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IT ALSO INCLUDES THE QUALITY OF USAGE, THE DEPTH OF USAGE, AND THE BREADTH OF USAGE.

In customer success’ vocabulary, churn is definitely the

most used word. Not far behind is the word that many

believe is the solution to churn—adoption. Adoption

in customer success is determined by whether your

customers are using or ‘adopting’ your product. But it is

so much more than answering the question is the client

using the product.

Sounds pretty simple, right? Of

course, as you can guess, that’s not

always the case.

4

WHAT’S COVERED IN BOOK FIVE?

Adoption VS. Churn

Value based adoption is combating churn

Not by adoption alone

Types of adoption metrics

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Adoption not for cs alone ............17

If there were a CS coin, one side would say “churn” and

the other side would say “adoption.” One is the problem.

The other is the solution. The theory is understandable.

First, the more your customers adopt or use your

product, the more value they should get from it. Right?

For years we have heard that adoption is the closest

proxy for value. However, does it always mean that if

your customer is adopting your product, they are also

finding value? Not necessarily. However, one thing you

can be sure of is that if they aren’t using or adopting,

there is certainly no value.

ADOPTION VS. CHURN

If you have good adoption metrics, are your customers finding value, as well? Is it correct that the more your customers use your product, the more value they get?

The second part of that assumption

is the more value your customers get

from the product, the less likely they

are to churn. That may be undoubtedly

true, but be careful.

While this should be true, there is almost certainly some

nuance to that statement that is not always correct.

As discussed before, “value” can be challenging to

define. The importance of knowing the customer is

imperative, including what the definition of value is

for them. You could be driving adoption in a direction

that has absolutely no value for your customer. It is

critical to ensure that what you create and deliver is the

customer’s absolute definition of value—consistently

and continuously. Until then, adoption is not a symbol of

success unless the product can be utilized with value.

Combatting Churn and enhancing adoption is the

reason that customer success was born. The discovery

at Salesforce that their churn was too high was quickly

followed by the formation of the first Customer Success

team in SaaS. Their mission included only two elements—

adoption and retention. For nearly every Customer

Success team since that time, one of the driving metrics

behind their efforts has been adoption, initially defined

by the frequency and number of logins compared to

licenses sold. For those of you who know tech history, or

have been around for a while, you’ll be familiar with the

word “shelfware.” Driving adoption is our way of ensuring

that our software does not end up being shelfware, i.e,.

sitting unused on the shelf. Even in SaaS, your software or

product can end up “unused on the shelf.”

ADOPTION STRATEGYOne thing that should be addressed is that the word

adoption as usage is almost exclusively applied in the

software business. But there are a number of other kinds

of businesses for whom increasing adoption is a loyalty-

building strategy.

Some of those businesses include:

• Hardware companies

• Services companies

• Software companies who don’t sell user licenses

• On-premise software companies who can’t get their

adoption data

VALUE BASED ADOPTION IS COMBATING CHURN

For a services or hardware company, they will want

to be very aware of how much of their product(s) are

being actively used or adopted by their customers. For

example, if you run a services business and have ten

different packaged services offerings, you should want

your customers to use more than one. Perhaps you have

a long-time customer who has only ever bought one of

those ten offerings. You want to get them to increase

their adoption by purchasing one of the other nine

packages. You should be confident that they will become

a more loyal customer if they have expanded the breadth

of what you are doing for them. After all, that second

package should bring them more value than the first one

alone.

Some software applications are not based on end-user

licenses. This situation makes measuring adoption a little

different, perhaps even challenging. Take, for example, a

company like Mulesoft, which is now part of Salesforce.

A big part of their business helps companies move data

around an enterprise easier. This movement is often done

through the use of an application program interface

(API). So Mulesoft can be, and is, highly valuable to a large

number of their customers. Yet, most of those customers

seldom login to it.

Once the product is set up, it runs automatically through

API calls and moves data between systems without

human intervention. Do customers “adopt” systems like

Mulesoft? They most certainly do. Can that adoption

increase in measurable ways? Yes, it can. It doesn’t

happen in the typical measurable ways in which we think,

for instance, users logging in with increased frequency

and using more features. It happens by broader and

more frequent use of their APIs. There are many software

companies that live in this world. Adoption is crucial for

them, as well, just in different ways.

ON-PREM, SAAS, AND B2BOn-premise software companies are a hybrid of a typical

SaaS company and an API-driven software solution when

it comes to adoption. On-prem companies often have

software that users log in to. They have many different

features that each user can choose to use, just like with a

SaaS solution. The challenge with an on-prem company is

that it may be much harder, even impossible, to get their

hands on login and usage data. It often sits behind the

customer’s firewall, running on their servers. So the use of

their software mirrors any SaaS solution, but the ability to

access usage data information is more difficult like it can

be for API-driven applications.

