without any effort to translate it into meaningful equivalents.

Sure, the vendors may format the data into a pretty chart or graph, but it is not typically not delivered in a way that helps customers quickly make meaning from it.

The vendor is not speaking the language of the customer.

Example: Software Vendor Not Communicating Their Impact on the Customer

Not long ago, I was helping an organization improve its customer success processes. They had a compelling technical integration product that eliminated tons of manual data entry, removed a lot of keystrokes, prevented double or triple entry of transactions into multiple systems, and improved data quality by reducing errors and ensuring consistency across various applications. They had a great tool that delivered a lot of value to the customers.

But my client didn’t tell their customers about the clear impact the product had on the customer’s business.

Instead, my client periodically reported just a single number of transactions processed that period.

The metrics the vendors provided were essentially meaningless. Their customers had no idea the value they were getting!

Your Customers will Tell you What is Meaningful

The fascinating part is my client had collected numerous customer testimonials, including many video testimonials. When I reviewed these testimonials, there were countless examples of the customer talking about the value and impact they received, in a way that was incredibly meaningful to them.

While my client only shared transaction data and metrics, their customers reported useful equivalent metrics and examples of the value they received. The customer reported metrics like:

  • Hours of work eliminated
  • Number of FTE staff members they did not need to hire
  • Increase in volume of transactions they could process in a day
  • Hours not spent fixing data quality errors
  • Increase in sales growth and product shipments, with no increase in staff
  • Improved productivity from reallocating internal development resources from fixing mistakes to instead focusing on new development projects

The lesson here is that as a vendor, you need to communicate easily understood and quickly actioned information, in a way that is meaningful and helpful to your customers!

6 Steps to Develop Great Equivalent Metrics

So, how do you move forward with building out significant equivalents? Here are a few simple steps.

1. Listen to Your customers about what is Meaningful to Them

Your equivalents need to be stated in terms that are meaningful to your customer. With our solar panels, they used environmental factors. With the software company, the metrics were related to time, staff allocation, and revenue growth.

A good tip here is to listen to the language your customers use, and then come up with something meaningful here.

Listen carefully to the questions they ask during the sales and renewal process. Comb through your testimonials and look at the exact words they use. Where are they focusing their comments and reviews? Start there.

2. Identify "Action" Equivalent Metrics and "Feel Good" Equivalent Metrics

You want a mix of both.

For action equivalent metrics, like walking or running in the PACE example, identify the specific actions you would want someone to take as a result of reviewing the metric. Then develop a meaningful equivalent that is clear and concise to get someone to take this action.

Feel-good equivalent metrics are vital for helping people recognize the value they have already received. This is critical for helping to justify renewals, up-sells, and expansions.

Think about what clear equivalents you can provide your customer, that will both help them decide to renew, and also make them and others in their organization feel great about their purchase.

How can you make it a “no brainer” for them to renew?

3. Justify How You Calculate the Equivalent Metrics

It is OK to be Imprecise.

Equivalents don’t need to be precise to be meaningful and impactful. If you can come up with a logical and justifiable conversion, people will embrace it.

For example, our solar panel company explained how they calculated their equivalents based on guidance from the EPA.

Can you develop your algorithm for how you calculate the equivalents? Can you base it on respected, neutral 3rd party data or recommendations? If your calculation is reasonable, and you apply it consistently, you will be fine.

4. Make it Easily Consumed and Actioned

Don’t make people think!

Make it so easy to understand and take action that people are not even conscious about the decision-making process. Get them to focus their energy on taking the desired steps.

Visuals work great. Simple changes, like using the right icons and colors, are compelling for eliciting the desired action.

5. Adjust Your Policies to Support Desired Behavior

Having better metrics and are clear equivalents is a great starting point. To drive desired behavior, you may need to reinforce these by changing your metrics too.

For example, if you are trying to improve operations by getting people to adopt new software fully, you might find a way to share some of the business benefits with the individuals who are using the tools in a way to generate new value.

