In an earlier post, I discussed how to get measuring customer success right. It sparked quite a few questions about how to choose the measurement and how to ensure it causes you to be aligned with your customer’s business success. Here are some thoughts about how to get it just right.
The Goldilocks Customer Success Metric
In my earlier post, I compared two public safety companies that had very Getting It Just Right: Measuring Customer Successdifferent measurements of how their customers became successful because of their products.
One was RedFlex, whose most often cited metric was the number of red light tickets issued because of their cameras (though, I don’t think they want to be measured this way). This metric misses the mark, because it does not measure an outcome that is of value to the people who have to make a decision on the purchase of the camera system. The goal is public safety, not more tickets.
In contrast, ShotSpotter (SST) measured a variety of outcomes, including number of arrests resulting from gunshots detected and number of convictions made easier because of their data. The goal—public safety—is the same, but the metrics are directly relevant to the outcome.
Let’s analyze these:
Neither company chose what I’ll call the “papa bear” metric, which is something such as increased public safety. This metric is far too broad, far too hard to measure, and while both companies do something that affects public safety, neither can claim to have increased it directly.
The number of tickets metric, which I’ll call the “mama bear” metric, is too narrow. It measures the direct result of the system, but it does not take into account any of the results the activity produces.
The number of arrests metric is the Goldilocks metric (or one of them). It’s not the direct result of the system (you could measure number of gunshots identified), and it does not claim to be a panacea for all police issues. It does measure an outcome most of us can link directly to which is increased public safety (criminals get arrested), and one the immediate buyer (police department) and the ultimate buyer (political leadership) can relate to and definitely care about.
One alternative to the number of tickets metric might be to look at the total number of accidents at intersections with red light cameras. For most of us, fewer accidents mean safer streets.
So How Do You Choose Your Customer Success Metric?
Let’s assume for the moment you are selling to a business.
Increase revenue or reduce costs. I hope whatever it is you are selling to the business does one or both of these, or I suspect your prospective customer will never buy. That said, with very few exceptions, your product or service probably does not directly do either one, and the outcomes of your product are not “more revenue.” They should do things that lead to one of these two.
These are the wrong metrics.
More twitter followers (sorry, social media folks, this isn’t a business outcome). This is certainly a metric, but for most businesses, it doesn’t produce something effective, nor does it (in any meaningful way) affect costs or revenue. It’s too narrow, and too immediate. Other examples are things such as, “keeps all your customer activity in one place” or “ensures everyone knows the correct procedures.”
Those might be things your product does, but they are not why your customer buys.
The Goldilocks Metric (encore)
If you were selling a product to a marketing department, the outcome might be “produces more leads in the pipeline” or “shortens the time to conversion to a sale.” Both of those are things your product might do where you can measure the effect your product has on either number of leads or time to conversion, and the metric has a credible effect on the business (in these examples, more revenue).
In another recent post, I discussed Christensen’s idea of “hiring” a product to “do a job.” Your customer has a job they need done (e.g., they need more leads). That’s something they hire a product to do. And it’s something you can measure before and after they buy your product, so you and they can tell how effective your product is for them.
Another way to consider this is that every team, every group, and every department in a company has business objectives they can measure. Your product needs to help their measurement of at least one of those business objectives moving in the right direction.
The Goldilocks metric has to be specific and countable. ShotSpotter counts the number of prosecutions and convictions that use their data. You can count number of leads, length of sales cycle, reduction in overhead, etc.
So finding the right metric is really simple: It is a business objective, and it is countable.
Get that right, and you’ll have no trouble getting your customers to show you just how successful you are for them. Which is just right.
Tell us how you are measuring your customers’ success in the comments.
More Business articles from Business 2 Community: