Why Value Realization is Difficult

Recently, working with a customer success team through some upcoming renewals, we came to a particular customer whose health score was low. We had just revamped the scoring to better predict churn, so this one stood out. The CSM said, “It’s ok, they’ll renew. They like us. They know they’re not fully using the platform, but they’re ok with that.” To which I said something like, “They’ll definitely churn when they realize they’re overpaying.”

Not four weeks later, the customer sent in a churn notice.

The team was shocked. I was not.

I’ve seen way too many CSMs over-valuing two things in particular:

• Good relationships with people that like them;

• Good product usage.

I’m not saying those are unimportant. I am saying that those two are only part of a larger picture. And what’s definitely true is that you can have those two nailed – good relationships with good users – and still lose the customer. We’ve all seen it, right?

Why is that?

Because you’re not managing how a customer realizes value from a product like yours.

What I mean is best illustrated by the graphic below.

Usage is the lowest level of value, but that’s where too many CSMs remain – establishing relationships with users and making sure they’re using the product. What’s left unstated is that the CSMs “hope” the resulting usage is valuable to the customer. But as we all well know, hope is not a strategy. You have to continue to manage the chain of value, which goes way past usage.

Looking at this value pyramid from the top down goes something like:

• Business value is realized by executives, and executives track KPIs;

• KPIs improve because business processes improve;

• Business processes improve due to (in your case) effective product usage.

For the CSM, this means a whole set of responsibilities that are not just about user relationships and product enablement. Those responsibilities include:

• Ensuring that adoption results in process change;

• Understanding what KPIs govern key business processes;

• Knowing who owns those processes and KPIs;

• Establishing relationships with those various stakeholders and having discussions that matter to them.

Let’s be honest: this is a much harder job for a CSM, versus simply doing training and check-ins.

But the real job of a CSM, despite whatever the job description might say, is to manage that chain to ensure the business realizes value from its investment. Only then will you stop being surprised by churn.