7
Defining the Journey to Customer Outcomes
We live and work in the age of data. The ability to use the information gathered on customers for insight into your relationships with them is more important than ever before. Data is a powerful asset. You could say that data, next to your customers, is your most precious resource.
It is interesting that customers willingly provide you with this kind of access. They permit you to watch and analyze their usage of your product. They even give responses to surveys and participate in other data-gathering techniques. Why do they allow such intrusions into their business information? Your customers do this because, first, they feel safe and their information is protected. Second, they expect something in return. They have the rightful expectation that your company will safeguard their information and utilize all the data you have gathered to accelerate the delivery of success for them.
With all the knowledge provided by collected data comes serious responsibility. As a Customer Success Manager or the leader of the Customer Success team, you must harness the information, convert it into actionable insights, and proactively engage with your customers to achieve their outcomes and goals. Most of all, you must do this in a human-first manner, ensuring the safety of all the knowledge gathered and protecting your customer's vulnerabilities.
Using the knowledge and insights driven by data, you can draw out the expected path for your customers to get to their outcomes. This path can change from one customer to the other depending on a variety of factors. When customers go off their planned success-path, it's important to acknowledge it, communicate the plan to get back on the path and execute together to make it happen. This chapter delves into how you can create the desired journey and tailor it, depending on your customer segments. We'll also dive into tactics and examples of operationalizing the path to outcomes and desired milestones along the way in Chapter 8.
Customer Lifecycle, Journey Map, Customer Journey
The Lifecycle, the Journey Map, and the Customer Journey are three terms that have long been used interchangeably to describe the multi-staged paths that get your customers to their goals or outcomes. Unfortunately, the descriptive titles are close in nature, but their purposes are misunderstood. Each is a distinct entity with its own aim that should be defined and clarified.
We believe in the necessity of standardization for all Customer Success, which is one reason why we wrote this book. As Customer Success grows and evolves, there needs to be a foundation, a touchstone, that everyone can look to and reference. Without it, definitions are blurred and the industry becomes unfocused. Here is where we hope you will learn the proper definition of the Customer Lifecycle, a Journey Map, and the Customer Journey. You will also learn what your role as a CS professional is in each phase of the Customer Lifecycle, how to create a Journey Map for your customers, and how to navigate the Customer Journey.
Defining the Customer Lifecycle
In the business world, the Customer Lifecycle is a term that describes the entire process of managing a customer. You may have seen graphics like the ones in this chapter that represent the Lifecycle. Perhaps the circle illustration or the infinity symbol (Figures 7.1 and 7.2)? The Lifecycle has also been called the Customer Journey. However, with further study of examples, we see that the Customer Journey is now seen as a subset that exists within the Lifecycle.
Confused? Don't be. It will be explained. Remember that the Customer Success field is evolving. It is still young, and definitions will be clarified as it progresses.
No matter the industry or business you may be in, there is a commonly acknowledged methodology that every customer must pass through. Whether you are a tech company, SaaS, or you deal in on-premise software, customers go through recognizable phases of progress in their Lifecycle. There are typically five phases to the Customer Lifecycle and each phase has a purpose with the potential for success and failure. While the Lifecycle is a general mechanism, different companies may choose various terms and names for each phase. These are the most commonly named phases within the Lifecycle: Consider or Evaluation, Purchase, Onboarding, Adoption, Renewal, and/or Expansion or Churn.
- Consider or Evaluation: this is the phase where the customer compares products that could solve its business problems. The Marketing organization, and sometimes Sales, generally manages this phase. Marketing creates advertising and the environment that makes your product or service appealing. A potential customer reaches out through various avenues of contact. Then a Sales Rep will take the lead to try to produce a sale or purchase.
- Purchase: the purchase phase typically involves a choice of product or service and negotiations over a contract. While this phase is the domain of Sales, it may require the expertise of a Sales Engineer or even an experienced CSM in an advisory role. Your future customers could have special needs or demands that are placed in their contract or a Statement of Work which is also called an SOW. Once the contract is signed, and there is an exchange of funds, the transition begins. You will want the customer to move forward, onboard, and engage the product as soon as possible.
- Onboarding: typically the onboarding phase includes setting up and activating the people that will be using your product. In most companies, this phase is managed by an onboarding team or CSMs depending on the product complexity. The phase ends with the customer being educated and adept at using your product or service.
