The customer agenda faces tough competition for investment

Orienting a business around customer success is a challenging feat that fewer companies are committing to. CS leaders need to recognise the relative strengths of different approaches and accept that a successful customer agenda doesn't belong to them alone.

LEADERSHIPARTMETHODOLOGY

9/23/20244 min read

I hear the customer success agenda being pushed much harder in 2024 than ever before, which tells me two things. 1, That more people know what has always been the truth about sustainable recurring revenue growth and 2, despite this, that the truth is not widely tolerated.

The customer success agenda is not about a team or department, it is the shared aspirations and behaviours of an entire organisation putting real customer objectives at the heart of what it does. Sounds simple but the majority of businesses struggle to bring it to life and as a recent trend, fewer are trying to. And this is to their detriment because other paths are simply less effective over the long-term.

  • Product is the emerging darling of growth, product oriented businesses look to maximise margin in both revenue streams and operations. They're also sexy generating interest, massive R&D claims and multiples to the business in asset value. But product orientation also creates echo chambers, leading to products that don't add value and, resulting in poor ROI and is detrimental to financial fundamentals.

  • Sales is an evergreen bastion of investment in tougher economic times and why not? The impact is immediate, cash flow generative, culture building and growth drives value more than profit. But, sales orientation obscures the true funnel (with renewal number X at the bottom, not the first sale), prioritises tactical requirements over strategic, which leads to poor LTV:CAC ratios that reveal once promising results as superficial.

  • Finance orientation is a tried and tested route to efficiency and defensible decision making. This approach shows immediate impact (though more-often-than-not, isn't cash generative), is precisely measurable, sees into the future and - given the surprising latitude in international accounting standards - sees the present as almost anything at all. However, finance orientated businesses are weak on culture and innovation. They are eventually outpaced leading to declining market share and eventually grind to a halt.

  • And what of the enlightened few customer success-oriented businesses? Resources are spent in a targeted (though lavish) fashion, LTV:CAC is epic (on both sides of the equation) and they are resilient in the face of external impacts. But, as an extrinsically focused approach it can be complex, slow to achieve and is easily damaged by even temporary changes in priority.

As always, there are trade-offs in decision making and in reality, businesses change their top tier priorities to suit immediate requirements, sometime as a matter of survival. There is however a fundamental difference to unlocking performance in a customer success oriented business that is undermined by tactically switching priorities to suit the moment.

The problem with customer orientation

The customer agenda - the shared aspirations and priorities of the whole business aligned with customer objectives - is the freight train of growing recurring revenues. Once it's up to speed it's unstoppable. No other approach is able to deliver as much value to customers and shareholders alike.

Here's the rub, and the first of two ironies for our beloved customer agenda; it is most effective and valuable when times are tough but it's in these same tough times that pursuing another, more immediately gratifying agenda is most tempting. If customers are not already at the heart of every function and if the business' funnel stops at the first signature then the customer agenda can't solve today's problem's today.

That's doesn't mean that bringing our freight train up to speed isn't the right call to make. It does mean that in less than perfect circumstances (even IN perfect circumstances depending on runway and fund life cycles!), aligning a business with the customer agenda takes grit, vision and belief that many won't tolerate or even, can't tolerate.

The second irony for our treasured agenda is that the primary challenge for modern CS leaders is one of time-to-value.

A problem shared is a problem halved

The solution starts with:

  • Recognising that the customer success agenda really isn't the CS team's agenda writ-large

  • Aligning the customer agenda with the strengths that other approaches bring to the table

Ownership is vital to the success of any critical initiative. In this case of business-wide alignment, the hope is that every member of staff will eventually assume ownership. When a business tries to walk the talk of customer-eccentricity it needs to be clear that the strategy is not about elevating the customer facing organisation, it is about elevating the customer.

It is for this reason that it is imperative that a business thinks hard about who will hold the company accountable (in good times and bad) to the customer. Personally I think this is the most important role of a Chief Customer Officer and in some businesses, a good reason to think hard about whether the same person has operational ownership for service delivery.

Finally, sales, marketing, finance, product, engineering, HR all accelerate a business profoundly. Customer organisations can learn a lot from the immediacy and focus of other functions and do well to take a lead from them in many respects. In my experience there are easy wins to be had in collaborating with more nimble teams: seeking to empower other functions with insights and resource can reveal many of the long term benefits of customer orientation before the train is up to speed.

A shared customer agenda is best built by sharing!

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