4 customer success data hacks to identify your ideal customer profile

4 Customer Success Hacks

to Identify your Ideal Customer

Profile

Lincoln Murphy

Customer Success Evangelist

September2014

2014 Gainsight, Inc. All rights reserved.

Agenda1. Methodology2. Ideal Customer Profile3. Ideal Customer Hacks

1. Surface Your Most Successful & Healthy Customers2. Find Your Most Profitable Customers3. Identify Customers with Expansion Potential4. Leverage Your Army of Advocates

4. Q&A


Methodology1. Get access to your Customer Success data2. Look for patterns3. These patterns will expose your Ideal Customers4. Fill-in Ideal Customer Profile for those customers5. Acquire Customers matching your Ideal Customer Profile6. Profit!


Watch the Webinar Replay

https://www.brighttalk.com/webcast/11255/124541


Ideal Customer ProfileReadyWillingAbleSuccessfulProfitableExpansion PotentialAdvocacy


HACK #1: SURFACE YOUR MOST SUCCESSFUL CUSTOMERS


Hack #1: Surface Your Most Successful Customers

• Your Ideal Customers are the ones most likely to achieve success with your product

• Find those with the highest average lifetime Customer Health Score• They didn’t just achieve a high Customer Health Score two-

years into their contract with you, but were healthy from the beginning and kept that up over time. And then we’ll look for patterns.



• If you don’t have a Customer Success Management platform yet, an actual Customer Health Score may be hard to find – especially historically – so you’ll pull together other data points to try to come up with your own “Customer Health” score

• Sure, a real Customer Success Management (CSM) solution like Gainsight could give you this report quickly, but even without that you should be able to get this data.



• For instance, you could pull together:• average Net Promoter Score (NPS) over time• Sales cycle length• Time to first value• on-boarding/implementation milestones and timing• Customer Support data• and maybe get your Account Managers to apply a “health”

score – based on their gut – to each of the customers they manage

• Apply a “weight” to each input



• You have to consider all on-boarding, customization,

data seeding/cleansing, etc.• Also the technology/infrastructure requirements on their side

• Is there an industry, company type or size, or revenue

amount that appears to be more successful (healthy)

than the others?

• Did the companies that found success buy through a

VAR? Was an internal champion present?



• What are the patterns that seem to lead to success?

• Understanding what goes into making your customers successful will surface ideas on what to look for in prospective customers.


HACK #2: FIND YOUR MOST PROFITABLE CUSTOMERS


Hack #2: Find Your Most Profitable Customers

• The definition of – or even the need for – profitably acquiring and supporting a customer changes depending on your company stage and goals.

• Because of the deep dependence on the situation, I won’t spend a lot of time here except to say that acquiring customers has a cost and you may want to make sure you recoup that cost as quickly as possible.



• This cost is generally referred to as Customer Acquisition Cost (CAC), and should be “fully loaded” including all the costs to:• Advertise to• Sell to• Support during a Free Trial or Proof of Concept• Convert to paying customer



• If the sum of all that is less than the profit you get from them over some pre-determined time-frame (we’ll say in the first 12 months), then you can say that you’ll acquire them profitably.

• But CAC isn’t the only cost you need to be aware of in figuring out the “Profitable” input for your Ideal Customer Profile.



• Need to figure in the immediate-post-sale costs such as:• Onboarding• Provisioning• Data cleansing/seeding• Customization/configuration• Training, etc



• And then the ongoing cost to support regular use:• Infrastructure costs• Technical Support• Customer Success



• The difference between skating by on razor-thin margins or living large with super-fat margins, ultimately comes down to the customers you acquire.

• The customer you go after determines whether they’ll pay the premium price, whether their support costs are too high, their CAC is too high, sales cycles are too long, their customization/integration needs are too high, etc.



• Some hacks are to look for customers:• That had a short sales cycle• Have a high LTV• Have long-term contracts• Frequently Increase usage/buy add-ons/etc.• Have a low cost to support• Or all of the above?

• What are the patterns? What are the characteristics of those customers?


HACK #3: IDENTIFY EXPANSION POTENTIAL


Hack #3: Identify Expansion Potential

• This is what I refer to as Intra-Company Virality and provides you with tons of opportunity for Cross-Sell within the same company.

• “Should we go after Enterprise or SME customers?”• This should be an input into answering that question

• Now the real answer to the question – target Enterprise or SMEs? – has many inputs:• sales cycle length• deal size• etc.



• But one input that few really consider is the Expansion Potential of the account.

• If you sell to a company with 25 employees and they buy 25 seats and have 100% usage, how do you expand the account? How do you grow revenue? You need additional features or non-user-based usage fees you can charge, right?

• Because if you wanted to add just 1 more user, the company would literally have to grow by 4%.



• But if you sold that same 25 licenses with the same usage, into a department/org in a large Enterprise, if you wanted to grow the account by 1 user, they’d just add a user.

• The department growing by 4% is nothing. A rounding error.



• Couple that with other departments that are interested in what you have (which happens even more and a lot faster when you fully orchestrate this process; the “virality” piece I mentioned), and there is a ton of expansion potential.

• Maybe the sales cycle will be longer for the initial Enterprise-focused sale (though if you do things right you can accelerate this significantly, especially in this land-and-expand fashion), but the long-term growth after the initial sale might just make it worthwhile.



• And you should be able to gather from your Customer Success Management system a list of companies that have expanded their use over their lifetime with your company.

• What are the patterns and common characteristics? Who did you initially sell to?

• What department/persona?



• When it comes to expansion potential, that potential is only realized when the customers have achieved success... when their customer health score is high.

• No Customer Success… No Expansion Revenue. Period.


HACK #4: CREATE AN ARMY OF ADVOCATES


Hack #4: Create an Army of Advocates

• I think of Advocacy as Inter-Company Virality...

• This is how boring ol’ B2B products “go viral” and it’s how you can leverage your focus on Customer Success to drive Second Order Revenue by having your customers bring you more customers.

• Chasing logos is fine... but chase logos that’ll bring you more logos!



• And the only way Advocacy happens is if customers are finding success with your product.

• If they’re ever going to be an advocate for you, it’s when their Customer Health Score is high.

• No Customer Success... no Advocates.

• And no “viral” growth, either!

• So use your Customer Success Management solution to look for customers that have been your biggest advocates.



• Look for customers that have:• Referred new customers through their use of your product

(think: they send a file, the recipient gets the file but also becomes a user and then a paying customer)

• Have given testimonials• Have talked to prospects on your behalf• Have spoken at your events• Participated in case studies with you

• Or with other vendors

• Written guest posts for your blog• etc.



• While you may not WIN the deal because of the advocacy of your customers, you may be IN the deal because of it.

• Don’t underestimate the value of Customer Advocacy.



• When you pull this data on your biggest customer advocates – again, ensuring other situational parameters are set, too – what patterns emerge? • Types of customers?• Size of customers?• Industry?• LTV?

• Now you take that Advocacy data and use that input in your Ideal Customer Profile and all of the sudden you have an amazing picture of your absolute Ideal Customer.


http://www.gainsight.com/


Q&A

4 customer success data hacks to identify your ideal customer profile

Data & Analytics

customer success data2

ideal customer profile6

ideal customer profile3

ideal customer hacks1

fillin ideal customer

customers theymanage

inprospective customers

likely to2014 gainsight