- Adoption: in this phase, customers are “adopting” the parts of the product that they are entitled to use by the terms of their purchase contract. Customer Success Managers usually lead customers during this phase. You will know if your customer is a success if they are achieving their business outcomes. When they do, they become a potential advocate on your behalf to other prospects and customers. This phase may also include customers buying more products, additional services, or buying more licenses or seats to your software or product from you. These are referred to as upsells, cross-sells, or expansions.
- Renewal and/or Expansion: this is the phase where customers decide to continue and/or expand their relationship with your product or service. This phase, like Adoption, is often managed by CSMs. The goal is to learn as much as you can about your customers. If they are using your product well, then this indicates they are in good health and can potentially benefit from additional products or services that you may offer. That good health must be sustained by monitoring their health scores and nurturing the customer experience.
- Churn: this is the phase where customers decide to end their relationship with your product or service. This phase, like Adoption, is managed by CSMs. If they decide to end the agreement and no longer use your product or service, it is necessary to find out the reasons for the churn. Do not try to ascertain the reason behind their departure on your own. Always try to use an unbiased third party who is skilled in debriefing your customer. The information is incredibly valuable. We'll discuss churn analysis in greater detail in Chapter 12. In the meantime, it should be your company's aim to make the offboarding process as simple as possible, for you and your departing customer. The idea is that you would like them to become a prospect again. Letting them depart with “class” may potentially increase the likelihood of their return as a customer in the future.
Customers travel through each phase or drop out of the Lifecycle completely, leading to a Churn. To be successful, however, every customer, no matter the company has to go through an Evaluation, a Purchase, an Onboarding, an Adoption, and hopefully a Renewal/Expansion, while avoiding Churn altogether. There are many ways to visualize the Customer Lifecycle: Figures 7.1 and 7.2 show two.
Figure 7.1 Example 1 Customer Lifecycle.
Figure 7.2 Example 2 Customer Lifecycle.
The Journey Map Defined
Within each phase of the Lifecycle lies the Journey Map. The Journey Map is a lean management technique. Its purpose is to devise a path for the customer from the sale, through implementation and adoption, then to full engagement, and, hopefully, retention. This map is a set of milestones that indicate advancement toward the overall goal of customer success. The markers, transitions, and events along the journey are set by the CS team to show the customer their progress along the way. With journey mapping, you will identify every step and every event. You may even be able to forecast potential problems because you thoroughly planned the customer's journey.
The Journey Map is not a new method or device. It has recently re-emerged within the recurring revenue business model with a different sense of purpose and urgency in its usage. The purpose of a Journey Map is multifold. The first is to closely monitor and actively manage every aspect of the Customer Journey. The best way to monitor a customer is along a predetermined path. The path you create centers on the goals and expectations of both your customers and your company. Every customer buys your product or service for a specific use that can be distilled into three questions.
- How can they make more money?
- How can they save money?
- Are they attempting to become efficient and save time?
Your company has expectations and goals for not just the customer's success, but for every team and every Lifecycle phase. Whatever the designated targets, the customer should be the center of your Journey Map. The expectations and goals are essential, and they must be reaffirmed and recorded properly for peace of mind of the customer, for the intentions of your teams, and to guarantee the continuity of care.
The second purpose of the Journey Map is to determine the best and optimal steps to get to those goals. With each set of steps, you must identify where different teams or organizations within your company become responsible for various tasks during each Lifecycle phase. The transitions from one team or organization to another are called handoffs. Most companies who are a recurring revenue business have quite a few handoffs in the Lifecycle. In a progressive Customer Success environment, there is no way to avoid it.
If you think about the Lifecycle of a customer, they could have up to a dozen or more people from your company involved in their journey in the first year alone. That can be overwhelming. Every Customer Success team using a Journey Map should use it as a standardized method of handoff from pre-sales to post-sales phases. Each handoff has the potential to erode the trust that was developed during the initial sales cycle. It can also prolong the time to value. There is much information that needs to transition from one group to the next. All the learned information about the customer must be smoothly communicated from handoff to handoff to sustain the momentum you gained during the sales cycle.
The truth is, customer handoffs set the quality standard for the rest of the Customer Journey. If the relationship starts on a wrong note, it is hard to get it back in tune. It is also not uncommon for a CSM to be assigned more accounts than they can handle. It is vital to keep your own emotions in check in these situations because you don't want your new customer to feel your anxiety as it may cause uncertainty at a critical point in your new relationship. It is essential to manage the entire journey, especially the handoff, in a way that builds confidence with the customer.
