Last week, I published an article for Forbes entitled Customer Success? Pull The Other Leg. In the article, I bemoan the fact that customer success initiatives have largely gone off the rails, focusing on reducing customer churn or selling more to customers, rather than actually focusing on the success of customers.
I then left readers with a cryptic definition: customer success means focusing on customer outcomes in terms of your customers’ profitability, which inevitably depends upon the success of your own customers’ customers.
Astute readers might have noticed the suggestion of an infinite loop in this definition, a rabbit hole even Alice might not escape: what if your customers are themselves following this definition of customer success? Then your customer success depends upon their customer success, which in turn depends upon your customers’ customers’ customer success, ad infinitum.
Only this story isn’t ad infinitum. It’s recursive. And as with all recursive algorithms, there is always an escape hatch that prevents infinite loops.
In the case of customer success, what is the terminating condition of the recursive loop? The consumer.
In the Forbes article I also discuss customer delight – that subtle, complex combination of emotional queues that gives us humans all the warm fuzzies we could ever desire when we interact with a company.
For consumers, outcomes fall into two broad buckets: customer delight and consumer goals. For example, if you’re buying a pair of shoes, you may select a pair that you love (customer delight). But if your goal is to wear the shoes, then they had better fit as well.
Note that delight and the goal often interrelate. You may be less delighted with a product because it doesn’t help you achieve your goals, and correspondingly, being delighted might very well be one of (or your only) goals.
Customer delight, however, is mostly a consumer phenomenon, so it’s primarily of interest to B2C companies. True, we experience customer delight in B2B scenarios as well, as human relationships form an essential role in such interactions.
Nevertheless, in B2B situations, customer outcomes are far more likely to correspond to quantifiable key performance indicators (KPIs) like customer profitability, productivity, cost savings, etc. Customer delight might very well be on this list, but it is far more difficult to measure.
We can thus come to the reasonable conclusion that customer success initiatives will only be successful if the people responsible for it take their focus off of inward-facing metrics like churn, upsells, and cross-sells, and instead give their full attention to such customer outcomes.
Just one problem: in the B2B scenario, simply focusing on business KPIs as business outcomes still falls short as a true metric for customer success. To explain this conundrum, take a look at the following diagram.
In the diagram above, customer success divides into customer delight and the customers’ business outcomes. These two components of customer success are interrelated, and in the B2B case, business outcomes are usually more important.
In the B2C case, outcomes center on a combination of the consumer goal and customer delight, while in the B2B situation, we must up our game for those customers who are also interested in improving their own customer success metrics.
When our own customers are themselves looking to improve their customers’ business outcomes, then our customer success doesn’t simply depend upon our customers’ measurable KPIs, but also depends on how well we can support our customers’ customer success initiatives – in other words, our customers’ customers’ business outcomes.
Note, however, that our customers’ customer success is only a B2B priority. If our company is B2B and our customer is B2C, then our customers’ customer success is a combination of consumer goals and customer delight – and thus we must base our customer success on the success of those results.
If we unravel this spool of customers’ customers, it becomes clear that customer success cascades up B2B2B2C value chains, where there could be any number of B’s before we get to a C.
In the B2B context, customer success has always depended in part on customer relationships – the human part of business that greases the wheels of commerce with everything from handshakes to expensive meals.
As customer success initiatives mature, however, they must increasingly depend upon technology, as there would be no practical way to gain the visibility necessary into the customer success value chain without it.
In the cloud services (SaaS) marketplace that launched many a B2B customer success initiative, such technology is relatively straightforward to envision.
For example, if my company sells SaaS-based customer relationship management (CRM) software, then one of my customers’ business outcomes is how much using my software increases their sales conversion rate – a metric I can build into my CRM app.
If my customers’ customers are themselves B2B companies, then my customers’ customer success initiatives depend upon how successful my customers are at ensuring their customers achieve their own business outcomes – a result that now depends on my customers’ offerings, rather than my own.
However, starting with the vendor and working our way down the chain doesn’t give us the insight we require (even though virtually every vendor takes this approach).
Instead, let’s begin with a consumer. Let’s call her Sally. Sally goes to the supermarket to buy some soap. The supermarket focuses on Sally’s customer outcomes: the emotions she feels in the store (ideally delighting her), and her goal, which in this case, is to bathe with the soap.
The soap manufacturer isn’t simply concerned with the supermarket’s outcomes, it must also focus on Sally’s outcomes, as do every company in the manufacturer’s value chain, including the suppliers of raw materials, the vendors of equipment in the manufacturer’s factories, and even the ad agency that put together the marketing campaign for the soap.
Furthermore, every one of these companies leverages IT – and every software vendor up and down the customer success value chain must not only focus on the success of its customers, but the success of every participant in the chain, all the way down to Sally.
This entire story wouldn’t work without the right software, but building the ability to measure these outcomes into any offering is far more difficult than simply measuring the customers’ KPIs – which explains why few if any vendors are implementing this capability.
However, the writing is on the wall. Every time a company implements a customer success initiative that depends upon its customers’ customer success, one domino falls. Before long, we have complete value chains of dominoes that will fall in sequence – with the consumer customers of a B2C company at the end of each chain.
With all this talk of chains of companies, you might wonder where the digital transformation story lies in all this. The answer: the entire transformation to customer success centricity is inherently digital. Not only does software and its support for data support every step in the value chain, but software facilitates an unprecedented focus on the end customer.
The final result: a transformed data-driven economy laser-focused on customer success up and down every value chain, leveraging end-to-end technology all aligned to deliver a delightful customer experience to everyone, all the time.
Copyright © Intellyx LLC. Intellyx publishes the Agile Digital Transformation Roadmap poster, advises companies on their digital transformation initiatives, and helps vendors communicate their agility stories. As of the time of writing, none of the organizations mentioned in this article are Intellyx customers. Image credit: Intellyx.