Book Features

What you will learn from Customer Success: The Book

Increase Success

It’s not about keeping your customers happy. It’s about exceeding their expectations of your product and company. Successful customers are the foundation of successful companies.

Decrease Churn

You can’t grow through pure sales anymore. Without retaining and expanding your customer base, churn will strangle your business. Customer Success is built to fight churn.

Boost Upsell

The fastest-growing SaaS companies are doing it by upselling existing customers. Unlock your company’s potential growth by helping your customers climb the ladder of Lifetime Value.

Free Marketing

Transform your customers into your biggest advocates. Customer Success cultivates public champions for your product by operationalizing customer promotion.

Praise for Customer Success

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Jim Steele
President and Chief Customer Officer, Insidesales and former President and Chief Customer Officer, Salesforce

Having been at Salesforce to witness the birth of Customer Success, I’m excited to see a book focused on this subject around which I have so much personal passion. One of the foundations of our success at Salesforce was Customer Success, so it’s particularly great to see the history of the discipline, along with a glimpse at the future, documented in this book. I recommend it to every CEO or leader out there who is truly seeking to build a customer success-centric company.

...

Tien Tzuo
CEO and Founder, Zuora

The world is moving to a Subscription Economy, and this book directly addresses that shift. Smart companies aren’t trying to pitch products to strangers anymore. They’re figuring out how to grow, monetize, and build an ongoing, mutually beneficial relationship with a dedicated base of subscribers. Customer success is fundamental to this process, and this book documents three core aspects - philosophy, discipline, and organization - in a sharp, practical way.

Free Samples

Check out this sample from Customer Success: The Book

"The bottom line was simple and direct: despite what it looked like from the outside, Salesforce as a business was in a death spiral. Underneath the glowing results and amazing growth rates, there was a fundamental flaw in the business, and continuing on the current path would bring disaster."

...

Attitudinal versus Behavioral Loyalty

Customer success is ultimately about loyalty. Every company wants loyal customers. Recurring revenue businesses, such as Salesforce, need loyal customers. Acquiring customers is expensive. Really expensive. That makes keeping them a necessity, no matter how big your market might be. It’s simply a losing battle to try to out-acquire a high churn rate. So, if a business depends on loyalty, it’s critical to understand what that word means.

Much has been written about different kinds of loyalty. The general consensus is that there are two kinds of loyalty—attitudinal loyalty and behavioral loyalty. These are sometimes referred to as emotional loyalty and intellectual loyalty. The premise is simple although the social science may be quite complex. The premise is that there are customers who are loyal because they have to be (behavioral/intellectual), and then there are customers who are loyal because they love a particular brand or product (attitudinal/emotional). As a vendor or brand, the latter is highly preferable for a variety of reasons: willingness to pay a higher price, less vulnerable to competition, more likely to advocate for “their” brand, and so forth. The housewife who shops at Hank’s Grocery because it’s the only place within 30 miles that sells bread and milk is behaviorally loyal. It’s possible she’s also attitudinally loyal (Hank could be her husband), too, but her basic loyalty is because she does not have options. That’s the extreme example, but we’re probably all behaviorally loyal to a variety of products. I get gas at the same place 90 percent of the time because it’s convenient and, based on very little research, a good price. The fact that they shut down their credit card machines for 10 minutes at 7:00 every morning is annoying because that’s exactly when I’m on my way to work. They don’t know it, except for the cashier I expressed my frustration to one day, but this creates the opposite of attitudinal loyalty for me. Fortunately for them, the convenience continues to win the day for now. But they are vulnerable to another station popping up nearby, priced similarly, and with credit card shutdowns at 3 A.M. instead of 7 A.M. or, better yet, who has figured out that it’s important not to shut down the credit card machines at all.

Attitudinal loyalty is much harder to create and sustain because it’s expensive. It’s expensive to build products that customers love instead of products that they simply own. It’s expensive to create an experience that delights instead of one that just tries to not annoy. When my daughter was graduating from high school, she needed a laptop computer. What was it that caused her to stomp her foot and insist on a Mac when the Dell options were functionally comparable and much less expensive? The logical conversation I attempted with her did not move her an inch. Despite the fact that she couldn’t cite a single speed, function, or quality argument for the Mac, her heart was set and her mind made up. I still don’t know why (but she did get her Mac). Maybe it was because the cool kids all had one. Maybe it was because she loved her iPod. Maybe it was because she just liked jeans and black turtlenecks. I honestly don’t know. But now I know what to call it—attitudinal loyalty or, in her case, more appropriately, emotional loyalty (because the discussion did include tears). And that’s the kind of loyalty we all long for in our customers.

