Why You Must Assess Your Customers' Maturity to Serve Them Well

June 21, 2017

Why You Must Assess Your Customer MaturityIn the first part of this blog post series, we introduced the concept of Customer Maturity Index (CMI). We suggested that some of the current methods of assessing a customer’s health in order to determine the best actions to take with them are ineffective.

1.  The Problem: The Current Customer Health Score is Useless

Current methods are focused on calculating a Customer Health Score (CHS), which is a measure of the relationship between the vendor and the customer. We suggested that this metric is insufficient and a new analysis, CMI, is needed to augment it for it to be useful. Customer Maturity measures the sophistication of the customer in running their function and consequently their ability to utilize and derive value from the vendor’s solution. We tried to illustrate this via a detailed example of two customers whose CHS are similar, but their fundamental characteristics are very different and hence different actions (aka success plays) are needed to make them successful.

This post explains how the concept of Customer Maturity is the natural next phase along the evolution of the Customer Success profession.

2.  The Rationale: The Evolution of Customer Success

Before we dive into the importance of assessing customer maturity, it is useful to point out the progression, continuous improvement and evolution of the CS space over time. We have seen it emerging around us and probably witnessed it in our jobs many times. Both of us have read the books (heck – Boaz even helped write one!), followed the methodologies, and have even innovated some of the processes and metrics to be more accurate and effective. And still something was missing. 

In the past few years, as the Customer Success field has been maturing, a greater depth of understanding of the subtle differences among terms, metrics and success factors in the field has been emerging.

For example, don’t you recall needing to explain to people why Customer Success is not the same as Customer Satisfaction? CSAT is a feeling and attitude, definitely important as part of building strong, lasting relationships with customers, but not useful for having a tangible impact on THE CUSTOMER. CSAT is therefore measured as an abstract number that has no meaning in and of itself (e.g. “47” or 75%). 

Customer Success, on the other hand, is the ultimate measure of the value the customer derives from the solutions, and the value we, the vendor, can in-turn derive from that customer. Thus, it is measured in almost all cases in monetary terms. This question of CS versus CSAT is all but gone by the way side by now.

We are now starting to see CS organizations differentiating Value to Customers (or what CS evangelist Lincoln Murphy recently started to refer to as “customer-desired outcomes”) from Value to the Vendor. 

This leads companies to refocus more of their attention on the value the CUSTOMER gains from the solutions, and track that value separately from the value the vendors gain from the relationship. This thoughtful differentiation between adoption statistics (merely the activities the customer takes in the vendor’s solution) and the value from those statistics is a positive step in the right direction. It is becoming more clear to companies that the success the customer derives from the vendor’s solution is both a critical leading indicator and a strong predictor for the value the vendor can derive from the relationship.

3.  The Solution: Assessing Customers’ Maturity to Guide CS Actions

We believe the next step in the evolution and sophistication of the Customer Success field is to realize that Customer Health Score alone is not comprehensive, and a Customer Maturity Index is needed to best assess the actions required to ensure customer success.

Therefore, we reason that:

Effective Customer Success Management Requires Customer Maturity Assessment

The concept of “maturity” is not new in the business world; 

While the Customer Health Score (CHS) measures the health of the customer-vendor relationship, the Customer Maturity Index (CMI) measures the maturity and sophistication of the customer with which the CS team is working. This index measures the customer’s readiness to effectively utilize and derive value from the vendor’s solution. More specifically:

Customer Health Score is a measure of the relationship between the vendor and the customer

Customer Health Score is a measure of the relations between the vendor and the customer in the utilization of the vendor’s solutions. It is aimed at assessing the health of those relations, enabling the identification of actions to enhance, overcome, and capitalize on the situation and predicting the future direction with the customer (e.g., churn, renewal, expansion). The fundamental point here is that the components driving CHS are all based on the interaction between the two parties: the customer and the vendor.

Customer Maturity Index measures the sophistication of the customer in running their function

Customer Maturity Index measures the sophistication of the customer in running their function. While this maturity clearly impacts the customer’s ability to utilize and derive value from the vendor’s solution, it is inherently independent of the customer-vendor interaction. CMI is aimed at identifying the actions the vendor should take to address the customer needs. Addressing these needs is correlated with, but not necessarily aligned to, the vendor’s immediate interests.

A Sample Use Case: Company selling a CSM software

Since we all work in the Customer Success field, let’s assess Customer Success Management (CSM) Software solutions, as an example. Vendors in this space should assess the customer’s maturity (i.e., the maturity of the customer’s CSM team) separately from the customer’s health when deploying their solutions. Assessing the maturity of CSM teams should be based on assessing the strategy and charter, organizational structure, processes, and technologies of the CS team. 