When the journey is defined clearly, make sure that you follow it. Map out the entire Customer Lifecycle and identify the different milestones that they are going to hit, along with the lifecycle stages, transitions, and events. This process will keep your teams aligned on the customer's priorities across Sales and Services handoffs. It will also ensure that you are executing in support of those use-cases. You can watch every step. This methodology, however, is not just for the internal use of you and your team. It is both for yourself and for your customers. A healthy customer is an informed customer. Creating a Journey Map prevents the increase in anxiety and an occurrence of “buyer's remorse.” It ultimately enhances the customer experience.
How to Create the Journey Map
There are many ways to go about creating Journey Maps for your customers. The process begins with your CS team physically coming together to look at your customer base. Maybe you have a place in your business that the team can gather. Another thing to consider is to take your team off-site to a co-working space or conference room and get creative.
The next step is to find what tools can you use. Some people simply utilize a whiteboard. Others favor giant sticky notes, small post notes, or notes of all shapes and sizes. Another option is three by five cards. If there is a preferred methodology at your company that is established, utilize that. Often, mapping in a linear sequence is best.
Whatever you choose to do or whatever works well for you and your team, there are two critical parts. One is input. Sometimes it takes everyone getting a pen and writing down what they believe will be beneficial to the Journey Map. As you proceed through all the ideas, you find you can revisit them until you are confident they all apply to your customers. In fact, you may find that the Journey Map is not a one size fits all. You have to create various maps based on the type, size, or needs of the customer. The operation is not as important as the consensus. There are definite benefits to thinking through the process and doing it as a group makes a big difference.
The second critical part is to consider the customer's point of view. Create a map with the customer in mind. Think about them holistically from purchase to the realization of their goals. Consider if they interact or do business with other companies. Think about who their biggest competitors are. Next, contemplate the customer's culture and language within their company. Are there ideologies that they promote? Are there keywords that they use? These are highly important in your presentation of the Journey Map. Lastly, think about the moments on their journey that are relatable to them. As you go through this exercise, you will find that you can break it down into greater detail.
Like a road map, a Journey Map can have various routes to the same destination, which is renewal and/or expansion. However, each course is dependent on the customer, their size and segmentation, their desired outcomes and goals, and the speed at which they want to accomplish them. Also, remember that the customer will interact with different teams or organizations within your company during each phase. As you and the customer move through the Lifecycle, you will know they are ready to move on to the next phase by what they accomplish. However, it is not just about hitting the benchmarks. It is also about managing the Lifecycle to create an experience in which every customer feels there are possibilities and accomplishments. In Figure 7.3 we highlight an example of the milestones you might consider building out in your own Journey Maps for your customers.
Figure 7.3 An example Journey Map.
When your Lifecycle and Journey Maps are not clear, your interactions with your customers will likely appear haphazard, without intent or without ownership. The symptoms can be a poor transfer of knowledge from one team to another within the company. Another is repetitive manual actions that cannot scale as the customer count increases. Such a disorganized execution can produce an inconsistent experience from one customer to another. Eventually, the symptoms become detrimental to the overall health of your customers. Because of a lack of clarity, direction, and ownership, customers inadvertently receive only what they ask for, not what you know they need most. Ultimately, none of these activities will get your customers additional value from your service or product.
The antidote to these symptoms of disorder goes back to creating an organized, consistent Journey Map within each Lifecycle phase for your customers. The Journey Map enables your customer-facing teams to execute the individual Customer Journey with precision so that your customers know exactly what to expect working with your teams.
Establishing a Journey Map starts with identifying clear customer segments. Journey Maps are not the same for every customer or customer segment. They will, however, have common markers that must be hit during each phase of the Lifecycle. Each Journey Map is largely dependent on how your customers are separated or segmented.
Segment Your Customers
As stated in Chapter 6, customer data is an incredible asset in managing the customer relationship. One tool to organize that data is known as segmentation. In the book Data Mining in the CRM Framework, the authors define segmentation as “the process of dividing the customer base into distinct and internally homogeneous groups in order to develop differentiated marketing strategies according to their characteristics.”1 The homogenous groups are subgroups of existing and even potential customers that share certain identified market traits. Utilizing this information can, as the authors suggest, “support an ‘individualized’ and optimized customer management throughout all the phases of the customer lifecycle, from the acquisition and establishment of a strong relationship to the prevention of attrition and the winning back of lost customers.”2
The segmentation tool can also help you deliver what each type of customer needs in a way that's affordable for the company. Separating your customers into logical groups is critical for optimizing the efficiency of your Customer Success Management team. Segmentation will also help define the relative value of each customer and, ultimately, determine your engagement or touch model. In the end, segmenting your customers allows you to allocate resources to the right customers at the right time.
