Jan 21, 2021

Issue #39: How to Approach the Customer Maturity Index

Chris Hicken By Chris Hicken
CEO at 'nuffsaid
how-to-implement-a-customer-maturity-index

 

boaz

 

The following is Boaz’s response to the question, “Can you give us an overview of what a Customer Maturity Index is, and how Customer Success leaders can implement that as a way of measuring customer health and risk in their orgs?”

 

So a couple of years ago, Ralf Wittgen and I got together and started to think about how can we help evolve customer success as a function. And one of the things that we discovered, alongside a fair amount of research, is that almost every professional in customer success is using the concept of the customer health score to assess the level of relations between the vendor and the customer, and then trying to predict based on that assessment what the trajectory of the relationship is. So, is the relationship going towards churn, towards renewal, or is their growth opportunity.    

 

But what we found is that most people using a customer health score said they were frustrated because it is not as actionable, practical, or helpful as they would like. 

 

So when we analyzed the reasons their customer health scores weren’t sufficient, we found that one of the facets that was missing from the assessment was the objective assessment of the customer’s ability to do their job well—which has nothing to do with us as a vendor. We can help customers with our product, but there are other elements in the way they run their business that are irrespective to us. For example, do they have enough people on their team, do they have sophisticated processes to run their business, or is technology an inhibitor or helper in getting them to do what they need to do?  

 

That missing facet evolved into what we now call the Customer Maturity Index, and it’s equally as valuable in understanding what actions we should take with a customer as is the customer health score. 

 

Our suggestion with this framework is that a strong customer success function would assess every one of their customers on two dimensions: customer health (which is the subjective assessment about the trajectory of the relationship with the customer), and customer maturity (the objective assessment of the customer’s ability to do their job well). The combination gives you a framework with two dimensions of customer health, as opposed to just “high, medium, and low” or “red, yellow, and green.” Instead, with the framework you get a a 2x2 or 3x3 grid that shows what to do in each scenario. 

 

If you have high maturity and high health, then you’ll want to grow and expand their business. Low and low, and you’ll want to churn or let them churn. 

 

But take for example if the customer has a high health score but low maturity. It wouldn’t help to give them more training on the product, because that’s not the problem. The problem is they need help in driving their own business, which if you're willing to do as a vendor by for example providing management consulting type business services, then that's great. If you don’t want to do that, then you may just want to renew that customer as is on the basis that they like you but you can’t expand the product within their business. You don’t try to grow the product within their business or get them to do a big case study, or anything like that, so as to not exacerbate the problem. 

 

The opposite scenario is if the company has a high maturity score but a low health score. Meaning, the relationship isn’t good and they’re not making good use of the product for whatever reason. But, by all measures, they’re good at running their business and their technologies and processes are a great fit for your solution. These customers are the ones that are worth investing in—they have high potential to be great customers if they were to use the solution well. So train them on the features, help them build relations with executives, get them involved in your customer community, do whatever you need to do to motivate them to start adoption the product. 

 

So that’s how a customer success leader should approach the Customer Maturity Index. 

 

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