The following is adapted from The Seven Pillars of Customer Success.
I think it’s pretty safe to say that every business dreads the idea that their customers might leave and start doing business with their competitors instead. Why? Because when a customer leaves, it’s a big blow to overall profitability and growth potential.
I know I’m not telling you anything new here. But what might come as a surprise is that you don’t have to sit idly by, helpless to stop your customers from leaving. Instead, you can take steps to identify and mitigate the risks that might cause your customers to leave.
One of the best ways to do this is to build a risk management framework. I know that might sound complicated, but it really isn’t. This framework is simply a way of proactively identifying, tracking, and managing risk throughout the customer journey life cycle.
To help you get started, I’ll share the foundation for this type of framework, then cover eight key risk areas and what you can do to safely move past them.
The Framework’s Foundation
Before you can begin to put your framework in place, you need to lay a foundation for it by establishing clear goals for the framework. Once you’re clear on the goals, you’ll be able to take steps to set your framework up so it addresses your organization’s unique situation.
As I see it, every risk management framework should have four main goals:
Better codify “risk”
Quantitatively identify and measure who is your riskiest customers
Provide enough lead time to the field and executive team to positively impact the risk
Feed a red account customer program
To accomplish these goals, you need to understand the eight key risks customers face, then come up with a plan to address them. Each company’s plan to mitigate these risks will differ; however, by asking yourself the following questions, you’ll be well on your way to devising a risk-reduction plan.
#1: Readiness Risk
Readiness risk is all about the readiness of the customer to plan, deploy, and gain value from your software or service. The following questions will help you think through how to address readiness risk:
Do they have clear business value and success outcomes defined? Do they have the right services and training defined? Are the supporting pieces of technology in place? Is there a compelling event for launch?
All of these things need to be identified and confirmed to mitigate readiness risk.
#2: Relationship Risk
This is about the risk of losing a key champion, advocate, or sponsor. Ask yourself who those people are. Is there a chance they may leave?
If a key stakeholder resigns and their replacement loves your competitor, suddenly there’s a huge risk of losing that business. To mitigate this, identify who those people are, come up with a plan to make sure they don’t plan to leave, and come up with a plan for how you’ll handle it if they do end up leaving.
#3: Adoption Risk
Adoption risk happens when the customer (or their employees) doesn’t use your product or service. The customer signed on the dotted line and completed the implementation process, but if none of their employees are actually using your solution, how long do you think the company is going to pay you for it?
As a customer success professional, you need to come up with a process to make sure that your customers are using your software or service. This may involve regular visits to their office to demo the product, implementing surveys to gauge their usage level, or other tactics.
#4: Launch Risk
This risk means the deployment of the software or service is having trouble. No matter what causes the issue, if launch risk goes on for too long, the customer is likely to bail on the deal completely.
Make sure you are in contact with relevant teams in your organization and are aware of any launch risks. You will need to stay on top of this to ensure that everything goes smoothly, and if it doesn’t, you need to be prepared to work closely with the customer to ensure they don’t pull out.
#5: Fit Risk
Fit risk has to do with using the product the way it was intended. Sometimes your customers will find creative ways to use your software, and when you upgrade it and their creation breaks, they blame you.
Fit risk also occurs when there’s a misunderstanding in the sales process regarding what the actual product is capable of achieving. As a customer success professional, you need to set realistic expectations, then maintain contact with your customer to ensure their expectations continue to be met.
#6: Product Experience Risk
This refers to bugs in the software. Bugs are frustrating for the customer, mean lost productivity for the internal teams, and potentially have a huge impact on business.
If a customer continuously experiences bugs in the software, they’ll get frustrated over time and eventually leave. You should have a process in place to work with development teams and the customer to ensure that everything is working properly.
#7: Feature Idea Risk
This risk exists when you ignore customer requests, such as, “Could you just change this one thing?” If these requests begin to add up over time, the customer is going to get frustrated. Every time they think about it, they’re going to be reminded that you’re not listening to them.
When this happens, you’re creating a persistent risk. Eventually, the customer gets so frustrated they look for another solution that will accommodate their needs. When they find it, they’re out. To mitigate this risk, you need to have a process to capture and act on customer feedback.
#8: Non-controllable Risks
These are the risks you have little to no control over (such as a global pandemic). Or perhaps your customer has been acquired and the new owner no longer wants to use your service.
These are non-controllable risks, but they are absolutely influential. The key to non-controllable risks is that you can control how you respond. For example, during a pandemic such as COVID-19, having pre-approved terms (pausing payments, approved discounts, etc.) for affected customers lets your company respond immediately when a customer experiences hardship.
This can pay off in the long run. Customers remember the vendors that helped them versus those that held rigidly to the contract or took weeks to respond.
You Can Prepare for Key Risks
A customer risk framework helps you identify the persistent risks that are weighing you down over time. It also prepares you for the acute risks that might hit you right out of the gate.
Taking the time to build and implement a customer risk framework will help you overcome the key risks you’ll undoubtedly face. By doing that, you can significantly decrease customer churn and, instead, help your organization retain customers.
For more advice on how to mitigate customer risk, you can find The Seven Pillars of Customer Success on Amazon.
One of the world’s leading customer success experts and a Top 100 Customer Success Strategist, Wayne McCulloch works with Google Cloud’s entire SaaS portfolio as the Customer Success Leader. He’s a keynote speaker and the recipient of multiple industry awards with more than twenty-five years of experience in customer-focused roles. Wayne began his software career at PeopleSoft and Vignette before becoming an SVP at Salesforce, the Chief Customer Officer at Kony, Inc., and the VP of the Customer Success Group at Looker. For more information about The Seven Pillars, including downloadable templates and training and certification materials, visit www.cspillars.com.