Do you really understand how your customers define value?

Picture you’re a leader whose budget has been cut and you are going through your expenses and trying to decide which ones you can’t live without. 

Some SaaS products have a solid line that makes calculating the ROI really clear. A sales pitch like “Sell more” is pretty easy to calculate, Did you sell more? Do you believe the product helped you do that? Then the return on investment is a no-brainer. 

Unfortunately for most of SaaS, sales pitches and ROI calculations are a lot more fuzzy than that. Sometimes customers don’t even have a firm idea about how they will calculate the value of their purchase until they sit down to do it. Unless a CSM steps in.

Common value propositions in SaaS are things like:

‘Simply your processes’ - HubSpot

‘Makes you more productive’ -Zoom

‘Collaborate to help innovative ideas come to life’- Miro

Empower teams to do their best work- Google

Even though these products are completely different, these value propositions could be used interchangeably. Which means that they are basically meaningless. However, many companies don’t go beyond the surface pain point like a need to collaborate, be more efficient, save time, make employees happier, etc. We must dig deep enough into the pain point to understand what a customer truly needs to accomplish and how they will measure the outcome.

Without a true north, The CSM starts reporting on vanity metrics like engagement and adoption, or NPS

The internal teams at the client may not be on the same page, and you may hear things are going well but without clear criteria those signals are meaningless

Then the budget holder has to decide if the product is worth it and dang, we end up with “surprise churn”.

When budgets are flowing this is less of an issue, when the economy is struggling and each purchase is scrutinized, we end up with the year many CSMs faced in 2023 and will likely face in 2024- so how do you get ahead of this cycle? The first step is to understand the underlying pain-point that motivated them to buy, buy now, and buy from you. 

We recommend that in the kickoff call or within the product onboarding flow we ask the 5 whys. Once you get to the core business objective you can define how your product will address the issue, and how you will measure and monitor the outcome to help them reach their goals.

SMART

Most of you know about smart goals. But for CSMs it’s more nuanced than just quantifiable results. These often start with the question At the end of this contract, how will we know this partnership was a success and we addressed- whatever we just identified was the root pain point…

S

Sure ‘specific’ in the traditional sense, but for a CSM also what is the one number that all the customer’s stakeholders can rally around? Make sure what you land on is what your primary POC, Decision Maker, and key stakeholders that oversee the end-user can agree matter. And get it in writing as a follow-up. Remember, your goal is to be able to say our solution more than pays for itself. 

M

Measurable doesn’t just mean quantifiable for CSMs. Is the data something you can access- is it captured by your product? Or is it something that the customer is capturing and will have to share with you? Are they willing to do that? Will it be an API, a monthly automated report, or quarterly on requests? Steer clear of metrics that can only be measured annually- like an annual employee satisfaction survey- because you won’t know if the account is in trouble till it is too late.

A

Customers can be really uninformed, don’t assume they know what good looks like even if they used a competing solution before. 

For example, if you ask what is your target engagement they are likely to say 100%- then if they hit 90% they’ll be disappointed

If you say our typical range for engagement is $70-%80 where would you like to set the goal for your company and they hit 90% they’ll be thrilled. 

Be consultative, you are the expert on your product. 

R

Relevancy is important because if there are a million factors that go into the result, how do you tell what impact your solution had? Suggest KPIs that have clear attribution and never sign up for a KPI that your solution doesn’t directly impact.

T

Center your KPIs around the time you have to measure results. If I can’t measure the result before they have to decide if they want to renew the contract, it’s the wrong KPI. 

KPIs must have clear attribution to address their core business objective, all other metrics are just noise. Make sure to include KPIs that will tell you in a month, a quarter, and halfway through the contract if you are on track so you have time to course correct before the renewal decisions are made. Once you understand how their ROI calculation will be made, and how to measure if you are on track, center activities around achieving and communicating about the value that matters. If your customer believes your service more than pays for itself, the renewal will be a no-brainer.