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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
- Advocate for you
…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 Evolves
There is no “set it and forget it” when it comes to Success Potential (or Customer Succes… or any part of your business!).
Success Potential can (and likely will) 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.
Once you have a Bad-fit Customer Profile created, you’ll use that to figure out how to actually operationalize around your existing customer base. When you’re done reading this post, read my post on Customer Success Goals: Cohorts, Metrics, and Prioritization for what to do next.
That all said, let me get to the heart of the matter…
Stop Acquiring Bad-Fit Customers
This is one of those little ideas that will challenge the status quo in your business. This is the thing that will prove if you really do have a Customer Success culture or if your executives are all talk.
Are you willing to stop signing bad-fit customers? Are you willing to disqualify customers already in the pipeline that do not have Success Potential? If not, why are you investing in Customer Success Management? It’s a waste of money (and other resources) since you’re essentially setting everyone up for failure post-sale… including the customer. Good luck with that.
Done right, though…
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 6 Success Potential Inputs
There are six 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 four 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
Resource Fit (Required Outcome)
If they do not have the resources to invest (money, time, energy, etc.) into everything required to be successful, they are a bad fit.
Example: if they can’t afford the required advanced integrations – even though they can pay our base fee – that will be a problem.
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.
But keep in mind that…
It’s Not Success Guaranteed!
Acquiring good-fit customers – those with Success Potential – is foundational to Customer Success.
But customers with Success Potential aren’t guaranteed to be successful!
It’s just potential… and it’s up to you to unlock that potential!
If all it took was to acquire customers with Success Potential, that’d be awesome. I wouldn’t have to travel the world helping companies implement this concept of Customer Success.
But it’s not guaranteed.
Which means we need to know what is required for our customers to be successful and ensure that’s possible.
Note my wording… ensure that’s possible.
We can’t (always) do that for them (though sometimes we can, maybe even for an extra fee)
But we need to know what is required for them to be successful and orchestrate the process of moving them toward that success.
That’s Customer Success Management.
One aspect of managing the success of your customers is knowing where to meet them, and for that, we have to look to the…
Spectrum of Readiness
A good fit customer is one for whom you can check all of the Success Potential boxes.
They meet all of the criteria that would indicate they have the potential to be successful as your customer.
But within that cohort of good fit customers exists a Spectrum of Readiness (SoR), from those customers that are not at all ready to those that are able to hit the ground running.
It’s up to you to meet them where they are and take them where they need to go, but you can’t do that if you don’t know where they are on the SoR.
If you fail to recognize that customers exist across this spectrum and instead normalize an experience across all good-fit customers, you will fail to unlock that Success Potential for at least some of those customers.
And a good fit customer that churns out (but is still in business themselves) is the worst kind of churn. It means you failed them.
Now, one last thing to consider…
Is this All or Nothing?
I recognize that some of these inputs into Success Potential are going to require you to spend some cycles working to uncover, meaning some of these will be harder to come up with at first. That’s perfectly okay.
So should you wait until you have all of the inputs fully developed/discovered or should you start with what you know and evolve the definition of Success Potential from there?
The latter… do the latter.
You know some of these already, so start there.
Start with Technical and Functional Fit (the two that are generally the most obvious) and share that with sales and marketing; don’t go after – or sign – customers that don’t meet these criteria.
Other “Fits” like Resource or Experience may take more time to uncover, so don’t wait until then to start implementing the Success Potential checklist across your customer experience.
As you add to the Success Potential definition or as it evolves, share the updated definition with everyone so you’re all working from a single version of the truth.
Don’t wait until it’s perfect… it never will be, so go with what you have and iterate from there.
In fact, overall, you need to ensure you’re…
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 six 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
About Lincoln Murphy
