We use cookies on this site to enhance your experience. Visit our Privacy Policy for more info.

Mind the Value Gap: Why Companies Fail to Scale Customer Success

Samma Hafeez | March 29, 2021| 4 min. read

If you have traveled to London, you might be familiar with the oft-used expression “mind the gap,” a warning boldly imprinted on nearly every London Underground platform to remind riders to take caution and avoid the gap between the subway platform and train when boarding. Multiple preventative safety measures have similarly been introduced over the years to prevent rider injuries, allowing the Tube (the Underground’s colloquial name) to retain one of the best safety ratings in the world – a major feat for an urban transport system that is over 150 years old and spans 250+ stations.

How can we adopt similar safety protocols to protect our businesses from catastrophic churn? As investors who review hundreds of retention health reports a year, we have seen our share of irreversible churn injuries that could have easily been avoided. The sad reality is that very few of these churn incidents occur by mere happenstance; the metadata on SaaS churn points to a patently clear pattern.

Companies are failing to mind the value gap.

What is the value gap?

The value gap is best explained using the late Clay Christensen’s “jobs-to-be-done” framework. According to Christensen, customers hire products and services to deliver specific outcomes or perform specific “jobs” in a more optimal way (i.e., faster, better, or cheaper). When a given product or service doesn’t satisfactorily complete a desired job, skepticism and negative thinking start to creep in. Left unchecked, customer trust and faith in the vendor quickly erode. Once customers feel disgruntled about an experience or sense that their desired outcomes are unlikely to be achieved in the near or foreseeable future, they default to plan B. If we fail to read the writing on the wall, the gap between the metaphorical platform (customers’ expectations, anticipated value) and the subway train (the customer experience or outcomes we actually deliver) becomes irreversible, widening to a point of no return.

If your company is serious about growth, it’s time to get serious about closing the value gaps along your customer and user journeys.

How can companies close the value gap?

Insight Partners recommends conducting a formal customer value gap analysis (VGA) on an annual basis. No matter how impressive your net retention (NRR) or gross retention (GRR) numbers are, it behooves you to develop a mature discipline that routinely exposes your blind spots. As the fitting platitude goes, an ounce of prevention is worth a pound of cure.

How do you conduct a customer value gap analysis?

A customer value gap analysis leverages quantitative and qualitative methods to:

  • Understand what jobs your customers are hiring your company to do and where you are falling short.
  • Identify the root causes of churn along with the emotional and rational motivations that result in downgrade or termination requests.
  • Flag coordination failures and communication breakdowns across the customer lifecycle.
  • Discover process or documentation gaps that stall progress or result in haphazard engagements.
  • Determine how to better match talent to task and reduce enablement or skill gaps.

If you want to perform a robust VGA, we recommend allocating a full quarter to complete the exercise, as several teams and individuals will need to be consulted throughout the process. The ideal time to perform a VGA is typically the first half of the year to allow findings to inform your strategic and budgetary plans for the subsequent year.

A VGA is typically managed by an operational leader who has the authority, influence, and ability to round up key stakeholders and synchronize different workstreams.

Follow this 10-step process to conduct your next customer value gap analysis: 

1) Secure executive sponsorship 

Without a formal endorsement from your leadership team, this exercise is unlikely to bear fruit or result in any material changes for your customers. Ensure your executive team is willing to engage and help smooth over any potential internal friction or naysaying. Keep in mind that a VGA inevitably involves sniffing around and probing under the organizational hood. Without advanced notice, internal teams or employees may raise concerns, shutter their windows, or display other acts of resistance.

This effort should ideally be socialized across your company well in advance to prepare employees for changes that might arise based on the findings. We encourage you to have fun and use this opportunity to bring your teams closer together.

2) Assemble a cross-functional task force

To uncover all the possible value gaps across the customer lifecycle, you will need individuals from marketing, sales, professional services, customer success, customer support, operations, and product to engage in some capacity.

3) Define clear workstreams in a project plan

A project plan provides management with clear visibility into who is working on what while allowing everyone to understand how they fit into the big picture and stay on task.

4) Gather and analyze various customer data sources

It is important to understand when and where your customers and users are getting stuck or frustrated. Here are some data sources we recommend leveraging for your analysis:

  • Customer health data from your customer success platform
  • Customer escalation history
  • Implementation/onboarding logs
  • Customer training/learning data from your learning management system
  • Open and closed customer support tickets (pay extra attention to your open backlog)
  • Voice of the Customer data or NPS/CSAT/onboarding/offboarding survey responses
  • Product usage/UX analytics
  • Observations, interviews, and notes from your most recent client advisory board (CAB) session or user conference
  • Win/loss analysis interviews
  • Sales and post-sales call recordings (customer demos, handoffs, kickoffs, etc.)

Look for patterns by region, segment, product, customer persona, vertical, use case, sales rep, CSM, channel partner, etc.

5) Learn from customers who churned

Take a microscopic look at the customers who downgraded or cancelled over the last 12-18 months. Analyze your data sources for early warning signs you may have missed along the way. Call lost customers to gather candid feedback and ask what you could have done differently (you never know who you might be able to win back!) and if they are realizing value with another solution. We recommend coming up with interview questions beforehand and when possible, talking to more than one stakeholder or user at a company. Customers are not monolithic entities.

Warning: Looking solely at internal data sources may skew your perspective and lead you to misdiagnose a churn event.

6) Learn from customers who renewed or expanded

Remember to learn from your happy customers! This is an opportunity for your company to identify key moments in value throughout the customer lifecycle and determine how to reproduce and scale those experiences in the future. It is just as important to discover what is working as it is to discover what is not.

7) Observe your customers in action

Schedule time to observe a representative sample of customers using your product or filing a support ticket to discover how different users behave, what they expect your product to do, and where they forfeit their session, drop off, or raise their hand for help. It is critical to gather non-verbal feedback to inform your analysis.

While this is typically product/UX-team territory, we recommend allowing other team members to observe a few live interactions to generate richer insights.

8) Identify quick wins

As you synthesize your newly gathered insights, focus on near-term quick wins. You don’t want to lose sight of immediate opportunities to minimize churn or boost retention.

9) Design and run an MVP

While you action those quick wins, don’t lose sight of the long game. Design a minimum viable solution that addresses high-risk value gaps and then go test it.

10) Refresh your customer empathy and journey maps

With your newly acquired learnings and MVP results in tow, don’t miss out on the opportunity to reflect what good looks like. Update your customer empathy and journey maps so they remain evergreen and serviceable for your internal teams.

What is the ROI of a VGA?

Closing customer value gaps directly translates into higher gross and net retention performance. And in case you didn’t know, there is no ceiling to net retention. By delivering value earlier and earlier in the customer journey, we can significantly reduce renewal dread while initiating upsells and expansion opportunities more organically and effortlessly.

Organic growth translates to compounded growth, which ultimately translates to a higher valuation.

Don’t allow your customers to fall off the edge of the train platform. Improve your safety protocols today by running a customer value gap analysis and hanging a safety sign in your home or corporate office to remind yourselves and your teams to mind the value gap.

Explore the SaaS Growth Acceleration Framework

Explore this topic and 40+ other critical business considerations in our interactive SaaS Growth Acceleration Framework for founders and GTM leaders.

Here’s how SaaS leaders ($10m + ARR) can use this framework to win:

  • Understand the downstream implications of 40+ critical business decisions
  • View how product-related decisions can shake the foundation of your go-to-market strategy
  • Dig deeper into any GTM component to view key questions you should be asking when making changes

Growth Acceleration Framework Logo

Calculate the ROI of Your Customer Success Investment