Desired Outcome is a Transformative Concept

desired-outcome-transformativeOne of the most powerful concepts I’ve ever come across in business is the idea of the customer’s Desired Outcome.

And if you’re thinking “one of the most powerful concepts in business” seems like a pretty hefty charge, you’re right; this concept has transformational properties.

When I first introduced Desired Outcome, I explained that this idea came about as a simple replacement for “what does Success mean to your customer?”

But it’s SO MUCH MORE than that… let’s dig in.

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The Seeds of Churn are Planted Early

seeds-of-churn-are-planted-early“The Seeds of Churn are Planted Early” is a phrase I came up with in early 2013, published shortly thereafter, and have said and used many times since.

I wanted to go on record with that – BTW, if you see the term’s use outside of my work or that of Gainsight’s, maybe send them this link – but I also wanted to give the origin story of this powerful Customer Success concept.

It was late December 2012 when the CEO of a startup that had a major churn problem contacted me.

They were losing far more customers than they were bringing in – and they were bringing in a lot of customers – and he knew this was clearly not sustainable; I could tell he was worried.

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5 Situations When Massive Churn is Just Fine

5 Situations When Massive Churn is Just FineThe mantra of “grow at all costs” – that seems to include acquiring wrong-fit customers (those who aren’t your Ideal Customers), churn be damned – has popped up several times lately and my reaction to it is two-fold.

First, I immediately thought how stupid this is and how it flies in the face of everything that has to do with customer success and what I’ve been preaching for the last few years, but also goes against the core fundamentals of building a high-growth business (of which not losing more customers than you bring in is kind of important).

But then I thought maybe this could be a fun thought experiment where we can explore five situations where having high churn is actually just fine… in fact, it’s totally acceptable.

Cool, let’s do this.

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5 Lesser-Known Ways Churn Hurts your Company

5 Lesser-Known Ways Churn Hurts your CompanyThe common refrain by SaaS experts that think business is just a math problem is that if a customer stays long enough to pay back the cost to acquire them (the metric is called Customer Acquisition Cost or CAC), they became a “profitable” customer (“unit economics” don’tcha know) and everything is great.

Just do more of that and you’ll be a unicorn.

But the fact that your customers churned out – even after becoming “profitable” – likely means you didn’t get all the value you could from them and they definitely didn’t get all the value they should have from their relationship with you (you didn’t help them achieve their Desired Outcome).

Those customers you paid to acquire – that your company put time, energy, resources, and money into acquiring – are leaving, and there’s a cost that comes along with that that you might not have considered.

Let’s explore this, shall we?

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Podcast: Getting Inside the Minds of Your SaaS Customers

LincolnMurphy-mdiHow do you define success for your SaaS customers?

While it sounds simple, it’s not.

Success is only achieved when your customers reach their Desired Outcome by their interactions with your company.

But first, you have to understand what it is that your customers want to achieve — and that can take some work.

I was recently a guest on the business analytics podcast, Million Dollar Insights, and I spoke with host Cara Hogan about how SaaS companies can begin to define and invest in customer success, from identifying an Ideal Customer Profile to reducing churn.

If you want happy, engaged customers who rave about your product, you should take a listen.

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The Fiction that Friction Improves Customer Onboarding

The Fiction that Friction ImprovesA few months back an article was published that talked about how this popular brain training game (I can’t remember what it’s called) made their onboarding process MORE complex – not less – and increased their active users by 10%.

While the article was very clear on when to add friction, most of the discussion around the article that I saw fell into the category of “yes, that’s brilliant! I hate my users and customers anyway, so I’ll add MORE friction to our onboarding and we’ll improve like crazy!”

Crazy is the right word… but the context is wrong.

What they should have said was “I’d be crazy to simply add friction and think for a second that the outcome would be in some way positive.”

Unfortunately, this idea of adding friction has come up a few times recently with at least one client and on a few Clarity calls, so I feel the need to dig into why adding friction all willy nilly is simply one of the stupidest things you could do.

