Beyond NPS: Eight Metrics for Support and Success

Beyond NPS: Eight Metrics for Support and Success

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Beyond NPS: Eight Metrics for Support and Success

High customer satisfaction and Net Promoter Scores as the desired outcome of Support and Customer Success interactions, while positive, is not enough because it does not connect service delivery excellence with tangible business outcomes.

Why NPS is Not Enough for Support and Success

Support and Success must be focused on the attainment of tangible business objectives. For the customer, this implies that Support or Success interactions must help the customer apply a product successfully. For the business, providing these services must contribute to retaining relationships with hopes of expanding their value. This is why organizations must look beyond NPS (Net Promoter Score) when measuring the impact of Support and Success on lifetime customer value.

Attainment of high Net Promoter Scores, while positive, is not enough to indicate that “promoters” will correlate to the positive outcomes the business expects. The measure of Support and Success must be tangible and focused on “end game” results such as:

  • Can the customer use the product?
  • Can customers achieve tangible business outcomes by using the product?
  • Did support or success services help the customer attain their goals?
  • How will the customers’ ability to achieve their desired outcomes influence their ongoing relationship?

Beyond NPS: The Right Metrics for Support and Success

What is the primary reason for offering Support and Success services?  In most cases these organizations are aligned to help customers adopt and apply products successfully. The rationale is if customer can use and apply products successfully, you will increase the likelihood that you can retain and expand these relationships.  A single, simple measure such as NPS cannot provide sufficient insight to indicate that Support and Success efforts are resulting in tangible business benefit.

Consider the following eight metrics for determining the impact of your post sales services.

Metric

Description

1. Onboard

The percent on that new customers have received formal onboarding guidance.

2. Adoption

The rate that customers have met adoption milestones.

3. Success

The percent of customer that have reached established performance goals or milestones on defined journey map.

4. Availability

The rate that customers business operations have not be interrupted due to downtime or outages.

5. Engagement Quality

The percent of all customer engagements that result in positive outcomes.

6. Retention

The percent of active customers that have committed to renew an existing relationship.

7. Health

The relative health of a customer relationship based on the composite rates of adoption, success, retention, and recurring revenue rates.

8. Net Recurring Revenue

The net growth or contraction of the total recurring revenue relationship value. See How to Measure Net Recurring Revenue

How to Measure Net Recurring Revenue

How to Measure Net Recurring Revenue

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How to Measure Net Recurring Revenue

Net Recurring Revenue is a comprehensive indicator that reveals the extent to which you are retaining, expanding, and growing customer relationship value.  Examining the specific underlying elements that contribute to the calculation of Net Recurring Revenue provides necessary insights to identify the root causes of churn, attrition, and contraction.

Net Recurring Revenue Defined

Net Recurring Revenue measures the additions and losses to recurring revenue over a specified period. Net Recurring Revenue Rate indicates if the overall value of customer relationships is expanding or contracting. Knowing how to measure Net Recurring Revenue, you can obtain a clear indication of the performance and impact of service offers, products, programs, and customer-focused policies and practices.

How to Measure Net Recurring Revenue

To calculate the Net Recurring Revenue Rate, you need to know how much recurring revenue is added and lost within a period.  While you can calculate Net Recurring Revenue Rate by knowing the aggregate recurring revenue you add and lose within a period, it is ideal to have as much granularity as possible.

Recurring Revenue Measurement Period

Net Recurring Revenue is a time-based measurement.  Choose a period such as a month, quarter, or year.  The shorter the period the more likely you are to see variations from period to period due to time-based market factors and customer behaviors.  Measurement over longer periods will provide a more accurate reflection of the actual trajectory of recurring revenue performance.

Existing Recurring Revenue

Start with your Existing Recurring Revenue (Existing RR) at the start of a period.  This includes any sources of revenue that are renewable at the end of a term including product and service subscriptions.  This does not include one-time purchases and license fees.

Recurring Revenue Lost

Subtract Recurring Revenue Lost (RR Lost) during that period.  This includes subscriptions that are canceled or non-renewed (lost) and subscriptions that are reduced in total value (contraction).

Recurring Revenue Added

Add Recurring Revenue Added (RR Added).   This will include any new sources of recurring (additions) or expansion of the value of existing recurring revenue relationships.

See the formula below.

The Meaning of Net Recurring Revenue

Measuring Net Recurring Revenue provides a clear indication about the extent to which recurring revenue is growing or declining.  The more important insights from this metric come by examining the reasons for growth or contraction of Recurring Revenue.  Consider the following when examining Net Recurring Revenue:

  • What is the trend in Net Recurring Revenue – growth or contraction?
  • What is the rate of rate of change in growth / contraction?
  • What are the primary reasons for loss of recurring revenue – loss of customers or contraction or exiting of relationships?
  • What are the primary factors that contribute to revenue gains – new relationships or expansion of existing relationships?

The type and magnitude of changes to Net Recurring Revenue Rate can provide important insights into the reasons for changes to the value of customer relationships.  Use these insights to develop strategies to stem customer churn and reduction of contract value. Build upon practices and circumstances that lead to new customer engagement and growth of existing relationships.

Net Recurring Revenue

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High Net Promoter Scores as the desired outcome of Support and Customer Success interactions, while positive, is not enough because they it does not connect service delivery excellence with tangible business outcomes.

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Net Recurring Revenue is a comprehensive indicator that reveals the extent to which you are retaining, expanding and growing customer relationship value. Examining the specific underlying elements that contribute to the calculation of Net Recurring Revenue provides the necessary insights to identify the root causes of churn, attrition and contraction. In addition, examining the reasons for revenue growth presents opportunities to embrace and expand practices that encourage expansion of relationship value.

Success Marketing and Portfolio Management

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Essential Customer Success Activities

Customer Success is a series of interrelated activities performed throughout the customer relationship lifecycle. This article identifies and defines critical success activities.

Essential Customer Success Activities

Essential Customer Success Activities

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Essential Customer Success Activities

Customer Success is a series of interrelated activities performed throughout the customer relationship lifecycle. The most effective customer success initiatives include activities from onboarding to expansion with an emphasis on assuring customers’ successful use of products. Typical customer success initiatives include multiple success-focused activities, yet nearly half of companies focus on just one or two.

Essential Customer Success Activities

Customer Success Activities Defined

Customer Success Activities Commonly Used

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Beyond NPS: Eight Metrics for Support and Success

High Net Promoter Scores as the desired outcome of Support and Customer Success interactions, while positive, is not enough because they it does not connect service delivery excellence with tangible business outcomes.

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Net Recurring Revenue is a comprehensive indicator that reveals the extent to which you are retaining, expanding and growing customer relationship value. Examining the specific underlying elements that contribute to the calculation of Net Recurring Revenue provides the necessary insights to identify the root causes of churn, attrition and contraction. In addition, examining the reasons for revenue growth presents opportunities to embrace and expand practices that encourage expansion of relationship value.

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Support or Success – What Type of Post Sales Service Portfolio Do You Need?

Support or Success – What Type of Post Sales Service Portfolio Do You Need?

It Is Time to Move Beyond Support Portfolios

Support and maintenance portfolios have been the foundation of many post-sales service offers, yet Support offers alone are no longer adequate to sustain and growth customer relationship value.  Modernization of support portfolios and the evolution to success-focused programs and offers is the future of post-sales service portfolios.

Support Versus Success

If you are creating or modernizing a post-sales portfolio that offers customers more than reactive problem resolution assistance you are likely building a success portfolio.

Success portfolios differ from support portfolios because they offer services typically beyond the scope of technical support and often include services and resources from departments such as Training, Professional Services and Technical Support.

The focus and intent of post sales services programs help to define the type of portfolio you are building and suggests what entitlements to package and offer to customers.  Use the table below to consider what the focus and intent of your post service offers should be.

Support

Success

  • Services focus on responding to, diagnosing and resolving issues.
  • Services are designed to increase supportability by helping customers use and administer products more effectively. 
  • Tools and services monitor issues and provide recommendations or corrective actions to mitigate problems.
  • Speed, effectiveness of response and customer satisfaction are key indicators of success.

 

  • Services focus on helping customers use the full functionality of a product. 
  • Consultation and guidance through high-touch and tech-touch.
  • Onboarding, adoption and success planning services offered.
  • Services focus on helping customers to achieve tangible business outcomes.
  • Product use, customer success, retention and growth of recurring revenue are key indicators of success.

 

Note: Success Portfolios often include support services, but Support portfolios do not include services beyond traditional issue resolution entitlements.

Characteristics of Leading Post Sales Service Portfolios

Well-defined post-sales service portfolios with up-to-date and customer-driven service entitlements can significantly increase your ability to help customers use and apply products.

Market leading service portfolios are well structured to offer differentiated service rights, entitlements, and resources to deliver maximum customer benefit.  World-class service portfolios offer:

  • Access to skills, resources and expertise from across all service departments including Support, Professional Services, Education and Success.
  • Flexible program structure and purchase options provide access to the services customers need when they need it even as their needs evolve.
  • Expert assistance to drive tangible outcomes and achieve quantifiable benefits for the price paid.

Take Your Services to the Next Level

Is it time to update your Support portfolio or add Customer Success programs extensions and add-ons? Give us a call. We can help you define, price, and launch successful new service offers.

Contact us today.

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The current organizational structure of your Services team and alignment with other customer facing resources may inhibit your ability to retain customers and expand relationship value. Organizational alignment, increased cooperation, and shared goals are key to customer retention and revenue expansion initiatives.

The State of Service Organizations

Service organizations are optimized to achieve task-based service objectives such as case closure efficiency, onboarding and adoption milestones, case deflection, and attainment of target Net Promoter Scores.  While these are all important objectives, they are inadequate goals if not directly aligned with the attainment of strategic outcomes such as retaining customer relationships and growing account value. 

