Why Are We Losing This Customer?
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Why Are We Losing This Customer?

Losing any customer is a bad thing for most businesses (there are some customers that need to be fired, but that is a topic for another day). Losing a customer when your business is a subscription model such as SaaS can be extremely painful. I was called by a client to conduct a loss review with the losing account team of a key customer. One which they had serviced for a number of years; as usual I started with my list of “dumb questions”.

First question: “How long have you had them as a customer?” Answer: Almost 4 years.

Next, “How much money had they spent with you over that nearly 4 year period?” Answer: “About $2.7 million”.

The next “killer question” (at least my clients claim it is): “What is the Past Value Delivered (PVD) to that customer?” Answer: “Our solution performed as advertised”.

At that point, I was pretty sure we’d started to narrow down the root cause. The account team did not know the value they had delivered to their customer. Odds are, the customer did not know either – and that is a big problem for the selling organization.

When I am working with clients on the buying side of the equation, one question that is getting asked more and more often is “What is the value we have are getting from XYZ supplier?” Typically this is coming from another part of the organization such as Finance or a Sr. Executive. When the people charged with managing the relationship do not know the value they are receiving then XYZ supplier gets a big target painted on them. At a minimum the customer is going to believe they are paying too much and the supplier should expect a really tough price negotiation when renewals come around. Other times, it brings into question why are we doing any business with this supplier? That’s what happened to my client.

They lost the business and their customer turned to a competitor. Remember this: Customers do not buy products or services from you (that’s what they pay for), instead they buy a different outcome. How they choose to measure that outcome is how they choose to measure value. You must ensure that you deliver as a minimum the value they expected after the sale. Hopefully, you will have delivered more.

In any event, a formal Customer Business Review (CBR) to discuss the value you have delivered must be scheduled at the appropriate interval after implementation. This is a must in business today. Regular CBRs at appropriate intervals must be core to the way you do business – especially if your business is a subscription model such as SaaS. Why is this critical? To ensure you are still delivering the value the customer expects and to understand what is changing with the customer’s business, because every business is changing. And that is where new opportunities lie.