New Customers Only

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“New customers only”…

New Customers Only

… this is a phrase I really don’t like to hear but sadly it’s still widely used in many B2C industries and businesses – including the traditional home TV, phone and internet service providers.

Even as a loyal customer of many years, brand new customers can get significantly bigger discounts with these providers and this doesn’t seem right.

The logic being used feels outdated in 2022 and I’d love to see more companies focusing on delivering value at the right price and keeping customers. I think many of these companies are relying on customers finding it too difficult to leave and move elsewhere but even if that’s true today it won’t be for much longer.

It’s great to see some more niche players coming into the market offering very competitive services – e.g. home internet connections – and at consistent prices (for all customers).

Is it just me or is the idea of doing something in terms of a deal only for new customers, on its way out?

Combined thoughts on “Everything As A Service“

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These are some thoughts captured and co-written by Stephen Danelutti and Jason Noble, two long time contributors to the world of Everything As a Service (XaaS) who met again recently. We realised our common background and insights and decided to produce this combined thought piece – hope you enjoy.

Background

We worked at Sony together many years back and only discovered this recently when we met. Funny how our orbits work as people and then you collide.

We worked in different parts of a division at Sony called DADC, which invented the CD and developed digital content streaming services. This was before iPod, iPhone and Spotify. Stephen has written about that, including a demo: The end of ownership and the rise of usership. This experience was a good precursor to our thinking on Everything as a Service (XaaS).

The as a service iceberg

We met when we both were (and still are) professionally in Customer Success management leadership roles, a function of SaaS companies that is, amongst others, being translated into XaaS. So we are both rather well positioned to talk on this topic.

Stephen is writing an eBook on the subject which you can find out more about here. We decided to use that as a framework (The As a Service Iceberg) for exploring our mutual thoughts. While we divided subtopics up between us, we worked collaboratively throughout to edit and progress in tandem and what you read is very much a joint effort.

 

Everything as a Service (XaaS)

There is a distinction between the purely technological view which is where the term XaaS comes from and the one we refer to in this article. In ours we have jumped from technology to other industries – we have crossed the chasm. Essentially we are talking about taking the learnings from the Software as a Service (SaaS) industry and applying it to other industries.

Some examples

SaaS has been around now for a good few years, and we’ve seen other as-a-service philosophies and approaches pop up since – most related to technology (e.g. infrastructure as a service) but there are more and more examples now across all industries. Some great ones include:

  • Mobility and transport – think of an extension of your Oyster card
  • Property – renting plus add-on services and services like airbnb
  • Shopping – home delivery pre-prepared meals
  • Healthcare – shaving services
  • Airlines – yes even some airlines are often monthly subscription
  • Digital content – not just music, but now movies, TV, games and books

It’s not just about what is being delivered, but how it is being delivered – and the level of experience offered that takes these examples into the true as-a-service arena.

In times of crisis, like COVID-19, there is a stronger need to justify new technology services and innovations, and many businesses are looking at rapid return on investments as part of it. We will see a continued development of new as-a-service ideas coming over the coming years that have been accelerated by the need to innovate and change.

The as a service iceberg

1. Customer solutions

This is the outward manifestation of all of the others and is all about solving problems and meeting needs. No longer is something purchased just for its intrinsic value but what it will help a person or organisation achieve. Several sub components or theories support this and some have been around a while:

  • Systems thinking views a system as a cohesive conglomeration of interrelated and interdependent parts and in the case of customer solutions, it represents how products are now increasingly being viewed as tangible goods plus services.
  • Business outcomes management entails identifying, measuring and achieving business outcomes for the customer, often with the help of Customer Success teams (see the next influence).
  • Jobs to be done theory is a framework for understanding customer needs and innovating around them with new offerings.
  • Solution selling is an approach taken by sales teams that incorporates a consultative approach to identifying solutions to best meet a customer’s needs in the most cost efficient way, especially with multiple product offerings.

More elaborated on this in this post: As a Service trend research – customer solutions.

2. Customer success

With the shift to XaaS, the way we interact, work with and deliver to our customers has also evolved. Our customers’ expectations have risen rapidly and we need to focus on what experience they require and want, and also what it is that they are ultimately looking for, in outcome or value terms. The idea from SaaS vendors, that gave rise to customer success, is that they work with customers proactively to drive value and growth for the customer, in turn justifying the vendors offering. The old reactive way was letting the customer figure things out for themselves after the sale. This has been a monumental industry shift and it’s one that is still evolving and maturing. The role of a customer success manager (CSM) is one of the fastest growing roles today as more and more companies understand that it is critical to their own and their customers’ growth and ultimate success.

