Customer ROI as part of health score?

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Andy Barton
Andy Barton Member Posts: 18 Thought Leader
edited July 2020 in Metrics & Analytics

I know its very challenging but does anyone use customer ROI metrics (ie value they are getting from your offerings) in their health score? I know you would need to have it well examined for most customers of a segment to make health scores comparable... if so, do you use it as a means to get time with the DM or Sponsor? 

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  • Kevin Mitchell Leonor
    Kevin Mitchell Leonor Member Posts: 248 Expert
    First Comment Name Dropper First Anniversary
    edited April 2020
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    Important thing is to understand customer's expectation for ROI. Sometimes they buy tools for efficiency.  What was the normal time to completion, what does it cost in man hours, and what does our tool save them in billable hours?

    If you are revenue impacting, you have to have two methods of ROI. ROI in an upmarket and ROI in a down market. If a company does not have a plan on how to display ROI in a down market, they will have to answer questions on why there is negative YOY. Generally, we need to have a market assessment and the revenues of their competitors. From there we could display where they would have ranked in the market if it weren't for your solution. Some industries have revenue data for your competitors that can be subscribed to either through hoovers or an industry source.

  • Shane Correa
    Shane Correa Member Posts: 2 Navigator
    edited April 2020
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    Great question! Really has me scratching my head =] 

    If your a B2B, and your product helps with financial information (revenue, sales, inventory, costs, etc.) then you are able to get capture some of these numbers and compare against industry baselines. Most importantly, based on the behavior and use of the product combined with the knowledge of a given industry; research on the offering and pricing; quality and reviews; etc. etc. the CSMs can build an awareness and prescribe the actions that the customer needs to take to reach the outcome that you agreed. These expectations should be the baseline of every conversation and should clearly have an ROI (assuming it is critical for the company)

    If you don't have this (financial) as part of your product, then it is far more difficult. That said, I think that @Kevin Mitchell Leonor 's point is spot on and why this question is quite important. 

    During the sales cycle, the customer had identified a pain. They were wasting too much time managing email marketing. If they had the ability to accurately capture the time invested across all users, that is one part. You then have some more difficult aspects like lead gen and booked demos etc.. Furthermore, you have open rates and click throughs. Finally sales and revenue. 

    The ROI should combine both the time saved and most importantly, the improvements in the marketing function related to email. The premise is that the team is not only saving time, but more time innovating, learning and becoming a better marketer. This means that they should be able to secure more revenue for the company. They are spending less time cleaning lists, finding nice banners, fonts, hex codes, mailing lists and unsubcribes to protect the IP, etc. etc. Hopefully they wee sold that it will reduce their admin load and get them onto innovation. 

    The trick is what is the expected outcome? You can't commit to a revenue increase, but you could claim customers x,y, and z have acheived 20% growth while reducing admin time by 50%. Or more specifically in this case, open rates increased by 10% etc.

    I generally coach my CSMs to make them better marketers and not better at using the product (that is secondary). If they are doing this, and sharing best practices from relevant industries... then the customer is more willing to share their KPIs and targets and revenue etc. If you have not captured this during sales and onboarding, you at least have this to answer the question above.

     

  • David Jackson
    David Jackson Member Posts: 36 Expert
    First Comment
    edited April 2020
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    Andrew,

    Customer value has to be at the heart of customer health: it is the only valid reason for why companies build CS capabilities.  However, ROI is a measure applicable to a company and often only relevant to a few roles.  As such, I think it makes implementing outcomes challenging and, frankly, irrelevant to most users.  I am working on an alternative idea - watch this space.   

  • Tammy Krieger
    Tammy Krieger Member Posts: 13 Contributor
    First Anniversary Photogenic
    edited April 2020
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    At one company I worked for with Enterprise sales we had an ROI framework that we would take the customer through based on their data and use cases with their current system overlaid with the same uses and data but as if they were using our system. When I was able to get this it was a great* way to track and launch "I noticed" conversations with the customer. Also brought them back to the initial value proposition or their "why" which was helpful during year one when the honeymoon starts to wane. 

    * I say "great" but could easily also be something you would want to bury as a CSM. This analysis needs to be done very very carefully as it can be a double edged sword....meaning it can also be used to demonstrate based on your own data that you are not delivering.

  • Andy Barton
    Andy Barton Member Posts: 18 Thought Leader
    edited April 2020
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    @David Jackson  I agree of course that its at the heart of health, but its often the most difficult thing to define.. few thoughts 
    - this is one of the things that many CSMs find difficult to work on with customers. As you said, the customer users who CSMs have access to, often dont have a picture of the greater ROI. Nevertheless, its important that a CSM tries to make their counterpart/user see the personal value that they get from the solution. 
    - This requires connecting the value of the solution to the user's personal metrics. This is often the lightbulb moment that leads to a more in depth conversation about value... Even this metric could be used for account health if you have enough users bought into it and can quantify it.. 

    Its still very difficult as there are so many personas and metrics in a portfolio of customers, but if done well, could/should become the strongest weight in customer health scoring.

  • Andy Barton
    Andy Barton Member Posts: 18 Thought Leader
    edited May 2020
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    Great insights @Shane Correa . Thanks for sharing.... Fully with you. Have you been able to include in customer health?

    On your noted business case above, freeing up marketers time would hopefully increase lead gen activities and hence $ pipe... 

  • Andy Barton
    Andy Barton Member Posts: 18 Thought Leader
    edited May 2020
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    @Tammy Krieger I agree and does need to be done carefully. Its also not the easiest. My approach is generally along the lines of:

    1. I start by creating a matrix of typical performance KPI's for all the customer roles that a CSM would regularly come in contact with. 
    2. Get them to create a list of customer contacts and define how adoption of the SW can help those individuals 
    3. Enable them by role play, getting them to have conversations that help define business results, even if personal. Its often up to the CSM to lead these conversations as they are no often in touch (or get the bandwidth) with the main business owners. 
    4. These conversations often lead to the CSM enabling their counterpart to start thinking about how to define business return themselves. 
    5. When they start believing themselves (the customer individual question), they become more of a promoter... 

    Feel free to add.. this was just a few thoughts over early morning coffee! 

  • Tammy Krieger
    Tammy Krieger Member Posts: 13 Contributor
    First Anniversary Photogenic
    edited May 2020
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    Thanks! These are great and not even through your morning coffee.

  • Andreas Knoefel
    Andreas Knoefel Member Posts: 74 Expert
    First Comment
    edited May 2020
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    100% dead-on, @David Jackson . The farther removed you are from a metric that excites a CFO, the worse off you are. Try pitching in this climate some esoteric betterness result, when  $,£, € and ¥ drive every decision.

    On that premise it is part of the pre-sale process to link our benefits to a financial value and a way to measure it. Point in case with a Marketing solution vendor I worked with: we set targets for conversions, enablement and win-back and the value of each with our customers. If they don't know, we agree with their execs to use our benchmark data. 

    Now every conversation with key stakeholders also has a component on our performance in their language: are we on track/above/below and what is next. At the end of the day that is what they are interested in and have fiduciary responsibility for. 

    Hence this is a cornerstone of the segmentation taxonomy, playbooks, and metrics I track.