One of the reasons adoption has gained so much

attention, and momentum is because of the advent

of SaaS. As you know, SaaS is just a delivery model for

software. There was a time when software was delivered

on reel-to-reel tapes. Eventually, the software evolved

from floppy disks to hard disks. As technology improved,

it moved to the point where most software was delivered

via online download. No tapes or disks needing to be

shipped in boxes.

The only requirement was bandwidth. Today, however, even that methodology is outmoded.

SaaS software is “delivered” through your web browser. If

you want to get nit-picky, it’s not delivered at all. It runs

on servers, often sitting at AWS, Azure, or Google, and

is accessed through a browser. The pivotal point is that

the vendor’s software “runs on their designated servers.”

What that means to you the software vendor is that you

can see who is using your software, how often, and which

parts. Amazing. You can literally have access to every

single click, or API call that is performed on, or by your

solutions. This position is nirvana if you want to measure

and manage your customers actively and accordingly.

But you must continuously monitor and ensure value is

delivered for your customers over their life cycle, or they

won’t adopt your products.

Business-to-business (B2B) software tends to be quite

complicated. Unlike Facebook, for example, which most

people can figure out without much guidance, solving

significant business challenges requires software that is

not quite as easy to learn, understand, and use. There are

just not many B2B products that are simple to adopt, and

value is so self-evident that they grow organically. There

are solutions needed to drive adoption with some post-

purchase assistance.

Here are a few suggestions:

• Onboarding - trained professionals to install and

configure the product to work per the customer’s

specific needs

• Training - Onboarding may stand up the solution, but

there is usually a need for specific training to ensure

that users know how best to use, and get value from

the solution

• Customer Success - business strategists with product

knowledge whose jobs are to help customers

maximize the value of the products

• Documentation - not very sexy, but very valuable, and

vital to the long-term success of your customers

NOT BYADOPTION ALONE

Let’s talk about a possible “fly in the ointment” of this

wonderful plan to measure adoption and use it to deter-

mine the value being derived. Is it that simple? Of course

not. Is adoption a good proxy for value? Most definitely. Is

it perfect? Definitely not. Let’s explore a couple of situa-

tions where you could get fooled if you pay attention only

to adoption.

ADOPTION IS NOT LOVE Let’s take that as a given that the solutions companies

produce solve real-world business challenges. The grand

purpose for most companies is to get to a place where

their software is must-have or to use a currently overused

word, essential. Everyone wants software that performs

a necessary task in the life of a company. Invoicing is a

prime example. If a customer buys your invoicing solu-

tion, it’s a guarantee they will use it. If their business is

growing, they will use it more next month than they do

this month. But using it does not mean loving it.

What if they actually hate the way your product works? If

all you look at are the adoption metrics, you’ll never know

that. There have been situations where the customer was

fully using a solution more each month, right up until the

day they stopped using it altogether. It was too late for

the vendor to discover that the customer despised their

software.

Let’s go back to the previous example of the ever present

need for business invoicing. What if customers could pur-

chase and implement a competitor’s invoicing solution?

They ran it alongside yours, and while working with both,

they preferred your competitor over you? At contract

renewal, the customer switched over to the competition’s

solution and sent you a churn notification. The cruelest

truth of all might be that the month before they churned,

was when they used your solution the most. Not because

they loved it, but because they were about to drop it.

Adoption is not the only thing you should be measuring.

ADOPTION DOES NOT NECESSARILY EQUAL VALUEB2B software is designed to provide some kind of value.

But that value may not be enough to keep your customer.

Take a marketing automation tool like Marketo, for ex-

ample. There’s enormous power in being able to send an

email blast to all your customers or prospects. It’s simple

to do with significant value. However, if that’s all you ever

used Marketo for, there would be a risk of you churning.

Why? Because you can accomplish that same task less

expensively with other software than Marketo.

The value of that core feature is not always enough to justify the purchase of a robust platform, no matter how much it’s basic features are used.

Although measuring adoption alone might still leave you

with some risk, it is the key metric to understanding the

value a customer is likely deriving from your solution.

This is why on-prem software and services companies

are finding multiple ways to measure adoption and val-

ue. Some on-prem companies have built “phone home”

functionality into their solutions, so adoption information

is exported outside the firewall and back to the vendor.

However, many customers with on-prem software do not

allow any data, as innocuous as it may be, to leave their

purview. The good news is there is a trend that these cus-

tomers are making room for this functionality, assuming

it’s secure.

Informed customers will understand that the more in-

formation their vendors have, the more the vendors will

partner with them to maximize value. The allowance to

access customer data is not an invasion. It enables ven-

dor guidance. This is the truth behind the whole custom-

er success movement, and customers must embrace it, or

it will be worthless. The good news is that your executive

buyer is highly incented to ensure the value of your solu-

tion is maximized. So, they should want you to see their

adoption data and respond accordingly. It is a classic case

that the more you share information on how the custom-

er is using or not using the product, the more collabora-

tion there is towards a common goal.

