How to become a data-driven CSM - Part III

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Hi, Markus here. Welcome to a new episode of the Customer-Value-Led-Growth Newsletter.

I share strategies and guides to help you become a proactive CSM delivering more value for your customers and revenue for your company every week.

Need additional help? Check out these resources 👇️ 

• Free Templates

• Notion Guides

• CSM Operating System

• Learning Platform

• Coaching Services

Last week we explored the Customer Journey and the data to make sense of it. Now it’s time to look at the cold hard facts.

• Your customers might be sticking to the plan precisely.

• They follow all your recommendations about the content and services they should consume.

• Their feedback is very promising.

But that still does not mean they actually become successful.

In today’s episode, I will show you how to measure your customers’ outcomes through effective qualitative and quantitative KPIs.

1. Solved Problems

How do your customers get value from your product? Put simply, when they are completing tasks and solving problems that moves them one step closer to accomplishing their desired outcomes.

Customer value does not happen in the last 30 days. It does not happen on the last day. It happens continuously throughout the customer journey (or does not).

Why am I saying this? Because your customers will only continue pursuing their goals if things are moving in the right direction. This is why customer onboarding is so important. None is going to spend serious money, time and effort

The problems your customers have solved are the qualitative component of measuring progress. It’s important to understand because the numbers that follow depend on it.

Examples:

• Customers moved from random to clear product roadmap - they still have to build the features and verify the impact

• Customers went from selling to everyone to define their ICP - they still have to verify accuracy and impact on revenue

• Customers uncovered the true reasons for churn - now they have to see whether their countermeasures work

2. Customer North Star Metric

At the beginning of the customer success journey, you’ve defined, together with your customers, what success looks like. You’ve captured how they would measure success. Ideally, it all comes down to a single metric - your customers’ North Star.

The NSM is typically used for your own company. A single metric that represents its success. It’s used to create and support alignment throughout the entire organization. The same principles are useful to define the success of your customer engagements.

2.1 Customer Progress

If you are looking at the NSM after 3,6 or n months - how likely are your customers going to accomplish their goals? If they have only achieved 20% after 6 months it’s unrealistic that they will get to 100% after 12 months.

This way you can detect and quantify customer churn risks and start countermeasures in time. 30 days before the renewal is too late to turn the tide. All you will accomplish is wasting a lot of your time fighting lost battles.

2.2 Customer Results

Many CSMs are still overcomplicating churn. They are still falling for proxy churn reasons like too expensive or missing features. But in the end, customers are either leaving because they did not get enough value or for external reasons.

External reasons are not under your control and should be neglected. So when your customers are leaving due to missing their goals you want to understand the gap.

You want to understand whether goals have been missed narrowly or by a mile. It decides whether it makes trying to win them back.

2.3 Account Expansion

New customers are buying based on the value they expect from working with you. Existing customers buy based on the results they have already received. The way most companies define CSQLs is utterly terrible.

They are looking at product adoption, usage, and health. They are not looking at customer results. A big mistake. Who will be more receptive to buying more than a customer who did not only meet their goals but exceeded them by 50%?

3. Input Metrics

The Customer North Star is great for tracking your customers’ results. But it does not help you to make sense of it. As an aggregated metric, you need to break it into smaller pieces - input metrics.

Let’s assume your company is selling sales software. Your customers’ goal is to accomplish their quota and that means they have to grow revenue by 30% YoY.

How can they get there? They have 5 different angles at their disposal:

• booked meetings - talk to more potential buyers

• conducted demos - create more opportunities

• sent proposals - convert more demand

• revenue potential - talk to customers with more valuable problems

• quantified pain - highlight costs of inaction (needs to be realistic though)

They can work on a single one, improve all of them, or any combination in between. If you are measuring customer performance in each one of them you can identify where they are doing great and where they are not.

Your customers might have booked 30% more meetings. But it does not matter if they don’t have high costs of inaction that makes them take action. The solution is not to help customers book even more meetings.

In most situations, your customers are not struggling with a single thing. They are underperforming because they have shortcomings in all areas. However, some problems are more urgent than others requiring to tackle them in a specific order.

The order could also be given by the type of product your company sells and how customers are using it. If your customers are not booking meetings they will not sell anything.