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Customer Psychology and the Wasted Power of Surveys

Customer Psychology and the Wasted Power of SurveysSurveys can be dangerous if used wrong, but can be super-powerful if used correctly!

Whether it’s the Net Promoter System to gauge customer satisfaction, doing pre-launch customer development work for your startup, or one of the myriad methods we use to interact with and learn from our customers, prospects, and other people, surveys are by far the easiest implement and most effective feedback mechanism at scale.

The problem with surveys, aside from all the ways that people generally mess them up (too many questions, leading the witness, not specific enough, poorly targeting / segmenting the audience, etc.), is that the underlying psychology of surveys is rarely taken into consideration.

Now I’ve said before that I’m not a big city psychologist, but I spend a lot of time studying psychology and human behavior as I try to figure out why people do what they do and also how to get them to do what I want them to do.

And some of that studying led me to realize that many of the behaviors we employ around surveys – especially in the Customer Success world with the use of NPS surveys – can have a very negative impact that does the exact opposite of what we’re trying to do.

In this article I explore how we use surveys and suffer the often-unintended consequences.

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How Social Proof Actually Works in Marketing

How Social Proof Actually Works in MarketingI’m not a psychologist, but I play one every day as I try to figure out why people (users, customers, visitors, etc.) do what they do… and how to get them to do more of what I want them to do.

I spend a lot more time reading books about – and otherwise studying – human psychology and the way our brains operate, than I do on specific marketing techniques, growth hacks, or the latest viral sensation.

Those things are fleeting, but the way our brain works is much slower to change.

One of the people I’ve learned the most from when it comes to human behavior is Dr. Robert Cialdini, starting with his game changing book Influence. He and others from his Influence at Work group have released other books that provided real-world examples of how to leverage the principles of Influence – or avoid them – but Influence is still my go-to resource.

Dr. Cialdini has posited that there are six principles of persuasion – Reciprocation, Liking, Consensus, Authority, Consistency, and Scarcity – each of which has the power to elicit certain behaviors (simply due to how our brains work) in those at whom the principle is focused.

In this article I want to explore the Principle of Consensus, otherwise known in marketing as “Social Proof” and in Customer Success as “Advocacy.”

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Customer Success Starts at Sales Done Right

Greg Pietruszynski - CEO - GrowbotsAfter getting a demo of their new product from their Chief Data Officer (Luke Deka) while I was in Poland, I was excited to catch-up with Greg Pietruszynski, CEO of Growbots, when I got back to San Francisco.

We talked about lots of different topics, but the post that my friend Steli Efti from close.io shared a while back – 4 Sales Mistakes That Lead To High SaaS Churn – came up.

Greg said the post was a brilliant summary of tactics that can help you focus on the right customer segments and therefore decrease long-term customer churn.

But then he said something that I thought would make a great post… it’s one thing to know who to sell to; it’s quite another to actually make the sale.

It’s yet a another to make the sale with Customer Success in mind.

Luckily, Greg agreed that this topic would make a great post.

I have a few things to say in the After Word about how churn hurts your Total Addressable Market, but until then, take it away Greg.

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Achieve Network Effect on a Smaller Scale

Piotr Zaniewicz - Right HelloI was talking to my friend Piotr Zaniewicz the other day about the importance of network effects on SaaS businesses.

I mentioned how the common misconception around network effects is that, in order to achieve a real network effect (this is the reason some people say B2B SaaS can’t be “viral”), the level of critical mass necessary for network effects to take place usually requires a lot of time, effort, energy, and resources to develop, on top of that ‘mass’ of users and customers.

But Piotr, the CEO of RightHello, an outbound sales startup based in Poland, and I know different. We started talking about this really awesome way he came up with to generate network effects, but on a small-scale. This is exactly what he did for his company.

I told him – as I do – to write it down and let’s publish it so everyone can learn about it. He obliged and his post is below.

I have a couple of notes and some more resources for you at the end that you’ll want to read, but for now… take it away Piotr.

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