Our guest author, Damien Howley, (VP, Customer Success for Passport) shares with us the value-relationship matrix that he brings to his customer success teams. This concept has led to rapid net retention growth and keeps his team focused on "Always Bringing Value" to the customer.
What is the Value-Relationship Matrix
Value vs Relationship: I’ve been discussing this idea with my customer success teams for about five years now.
It’s a simple concept that goes like this:
In the long run, if evaluating the value we provide vs the relationship with have with our customers, value will achieve more for a customer than relationship. Over time, it’s inevitable that companies who rely more on relationship will achieve less than companies that over-index on value.
Early stage software companies usually have abundant vision but their products and services are formative in nature. Given this reality, relationship is often the primary means by which to drive loyalty and retention. So it makes sense that startups rely heavily on developing deep-rooted personal relationships.
But as companies mature and establish an operational ability to deliver value, customer success teams must shift focus toward value delivery.
What follows is a concept I’ve developed that I call the Value-Relationship Matrix. It provides a framework that you can use to determine whether your company is oversubscribed on relationship or focusing on true customer value delivery. I’ve based this model on interactions with hundreds of customers over my career in SaaS.
Here’s how I justify the theory in terms of extremes:
In the long run value will always out-achieve relationship.
The Value-Relationship Matrix
Here are some additional anecdotal scenarios::
Slow, Painful Failure (Low Value / High Relationship)
A highly misleading stage
In the face of frustration, we may be able to swarm the account and make "hail-mary" commitments that improve customer sentiment towards us. Up front, this feels like the right move and both the client and the company feel a temporary relief and renewed sense of commitment.
That said, the underlying frustrations in this scenario are associated with a perception of low value. Furthermore, the "hail-mary" commitment puts us in a tough position to deliver successfully and consistently over time.
The best strategy in this position is to deliver on a series of small and frequent wins. It may feel counterintuitive but it’s a surefire way to prove value and regain confidence.
Along the way, track the little wins and build a report card (with big green checkmarks) that communicates value to day-to-day contacts as well as senior customer stakeholders. When things get rough and the conversation escalates, the report card is immensely powerful to demonstrate a pattern of value delivered.
I’ve seen all-too-often how the promise of a “key feature” will cure everything. Depending on one big deliverable, can work... but most often fails to produce enough value to make up for the customer’s perceived overall deficit. The timing and quality of big deliverables varies and generally leave the customer in a more frustrated position.
How high relationship biases your sense of value
It is quite common for CSM's to empathize deeply with customer pains and begin to doubt the value of your software. Typically, this occurs when a CSM relies heavily on relationship value to engage customers. CSM's who do this will incorrectly interpret relationship struggles as reductions in overall value.
As a CSM, it is important to keep a clear mind when considering the value of your software. Consider things like adoption, stability, reliability, client revenue, exposure, etc. Also, think of the lifetime value that you have brought to the customer, the alternative solutions available to them and the pain of switching.
A quick flare-up from a client does not mean that five years of solid value is instantaneously dissolved. In most cases, you can leverage value to squash the flare-up.
Solo relationships are horrifically risky
A significantly damaging mistake occurs when a CSM represents a customer’s health based on their relationship with one contact rather than the value exchanged with the company. Again, this may be a sign the CSM is relying too heavily on relationship which limits access to new contacts and generally leaves a one-to-one or one-to-few relationship for the CSM.
With limited exposure to the organization, it makes sense that the relationship of one person would be interpreted as truth. In this moment, a CSM should recognize that they had failed to expand the contact pool and secure a more balanced, “high and wide” perspective of value.
Here’s your Homework
So, now it’s time for action. Whether you’re a CSM or a manager of a customer success team, here are some steps you can take to assess your customer relationships.
Use this exercise as an opportunity to be brutally honest. Calibrate by comparing notes across the team and build actionable plans to move away from risky relationship-based behaviors and toward true customer value.
Our guest author, Damien Howley, is a seasoned customer success leader with a passion for SaaS startups. Over the past decade, he has held several senior leadership roles including VP, Customer Success at MindTouch, Sr. Director of Customer Success at Support.com, and he is currently VP, Customer Success for Passport, a mobility management platform based in Charlotte, NC.