Step 4: A Delighted Customer Solves All Known Problems

“If I asked my customers what they wanted, they’d say a faster horse” – Henry Ford

Innovation comes from great entrepreneurs, but you still need validation of your idea from customers (as they will pay for it) and a sanity check with analysts, competitors, and thought leaders to ensure you aren’t operating in your own bubble and burning cash when somebody else has already solved the problem, albeit in a better way.

Consumerization

Enterprise software is having what I call a ‘come to Jesus’ moment.?Let’s be honest we have been overselling for years and more recently many start-ups have gotten way over their skis making promises they can’t fulfill.??The buyer is much more aware, according to recent figures 77% of them have done their research before they engage with your sales team.?They want a frictionless sales process, with transparent pricing and an easy way to access and trial your product.?They want the same journey in enterprise software as they experience in the consumer world. ?The consumerization of enterprise software is here.

Customer Success is a winning business strategy because it prioritizes the needs and satisfaction of the customer. This approach not only leads to happy and loyal customers but also helps a company to obtain product market fit, a crucial aspect of success in the tech industry.?Remember, happy customers will tell five of their peers and unhappy customers will tell at least seven of their peers!?Your number one lead source is customer referrals.

Product Market Fit

Product market fit refers to the point at which a product meets the needs of its target market.?(I define product market fit as six customers in the same vertical, using the same product in the same way and being referenceable). ?This is essential for a business to grow and scale effectively. Obtaining product-market fit requires a deep understanding of the customer's needs and pain points. By focusing on customer success, a company can gather valuable feedback and insights that can be used to improve the product and achieve product market fit.?

It is imperative you have the right teams speaking to the customer during product discovery and that they have an open mind.?Their role is not to “convince” the customer, but to discover real pain around the market problem and then rapidly ideate the solution with their input. ?A good team makeup would be the product lead, an engineering lead, and a qualified researcher to structure and lead the conversations. You may also want a designer to hear firsthand customer feedback.

The "ah-ha! moment" is a term used to describe the point at which a customer experiences the true value of a product. This can be a game-changing moment for the customer, as it demonstrates the product's ability to solve a problem or meet a need that they previously had. ?It can also help the product go viral inside an account and become ‘sticky’, the ultimate goal. ?

Great products also have significant value in generating leads. Seeing usage and learning about new use cases that customers use the product for can provide valuable insights for the company and help to identify new potential customers.

Independent endorsements from G2 Crowd and Trust Pilot are all becoming important validation points for customers. These platforms allow customers to read reviews from other customers and get an idea of the product's effectiveness. A product that has positive reviews on these platforms is more likely to generate leads and attract new customers.?This is another example of consumerization bleeding into the enterprise buying process.

Compensation

Additionally, aligning sales compensation to customer success and renewals can also be a powerful strategy for promoting customer success within a company. By linking sales compensation to the success and satisfaction of customers, sales representatives are incentivized to prioritize the needs of the customer and ensure their success with the product. This can help to discourage "drive-by selling," where sales representatives focus on making a quick sale rather than building a long-term relationship with the customer.?This tactic may fix the current quarter but it isn’t a long-term strategy to scale the business.

When sales compensation is linked to customer success and renewals, sales representatives are more likely to take a consultative approach, working closely with the customer to understand their needs and pain points. They will also be more invested in ensuring the customer's long-term success with the product, which in turn, can lead to increased customer satisfaction and a higher likelihood of renewals.?It is important that you hire salespeople who share this value and are genuine advocates for customer success. ?Compensation drives behavior in sales, so ‘put your money where your mouth is’ and make your customers widely successful!

Service Level Agreements

Customer Success should be a core company value, it is essential that metrics, SLAs (service-level agreements), and compensation across all teams are aligned with this value. This alignment ensures that all teams are working towards the same goal of ensuring customer success and delighted customers.

Having metrics in place to measure customer delight is crucial to understanding the effectiveness of the company's customer success strategy. These metrics can include customer retention rate, customer satisfaction score, and net promoter score. By regularly monitoring these metrics, companies can identify areas where they need to improve and make adjustments to their strategy to better meet the needs of their customers.

Additionally, SLAs can be used to establish clear expectations and guidelines for how different teams should work together to ensure customer delight. For example, an SLA can be established between the customer success team and the product development team to ensure that customer feedback is taken into account in the product development process.