  • Immature CS teams: it is possible that the CS team the CSM platform vendor is looking to sell their solutions to is too immature to use the solution. Perhaps they only have a couple of CSMs that are focused on providing high level support to their on-going customers. Furthermore, they may not have an executive in charge and therefore no clear goals or repeatable processes. In this situation, the sales team of the CSM platform solution may consider them an “unqualified lead” and decide to refrain from selling their solution to this prospect at the present time.
  • Low to medium maturity customers: These customers would be overwhelmed and confused if approached with all the sophisticated tools of the CSM Platform vendors where their basic infrastructure is not yet fully set up. They can benefit most from being coached to establish fewer, simpler metrics (i.e., “walk before you run” strategy). It is quite probable that they need a lot of assistance in developing their processes (“success plays”) ahead of deploying sophisticated technologies, which are effective in scaling teams, but not founding functions. Vendors are likely to find that such customers require more consulting and education than software solutions.
  • High maturity customers: On the other hand, mature CSM teams need sophisticated tools, like task automation and one-to-many campaigns, utilizing sophisticated reports such as cohort analysis and comprehensive goal structure with a highly developed matrix of leading and lagging indicators across a multitude of facets of work. They probably do not need a lot of coaching and education, but rather higher availability of the software and the most robust and advanced set of features the vendor can offer.

The required conclusion for our CSM platform vendor is that there is a strong need to assess the maturity of their customers to appropriately help them. Even though the CSM vendor is interested in selling their full suite of software solutions and limit the portion of services they provide, some customers may only be ready to utilize basic components and may require a lot of consulting, training and education before they can make effective use of more advance features of the software solution. It seems only trivial that customers whose CSM maturity is low should be managed in a different way than customers whose CS teams are very mature. 

Split of Revenue Sources by Customer Maturity

The attached diagram illustrates the implications of Customer Maturity levels on the revenue split (software versus services) that the vendor can expect from the customer and the actions needed to ensure the customer is successful:

Split of Revenue Sources by Customer Maturity

Now, let’s combine these two themes, Health and Maturity, together. We all agree that the CHS is heavily influenced by the segmentation of customers. For example: it makes no sense to combine Health Scores of customers during early on-boarding stages with those of customers who have been working with the solution for the past three years. And it is much more powerful and actionable to show Health Score trends for different regions and different industries, especially if different teams manage those segments separately. How else can you coach your team and assign accountability to them?

Consequently, assessing Health Scores of customers without considering Customer Maturity is likely to lead to lack of clarity in understanding true health, and prevent the vendor from setting up the right actions to foster the customer’s success. This will curb the vendor’s ability to maximize monetary and non-monetary value from the relationship.

4.  A Framework for Assessing Customer Maturity

By now, we hope we have convinced you that understanding the customer maturity in running their function is critical to effectively manage the relationship between the vendor and the customer. The next step is to:

1.    Establish the factors that determine the customer maturity

2.    Calculate an effective Customer Maturity Index (CMI), and

3.    Define the playbooks for the different CMI situations


This post was originally published on Boaz's LinkedIn

About the Authors:

Boaz Maor

Boaz Maor is a serial start-up executive with passion for Customer Success. He brings over 25 years of experience in a wide range of organizations from software to logistics to services. Considered one of the early executives to help drive the development of the Customer Success function, Boaz is a frequent speaker, writer and presenter at conferences and events. Most recently, Boaz found and led the Customer Success team at Mashery (acquired by Intel). Before that, Boaz held customer success executive positions at newScale (acquired by Cisco) and FreeMarkets (IPO and then Acquired by Ariba). Boaz holds an MBA with honors from Carnegie Mellon University.

You can follow Boaz on twitter and on LinkedIn

Ralf Wittgen is an industry veteran building with more than 20 years of experience in managing professional services teams in Germany, the U.S., and in New Zealand, providing consulting, implementation, training, and support services mainly for software products. He was one of the early adopters of Customer Success methodologies and is today a very enthusiastic, energetic and inspiring thought leader in the Customer Success area.

After serving as Vice President of Professional Services at Author-it Software Corporation in San Jose (California/USA), he is now holding the position as Chief Customer Officer at Promapp Solutions in Auckland (New Zealand), leading their On-boarding and Customer Success Team. He is a frequent speaker, blogger and tweeter at conferences and events.

You can follow Ralf on twitter and on LinkedIn

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