Investing in Member Success-driven Growth is an efficient way to drive revenue and organization valuation, and a metric is needed to measure that growth. That metric is the Success Vector.
We’ve mentioned previously that the NPS (Net Promoter Score) is the ONE metric that can facilitate quickly and efficiently the overall health of your member’s satisfaction with their relationship with your organization, but it can be seen as a moment-in-time snapshot; an ever-changing indicator.
Something else is needed to “pair” with that, something more forward-looking – more of a Key Success Indicator – KSI – than a simple performance indicator (KPI).
In looking at Member Success as the growth engine it is, we need a KSI that we can use to ensure we’re on track to meet the growth potential that Member Success will unlock within our existing member base.
The Key to Real Predictable Revenue
Every organization wants predictable revenue, but most turn to new business sales to get it. They create a goal they want to hit – essentially a made-up number the CEO or Board wants to see – and then they try to figure out how to hit that number.
The “predictable” part of all of this comes down to ensuring your pipeline is loaded with (at least) 5x more leads than your target goal so you can hit it with a 20% close rate.
While that may be “predictable” in a spreadsheet, in reality, hitting that goal requires a lot of work, coordination, effort, hustle, incentives, and – quite frankly – right-place-at-the-right-time timing. Yet, historically, this is where organizations look for new revenue by default.
That’s changing as organizations realize it doesn’t get more predictable than being able to look at your existing members, say these 100 members will reach this Success Milestone in the next month, that milestone has a logical upsell associated with it, the value of that upsell is $1000/ARR, and the percentage of members that should take the upsell based on their Success Vector is 90%.
That means, for that particular upsell, you’ll add $90k/ARR next month. Then, by combining the expansion value of all of the milestone upsells, you can give an accurate prediction of the revenue you’ll generate from your existing members.
That’s actual, real predictable revenue.
Historically, Member Health Score was a Key Performance Indicator (KPI) for Member Success, but it doesn’t give you what you need in this new world of Member Success-driven Growth.
Success Vector gives you a real way to see not just what’s happening with our members today, but where do you think they’re going in the future.
Vector is defined, according to a quick Google search, as “a quantity having direction as well as magnitude, especially as determining the position of one point in space relative to another”. That’s exactly what we’re looking for.
Direction + Magnitude. It All Starts with the Member
One of the biggest mistakes I see in Member Success is when the CEO of an organization hires or appoints a Member Success Manager (MSM), declaring the organization is now member-centric and then telling the MSM to “figure it out” without giving budget or resources. Though sometimes, if any resources are given, it’s to buy software.
People are a huge part of Member Success Management. If we want our members to grow with us over 3, 5, or even 10 years, ensuring the member is engaged and continues to achieve their evolving Desired Outcome is critical. In fact, it’s why your organization actually exists in their world. It takes people, not software to do that.
Before you can Orchestrate, Operationalize, Instrument, and Intervene – or develop a Success Vector – you need to be clear about the Desired Outcome for each of your discrete member segments.
Now, let’s get back to Success Vector:
Key Success Vector Inputs
The inputs that are 100% required for Success Vector to be meaningful are:
- Success Potential
- Success Milestones
- Joint Accountabilities
If your member doesn’t have Success Potential, that’s something you need to address (by actively segmenting them from those bad-fit members).
When it comes to Success Potential, there are several things we need to look at:
- Technical Fit – Do they have, or can they acquire a key piece of technology to reach the Desired Outcome they are seeking?
- Functional Fit – Does your product or resource have a key piece of functionality for them?
- Resource Fit – Can they invest – beyond simply paying your dues fee – in what’s required to be successful as our member?
- Competence Fit – Do they have – or will they acquire – the expertise internally required to be successful?
- Experience Fit – Do they have – or will they acquire, source, or train resources that have or can have the necessary experience to be successful with your product?
- Cultural Fit – They have beliefs, morals, attitudes, etc. that you know will align with the way you work.
If you can’t check all of the Success Potential boxes, then you can be absolutely sure that those members are not going to achieve their Desired Outcome – both their Required Outcome and the Appropriate Experience – so you’re setting everyone up for failure if you keep them around. They are what we call a bad fit. Do not consider this lightly – these types of members are better off – for you and them – not being members, rather than suffering the financial, emotional, and resource drain they will place on your organization.
Success Milestones & Joint Accountabilities
The biggest problem with Member Health Scores is they rarely include whether or not the member is actually doing the things necessary – inside the use of the product or resource and beyond – that would indicate they’re on the right path toward achieving their Desired Outcome.
