We’ve heard marketing departments across industries and highly successful companies buzzing about a new term that’ll soon become an organizational standard—customer success.
A function created by Salesforce for a SaaS product that needed to drive revenue and engagement measures such as enhancing its’ lifetime value with customers.
WHAT IS CUSTOMER SUCCESS?
In financial terms, customer success is maximizing existing clients’ return on investment (ROI) to increase your customer retention and share of wallet. In layman’s terms, it’s about helping customers to achieve their desired outcomes with your product. Simply put, it should be loyalty.
“The majority of the revenue from your relationship with a customer happens post-sale.” (Lincoln Murphy)
Customer success is nothing new regarding the concept of loyalty, only in how companies are now adopting it. It’s all about perception. Rather than looking at the client from the business’s perspective, customer success looks at the client from the client’s perspective. What is the customer’s goal for using your product or service? How can you help them succeed?
For example, a client purchasing Infusionsoft may have done so to automate an email campaign to drive sales. Even if the process is automated and the product works perfectly, with emails unopened and sales remaining constant, the customer won’t be satisfied and may not see the worth in continuing the subscription. What Infusionsoft has done to increase loyalty or renewals is to include onboard training where an employee now responsible for customer success is required to train you on the methodologies and tools of customer success. All of this helps their customer succeed, create partnerships and reliance on a company that historically would have purchased a license for a defined time and then moved on to new software, which in turn helps Infusionsoft succeed.
“The success of your business is inherently intertwined with the success of your customer. If customers succeed using your product, they’ll continue using your product, and thus, your business will succeed.” (Nick Mehta)
Customers are constantly evolving. As their own enterprises grow, what they want out of products or services is expanding. If the current product doesn’t provide what they need to succeed, they’ll switch to a competitor that does. The new tools and methodologies for customer success keeps this top of mind and focuses on expanding the company’s relationship with existing customers—something not always focused on previously.
New sales are no longer the name of the game!
WHAT ARE THE BENEFITS?
- Increased Up-Sale Opportunities – customer success methodologies require tracking and monitoring client needs and open communication to identify how to improve usage of products and services, ultimately enhancing the relationship. Tools like NPS are often utilized as a common measure as are measuring upsells.
- Decreasing Customer Acquisition Cost (CAC) – with highly satisfied, long-time customers becoming advocates, you won’t need to spend as much on generating leads
- Increasing Customer Lifetime Value (LTV) – the longer a customer stays, the more they’ll pay to use more of the product
Isn’t Customer Success Just Account Management reimagined?
In short, no.
Historically, account management is known as being reactive whereas customer success should provide companies the opportunities to be proactive. Traditional customer service measures don’t kick into action until there’s a potential client complaint.
What does Customer Success entail?
- Stockpiling customer success stories, demonstrating your customers feel heard and are achieving their desired outcome
- Knowing the answers to questions like:
- “What motivates you to use our product?”
- “What do you do at your company?”
- “How is your success measured?”
- Turning customer data into proactive action and customer-centric strategies
Should customer success be a separate function and/or even executed the same at every type of company?
It was just about 10 years ago that the idea of Customer Experience or CX began to be the center of all things marketing. More recently, with Chief Marketing Officers becoming Chief Customer Officers, large-scale professional services companies have been creating positions to support large existing clients and customers outside of the SaaS industry to drive this level of loyalty with top tier customers.
Now the buzz is Customer Success, but should this replace good old-fashioned Customer Experience functions that companies are only first really getting to work or does this effort belong with sales?
Understand your business and who has the relationships with your top clients. Is it sales, like at Salesforce? Is it Account Management in a less SaaS based environment and a more B2B services environment?
Since many of the requirements of good Customer Success is drive profitability with a client, by knowing that client inside and out, shouldn’t this be a function of the group who best knows the client? By implementing a new organization, you start to confuse the client. If the role is going to be nothing other than administrative, using the software tools, tracking the engagements, etc. then consider a structure where either sales or account management have a lower level support person who can ensure everything is captured for management reporting. However, to just layer on administrative work to either sales or account management will bog them down from those activities that may either drive new sales or on-going relationship building with key decision makers.
Customer Success is not a one size fits all. Think Salesforce where the function was created to augment sales and extend the lifetime value of their clients. Do you have a SaaS based product that does not have a strong account management and/or customer experience function? Then the Salesforce model is for you. If you are a large multinational services company, with many layers servicing clients, should you dumb down one of those layers and or combine functions to create a successful customer success model?
I’d love to hear your thoughts on Customer Success and where it belongs, especially from the heads of marketing and sales!!