More and more Customer Success groups are “owning” revenue — they have a number to meet and presumably are accountable for all renewals and expansion sales. The group performance metrics are a mix of tracking gross-this and net-that. That’s an important change that has been growing for the past ten years, and it may play well with the company’s board and the investors to have the Customer Success team be “responsible’ for post-sale revenue. But if you look deeper, the picture has some ugly edges. Responsibility and authority are not equal. Churn due to bad product decisions and Sales closing deals with inappropriate customers is being counted against the CS group who had no input to those choices. What’s worse, and far more fundamental, in the “ownership” discussions, nobody is talking about responsibility for ensuring and proving value realized by the customers. The imbalance and the silence is a set-up for failure both for the team and for the company. In an incremental income profitability model, the ownership of Customer Realized Value needs to be the foundation of a company’s global GTM strategy.
Definition: Customer Realized Value (CRV)
Customer Realized Value occurs when the customer actively uses their purchased product to profitably accomplish real tasks more effectively than otherwise — and is aware of that fact. That’s not something that can be safely left up to the customer to produce or to acknowledge, down that path lies both churn and significant money left lying on the table. It leaves the door open for the competition to distract with their glittering promises. The vendor needs to not only be a part of the ongoing ROI and budgetary discussions with the customer’s CFO, but to be actively managing them so that the decision goes towards continuation and expansion of the relationship.
Once a company fully understands and accepts that actual user adoption determines Customer Realized Value, and therefore the probability of renewal and expansion sales, then it’s time for the conversation about who in your organization owns and is accountable for guiding adoption through to accomplishment and proving that value. The first vital question is: Does the proposed ownership team have the appropriate staffing, data and tools to do the job? If the accurate answer is no, then there can be no true ownership.
CRV Requirements
So what are the required tools to enable authentic ownership of CRV? Specific application feature usage tracking by identifiable users is an absolute base requirement, for the CRV ownership group needs to use it to identify real jobs being done by the customer and to put a monetary value on each of them. Feature clicks alone are not the answer, for they are not proof of CRV that the customer will acknowledge. The company must be able to directly demonstrate the economic value of the real jobs being done and who is doing them. The CRV ownership team also has to have the in-depth domain expertise necessary for establishing their credibility with the customer’s CFO and other decision makers. The data that the team develops about actual value to the customers has strategically significant value to the company as well, for it informs both the ICP and the ongoing product development definition and schedule.
Does your Customer Success group authentically own Customer Realized Value? If not, who does?
Recommended Reading
- Value and Customer Success – Whose Value?
- Customer Realized Value: A New Metric For Customer Success Teams
- Are Your Customers Actually Using Your Application?
