Time of first value or time of first increment? Use the 5Cs to Boost Adoption and Avoid Revenue Churning

For companies that are part of the subscription economy, protecting recurring revenue is mission-critical.

When thinking about customer success, several metrics are important, such as net promoter score, customer satisfaction and net dollar renewal rate. An important one that is often overlooked for software-as-a-service companies is the time to first value, or TTFV. The purpose of this unit of measurement is to ensure that customer adoption is above all, minimizing buyer remorse and/or lack of return on investment.

While the definition of value may vary from customer to customer, the spirit of this philosophy is the same: The customer wants to feel that his purchase is validated by tangible business results. Below are five tips for delivering TTFV to your customers.

1. Communication

The best way to find out what matters to your customer is to ask them! Discovery must happen earlier in the sales process. You should then document an understanding of the customer’s pain points, or primary challenges, and ensure it is accessible to all customer-facing teams. Even better, track the customer experience from prospecting to renewal, through loyalty and advocacy, and beyond (think: a GPS tracking device on a migratory bird).

Another key dimension of communication with the customer is expectation setting. Customer kickoff should include information about what to expect from the product, what to expect from the services, to whom these services will be delivered and how long the services will be. Avoid leaving your customers guessing and instead communicate thoughtfully, and consistently.

2. Confirm

From there, revisit the customer’s mission with them on a regular basis. Business is dynamic. For example, before the COVID-19 pandemic most global companies had different priorities. Fiscal targets change with national and global economic influences and so do leadership positions (see “big change,

To understand the customer’s value objectives, periodically confirm that you are meeting the customer’s current needs and ensure they are the secret to those successful deliverables. This dialogue can come in the form of a bi-weekly Steering Committee meeting, a success planning workshop or a quarterly business review.

3. Coach

I recently had a client tell me that at his software company, “‘professional services’ was a bad word.” He continued to explain that the belief that a formal department to guide customer onboarding, which probably also did data migration and system configuration, was discouraged by the board of directors and viewed as a costly endeavor with low margins.

Whether you invest in a PS team to do the heavy lifting or instead take a “train the trainer” approach, or even outsource services to a third-party implementation partner, you can help your customer adopt your product. I can’t miss the opportunity to help. Instead, make sure customers are on the right track from the start. Avoid bringing them “back on track” by making sure they never left the track in the first place.

4. Calculate

Leverage tracking data to compile a customer scorecard that is proactive and predictive. This telemetry tool should include quantitative and qualitative measures to illuminate the risk before it becomes an occupational hazard. An example of a quantitative metric are daily active users. In contrast, an example of a qualitative metric is the relationship manager’s subjective feeling about the customer account.

This is often reflected in a quick snapshot attribution as red, yellow or green, going from most unhealthy to most healthy. Another framework for prediction is the TTFV framework. In this model, you need to know at what stage of the customer journey the customer receives their first meaningful business result (eg, 60 days). Test programs to take days off that current benchmark, using that number as a baseline. Customers will be pleased to see a quick return on their investment. By measuring what’s important, you can protect recurring revenue and your business’s reputation.

5. calibrate

Spoiler alert: Despite your best efforts, some of your customers will tend to churn. What your company does with that information can be the difference between revenue growth, stagnation or contraction. Customer review reasons for low product usage and dissatisfaction: Is there a product problem? Was there an education/onboarding failure, or something else entirely?

Once you uncover the root cause, do further research to see if the customer risk is an isolated incident or a systemic problem. You may need to pull together a tiger team, or group of subject matter experts, to analyze the data from a realistic perspective and initiate immediate remedial initiatives. For example, if trends are showing mismatched expectations of customer(s) from sales, cross-functional alignment is needed between the pre- and post-sales teams-stat.

Customer growth typically results in a reactive fire drill to save the customer and associated recurring revenue. Such situations are stressful for both the customer and your company. By taking advantage of these five Cs—communicate, verify, calculate, and calibrate—you can proactively and predictably drive a customer-focused experience for your software customers.

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