Part 2: Selecting Your Keystone Performance Indicator for Customer Success, and the Example of Business Outcome Reviews
This is Part 2 of a 3-Part series on Simplifying Metrics for Customer Success. Part 1 is available here. In this section we will explore how to choose a Keystone Performance Indicator, and use Business Outcome Reviews as an example keystone metric for Customer Success.
What makes a good Keystone metric?
A keystone metric is dependent on other activities and becomes more powerful when the activities demonstrate diverse competencies. Based on the principles of a Balanced Scorecard (BSC), both quantitative and qualitative metrics should be considered, along with a focus on a) learning and growth, b)business processes, c) customers, and d) finance. The trick is to find a metric that represents performance across multiple business proficiencies. Such a broad and balanced indicator will reduce blind spots and mitigate risk.
Business Outcome Reviews
Operational metrics in customer success often focus on financial measures. But the best way to measure Customer Success is to measure the customer’s actual success with your products! Each account has its own definition of what that is, but it’s always in pursuit of a business outcome. These “Business Outcomes” can fall into defined categories to help you standardize your approaches. If you can directly measure a customer’s Business Outcomes, perhaps through their usage of your product, that’s amazing! But even just knowing what they are helps Customer Success Managers (CSM ) understand how to deliver success.
Note: Here is how Gainsight defines a Business Outcome Framework
With a Business Outcome Framework in place, a valuable investment of your CSMs’ time is to meet regularly with customers to review progress meeting their goals with your product. If you build process around them these meetings are “Business Outcome Reviews.” You may also call them Business Reviews or QBR (Quarterly Business Reviews) – what matters is that you’re reviewing the outcomes your customer is pursuing.
These reviews require participation from both the customer’s representatives and your company’s Customer Organization, and they are documented. By listening to the Voice of the Customer, they provide insights into the customer’s outcomes and capture feedback for improvement.
To conduct successful Business Outcome Reviews, several foundational activities must take place. These include scheduling the meetings, identifying the right customer contacts, defining success outcomes in consultation with the customer, having reporting systems in place, capturing the voice of the customer, and measuring sentiment. Because so much goes into a Business Outcome Review, it can be an excellent Keystone Performance Indicator.
Example Requirements for a Business Outcome Review
Here is what a Business Outcome Review may include:
● Participation of both your company’s Customer Organization and representatives of the customer account.
● A discussion with the customer of their progress in achieving their pre-defined Business Outcomes. If there is any reporting available, it should be presented as part of this discussion.
● Held regularly at a defined cadence.
● Participation of managers that are “High Enough” in the customer’s organization, and have influence or decision making authority about the purchase of the product.
● Documentation to capture the Voice of the Customer. Any feedback on opportunities for improvements, pain points, or opportunities for further sales should be captured. This can also include a structured survey, such as CSat or NPS.
● Discussion on extension or modification of the Business Outcomes, and a meeting cadence to set the stage for the next Business Outcome Review.
● An internal post-review assessment of the “Sentiment” of the customer. This is a qualitative Red/Yellow/Green judgment by the Customer Organization of how likely it is the customer will continue its relationship with the company.
The Quest for Balance and Breadth
Metrics for all of these activities may not be necessary, as long as Business Outcome Reviews are conducted. Simply holding CSMs and teams accountable for conducting these reviews means your company is already doing the most important work toward strengthening the Customer Relationship, and providing reporting on Business Outcomes.
In the diagram accompanying this article, the prerequisite activities are grouped into two categories representing different competencies: 1) those that strengthen the customer relationship; and 2) those that demonstrate effective reporting.
Furthermore, the keystone metric and prerequisite activities provide the balance associated with a balanced scorecard:
Learning and Growth: Defining Success Outcomes and gathering Voice of Customer input provide valuable learning opportunities for CSMs and other teams like Product, Support, and Marketing who benefit from customer insights.
Business Processes: Various processes must be in place to conduct reviews, including customer contact and meeting scheduling, Voice of Customer processes, metrics reporting, sentiment collection, and processes for defining and reporting on Success Outcomes.
Customers: Regular meetings establish a strong customer relationship, address engagement issues, and focus on tracking customer outcomes and sentiment. This helps identify areas of struggle and recognize opportunities for success.
Finance: Business Outcome Reviews are a simple measure of productive output from CSMs. Financial metrics, such as productivity measures and ROI using Activity Based Costing principles, can be applied to assess the financial impact.
Part 2 Summary
1. A good keystone metric achieves a balance between different competencies. It should incorporate both quantitative and qualitative metrics and focus on learning and growth, business processes, customers, and finance.
2. Measuring the customer’s actual success with products through “Business Outcome Reviews” is crucial. These reviews are a good keystone metric because they require execution of many varied activities.
3. Just the act of scheduling and conducting a Business Outcome Review demonstrates strong management of the customer relationship, and creation of metrics useful for forecasting customer success.
This article on Selecting Your Keystone Performance Indicator is the second of a three part series:
Part 1: The Problem of Proliferating KPIs – Defining what a Keystone Indicator is, and why it works better. Exploring common KPIs used in Customer Success Organizations, and the challenges of managing with them.
Part 2: Selecting Your Keystone Performance Indicator for Customer Success – How a single Keystone Performance Indicator can demonstrate achievement in many areas. Using Business Outcome Reviews as an example of capturing operational balance and breadth.
Part 3: Change Management Transitioning to a Keystone Performance Indicator – How to establish a program of foundational activities. Measuring progress through a transitional phase toward Keystone Performance Management.