This slide deck - from a presentation given by Customer Success Evangelist at Gainsight, Lincoln Murphy - focuses on what goes into creating an Ideal Customer Profile and how to use existing Customer Success Data to surface customers most likely to be successful, acquired profitably, with expansion potential, or those most likely to be an advocate for you.
The most successful Enterprise SaaS or subscription companies - in fact, any company that values a long-term and expanding relationship with their customers - know that growing revenue only through new customer acquisition is the less efficient way to scale. Rather, they understand that growing revenue within your existing customer base - through up-sells, cross-sells, and expanded use - is the most profitable way to scale.
In fact, Enterprise SaaS companies that grow revenue - and company valuation - by expanding revenue within their existing customer base also know the key to making this work is to focus on - and operationalize - Customer Success.
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4 Customer Success Data Hacks to Identify your Ideal Customer Profile
1. 4 Customer
Success Hacks to
Identify your Ideal
Customer Profile
Lincoln Murphy
September
2014
Customer Success Evangelist
2. 2014 Gainsight, Inc. All rights reserved.
Agenda
1. Methodology
2. Ideal Customer Profile
3. Ideal Customer Hacks
1. Surface Your Most Successful & Healthy Customers
2. Find Your Most Profitable Customers
3. Identify Customers with Expansion Potential
4. Leverage Your Army of Advocates
4. Q&A
3. 2014 Gainsight, Inc. All rights reserved.
Methodology
1. Get access to your Customer Success data
2. Look for patterns
3. These patterns will expose your Ideal Customers
4. Fill-in Ideal Customer Profile for those customers
5. Acquire Customers matching your Ideal Customer Profile
6. Profit!
5. 2014 Gainsight, Inc. All rights reserved.
Ideal Customer Profile
Ready
Willing
Able
Successful
Profitable
Expansion Potential
Advocacy
6. HACK #1: SURFACE YOUR MOST
SUCCESSFUL CUSTOMERS
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7. Hack #1: Surface Your Most Successful Customers
• Your Ideal Customers are the ones most likely to
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achieve success with your product
• Find those with the highest average lifetime Customer
Health Score
• They didn’t just achieve a high Customer Health Score two-years
into their contract with you, but were healthy from the
beginning and kept that up over time. And then we’ll look for
patterns.
8. Hack #1: Surface Your Most Successful Customers
• If you don’t have a Customer Success Management
platform yet, an actual Customer Health Score may be hard
to find – especially historically – so you’ll pull together other
data points to try to come up with your own “Customer
Health” score
• Sure, a real Customer Success Management (CSM) solution
like Gainsight could give you this report quickly, but even
without that you should be able to get this data.
2014 Gainsight, Inc. All rights reserved.
9. Hack #1: Surface Your Most Successful Customers
2014 Gainsight, Inc. All rights reserved.
• For instance, you could pull together:
• average Net Promoter Score (NPS) over time
• Sales cycle length
• Time to first value
• on-boarding/implementation milestones and timing
• Customer Support data
• and maybe get your Account Managers to apply a “health”
score – based on their gut – to each of the customers they
manage
• Apply a “weight” to each input
10. Hack #1: Surface Your Most Successful Customers
• You have to consider all on-boarding, customization,
data seeding/cleansing, etc.
• Also the technology/infrastructure requirements on their side
• Is there an industry, company type or size, or revenue
amount that appears to be more successful (healthy)
than the others?
• Did the companies that found success buy through a
VAR? Was an internal champion present?
2014 Gainsight, Inc. All rights reserved.
12. Hack #1: Surface Your Most Successful Customers
• What are the patterns that seem to lead to success?
• Understanding what goes into making your customers
successful will surface ideas on what to look for in
prospective customers.
2014 Gainsight, Inc. All rights reserved.
13. HACK #2: FIND YOUR MOST
PROFITABLE CUSTOMERS
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14. Hack #2: Find Your Most Profitable Customers
• The definition of – or even the need for – profitably
acquiring and supporting a customer changes
depending on your company stage and goals.
• Because of the deep dependence on the situation, I
won’t spend a lot of time here except to say that
acquiring customers has a cost and you may want to
make sure you recoup that cost as quickly as possible.
2014 Gainsight, Inc. All rights reserved.
15. Hack #2: Find Your Most Profitable Customers
• This cost is generally referred to as Customer Acquisition
Cost (CAC), and should be “fully loaded” including all
the costs to:
• Advertise to
• Sell to
• Support during a Free Trial or Proof of Concept
• Convert to paying customer
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16. Hack #2: Find Your Most Profitable Customers
• If the sum of all that is less than the profit you get from
them over some pre-determined time-frame (we’ll say
in the first 12 months), then you can say that you’ll
acquire them profitably.
• But CAC isn’t the only cost you need to be aware of in
figuring out the “Profitable” input for your Ideal
Customer Profile.