Companies that focus on attainment of transactional tasks may not be able to maximize retention and expansion of customer relationship value.  Sub-optimized organizations may:

  • Archive transactional success but miss opportunities to identify customers at risk.
  • Create delivery efficiencies though self-help and service automation but fail to deliver services necessary to help customers adopt and use products effectively.
  • Establish new relationships but fail to retain them for more than a year.
  • Provide a timely accurate response to a support issues but miss an opportunity to upsell additional services.

Characteristics of sub-optimized service organizations may include the following:

Narrowly Defined Customer Experience Strategy

The lack of a well-defined and coordinate Customer Experience strategy perpetuates inefficient and siloed organizational structures.  When specific teams and individual are not held accountable for contributing to overall CX strategic objectives revenue and retention opportunities will be missed.

Siloed Organizational Structures

Service remains predominantly siloed with separate departments for Support, Education and Professionals Services and are often separate from Product Management, Sales and Renewal teams.  Siloed organizational structures inhibit the ability to provide coordinated and efficient resource allocation to deliver the services necessary to sustain healthy customer relationships.

Lack of Common Goals

It is unrealistic to expect that teams will regularly coordinate activities if there are no incentives to support this behavior.  The lack of shared goals that transcend organizational boundaries assure that teams will focus their efforts on the tasks and activities they are goaled on.

Limited Coordination

Siloed organizations do not actively coordinate activities throughout the customer relationship lifecycle.  The lack of coordinated action is often the result of narrowly focused practices to achieve specific tasks and silo-specific goals with little or no incentives to promote cross-functional cooperation.

Sub-Optimized Resource Utilization

Use of overlapping and complementary resources from post-sales teams are not coordinated or pooled to drive customer success or achieve service delivery cost-efficiencies. 

What is Your Optimal Organizational Structure?

There are many ways to organize and align teams and resources.  Which organizational model do you use today? Is it optimized to achieve your strategic objectives?

Organizational Transformation is Inevitable

As companies refine their customer experience strategies and recognize that retention and relationship growth are paramount objectives, organizational transformation is inevitable. 

The imperative to successful organizational transformation is to organize teams and resources in the most efficient means necessary to achieve clearly defined strategic objectives. This process begins with the articulation of the customer experience strategy followed by a description of how specific roles and teams will contribute to expected outcomes.  Consider the following transformational imperatives.

Get Ready for Change

Change can be difficult especially when it challenges current operational and organizational norms.  When you can recognize the conditions that require change you can prepare for a smooth transition to a new operating and organizational model.  Consider the following indicators that signify change is necessary:

  • Customer Demand – Customers express explicit need for better coordination between service entities and enhanced responsiveness to product needs.
  • New Leadership / Vision – Service or corporate executives edict.
  • New Revenue – Pursuit of new revenue opportunities from new service sales (up-sell | Cross-sell).
  • Customer Retention – Effort to stem customer defection due to product and or service deficiencies.
  • Competition – Competitors (partners and/or product competitors) offer differentiation from coordinated service offers.
  • Product Transformation – Changes to product demand new types of customer engagement and/or programs.

Overcome Inhibitors to Change

Inevitably there are reason not to change.  Consider the reasons that may inhibit changes to the alignment of teams and individual resources. Consider the following inhibitors to change and develop a response to address each:

  • Incentives – The specific goals of teams and individuals do no foster cooperation. Individual and team goals and incentives may need to change to drive new behaviors.
  • Executive / Corporate Philosophy – “Technology first”, “we never did it that way before…” “let the channel do it…” attitudes inhibit organic service transformation. Change the culture with fact-based evidence to justify the reasons for transformation.
  • Lack of Vision – Lack of visibility into opportunities or risks of not making changes diminishes executive support. Make the case for why change is necessary.  Quantify the net benefits to change.
  • Parochial – Views that protecting organizational “turf” is more important than corporate growth. Convert detractors of change into champions by convincing individuals that the change will result in a net personal benefit.
  • Rapid Growth – No perceived need to change during growth. It is hard to make the case for change when all performance indicators are positive.  While change during high growth periods may not be necessary or possible, be prepared for when growth slows.
  • Too Busy –When there is a justifiable reason to change, then everyone can make the time to do what is right. Make the case that the benefits of change are worth everyone’s time.
  • Risk Averse – Change for the sake of change is never a good idea. All changes should be well thought out and understood.  A good plan should outline the risks versus rewards.

Transformation to a Future State

Transformation to a future organizational state demands that there is a clear vision for what this future state organization will accomplish with clear goals, objectives and measures of success.  This process begins with the articulation of the customer experience strategy followed by a description of how specific roles and teams will contribute to expected outcomes. The successful determination and transformation to the optimal organizational structure depends upon the successful definition of the following:

Established CX Strategy

Clearly Defined Organizational Goals and Outcomes

Well Defined Service Programs

Optimized Service Capabilities

Means to Measure and Improve Performance

Read more about The 5 Principles of Service Success

Featured: The Transformation of The Service Organization

ServiceXRG examines the current state of service organizations and the forces at work that are driving organizational transformation. This study reveals how the isolated service silos of the past need to evolve into unified entities to drive Customer Success.

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