Customer Success starts with acquiring customers that have Success Potential.
Customers that have Success Potential are said to be good-fit customers. This is the opposite of bad-fit customers that cannot get value from a relationship with us now or in the near future.
If you knowingly allow bad-fit customers to be acquired, nothing else you do in Customer Success will have the result you’re hoping for as those customers – no matter what you do – will never achieve their Desired Outcome.
In fact, if you’re a CEO that allows your sales people to sign customers without Success Potential, you should fire your Customer Success Management org because you’re just setting them up for failure anyway.
And if you’re a Customer Success Practitioner or Leader that works for a CEO that allows bad-fit customers to be signed, you should quit and go work for a CEO that isn’t setting you and your team up for failure.
Bottom line… if you want customers to:
- Stay longer
- Buy more
- Invite you into other parts of their company
- Advocate for you publicly
…then don’t acquire customers without Success Potential!
Okay, so let’s dig into this concept of Success Potential, shall we?
A Quick Reality Check
Before you even start logically segmenting your customers, you’ll want to do a quick reality check on what’s necessary for your customers to be successful in their relationship with your company.
BTW, if you go through this Success Potential exercise, when you do start to logically segment your customers, you’ll be able to quickly see what segments you cannot help right now and which are a perfect fit.
Okay, so Success Potential is a binary, yes or no answer to this question:
Based on the realities of what we can offer right now, and – assuming Joint Accountabilities are met on both sides – is this prospect likely to achieve success in their relationship with us?
If your customer doesn’t have Success Potential, and you know it when you sign them, don’t be surprised when they churn out and say terrible things about you publicly.
Success Potential can also change, either because you’ve added or removed functionality, changed your culture, removed or increased your ability to serve, etc. or because of changes on the customer’s side, like their expert quit, they got acquired and their culture changed, or they simply evolved out of being a good fit for your company.
If they do have Success Potential, remember, it’s only “potential” … even if they meet all the criteria as a good fit customer, you still need to ensure that potential is unlocked through Customer Success Management.
Success Potential isn’t Limiting; it’s about Focusing
A typical reaction to any type of action that appears to limit your market is the Fear of Missing Out (FOMO).
So when I say that you should NOT do business with a customer that doesn’t have Success Potential, FOMO is going to tell you that you should. FOMO is going to tell you that this is limiting YOUR potential, that it’s lowering your Total Addressable Market (TAM).
But FOMO is wrong and if you let it dictate how you run your business, you’re wrong, too.
The reality is simple: the TAM you share with investors or that you came up with when you decided to start your company is really the ultimate TAM if everything was perfect.
If your product was feature complete for every type of customer, if you could provide an Appropriate Experience to every customer segment, and if you could afford to get in front of all of those customers, then that TAM wouldn’t just be a theory, you could actually “address” that total market.
But right now, that entire TAM isn’t ready for you and you’re not ready for it; so you have two choices.
- You can either try to acquire as much of that TAM as possible, regardless of Success Potential, churning and burning your way through customers that are a bad fit, ultimately shrinking that TAM by not just the number of customers that churn out, but also those that the negative market sentiment (created through all of that churn) pushes out of the TAM, or…
- You can recognize that right now you have a specific segment of that TAM that has Success Potential and that as you improve your product and your ability to serve customers, you increase the number of market segments that have Success Potential, opening up more and more of that TAM.
In fact, if you choose the second option, your overall TAM may grow since your successful customers will spread the word, not just to customers like them, but potentially to customers in markets you haven’t considered in your TAM calculations.
Check out this quick presentation to visualize those options:
Okay, so here are…
The 5 Success Potential Inputs
There are five areas of Success Potential and you need to be intellectually honest about what it would take for a customer to be successful – to achieve their Desired Outcome – in their relationship with your company.
You’ll note that three of the following Success Potential inputs are tied to the Required Outcome part of Desired Outcome (what the customer needs to achieve) and the other two are tied to the Appropriate Experience part of Desired Outcome (how the customer needs to achieve it).
Success Potential includes, but may not be limited to:
Technical Fit (Required Outcome)
What technology must they be using – or must they acquire – in order to get value from our product?
Example: Our product is built on top of Salesforce.com; they need to be – or become – a Salesforce.com customer
Functional Fit (Required Outcome)
What features and functionality are absolutely required for this customer to be successful?
Example: Agencies need a roll-up view of all customers; not having that is a show-stopper
Competence Fit (Required Outcome)
What level of expertise internally must they have – or be willing to acquire – in order to be successful?
Example: They could functionally use our product for project estimating, but without someone on their team that knows how to prepare the data for estimation, they will not be successful. We offer training, are they willing to buy it?
Experience Fit (Appropriate Experience)
We cannot give them an experience that is appropriate for them, from how they buy to how they get value across their lifecycle, and including reactive support and proactive Customer Success Management, we cannot give them the overall experience necessary to ensure their Desired Outcome is met.
Sales Example: Selling Enterprise deals in Spain requires high-touch relationships, often with long, extended lunches and we don’t have the resources to provide that level of service.
Support Example: We do not have the ability to staff a 24/7 telephone support center
Cultural Fit (Appropriate Experience)
What beliefs, morals, attitudes, etc. do we feel like won’t be a fit with our culture?
Example: If they speak ill of their customers, have an abrasive attitude, and demand rather than ask it’s a bad fit.
Example: If they want to publish porn on our video distribution site, that’s a bad fit.
There’s a lot there, but it the key is…
Communicating Success Potential Internally
Acquiring customers that cannot achieve success in their relationship with you is the antithesis of Customer Success.
You cannot say your company is Customer Success-centric and knowingly and actively acquire bad-fit customers; those two things are at odds with each other.
That said, most of the time it isn’t that a company is acquiring bad-fit customers on purpose, it’s that they’ve never gone through the process of defining Success Potential… and they certainly haven’t communicated that internally.
For instance, when we see sales closing a lot of bad-fit customers, it’s not that most salespeople wake up in the morning and say “today I close ’em all and let Customer Success sort ’em out,” it’s that no one ever told them the characteristics of a bad-fit customer and what the acute pain of signing a bad-fit customer really is to the company so they just close.
But if you identify the 5 things that make up Success Potential and require a checkbox by each one for every new customer that’s acquired, you’ll truly be on the path toward Customer Success.
And now that you know about Success Potential, you can’t un-know it… if you choose to go forward without doing this work on Customer Success and continue to acquire bad-fit customers, you’re choosing to do things that will hurt your company, stakeholders, and customers.
I go into even more detail on Success Potential in This Customer Acquisition Mistake Can Kill your Growth