There are many ways to segment your customers, and it will vary from business to business. Every time you divide your customer base to organize it better, you increase your ability to manage your customers more effectively. So, how do you properly segment your customers?
One of the most impactful tools in segmentation is referred to as value segments. Value segments are classifications of customers that hold the most value to your company. There are five common distinctions: Contract Value, Customer Size, Industry, Brand, Customer Advocate.
- Contract Value: segmenting by contract value is a simple way that ranks customers, from highest to lowest, by how much they pay your company. Many companies see this as the first and only criterion for segmentation. Unfortunately, such a narrow view can minimize the “human-first” component of Customer Success.
- Customer Size: the second segmentation is based on customer size. Sometimes this is referred to as “white space segmenting.” Customer size does not necessarily mean the overall size of the company. Properly, it should refer to the size of the overall opportunity each customer has for greater expansion and recurring revenue.
- Industry: organizing your customer base by industry can be beneficial. For example, suppose your company's solution is the perfect fit for technology firms. Your company, however, is trying hard to break into Financial Services. You may find that your current Financial Services customers suddenly have a higher strategic value than your technology customers.
- Brand: a brand is the identity or image that makes a product or company unique. That same brand concept contributes to the value of a customer. That is why companies in your industry aggressively compete for the big logo customers because landing the big logo typically leads to more big names and highly valued customers.
- Customer Advocate: these are your very best customers. They have great customer health, excellent use of your product, and probably are already or are going to be long term. They are customers that would give you the best “references” to potential customers. It's logical, then, to place a higher specific value on them for the purpose of segmentation.
Another way to segment customers is to organize them by demographics, geographics, or a combination, called firmographics. The first is business size, either by the number of employees or annual revenue. Next, maybe the company location (i.e. inner-city Chicago versus rural Utah). Another is the industry in which the customer exists. Is it SaaS, tech-based, or brick and mortar? There are even further segmentations that can be used, such as the technologies and software utilized by the targeted companies.
Each of the previously mentioned segmentation models are based on your relationship with the customer, either to their size, place, or type of business. Consider a way to efficiently use segmentation concerning your product or service. Each segmented group should be defined by their need from your product or service and your ability to serve them cost-effectively. For each segment, you need to designate distinct markers of development that your customers accomplish after they buy your product or service on their Lifecycle path to achieving their business outcomes.
A more sophisticated way to think about segments is based on your customer's needs. For example, if you were Dropbox, you can segment your customers based on the requirement for storage solutions, productivity and sharing tools, or support levels. Another level of segmentation is your customer's sophistication using your product or service. How proficient are they in its use? There is even a segmentation based on behavior. Knowing your customer's behavior is especially beneficial when it comes to determining customer health. For instance, are your current customers interacting with your product or solution in a manner that may indicate they could benefit from expanding their current solution? Alternatively, is this customer at risk of churning from your solution?
In a 2019 Gainsight survey that benchmarked the CS industry, more than 800 respondents shared their top three metrics that dictate how they segment their customers (Figure 7.4). As suspected, the three most common, in order, were contract value (ARR), customer size, and growth potential. The numbers indicate that the most preferred method of segmenting customers relates to potential expansion opportunities, which includes growth and company size.
Figure 7.4 Results from a Gainsight Survey on how companies segment their customers.
Here is a consolidated list of variables to consider when segmenting:
- revenue
- Customer Lifecycle stage
- maturity stage
- growth potential
- geography/territory
- industry/vertical
- direct/channel
- use-case
- customer health
- CSM-skill required
- security clearance
- temporary TLC touch model
- strategic relationship
- product.
Certainly, there are many attributes that might drive your segmentation. Do not, however, make this process too complex when starting off. Keep it simple with maybe three to four segments, with the possibility of a few sub-segments. Remember, you want new customers to easily and logically fit into one of those relatively small number of groups. Also, you'll need to consider how to explain it all to the rest of your company. An example of a simple and common way of segmentation is based on revenue. Segmenting by Annual Recurring Revenue usually divides the customer base into three segments (Figure 7.5). These are Enterprise, Mid-Market, and Small Business.
Figure 7.5 Segments based on revenue.
