This document discusses how to scale a business by focusing on one customer at a time through a customer lifecycle of "Addiction, Adoption, Absorption, Adaptation" (the 4A's). It describes each stage of the lifecycle in detail, emphasizing measurement of customer usage and engagement. Maintaining the lifecycle leads to reduced customer acquisition and retention costs while increasing lifetime customer value. Teams should be organized accordingly to focus on trialing, landing, expanding, renewing, and upselling customers through the 4A stages. This approach can deliver significant leverage and impact on business models.

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The Power of One
HOW TO SCALE YOUR BUSINESS
ONE CUSTOMER AT A TIME
JUNE 14, 2016

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A Typical Customer Lifecycle
} Think: “How many Apps have you downloaded on your phone and now
don’t use?”
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What if no one ever died ?!
} Think: “Which Apps do you use every day and keep buying in-app upgrades
for?”
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Adding Renewals and Upsell
} … extends lifecyle
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Adding Renewals and Upsell
} A great business model…
• Short low customer acquistion and retention cost (CARC)
• Long lifecycle value (LCV)
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How do you achieve this?
} A great business model…
• Short low customer acquistion and retention cost (CARC)
• Long lifecycle value (LCV)
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THE GOAL:
CUSTOMER SUCCESS, FOR LIFE

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It starts with just 4A’s…
} Addiction, Adoption, Absorption, Adaptation
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The 4 A’s – One Customer At A Time
Yellowbars: Show both Initial and
Incremental sales(I). Incremental
sales are the salesof incremental
units such as per-userlicensesor
“seats” to the same account.
Green bars: Renewals(R)are
available on the cumulative salesto-
date at any point in time.
Orange bars: Upsells(U). Distinctly
tracking upsellswill help sales and
product teams understandkey
metrics like the adoption and
profitability ofexistingversus new
products.
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BUILDING UP THE 4 A’S

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Addiction: Trials
} Try before you buy…
• Earn the right to sell
• Scope the trial
• ”Default” to buy on
success
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Adoption: Land
} How do you know your
Landing has really
“stuck”?
• Measure it!
• Focus on usage metrics
by individual user
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Adoption: Renew, Reliably!
} Reliable Renewals only
happen when ADDICTION
is real and ADOPTION is
strong
• Look at engagement and
regularity of usage
patterns
Don’t wait to account for
ARR (Annual Recurring
Revenue),
DO measure:
• Daily
• Weekly
• Monthly
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Adoption: Renew, Reliably, Predictably!
} Reliable Renewals only
happen when Addiction is
real and Adoption is
strong
• Look at engagement and
regularity of usage
patterns
} If your measurements are
good enough, you’ll even
get to Predictability
Don’t wait to account for
ARR (Annual Recurring
Revenue),
DO measure:
• Daily
• Weekly
• Monthly
Predictable -> year after year
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Adoption: Renewals, Retention Drive Valuation…
Note sometimes Renewals and Retention are used interchangeably by Analysts
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Adoption Trap: SHaaS!
} Avoid “SHelfware” as a Service!
• Shelfware = your product not
being used, sitting on a “virtual
shelf”
• Instrument everything in your
product
} Ensure your teams are incented
appropriately
• Product on usage, engagement
• Sales on net new ARR
• Services on DRR (Dollar
Renewal Rate)
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Absorption: Expand
} Absorption drivers
• Your Customer’s Business
success
• How do they measure
their business success?
} If you don’t know you’re
not going to get to full
Absorption
What impact are you
having on your
customer’s business
in their terms?
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Absorption: Understanding Potential…
} Look at the Potential
Absorption in each
account
• You will be amazed at
the value in your existing
customer base
• Look at how to “Farm” it
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Absorption Tip: Standardization
} See if you can drive to get
your product adopted as a
“Standard”
• Be careful, this is NOT a
guarantee of usage or
Absorption!
} But it can reduce
friction
Standardization:
a license to “Farm”
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Adaptation: Upsell
} Adapting…
• Developing new products
and services to Upsell
• Assume nothing!
} Except: customer’s needs
will changingover time
• Stay paranoid!
} Keep adaptingto stay
aheadof the market &
competitors
• Not just technology,
business models etc
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Adaptation: Upsell = Leverage
} 14x Leverage!
• Zero CAC (Customer
Acquisition Cost)
• Marginally low selling
cost
• Expanding TAM (Total
Addressable Market)
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Adaptation and Upsell = the Power Couple
} After Upselling, the
following year leads
to follow on
• INCREMENTAL
Renewals!
• But again, don’t
assume anything
} Measure
engagement and
usage on new
upsold products
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4A Leverage ...
} Impact on
business model?
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4A Leverage ... Money and Time
} HUGE Impact on business
model:
• Reduced CARC
• Increased LCV
Reduced Time From Stage To Stage
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4A’s is how you achieve this!
} Addiction, Adoption, Absorption, Adaptation
• Short low customer acquistion and retention cost (CARC)
• Long lifecycle value (LCV)
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4A’s of customer success – translated to ACTION:
Trial, Land, Expand, Renew, Upsell
} Trial: sufficiently contained for initial addiction, with necessarycritical mass to drive approval /
purchase. Understand how your customers see your value proposition and their pain/gain ratio*
} Land: departmental (or similar) use case to get infectious, ideally viral adoption to encourage
expansion. Measure usage, engagement. Get an internal champion who gives you a license to “hunt”.
} Expand: adoption beyond initial departmental boundaries, to drive standardization, a license to “farm”.
Use reference-ability to drive virality betweencustomers.
} Renew: ensure continuous delivery of value to ensure renewal and absorption of new users / new use
cases,based on the customers’ strong business impact.
} Upsell: adaptation to new needs and use cases,creating new products, giving rise to new
opportunities for upsell and incremental renewals.Look to leverage in your business model.
} *see Building a compelling value proposition
ENJOY!
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How to
Organize
for Customer Success

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4A Cycle: Team ?
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4A Cycle: Early Stage
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4A Cycle: Mature Example
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Remember 4A’s are the key to a long life!
} Addiction, Adoption, Absorption, Adaptation
• Short low customer acquistion and retention cost (CARC)
• Long lifecycle value (LCV)
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May you
live long
and
prosper!
And tell us how you’re doing it so we can
all improve the 4A’s and learn from your
experience. (EG Please share your
comments and feedback below.)
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T 617.633.0577
@assemblevc
53 State Street, 10th Fl
Boston, MA 02109
Thank You
T 617.633.0577
@UnderscoreVC
53 State Street, 10th Fl
Boston, MA 02109
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