Using the theory of equivalent metrics, you could translate the value of the way the software is used into more meaningful benefits for your staff. This might include things like:

  • For every 100 hours saved from the proper use of the software, you could give the employee an extra 2 hours of leave
  • For every X percent increase in revenues (attributed to the appropriate use of the software), you could increase a bonus pool or money available for salary increases by Y amount.
  • Every X percent reduction in operating costs, you could increase the amount of money available for staff training by Y amount.

These are just a few examples of how combining equivalent metrics with internal policy changes could help motivate and reward your staff when they change they take desired actions.

6. Share, Share, Share!

Make the equivalent metrics clear and readily available wherever people are spending their time.

Keep them top of mind.

In the case of PACE, the metrics are listed on each piece of food packaging. With the solar panels, they are right no the homepage dashboard immediately after logging in to the system. They also send automated emails with attached PDFs, just in case we missed it.

Now it is Your Turn!

What will you do to make equivalent metrics? How will you develop meaningful equivalent metrics that drive desired user adoption, customer success, and renewals?

 

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The Big Bold Secret to SaaS Growth!

Success Chain

The Fundamental Shift You Need To Make

*This is an updated version of the article, “The Big Bold Future Of SaaS Growth Is Customer Success” that I originally published on Software Executive Magazine in May 2019.

Do you want to boldly grow your SaaS company? If so, it is time to move beyond the features and functions of your software, beyond the freemium price models, beyond the quick installations, and beyond offering unlimited integrations and partnerships.

Instead, you need to understand why your customers are not getting value from their investment in your software and then take bold action to help them actually achieve the results and success they need.

This is incredibly different than just delivering software.

This is fundamentally changing your business model and your mindset.

THE BROKEN SAAS BUSINESS MODEL

The birth of Software as a Service (SaaS), which brought us the great promise of the subscription revenue business model, was closely followed by the inevitable afterbirth – customer churn, revenue destruction, and slow or negative growth. The next generation of this business model, led by the creation of customer success (CS), is ushering in a new growth engine.

But only for those organizations that are brave and bold in how they embrace and approach customer success!

When subscription software first came on the scene, many people naively assumed that it was just another revenue model for the vendor. They assumed that if they just continued to deliver great features and functions that customers would naturally stay with them in perpetuity.

What they didn’t realize was that what they really introduced was a new consumption model for buyers, where the buyer would only be willing to pay for what was used and what was generating value for them. And so, the trouble began.

SOLVE THE PROBLEM YOU NEED TO SOLVE, NOT THE PROBLEM YOU KNOW HOW TO SOLVE

The core problem that emerged was not the technology and getting systems deployed quickly, but rather that most buyers’ organizations are not really good at using technology effectively to solve business problems and create clear, measurable value.

This is not a new problem for buyers.

Most organizations, regardless if they are investing in SaaS, perpetual license, or home-grown systems, can often get the system live. What they struggle to do is to get their people to use it in a way that creates the required business value.

  • With perpetual license and home-grown systems, buyers’ organizations pay for the value upfront (sunk costs) and then they are stuck with it whether they get the value or not.
  • With subscription software, they only keep paying (renewing) when they are getting value. This is very bad news for SaaS vendors.

Now the SaaS industry is facing a challenge the likes of which they have never known before, and a problem for which they are ill-equipped to solve using current tools and methods.

At the core, the problem that SaaS vendors need to solve is figuring out how to get their customers to successfully, effectively and efficiently get the people in the customer’s own organization to change the way they work and utilize systems in a way that actually generates expected business outcomes.

And then they need to figure out how they keep people creating value from technology, year over year, while working in a world of perpetual change.

BEWARE - ICEBERG AHEAD!

The good news is that SaaS companies are beginning to wake up to the fact that their future growth and survival depends on them doing more to help customers achieve results.

They are embracing a customer success mindset, investing in building customer success teams, and slowly trying to align their organizations around delivering customer outcomes, not just software.

The bad news is that very few SaaS vendors have figured out how to solve the root-cause problem, that is, how to get customers to drive effective adoption and use technology to create value within the customer’s organization.

Instead of figuring out how to solve this problem, many SaaS vendors are rushing to do what they know how to do, what they are comfortable doing, or what they have done for years when marketing and selling to new customers.

