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.