By Russell Bourne
In today’s blog, I’d like to explore a bond between a couple of subjects I’ve noticed come up a lot lately in Customer Success communities: Adoption metrics, and Leading and Lagging Indicators.
Adoption
In many CSM organizations, Adoption is the most passive stage of the customer journey. It usually comes directly after onboarding, and often represents a time when customers are pushed out of the nest to use a product with minimal supervision. How do we know they followed through on all the great things we taught them, and to what degree? These are big questions considering the next journey stage is usually renewal.
Fortunately, there are solid clues all around, if you know where to look.
Before we go on, it’ll help to clarify terminology:
Consumption is a measurement of how much of a product is used. For example, you may be using 9GB of Google account storage. Often, vendors use consumption as the basis for billing.
Usage shows where a product is consumed. From the Google storage example, of the 9GB, 5GB is from Photos, 3GB is Drive, and 1GB is Gmail. Usage begins to show you what value a customer derives from a product.
Adoption is a state of being in which the customer has undergone change management and now uses a product as it was intended, as an ingrained habit or procedure. Keeping the same example scenario, you have high Google adoption if you migrate your files from your hard drive to Google Drive, and you create and edit content online in Drive instead of offline in Office.
As you can see, Adoption isn’t inherently measurable in the way Consumption and Usage are. Instead, you can use a number of leading indicators to predict that a customer has Adopted well, and a number of lagging indicators to prove it after the fact.
Lagging Indicators
I recently engaged with a SaaS vendor who had an unacceptably high rate of customer churn. It was a classic post-purchase scenario: executive management invested in a SaaS tool that would help their employees work more efficiently, but the end-users wanted nothing to do with it. Some end-users refused to use the product, while others logged in to “check the boxes” and then went about their work “the old way”.
This is where relying too heavily on lagging indicators can give you a false positive. If a CSM at this vendor ran a report showing license consumption, they might see that most seats were installed. If they ran a report showing end-user usage, they’d see logins and data inputs. The CSM might conclude good Adoption - and might initiate a renewal opportunity with the completely wrong playbook!
Leading Indicators
An executive with the vendor told me he was considering a CSM initiative that would boost the number of data inputs from the end-users. The problem was, that would only result in more false positives. I asked him why he thought the end-users weren’t simply using the product as intended. What was holding them back?
To my surprise, he already knew the answer: lack of onboarding. He had a technical team running implementation, but there was no training. No one from his company trained the customer end-users, nor did they even train a customer department head who could then train their end-users. There was no online training platform that would show each end-user’s progress. The training wouldn’t have only been on the interface; it could have been a true change-management exercise that showed these end-users the personal benefits to them if they could use this software to help them exceed their goals.
The executive had a leading indicator hidden in plain sight: the yes-or-no question of whether certain onboarding steps were taken. The vendor can create a short checklist of the onboarding steps they feel are important. The checklist can live in field form in their CRM or CSM platform, and can be filled out by the CSM or possibly even by the customer. Consensus is always great to have. Then, a CSM can run a report showing which customers had thorough onboarding.
Putting it all Together
Now, back to the lagging indicators. If a customer’s leading indicators show poor onboarding, but their lagging indicators show strong consumption, that’s a sign the lagging indicators may be unreliable. But, if the leading indicators show full change management took place, you’re in a better position to trust the lagging stats.
If the above sounds similar to compiling a Customer Health Score, it is. Overall Customer Health Scores take all the Adoption factors into account, plus non-Adoption factors like relationships, payments, geography, and so on. Is it overkill to create an Adoption score on top of already having a Health Score? Probably - for some products, Adoption isn’t an important part of a customer being healthy and renewing. Sometimes, one executive user is all that matters, even if none of the other end-users adopt!
However, if you’ve isolated Adoption as an area needing improvement, it may help to think about what leading indicators factor into good Adoption and whether they’re worth measuring.
The Success League is a customer success consulting firm that offers customer success evaluations that are a great way to see what is working well and what needs improvement. For more information on our consulting services and training classes, please see TheSuccessLeague.io
Russell Bourne - is a Customer Success Leader, Coach, Writer, and Consultant. In a Customer Success career spanning well over a decade, his human-first approaches to leadership and program management have consistently delivered overachievement on expansion sales and revenue goals, alongside much friendship and laughter. Russell serves on the Board of Gain Grow Retain as co-lead for Content Creation. He is passionate about equipping individual contributors and business leaders alike to lean on their Success practices to grow their careers and help their companies thrive. He holds a BA from UCLA, and in his free time plays guitar semi-professionally.