The Customer Value Formula

Updated 10/25/2023

It's our responsiblility in Customer Success to hold everyone accountable in both organizations for doing their part to exceed customer expectations

B2B SaaS Customers are trying to understand one thing: Will I get more value than what I pay?? The Sales team’s job is to get the customer to buy.? They sell the ‘value’? (either in $$ or some other benefit) but it’s not really their responsibility to get that value for the customer. That’s why we have Customer Success.

Too often we assume we understand what the customer wants to achieve with our product or service - we don't

Too often we assume we understand what the customer wants to achieve with our product or service - we don’t. The lack of understanding comes from a tactical focus on requirements and implementation, not customer value. It’s our responsibility in Customer Success to hold everyone in both organizations accountable for doing their part to exceed customer expectations. But to do this, those expectations must be known and they must be documented in the CRM. It is the CS leader's role to make sure this happens.?Then once the customer starts achieving value, we need to show it to them as often as we can!

Onboarding is not about training, account set-up, or implementing business requirements...

It all starts with a customer value based onboarding process. Onboarding is not about training, account set-up, or implementing business requirements, it’s about understanding what the customer needs to achieve and setting them up to achieve it. Customer Success must learn during the onboarding process what is required for the customer to renew at renewal time. Having this conversation and documenting the response upfront gives everyone a clear understanding of the value that needs to be provided and drives the effort for the rest of the agreement. Don’t wait until renewal time to determine if your customer will renew. ? ?????

The Customer Value Formula

I take this a step further when I work with customers to determine their Customer Value Formula. It will vary based on the customer and the baseline of how they were doing the function before, but it follows the below outline. The trick is in capturing the information in a standard way so you can report on it by customer and CSM.

(Tangible Customer Benefits + Perceived Customer Benefits) - (Tangible Customer Costs + Perceived Customer Costs) =?

Gross Customer Value

Gross Customer Value - Alternative Benefits (prior solution) = Net customer value ?

It is critical for the ongoing relationship that you understand how the value of your solution is recognized by your customer. Like most things, it doesn’t happen by accident. There are a specific set of steps, standards, and techniques to making this all work togehter. If you want to know how focused your retention team is on Customer Value, anser the 5 questions below:

Want to know if your retention team is focused on Customer Value?

1. What % of customers have specific renewal goals captured in the CRM???
2. What % of each CSM has captured goals for their customers?
3. How are customers performing against their goals?
4. What % of customers possess the conditions most likely to be upsold???
5. Do you know the value Customer Success provides to your company? (It’s not a story, it’s an actual number)

If you don't have the answers above, you may be in more trouble than you think. Article: Why 75% of CS Leaders lose their jobs

Need help improving your customer process or developing a new retention strategy? Please reach out to me. Coaching and mentoring packages as low as $100 per week, fraction leadership as low as $1,500 per week.

LinkedIn profile: Daniel Hoesing

LinkedIn Company Page: Predictive Customer Behavior Index?

Website: https://predictivecustomersuccess.com/