TYPES OF ADOPTION METRICS

Software services companies can create adoption metrics

based on the number of engagements, or packages pur-

chased and delivered. They can also combine that metric

with the quality of the services delivered and create a

pretty solid health score. Customer Success principles can

be applied to every kind of business.

VALUEIf adoption is so critical, how can you get your hands on

adoption data? Then, what do you do with it? Let’s start

with the second question, “What to do with adoption

data?” Answering this question first will save you a lot of

time because it will help limit the quantity of information

you need to ingest. The critical word under consideration

is “value.” It has been used throughout this chapter. The

challenge with that word is that defining it is consider-

ably subjective. But it must be defined. For low- and mid-

touch customers, the definition of value must be general-

ized and will be normalized over time based on customer

feedback. However, for your largest and high-touch cus-

tomer segment, you must mutually define value on a

customer-by-customer basis.

No matter the type of customer, possible metrics might

include:

• Logins

• Pageviews

• API calls

• Number of features used

• Daily active users

• Weekly active users

• Licenses deployed

• Percentage of licenses deployed

• Percentage of licenses active

• Speed of adopting new features

• Quality of adoption (i.e, are they using the most valu-

able features?)

The list can be exhaustive. You can be sure that there are

people at your company who can make a highly focused

list based on their interactions with your customers. In-

tuition here will often be right in this situation. Don’t be

afraid to incorporate a dialogue of what your customer

might say or what they are doing. At Gainsight, it started

with this thought—“If a customer uses these three fea-

tures at least three times a week, they are healthy.”

Over time, we’ve refined that significantly. It is similar to

changing your pipeline stages, and criteria in your CRM

system. It’ll never be perfect the first time, but you have

to start somewhere. This isn’t optional if you’re going to

drive world-class retention rates. So, start now and make

it your goal to define something directionally helpful. Re-

member, perfection is your enemy.

USAGE DATANow, how do you get your hands on usage data? For

most companies, this is not a particularly difficult task.

Most products have some built-in logging mechanism

that transfers usage data into a database. It is likely pro-

prietary, but it’s not impossible to extract the relevant

adoption data from your product and place it where it

can be seen and used. The good news about this meth-

odology is that you can also bring in historical adoption

data. The most essential and valuable indicator of cus-

tomer adoption health is not in any given data point but

rather when observed against trends.

If you know that a customer logged into your software 13

times this week, you know virtually nothing of the value

your software holds for them. However, if you see that the

number went down over the past four weeks from 147 to

81, 35, and then 13, you’ve learned something extremely

valuable. Trends are everything.

Today’s companies do not lack data. They have it in

abundance. Accessing pertinent data no matter where it

might reside in the enterprise has become much more

straightforward than in past years. There are great tools

abound to help, from the very sophisticated, like Mulesoft

or Informatic, to something simple like Jitterbit. What

will be more complicated than just moving the data will

be correlating it accurately and consistently to the correct

customer and user. In order to help you accomplish that,

there are companies, like Gainsight, that can help.

There’s a natural way to achieve this task by using Gain-

sight PX. With PX, you can simplify the process by incor-

porating our flexible code into your product. It will obtain

the adoption data as it’s happening and record it in a

structure designed by you for easy understanding, with-

out slowing your product flow. The process is simple, and

it won’t be long before you have multiple weeks of history

to observe trends and take appropriate action.

Gainsight PX will also deliver additional value by offering:

• Deep analytics for your Product team on how your

product is being used, such as what path users are

taking to solve problems.

• In-app messaging can be used intelligently to ac-

complish some of the onboarding challenges without

human intervention and helps customers get to the

point of value quickly.

• In-app surveys can help bolster the measuring of

adoption effectively.

Adoption can’t be a CS metric alone. It must be a shared

metric across your company. It needs to be seen and

understood by all organizations. In particular, good

adoption information can tighten the relationship

between Customer Success and Product.

It truly is a game-changer. Some SaaS companies

organize around this truth. That is why they have the VP

of Customer Success and VP of Product report to one

person, assuming it’s not the CEO.

Adoption, since it will be the most heavily weighted

component of your customer health score, may well

become the most important leading indicator in your

entire business.

The best companies in today’s world are those who

understand their customers deeply. This understanding

can involve an array of interactions and data points,

but the central element is adoption. It can be argued

that if you could have only one piece of data about

your customers across the entire company and your

customer’s lifecycle, it would be adoption. If you’re

successful adoption won’t be your only metric, but don’t

miss out on digging in and making sure you nail that one!

ADOPTION NOT FOR CS ALONE

The best recurring revenue businesses in the world are those who understand the necessary bond between Customer Success and Product.

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A D O P T I O N