2014 Gainsight, Inc. All rights reserved.
17. Hack #2: Find Your Most Profitable Customers
• Need to figure in the immediate-post-sale
costs such as:
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• Onboarding
• Provisioning
• Data cleansing/seeding
• Customization/configuration
• Training, etc
18. Hack #2: Find Your Most Profitable Customers
• And then the ongoing cost to support
regular use:
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• Infrastructure costs
• Technical Support
• Customer Success
19. Hack #2: Find Your Most Profitable Customers
• The difference between skating by on razor-thin
margins or living large with super-fat margins, ultimately
comes down to the customers you acquire.
• The customer you go after determines whether they’ll
pay the premium price, whether their support costs are
too high, their CAC is too high, sales cycles are too
long, their customization/integration needs are too
high, etc.
2014 Gainsight, Inc. All rights reserved.
20. Hack #2: Find Your Most Profitable Customers
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• Some hacks are to look for customers:
• That had a short sales cycle
• Have a high LTV
• Have long-term contracts
• Frequently Increase usage/buy add-ons/etc.
• Have a low cost to support
• Or all of the above?
• What are the patterns? What are the characteristics of
those customers?
21. HACK #3: IDENTIFY EXPANSION
POTENTIAL
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22. Hack #3: Identify Expansion Potential
• This is what I refer to as Intra-Company Virality and
provides you with tons of opportunity for Cross-Sell
within the same company.
• “Should we go after Enterprise or SME customers?”
• This should be an input into answering that question
• Now the real answer to the question – target Enterprise
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or SMEs? – has many inputs:
• sales cycle length
• deal size
• etc.
23. Hack #3: Identify Expansion Potential
• But one input that few really consider is the Expansion
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Potential of the account.
• If you sell to a company with 25 employees and they
buy 25 seats and have 100% usage, how do you
expand the account? How do you grow revenue? You
need additional features or non-user-based usage fees
you can charge, right?
• Because if you wanted to add just 1 more user, the
company would literally have to grow by 4%.
25. Hack #3: Identify Expansion Potential
• But if you sold that same 25 licenses with the same
usage, into a department/org in a large Enterprise, if
you wanted to grow the account by 1 user, they’d just
add a user.
• The department growing by 4% is nothing. A rounding
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error.
26. Hack #3: Identify Expansion Potential
• Couple that with other departments that are interested
in what you have (which happens even more and a lot
faster when you fully orchestrate this process; the
“virality” piece I mentioned), and there is a ton of
expansion potential.
• Maybe the sales cycle will be longer for the initial
Enterprise-focused sale (though if you do things right
you can accelerate this significantly, especially in this
land-and-expand fashion), but the long-term growth
after the initial sale might just make it worthwhile.
2014 Gainsight, Inc. All rights reserved.
27. Hack #3: Identify Expansion Potential
• And you should be able to gather from your Customer
Success Management system a list of companies that
have expanded their use over their lifetime with your
company.
• What are the patterns and common characteristics?
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Who did you initially sell to?
• What department/persona?
28. Hack #3: Identify Expansion Potential
• When it comes to expansion potential, that potential is
only realized when the customers have achieved
success... when their customer health score is high.
• No Customer Success… No Expansion Revenue. Period.
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29. HACK #4: CREATE AN ARMY OF
ADVOCATES
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30. Hack #4: Create an Army of Advocates
• I think of Advocacy as Inter-Company Virality...
• This is how boring ol’ B2B products “go viral” and it’s
how you can leverage your focus on Customer Success
to drive Second Order Revenue by having your
customers bring you more customers.
• Chasing logos is fine... but chase logos that’ll bring you
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more logos!
31. Hack #4: Create an Army of Advocates
• And the only way Advocacy happens is if customers
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are finding success with your product.
• If they’re ever going to be an advocate for you, it’s
when their Customer Health Score is high.
• No Customer Success... no Advocates.
• And no “viral” growth, either!
• So use your Customer Success Management solution to
look for customers that have been your biggest
advocates.
32. Hack #4: Create an Army of Advocates
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• Look for customers that have:
• Referred new customers through their use of your product
(think: they send a file, the recipient gets the file but also
becomes a user and then a paying customer)
• Have given testimonials
• Have talked to prospects on your behalf
• Have spoken at your events
• Participated in case studies with you
• Or with other vendors
• Written guest posts for your blog
• etc.
33. Hack #4: Create an Army of Advocates
• While you may not WIN the deal because of the
advocacy of your customers, you may be IN the deal
because of it.
• Don’t underestimate the value of Customer Advocacy.
2014 Gainsight, Inc. All rights reserved.
34. Hack #4: Create an Army of Advocates
• When you pull this data on your biggest customer advocates
– again, ensuring other situational parameters are set, too –
what patterns emerge?
• Types of customers?
• Size of customers?
• Industry?
• LTV?
• Now you take that Advocacy data and use that input in
your Ideal Customer Profile and all of the sudden you have
an amazing picture of your absolute Ideal Customer.
2014 Gainsight, Inc. All rights reserved.