CSMs are generalists and facilitators, skilled across the business, commercial, technology and product functions. They are uniquely positioned to be able to guide and help customers achieve the outcomes they need, through the (technology) services they acquire. CSM’s act as trusted advisors, facilitators, business and growth consultants, analysts, project and programme managers, even as change managers for their customers.

3. From products to services

This fits alongside the customer solutions view where products play a role in a much wider ecosystem that includes services. It’s not just about technology and technology products, it’s much broader. Having said that, technology does enable this to a far greater degree, see next point. Think about how Apple has taken its iPhone and built an app (and services) ecosystem that serves to add value to Apple hardware and creates new revenue streams for them and third party app developers. These apps are increasingly being sold on a subscription basis which is also interrelated. For the broader context which incorporates service-dominant logic, check out this post: As a Service trend research – products to services.

4. Technology ecosystems

Technology has played a massive part in the shift to as a service. As we’ve seen the rise of technology services over the last 30 years, many more traditional companies (for example content creators and manufacturers) are now working with technology partners, for their technology development and almost outsourcing it. The focus now is about being enabled and empowered to use technology, as opposed to having to own and build it directly. Think of your internal IT department and how that’s changed. They’re now there to help you better utilise technology within the business and integrate with much wider technology ecosystems with external partners.

5. Being data-driven

Collecting data and understanding usage so that it drives greater insight, which in turn drives better products and services, has become a competitive differentiator. Translating this data into meaningful insights is the real challenge that only the leading companies are mastering. Questions like who is using what, how much and to what end, with which outcomes, need answering. You also need to consider where the data is, who can access it and whether this falls within regulatory compliance or not. These are big questions that require a holistic approach. Data science is a growing field that serves this area well and smart as a service companies are investing heavily into building their capabilities in this. A data-driven, decision making culture is also imperative.

6. Customer and user experience

The terms user and customer experience are front and centre now when it comes to technology. This has been driven by the rise of the consumer application ecosystem and high bars being set by companies like Amazon, Netflix and Apple (amongst many others) in how they interact with customers. Customer experience starts from the initial engagement with your customers and potentially through your marketing campaigns and outreaches. It then follows through with onboarding and implementation, project management, delivery, support and more. The challenge is ensuring that you deliver a constant customer experience and that it is specific to that customer (or segment of customers). The key to remember is that not every customer needs, wants or expects the same levels of customer experience.

7. Subscription economics

One of the biggest aspects of the as a service business model is the shift away from one-off payments to recurring payments, or subscription economics. Products and/or services are purchased in this way (on subscription) and sometimes even on an on-demand basis. Especially for B2B firms, this has shifted the financial impact from big capital expenditures upfront (capex) to more manageable on-going operational expenditure over time (opex). Many factors that this model of payment enables, need to be considered. One of the foremost on the vendors side is the emphasis this places on ensuring the customer continues to renew their subscription (not churning) by providing excellent service. For this the customer success managers role is key. Conversely, this makes the model very flexible for customers who can stop payments if they are not receiving any benefit or value. Take a look at this post for some graphics covering other aspects of what makes subscription models successful: Subscription Model Success Factors.

Other examples of where we’re seeing this shift

The shift to as a service as we’ve said started off in the world of technology but we are now seeing it everywhere across all industries. Some great examples include:

  • Gaming – all the big players like Sony and Microsoft have game subscription services, and even Google and Apple are now also in this booming market. From our days back at Sony, this way an area that we both were both closely involved with – the digitisation of content and streaming services.
  • Groceries – this is one to watch. The big supermarkets all have loyalty plans and they know what we like to buy and when. It won’t be long before this data is used to determine what our weekly grocery deliveries should be and we pay for a subscription service and food is just delivered at the frequency we pay for, and best of all most of what is delivered is exactly what we need.
  • Technology – infrastructure as a service, platform as a service and more. With the like of AWS and Azure, we can now subscribe to technology services including CPU power and data storage (and the related sub-services) and we can expand or contract our technology operations in response to demand from our own customers (this is all part of the big shift we’ve seen over recent years out to the cloud).