For Success Vector, knowing where the member is on their path toward success – including whether they’re holding up their end of the bargain on the joint accountabilities you’ve agreed to – is the main input.
In fact, if you don’t pull in any other contextual data and only looked at Success Milestones and Joint Accountabilities, you’d be better off than most organizations that pull together complex Member Health Scores.
When the member does have Success Potential, but they aren’t doing what needs to be done to achieve success, that’s a problem and we need to intervene.
If those things aren’t included in the Success Vector, then what purpose does it really serve? It’s like creating a Member Success strategy without starting with the member (which, sadly, is pretty common still).
When it comes to predictable revenue, this is where there is really good news.
Some Success Milestones will have a logical upsell or advocacy opportunity associated with them. Based on which Success Milestone our members will hit in the next month – and your confidence in both hitting that mark and taking the upsell or advocacy opportunity associated with the milestone – you should be able to accurately predict the revenue expansion from your existing member base.
Additional Success Vector Inputs
Organizations with more robust Success Vectors also have inputs like:
- Ascension Velocity – Are they taking upsells when they’re logical?
- Meaningful Product Activity – Also known as product usage data. It has to be meaningful activity, though.
- Adoption – Did they meet initial adoption goals? Are they meeting ongoing adoption goals?
- Advocacy – Are they advocating for your organization in appropriate ways where logical?
- Usability Issues – Are there problems or missing features keeping them from achieving success; missing features would indicate a lack of Success Potential and should be noted as such
- Member Organization (Account) – Are negative things happening with their organization? External triggers, bills not being paid, M&A, etc.
- Support – Support tickets aren’t bad unless they’re not being closed in a positive way quickly; also if support tickets slow or stop.
- Satisfaction & Confidence – NPS
Success Vector Status Definitions
The Success Vector of a member will change from time to time, but you ultimately want all of your members on a Positive Success Vector. Stagnant members on a Neutral Success Vector simply renewing at the same level is no longer considered good enough.
The new measure of success is members that are engaging, evolving, and expanding.
Positive Success Vector
- They’re on the right track – they aren’t just static, but are expanding or on-track to do so
Neutral Success Vector
- Stalled or Stagnated
- Does not fit with the new measure of success
- Member needs to be gotten back on track to achieving their Desired Outcome and on a logical Ascension Path
Negative Success Vector
- They’re not on the right track and intervention is needed
- Your key contact at the member has stopped engaging or responding – This member is about to non-renew
Situational Awareness and Member Triage
If you’re just starting out integrating the Member Success operating philosophy into your organization, there’s a really good chance you’ll have some members that have gone dark. For the members that are a good fit and should be saved, you need to go into an intervention procedure with them which will require issue resolution through cooperation of both parties. However, know that just getting them back is not Member Success. It will take extra work to get them on a Positive Success Vector.
To pull them from darkness back into the light or otherwise save them from churning has nothing to do with actually helping them achieve their Desired Outcome. They’ve given you another chance, but they should be considered to still be on a Negative Success Vector.
Member Success would have been ensuring they didn’t get to this point, to begin with!
You now have to work to take that member, plus any other member that’s on a Negative Success Vector and move them to Neutral and then Positive.
At first, you’ll have members in each category, but eventually, as you Orchestrate and Operationalize your Member Success Management processes, you’ll get to a point where you only have Neutral and Positive Success Vector members.
“Memberships are the most important asset in our industry today. Are you making the most of your membership program? Is it growing your organization? Are you putting enough resources into growing your member base? Do you have a targeted plan for Recruiting, Engaging, and Retaining your members? We can help.” – Andrew McElhannon, CEO – Association Project Management, LLC®.
APM® helps member-based organizations & professional Trade Associations achieve Member Success, stabilize their member retention and guarantee membership growth through Prospect Development and Member Recruitment, as well as Member Engagement and Concierge Onboarding.
Organizations implement APM’s® programs to sustain their current revenue, reduce losses due to Churn (member non-renewal) and generate new revenue by creating Raving Fans® who evangelize new members that over time becomes automatic, organic growth. “Members begetting Members”.
Association Project Management, LLC® also provides a list of other project management and project completion services through a virtual staff member – a committed, trusted expert who helps to reduce costs, lower risks, improve efficiencies, meet deadlines, solve challenging problems, support strategic initiatives and produce better outcomes for your association staff. Visit them today at www.associationprojectmanagement.com