The Secret Formula to Customer Success Is in Product Success
February 3, 2016
Most customer success organizations are focused on churn, upsell, and renewal. However, I believe at the heart of all these issues is making sure that our customers are getting value out of the software they have purchased. As a former product guy now running customer success, I believe if the product is driving value for the customer, you decrease your risk of churn and increase the likelihood of upsell of new modules.
How should a customer success organization define and measure product success and engagement? Like most SaaS companies, this is a question we grapple with internally, and one we frequently hear from our customers. Below is a framework that looks at product usage across three vectors—breadth, depth, and frequency. It is simple, yet broadly applicable, and so far I have been happy with the results at Pendo.
Framework to Measure Product Success
We use three indicators to provide a holistic understanding of whether our customers are both engaged and receiving value from our product.
|Breadth||Number of people using the product for a given customer?||Number of active users for a given customer within last 30 days|
|Depth||Is the customer using key features that will make them “sticky”?||Usage of 5-8 key features that have been validated as leading retention indicators|
|Frequency||How often do they access the application?||Number of logins across all users for a given customer within last 30 days|
How Does Pendo Measure Product Success?
Every product has different measurement benchmarks depending on the following factors:
- Vertical, domain, and industry
- Customer user counts
- Product stage (early introduction, growth, mature)
- Onboarding mode (self-serve, high touch, etc.)
At Pendo, we use the following criteria to measure product success to help determine if a given customer is healthy, or at risk:
|Healthy||>5 active users||Using all of the following 5 features:
• Publishing a guide live
• Creating a segment
• Launching a poll
• Enabling SalesForce integration
• Tagging pages and features
|>10 logins per month across the customer|
|Improvement||2–5 active users||Has used only 2 out of 5 features that define a healthy customer||2-10 logins per month|
|Risk||<2 active users||Limited use of the features||<2 logins per month|
Each item is an indicator, but a healthy customer could still have a low score in one area. For example, we have a couple very healthy customers who log in very infrequently. That by itself is ok, but if they scored low across 2 or 3 of the vectors, then we would be concerned.
Customer Success is the front line when it comes to helping customers get the most out of your product. Working with customers to drive the most value out of the product builds customers for life. Prospects BUY on pain—but they SUCCEED when customer success works with users to show them the value of the product.
By better understanding product success, your customer success team can identify solid referral customers for sales, prioritize customer training, and be another data point to prevent churn. In a world where software companies are easier to start than ever before, I believe a key goal of every customer success team should be to provide valuable feedback to product organizations so that they can build better products. If we do that, everything else will follow.
This post was written by Rahul Jain, one of Pendo’s founders and VP of Customer Success, and former Head of Product and Strategy at Cisco. Subscribe to Pendo’s blog and stay up-to-date on the latest improvements in customer success, and product management.