Other considerations

Customer centricity

There’s a lot of talk today about organisations making moves to be more customer centric and it’s something we have spoken and written about many times before (see link here to previous blogs). It boils down to really understanding your customers, as an organisation and being able to be agile and responsive to change as your customers’ needs and requirements change.

From a previous talk Jason did with a firm of VCs, the reason being customer centric is important is not only the obvious – that your customers stay loyal when they have good experiences – but also as our customers keep evolving and changing, so too are the ways that we operationalise that and support those customers.

A great way to think about customer centricity that really resonates with us is – “A business is customer centric when it delivers on-going growing value to and for their customers.“

Business transformation

Becoming an as a service business is not something you can easily tack on, like a plaster. That’s because of the overarching reach of so many of the factors listed above that are required for success. So wholesale transformation is often required for long term success. That doesn’t mean you have to do it all at once – see diagram for different stages and an approach you could take. This is like a product portfolio view of the transformation and tackles it one stage at a time, eventually rolling up into wholesale organisational transformation.

Keep an eye out for more joint blog posts we’ll be working on in the future.

A practical guide to customer centricity

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We know the theory and we know we need to be more customer centric. The biggest challenge for many organisations is how do it, at both the strategic organisational level and at the more tactical operational level.

I’ve worked with and for many organisations going through their own journey to be more customer centric, at both large well-established global organisations and more niche startup organisations and have been privileged to be in positions with them where I’ve been part of that change.

One of the more strategic level changes that is crucial for success is getting your customer leadership at the right level. It’s great to see more and more organisations across different industries and sectors investing in Chief Customer Officer or similar exec level roles now and the number has grown significantly over the last few years (and continues to grow).

Having the right leadership gives you the voice of the customer at the leadership table, having someone focused on driving customer growth and value and bringing the customer conversations to the exec and board level.

I really like this concise definition of a Chief Customer Officer:

“An executive who provides the comprehensive and authoritative view of the customer and creates corporate and customer strategy at the highest levels of the company to maximise customer acquisition, retention, and profitability.”

The customer leadership role – Chief Customer Officer or other – gives you:

  • Visibility – to understand and see what is happening to your customers
  • Clarity – of what happens when a prospect becomes a customer
  • Balance of power – creating the 3rd organisational pillar (with sales and operations)
  • Sales focus – allowing sales to focus on new business without customer distractions
  • Feedback – into what is happening outside of the business (the so called magic loop)
  • Signalling – the external messaging that we are customer centric

The magic loop above is:

Plan and Build (product management and engineering) vs. Demand and Sales (Marketing and Sales) vs. Customer Experience (Customer Success).

At the more tactical level though – in terms of things you could do more immediately – here are a number of great practical ideas for driving customer centricity in your organisation:

  1. Create a mission statement that impacts your customers and that includes customers
  2. Be a customer – yes role play (across all teams)
  3. Visit your customers – all execs and, even better, all teams
  4. Implement a customer forum or community (customers talking to each other)
  5. Create a voice of customer programme (and close that feedback loop)
  6. Bring your customer feedback into every meeting across the business
  7. Democratise customer insights and make them visible to everyone in the organisation
  8. Link team compensation to the customer and have customer focused goals
  9. Hire for customer orientation and customer empathy (and onboard them like customers)

I really, really like Amazon’s mission statement:

Numbers 6 and 7 above can be very powerful when done well and I’ve seen the idea of a customer feedback wall used very well and to great effect – where you include and share the very, very good, the good, the bad and the ugly.

Do these ideas resonate with you? What things have you done in your organisations to drive the journey to being more customer centric? And what has the impact been with your customers?

If you’re interested in chatting customer centricity or customer success, please do reach out to me – I always love hearing your own journeys and challenges and ideas (and good coffee).

And don’t forget to listen to my latest podcast with Jason Whitehead from Trituns on getting your customer onboarding right from earlier this month. Click here to listen to this one and others in the series.

Being customer centric shouldn’t just be a concept

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Being customer centric shouldn’t just be a concept – we need to approach it as our company missions.

We’ve been trying to be more customer centric for a long while but only 14% of leaders think they actually are and only 11% think our customers would say we are. I’ve never met an exec or business leader who says that they weren’t customer centric.