For example, many CS teams get very focused on developing success metrics, defining new internal processes, building playbooks, and trying to automate a lot of the customer success process. While these approaches work great for marketing, sales, and internal operations, they do very little to solve customers’ internal adoption and value problems.

Sure, on the surface, a lot of these activities make sense, and they will deliver some value to customers. But these approaches alone are not enough.

Customer success teams that only apply old problem-solving techniques to the new challenges of user adoption and customer value creation are effectively trying to Feng Shui the deck of the Titanic. Sure, you can do it, but it probably won’t solve your problem.

CUSTOMER SUCCESS IS WHERE YOU NEED TO COMPETE

Given the need to deliver business value AND the new realization that customers struggle to achieve business value on their own, puts the spotlight on the new future of SaaS growth.

The race is not to deliver more product features, it is to deliver quality, effective, scalable, impactful customer success services. This is where software companies need to compete!

To do this, they need to be bold in their approach.

What SaaS vendors need to realize is that driving adoption and value creation, especially in B2B businesses, is a people and organizational problem, not a technology problem. It is about getting people – large groups of people – to change how they behave at work, and how they perform their jobs.

People have a lot of their own motivations and personal identity invested in their jobs and their sense of professional success.

They also have many organizational factors, in the form of organizational structures, business processes, communication practices, and corporate culture, that all limit individual freedom for how they behave at work.

This combination of individual motivation, identity, and organizational factors, all impact how users adopt technology and use it to create business value. And alarmingly, these factors that most impact customer success are often misunderstood or outright ignored by SaaS vendors and buyers.

GO BIG AND GO BOLD WITH CUSTOMER SUCCESS - OR YOU WILL GO AWAY

Being bold about customer success requires you completely re-envision what success looks like from your customer’s point of view. Think long-term.

  • What would it take for the customer to achieve so much success from using your product that they renew for the next 20 years (or more)?
  • What actions do they need to take within their own organization to achieve this level of success?
  • How can they get their people to effectively collaborate using your software as it is designed and intended?
  • What are they not doing today that they need to start doing?
  • What do they need to do differently?
  • What do they need to stop doing that is preventing them from achieving success?

Think about the people in their organizations.

  • How can they get their people to embrace technology?
  • How do your customers need to address all the motivational, identity and organizational issues that affect user adoption?
  • How can they make sure they keep their current and future people using the evolving systems, in a changing world, over the next 20 years?

Now work backwards.

BE BOLD TO DELIVER A HIGH-IMPACT CUSTOMER SUCCESS PROGRAM

Ask yourself:

  • What will customers need from their vendors to achieve success over the next 20 years?

  • What is their ideal vendor profile and how do you become it?

  • What services, expertise and resources do you need to bring them?

  • Where will you get them or how will you develop them? How will you engage your customers differently to help them focus on their 20-year success?

  • How will you prioritize your investments in marketing, sales, product development, support and customer success to make sure you are providing the resources (not just the software) that customers need to renew for the next 20 years?

  • How do you need to engage with customers differently during the marketing and sales process to get to them focus on 20 years of success?

  • How do you get your marketing, sales, product, and customer success teams to align to deliver on this vision for the future?

Now let me ask you – what happens to your company if you don’t figure out how to solve these problems and your competitor does?

(And trust me, your competitor is working to solve these problems.)

 

Bold Customer Success Driven Growth in Your Future

Does this sound a little overwhelming?

That’s good. That’s why we’re here. 

When you look closely at the challenges ahead, you clearly see the foolishness of the approach many SaaS organizations take to approaching sales, renewals and customer success.

Hopefully the magnitude of the challenge – and the opportunity ahead –  demonstrates why you need to be bold in your approach to customer success.

This is both the challenge and promise of customer success.

If SaaS vendors can figure out how to deliver results, not systems, then customers will heap great financial rewards on them.

Much like a drug dealer tries to get their users hooked on a chemical high, SaaS firms will find that they can get their customers hooked on the high of achieving great business results. When done effectively, this customer high delivers the great renewals, expansions, and referrals that all SaaS vendors want.

This, not new sales, is what will lead to the biggest, boldest growth in SaaS businesses in 2020 (and beyond).

Get the free guide to see how your CS program compares!