I recently had the pleasure of speaking with Splunk CEO, Doug Merritt, about how he has led Splunk through a digital transformation, becoming a truly subscription-based company in the cloud. True confession: I’ve worked with Doug’s teams to help make this happen. You can catch the conversation here on our The XaaS Files podcast, but I’ll also riff a bit here on one of the themes Doug discussed: customer centricity.
I know, I know—customer centricity sounds like one of those corporate buzz phrases we consultants love to use. But it’s more than that. It’s operationalizing a mindset of “customer first” that I see truly giving companies across industries a competitive advantage. Forrester analyst Kate Leggett said: “In the age of the customer, executives don’t decide how customer-centric their companies are — customers do.” And while I agree that customer is king, I would add a caveat to that statement. Customers do decide—unless wise company leaders are proactive early and often, baking customer centricity into everything their people do. Splunk is doing just that.
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Customers at the center of the universe
Splunk moved to a digital subscription model for its data in 2019. Doing so meant putting the customer at the center of all it did. When a company moves to this model, its fate becomes tied to those of its customers as never before.
Doug is honest about how much work it takes to flip from a traditional customer service model to a true customer partnering model, one where ensuring the customer is set up for the right outcomes—continuously--is paramount. He put it well during our conversation: “It really emphasizes that customer partnering activity. As their business and usage goes up and down, our value and our revenue goes up and down with theirs. I think that requires much better knowledge, information and insightful perspectives of your customers.”
At Splunk, making customers the North Star required determining how they would derive value from what the company offered. Doug explains: “The value of the data we offer our customers is in the solution, the answer, the insight, the action that data points to . . . we realized if our customers want to get significant value out of Splunk, we have to have a whole series of solutions on top of our data tool to show them the way.”
Put another way, Doug and team figured out what was important to the customer and how to get there—and then flipped their business model on its head to make it happen. That meant a lot of operational changes, from new functions to aligning rewards and incentives with customer outcomes.
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We see these really rapid shifts where we moved 80% of our population, virtual and online in a week.
- Doug Merritt, CEO Splunk
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Reinvention: The hard work
Every major contract at Splunk now comes with a free customer success representative. “We’ve built a whole series of on-ramps for customer to ensure sales teams, customer success teams and customers feel like they know exactly how they’re beginning their relationship with Splunk . . . there are continuous check-in periods, ROI tools, usage dashboards and more.” And this is just one area of operations.
I so appreciated Doug’s honesty again when he talked about getting it right. “It’s been an evolving capability that every organization that goes down this path has got to get to. If you take the risk on a subscription model—the risk in not getting your payments upfront—you better be successful. That requires a true side-by-side walk between the organization proving the service and customers themselves.”
Mindsets and metrics
Splunk, like many companies I work with, needed a mindset shift as it utilized metrics to determine where it could be more customer-centric. “The hard part is, with typical Type A personalities in leadership, is we had to realize reviewing metrics should not be an exercise in thumping our chests or pumping our arms, celebrating that all indicators are green,” Doug explained. “Instead, this is an exercise in being excited when you find a yellow or red indicator because it gives us an opportunity to improve as a company and a team.”
To be truly customer centric, most companies will have to really amp up the metrics they have access to, so they can generate the customer insights they need to fuel new ways of operating. Fortunately, AI and advanced analytics make that easier than ever. At Splunk, teams look at these metrics hourly, daily. But weekly, leaders review just under about 40 key metrics to get the lay of the land with customers.
Splunk is far from alone in its continuing quest for customer centricity. Companies like Nordstrom, Harley-Davidson and USAA have created their brands based on it. But in today’s digital, cloud-based environment, organizations have a wealth of new technology and strategy tools at their disposal to better know their customers and to better serve them. More on that in my next blog. In the meantime, give me a shout if you’d like to discuss customer centricity in greater depth. It’s a topic I really never tire of.