- Enterprise: this is the segment with the highest revenue per customer. In most companies, the Enterprise segment has a small number of customers (10–20% of the customers by count) but constitutes 50% or more of the revenue. Companies often refer to this segment as the Strategic or Global tier as well.
- Mid-Market: the next segment in terms of the highest revenue per customer. This segment typically forms the next 30–40% of customers by count, bringing in a proportionate amount of revenue.
- Small Business: this is the “long tail” of really small customers with really small revenue per customer but together forming a meaningful percentage of revenue. Given the volume of customers in this segment, it's hard to economically manage these customers' success. Hence, most companies either leave this segment unmanaged or use technology to monitor health and automate outreaches, wherever possible.
How you choose to segment your customers is up to your company, but it is preferable in most businesses to use the same segment definitions across all functions or teams (e.g. Sales, Marketing, Customer Success, Support). However, if CSM efforts do not align effectively with designated segments, it's wise to consider developing a different segmentation model than the rest of the company. For example, apply a CS-specific segmentation model when some customers within the same segment require more advanced technical or strategic advice, in-depth knowledge of a use-case or product, or geographically convenient in-person support. Segmenting not only allows you to divide your customers for cost-effective and efficient management purposes, but it also enables you to produce accurate Journey Maps that reflect the specific needs and priorities of a customer. Segmentation and Journey Maps go hand in hand to help create a Customer Journey filled with experiences that reinforce their choice of your product or service.
The Customer Journey
You have, thus far, learned what the Customer Lifecycle is with all its distinct phases of Consider or Evaluation, Purchase, Onboarding, Adoption, Renewal, or Churn. You know that the Journey Map is a capable tool that provides a selected path with different milestones, transitions, and events across the Lifecycle phases. You also know how to create the Journey Map that matches the customer's desired goals, as well as their segmentation needs. This Journey Map will keep your teams aligned on the customer's priorities across Sales and Services handoffs. It will also ensure that you are executing in support of those use-cases. Moreover, you will find the Journey Map is both for yourself and your customers. It manages their anxieties, concerns, and emotional levels to produce positive experiences in what we call the Customer Journey.
The Customer Journey is deeply connected to the emotional part of the created Journey Map and the Customer Lifecycle. You could say it is the result of the experiences produced by both of them. It's what the customer actually goes through as compared to the desired Journey Map. The Customer Journey is the “actual” while the Journey Map is the “desired” – and in an ideal world, they are the same! It is interesting how powerful these experiences along the Customer Journey can be. Allison Pickens, Chief Operating Officer of Gainsight, said in her Pulse 2019 Keynote address that she believed that the “treadmill of technology has eliminated every autonomous moment we experience so that we rarely exercise the muscle of reflection.” Her statement caused us to pause and ponder how this relates to the Customer Journey.
In the technology and software industry, we create products and services with the intent of making our customers more successful. It is fascinating, however, that these same products can also remove the ability to feel human, connected, and even can make us more fearful than secure. Allison later went on to write an online article based on her Keynote speech. She stated that “Products today reinforce and take advantage of our basest emotions – especially feelings of inadequacy and fear of missing out or being left behind. They erode behaviors we once valued and that I would argue, make us more human: independent thinking, deep consideration, and control over our actions. Products today don't speak to our highest human nature. Technology has become first; humanity, second.”3 How, then, do you create an environment where the customer is moving towards their goals? Allison suggested countermeasures and principles that fulfill a human-first standard.
You, as the Customer Success Manager or the leader of a Customer Success team, know that when the customer buys your product or service, they purchased it for a specific use. What if by using your product or service, the customer not only found success, but it created a journey that caused positive experiences and elicited our most human emotions? What if you could accomplish this by creating “interventions” in each Lifecycle phase and then built them into your Journey Maps? What if you could even leverage the data that you collect on your customers to input these situations at the right time and right place along with the accompanying emotions?
Not only are you accomplishing the customer's goals and generating responses that will ultimately connect the experiences, you are building a strong, educated customer while creating a strong bond with the product, you, and your company.
Endnotes
- 1. Tsiptsis, K.K. and Chorianopoulos, A. (2011). Data Mining Techniques in CRM. Wiley, Kindle Edition: Kindle locations 202–203.
- 2. Ibid., Kindle locations 194–196.
- 3. Pickens, A. (2019). 5 Principles of Human-First Products, Gainsight, 21 May 2019. Retrieved from: https://www.gainsight.com/blog/5-principles-of-human-first-products/.