From the Harvard Business Review last year – “The most common, and perhaps the greatest, barrier to customer centricity is the lack of a customer-centric organisational culture. At most companies the culture remains product-focused or sales-driven, or customer centricity is considered a priority only for certain functions such as marketing.“

Being customer centric

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A great way to think about customer centricity that really resonates with me:

“A business is customer centric when it delivers on-going growing value to and for their customers.”

I really like this because…

  1. It’s not just for the short term and the now
  2. It’s about the what (the value) and the who
  3. It allows for customers to include customers as we know them, employees and shareholders and investors

The reason being customer centric is important is not only the obvious – that our customers stay loyal when they have good experiences and the product and sales are delivering on our promises, but also as our customers keep evolving and changing, so too are the ways that we operationalise that and support those customers.

If you are customer centric, it means that you are observing that evolution that’s happening to your customer base, and you’re able to be very agile and nimble in responding to that as a business.

Being customer centric is easy to say but hard to do and it doesn’t come organically. It needs organisation wide buy-in and sponsorship, from sales, to finance, to operations, to support, to customer success, to delivery! We live at a time of unprecedented customer expectations both for business customers and our end consumers, and being customer centric is critical. Why now? Think about your ultimate consumers – they’re you and your expectations have changed. Forrester research have stated “This new world requires leaders to think and act differently“ and George Colony, Forrester CEO predicts, if a company is not customer-centric, they’ll simply be out of business between 5 – 10 years. What are you doing to be more customer centric today? I’m going to share some practical ideas and examples over the next couple of days of things I’ve seen work very well with different companies.

“Customer Centricity is a journey and not a destination.”

Customer operations? Tell me more.

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It’s not that long ago that sales operations was a hot new topic, helping companies utilise their sales data better to drive more efficiency and better results in their sales processes. This expanded to a broader commercial operations function, to include marketing and to help track, process and manage leads, conversion rates, website analytics and more. All great but all only looking at the initial part of your customers’ journey – i.e. before your customers had engaged with you, adopted your services and were getting value from you.

Fast forward to now (or more a couple of years back) and we’re into the world of customer success and the need for businesses to have, as a core part of their corporate DNA, a customer centric way of working. Often this means having a customer success team or a few CSMs (customer success managers) but this is only the start. You need customer focused leadership, the right people, the right systems and the right tools – any one on their own isn’t sufficient.

As part of the right people being in place, a new role to consider is your customer operations analyst or manager (or team – depending on size). This may initially be part of a wider commercial operations team but it brings most value and ROI, when it’s a dedicated part of your customer success team.

Your customer operations team needs a solid but fairly narrow remit and needs to cover:

  • Customer data consistency
  • Customer data analysis
  • Customer success system
  • Customer data integration
  • Customer data reporting
  • Customer journey mapping

The customer success system piece is one where I’ve seen great success, in helping select, implement and manage the platform or platforms and tools that you’re using as part of your customer success programme and plan. And importantly their integration with other tools you’re using in your business, including your own product – for example to bring in product usage and product adoption data, as part of your customer 360 view.

Your customer 360 view should also include:

  • Customer health score information – how likely are they to renew or churn
  • Commercial information – e.g. monthly revenues, renewal dates and payment status
  • Customer risks – e.g. churn risk and overall business risk
  • Real time support data – from your support platform
  • License information – including additional services and products used

All of this comes from your customer data – a potentially untapped source of key business data. Your customer operations functions allows you to access and view all of this data in a customer focused way and shift your customer success management from being reactive to proactive to predictive (using the data to feed into trigger points that you’ve defined as part of your customer journey).

What does your customer operations function look like and do you know what insights there are in your customer data?

Who’s looking after your customers’ success?

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What a great question to ask. Do you know the answer, and if not, who’s finding it out for you? And even more importantly, do you know what your customers need to achieve to be successful?

Often as business owners and leaders, we naturally need to be focused on our company’s success and how we evolve and grow our business, building new products and services and acquiring new customers.  

We’ve seen a shift in the last ten years to the new world of Customer Success and the consumerisation of business services, where our business customers’ expectations are driven by their experiences as consumers. This has been and continues to be a huge change and a very challenging one. I say ‘ new world’ here, but it’s not new as in ‘ we’ve never done it before’ – just in that we need a different (and new) approach today.

