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When daily activity is not a good thing

In our last two minute short, we talked about how you can orient your Customer Success efforts around two key customer-focused objectives:

  • More logins (boosting daily activity)
  • More revenue

I mentioned that there were a few edge-case exceptions. Well, a few of you wrote in to ask what those edge cases are, so thought I’d cover them today.

So, in what cases should you be concerned about higher rates of user activity? We’ve come across four edge cases. Of course, the nature of edge cases is that there are always more of them… way out on the long tail. So our list isn’t exhaustive, but it’s pretty good:

Edge case #1:
User is very busy extracting data from your tool so that they can quit. We see this case most commonly with online tools that have a reporting or archiving feature. Here, the user is preparing to pull out of the tool, getting everything they can get out before they quit or stop using it.

At first glance, this user looks like a great customer. They’re very very busy, so the tendency is to think: great, this user is getting a lot of value. But if you look at their usage pattern, you’ll find that they’re too busy. Their level of activity is way above their average over the past few months. This is a case where an early-warning system is a really good idea. You want to catch this high risk user before they start to extract and leave.

Edge case #2:
User is very confused – and clicking around a lot in frustration. We see this case where the product has a compicated user interface. Typically this kind of user won’t stick around for long though. They’ll have trouble getting to value and will quit pretty fast.

Edge case #3:
User is looking at your pricing or account management page. This is a very common pattern in advance of a quit. They’re checking out the pricing options and wondering why they’re paying so much for something they aren’t liking much.

Edge case #4:
Your product doesn’t lend itself to daily usage. There are certain products that just don’t lend themselves to a daily, weekly, or even monthly usage pattern. These are apps with high seasonality or peak usage patterns around certain times, like birthdays or holidays. For these apps, daily usage would be a peculiar pattern.

And there you have it, four edge case exceptions – when driving daily usage doesn’t make sense or isn’t a good thing.

The 2 keys to Customer Success

If you’ve been reading up on Customer Success, you’ve probably seen a number of articles that outline the keys to Customer Success. There are posts about 10-step programs, 12 guiding principles, and even a manifesto. While these approaches aren’t wrong (they’re actually pretty good), they are complex.

At Sparked, we don’t think it needs to be that complex. If you’re in a role where you’re working to deliver more value to your customers and revenue to the business, you can narrow your objectives down to two:

  • Customers should login more
  • Customers should spend more

Ok, so why does this work?

First, let’s talk about logins – otherwise known as daily actives or monthly actives (DAUs or MAUs). After looking at the data from many different companies across industries, we know that customers who use a product frequently are those who are retained over the long term. It’s really that simple. The reason is that people who use a product a lot are getting a lot of value from it. Of course, there are a few exceptions, but they really are edge cases. So, from the customer-value perspective, you can really just boil it down to: are they using it?

BUT, that’s not all you have to care about. Because at the end of the day, you want your business to thrive. So you also need to look at how much money the customer is spending with you (or generating for you, if you’ve got an advertising model). Luckily, if you’re doing well on objective #1, this one falls in line. Customers who are logging in every day or every week are much more likely to find your product indispensable. So when up-sell, cross-sell, or renewal time comes, they’re primed for the purchase.

It’s worth noting that these are key objectives – not metrics. You can formulate your metrics around the specifics of your business. For your business, DAUs might make more sense than MAUs. In fact, when we look at the data, we find that weekly actives are often most significant to retention. But WAUs sounds kind of funny. Maybe that’s the reason we don’t see this metric used very often.

As for spending more, you might care about monthly recurring revenue, average basket size, or lifetime value. In fact, it’s probably lifetime value that you’ll care about most. If so, it means that sometimes you win when the customer spends less per month, but sticks with you for longer. That’s more valuable for the business in the long term.

And there you have it. Two key objectives for Customer Success. See you next time.

What does a Customer Success Manager do?

Here’s another one in our 2 minute short series about Customer Success fundamentals. So, what does a Customer Success Manager (or CSM) do?

To review the definition of Customer Success, it’s: the business function that ensures customers realize value throughout their journey with your company.

Logically given this definition, the Customer Success Manager ensures that customers continues to realize value after their initial purchase of a product or service.

The activities of a CSM vary, depending on the type of business and orientation of the Customer Success team. Typically, the CS team will be attached more closely to either Customer Service or Sales.

When attached to a service function, the Customer Success Manager is concerned with on-boarding, adoption, retention, and satisfaction. When attached to sales, the CSM is more concerned with renewals, cross-sales, and up-sales. Of course, all of these functions are interrelated. Overall, a customer who is realizing value from the product is going to one that spends more money over time.

It’s important to note that the CSM is not a customer service rep or a salesperson. These roles have very specific day-to-day activities that may not be concerned with customer value. The CSM is 100% focused on customer value – and therefore is often focused more on proactive activities, versus fire-fighting or selling.

And there you have it, a very simple definition of the Customer Success Manager role.

See you next time.

What is Customer Success?

Today, we’re going to cover the fundamentals, because we’re seeing a lot of you come to our website with one simple question: What is the definition of Customer Success?

Simply: Customer Success is the business function that ensures customers realize value throughout their journey with your company.

Of course, if you’re doing a good job at Customer Success, the journey will be a long one and your business will earn a good financial return throughout.

So, is Customer Success something new? No, not really. The best companies have been practicing Customer Success for eons. The archetypal example is the small shop owner who greets you by name, knows your order, and helps you find something new that you’ll love.

What is new is applying the “Customer Success” label to these activities. And although it sounds like a small thing, applying a label can be a transformative moment. Because all of these things that you kind of knew were good ideas, start to become documented, tested, and organized under one umbrella.

And so it is with Customer Success, where there are now functional areas at companies with titles like VP of Customer Success and Customer Success Manager; there are products (like ours at Sparked); best practices and lots of thinking being done under this Customer Success umbrella. So, it turns out that the label is really useful. Rather than a bunch of ad-hoc practices, we have a corpus of practices and a community of practitioners doing “Customer Success.”

And there you have it! Customer Success defined. See you next time.