Finally, aligning compensation to customer success can serve as a powerful incentive for all teams to prioritize the needs of the customer. For example, bonuses or incentives can be tied to customer retention or customer satisfaction scores, encouraging all teams to work together to ensure customer success.

When it comes to subscription renewals in the tech industry, benchmark data can vary depending on the specific product or service being offered. For example, according to data from Gartner, the software-as-a-service (SaaS) industry has an average renewal rate of 89%. This is considered to be a strong renewal rate, as it indicates that the majority of customers are finding value in the product and choosing to continue using it. Personally, I wouldn't be happy with anything less than 95%.

If a business is experiencing low renewal rates, it can have a significant impact on revenue and growth. Without a steady stream of recurring revenue, it becomes more difficult to predict future income and plan for expansion. Additionally, a high customer churn rate can also lead to increased customer acquisition costs, as the business will need to spend more to replace lost customers.?This must be fixed as soon as you won’t have a business.

Empowered teams

The importance of empowered product teams working closely with customers and being a product-led organization cannot be overstated. A product-led approach, as opposed to a sales-led approach, places the customer at the center of the product development process and ensures that the product is tailored to meet their specific needs and wants. This leads to higher customer satisfaction and ultimately, better business outcomes.

One of the key benefits of a product-led approach is that it allows for a more efficient product development process. By working closely with customers, product teams can gain a deep understanding of their needs and pain points. This allows for the development of a product that addresses these issues and therefore, resonates with the target market. A product that is tailored to meet the specific needs of the customer is more likely to be successful in the market than a product that is developed without considering the customer's perspective.

Additionally, a product-led approach promotes a culture of continuous improvement. By working closely with customers, product teams can gather feedback on the product and use it to make iterative improvements. This leads to a product that is constantly evolving and improving, which helps to maintain customer satisfaction over time.

In the book "Empowered" by Marty Cagan , he highlights the importance of empowering product teams to make decisions and work closely with customers. He states that "Empowerment is the key to creating a product-led organization. It allows product teams to make decisions based on customer needs and market opportunities, rather than being constrained by the sales team's short-term goals."

Voice of the Customer (VoC)

These programs are very valuable to get even closer to your customers and work out why they need you, and what their specific problems are.?There are many methods to implement a VoC program:

1. Customer Advisory Board (CAB)

2. Net promoter Score (NPS)

3. Customer Surveys

4. Online Chats

5. Focus Groups

6. Emails

7. Recorded Call Data

8. Third-Party Reviews

Product Lead Growth (PLG)

The value of product lead growth strategy lies in its ability to drive business growth by focusing on developing and improving existing products rather than acquiring new customers. This approach can lead to increased customer satisfaction and loyalty, higher customer lifetime value, and improved profitability.

Additionally, a product-led growth strategy can help a company maintain a competitive edge by staying ahead of market trends and continuously improving its offerings. However, it is important to strike a balance between product development and customer acquisition to ensure sustainable growth.

The Feature Function War

My advice for enterprise tech product managers to avoid building too many features and functions is to focus on the core value proposition of the product and prioritize features that directly support that value. Here are some steps to consider:

1. Define the target customer and their pain points.
2. Identify the unique value that the product offers to solve those pain points.
3. Prioritize features based on their impact on solving the customer's pain points and delivering unique value.
4. Continuously validate and refine the feature set through user research and feedback.
5. Avoid adding features just to keep up with competitors, unless they directly support the product's value proposition.

It's also important to keep the user experience simple and intuitive. Consider regularly reviewing and simplifying the product interface to make it easier to use. Continuously gather user feedback and use it to make informed decisions about what features to add or remove.?

At Siebel, we became the ERP of the front office and got a bad name from the users.?Salesforce pounced on this with a compelling value proposition because they understood the market problem.?CRM (Siebel) had a bad name, according to Gartner 72% of CRM implementations were failing, defined as failing to deliver an ROI.

Step in Salesforce with a simple value proposition; Easy to use, Fast to Deploy, and Low Risk. ?Wind forward 25 years and I fear Salesforce is going the same way.?It’s cumbersome, lacks intelligent automation, and has drifted from the core value proposition.?Don’t get me wrong, their success has been amazing, and long may it continue but only the paranoid survive and we live in an age where change happens quickly.

We all want to build and sell products that our customers love.??Set that as your goal.?Hire amazing curious product leaders and engineers who want to solve market problems and you will be setting your company up for success. Have a laser focus on getting to product market fit before you raise Series A. It will give you a lot more leverage.