How do we provide the same levels of services (and amazing products and platforms) that organisations like Amazon, Apple and Netflix do? They’re in completely different markets and you could see them as being irrelevant to the lettings industry. But many of your own customers use them – and many others like them – on a daily basis, and they just expect things to work and deliver, as and when and where they need and want.

Our customers are now more willing and able to leave us if we don’t do what they need or provide the value they expect – and they expect this level of flexibility. The so-called age of the customer is all about this flexibility – it’s about how businesses push value to customers, and ensuring customers become the focus and that customers are attracted to use them, not stuck with them.

When our customers are successful, and they can directly see the value our products and services give them, they will naturally gravitate more to us, use more of our services, grow with us and become great advocates.

I heard a great quote at Gainsight’s recent Chief Customer Officer Summit Europe 2018 that resonates so well and sums this up perfectly: “Make your product value painlessly obvious“.

Customer Success has to be a business-wide strategy and way of working, it isn’t just the responsibility of one team , one job function or one person , and you need a customer-centric culture to achieve this.

It often starts with one team – your customer facing team – but that team’s objectives and strategy and planning have to align with the rest of the business and radiate out to influence other teams and stakeholders.

This team absolutely can be – and often is – the starting point for this refocus back to the customer. They can plan and start new customer-based initiatives, projects and activities that then flow out across the wider business. In this fast-growing world of Customer Success, many organisations are leading the way and developing new and improved approaches that can be replicated elsewhere and by other companies, even in different industries.

How do you ensure Customer Success?

So what does a customer-centric culture look like?   At a number of startups I’ve worked with Customer Success has been a a core part of our operating philosophy from day one but in the early days it often starts with that team doing everything for customers. As you grow and expand as a business, so your Customer Success team and approach has to grow, and of course your customer-base. You move from being mainly reactive and often seemingly on the backfoot, to having a full single customer view that covers everything from commercial information, support details, customer sentiment, survey feedback, product usage, contractual information, sales information and much more. This is a critical part of our success and it continues to grow, with the right technology and tools (including a Customer Success Management platform).  

The teams have to also evolve and I’ve seen success in creating dedicated functions for onboarding and implementation (and customer education), customer and commercial operations, documentation and configuration and customer success management (that includes customer renewals, escalations, training, customer feedback, consultancy and advisory services, relationship management and customer advocacy and customer value reviews). All of these involve working very closely with the other teams and helping to make sure that customer feedback is being fed through the right channels, listened to and responded to in the appropriate way.

There is of course a balance needed between providing the level of services required (and achieving those desired customer outcomes) and over-delivering and over-servicing, and it can be challenging to strike the right balance. It’s critical to sometimes say no and to route our customers through the most appropriate channels into the business, for them to get the outcomes they require, and for this to be repeatable for them and scalable to grow with our business and our customers’ businesses.

How we measure Customer Success is critical to us – and that statement is even more powerful when reworded slightly… how do you measure your customers’ success?

There are a number of key metrics we can and do use for this, including Net Promoter Score. NPS is an easy-to-use measure to gauge customer loyalty and how it trends over time, and is used by many global businesses in many different industries. I’ve used NPS successfully in a number of different businesses, asking that one ultimate question – how likely are you to recommend us? – but also with a number of optional additional questions to get more customer insight. The score at a particular time is less important than the trend over time or the details and sentiment behind the score. When we receive completed surveys, the Customer Success Managers then carry out detailed feedback calls and campaigns with customers to understand better the reasons behind the feedback and to explore how we can improve.

It’s important to note – and this can be often overlooked – that Net Promoter Score and customers’ sentiment and feedback is not something that is just owned by your Customer Success team. These are and have to be company-wide measures and, ultimately, key business objectives. Your detractors ultimately aren’t getting the value they need and they can be calling in more for support and help, so what we need to do is help move these customers towards being promoters, and ensure that they are successful.

So the answer to the new ultimate question – the title of this post – is you and your company. Your Customer Success team helps you understand better what your customers’ success looks like, alongside of course your sales teams, and then works with the rest of the company to help achieve that success.

Customer Success is about both good outcomes and good experience and getting the mix right for that customer and what they need. If one of these isn’t right or isn’t working, you will not help your customers be successful.

Nothing is more important than your customers’ success.