In the Beginning

In the spring of 2005, Marc Benioff gathered his lieutenants together for an offsite in the sleepy seaside town of Half Moon Bay, California. San Francisco–based Salesforce.com was on a roll, the likes of which has been seldom seen, even in the technology world. After a swift five-year run to a successful initial public offering (IPO) in June, the remainder of 2004 brought more good news in the form of 88 percent bookings growth. Nearly 20,000 customers had purchased the company’s customer relationship management (CRM) solution, up from less than 6,000 two years prior. The year 2004 concluded with Salesforce sporting a market cap of $500 million, and that number would quadruple by the end of 2005. All charts were pointing up and to the right, just the way you’d want them if you were an employee or an investor.

The offsite was pretty typical, celebrating the success of the company, planning for continued hyper growth as the market continued to expand, and generally mapping out a glorious future. And then David Dempsey stepped to the podium to deliver the presentation that would earn him the nickname Dr. Doom.

By 2005, the Irish-born Dempsey was already five years into his Salesforce career. He had spent 11 years at Oracle before moving on, just as the dotcom bubble burst. Unfazed, he and two other ex-Oracle executives approached Benioff in early 2000 with a proposal to bring Salesforce.com to the European market. After several months of negotiations, the deal was struck. Today, Dempsey is a senior vice president and the global head of renewals, which, as is the goal of all recurring revenue businesses, carries 70 to 80 percent of Salesforce’s annual bookings responsibility. In 2015, that renewal number is approaching $5 billion.

When you have that kind of responsibility, you quickly begin to understand the levers of the business and what it takes to be successful. Great sales leaders and CEOs have made their careers by understanding what’s happening in the market and in their businesses and by taking the necessary steps, within their control, to keep their business growing. That might require major product changes, breaking into new markets, or any number of other strategies. The same general blueprint has been followed for years. But for Dempsey, there was something distinctly different about this challenge. No one had ever done what he was trying to do. No other subscription-based business-to-business (B2B) company had ever reached the size and growth rate of Salesforce, which also meant that, before him, no one had really needed to understand the reality and nuance of subscription software renewals the way he had to.

Attitudinal versus Behavioral Loyalty

Customer success is ultimately about loyalty. Every company wants loyal customers. Recurring revenue businesses, such as Salesforce, need loyal customers. Acquiring customers is expensive. Really expensive. That makes keeping them a necessity, no matter how big your market might be. It’s simply a losing battle to try to out-acquire a high churn rate. So, if a business depends on loyalty, it’s critical to understand what that word means.

Much has been written about different kinds of loyalty. The general consensus is that there are two kinds of loyalty—attitudinal loyalty and behavioral loyalty. These are sometimes referred to as emotional loyalty and intellectual loyalty. The premise is simple although the social science may be quite complex. The premise is that there are customers who are loyal because they have to be (behavioral/intellectual), and then there are customers who are loyal because they love a particular brand or product (attitudinal/emotional). As a vendor or brand, the latter is highly preferable for a variety of reasons: willingness to pay a higher price, less vulnerable to competition, more likely to advocate for “their” brand, and so forth. The housewife who shops at Hank’s Grocery because it’s the only place within 30 miles that sells bread and milk is behaviorally loyal. It’s possible she’s also attitudinally loyal (Hank could be her husband), too, but her basic loyalty is because she does not have options. That’s the extreme example, but we’re probably all behaviorally loyal to a variety of products. I get gas at the same place 90 percent of the time because it’s convenient and, based on very little research, a good price. The fact that they shut down their credit card machines for 10 minutes at 7:00 every morning is annoying because that’s exactly when I’m on my way to work. They don’t know it, except for the cashier I expressed my frustration to one day, but this creates the opposite of attitudinal loyalty for me. Fortunately for them, the convenience continues to win the day for now. But they are vulnerable to another station popping up nearby, priced similarly, and with credit card shutdowns at 3 A.M. instead of 7 A.M. or, better yet, who has figured out that it’s important not to shut down the credit card machines at all.

Attitudinal loyalty is much harder to create and sustain because it’s expensive. It’s expensive to build products that customers love instead of products that they simply own. It’s expensive to create an experience that delights instead of one that just tries to not annoy. When my daughter was graduating from high school, she needed a laptop computer. What was it that caused her to stomp her foot and insist on a Mac when the Dell options were functionally comparable and much less expensive? The logical conversation I attempted with her did not move her an inch. Despite the fact that she couldn’t cite a single speed, function, or quality argument for the Mac, her heart was set and her mind made up. I still don’t know why (but she did get her Mac). Maybe it was because the cool kids all had one. Maybe it was because she loved her iPod. Maybe it was because she just liked jeans and black turtlenecks. I honestly don’t know. But now I know what to call it—attitudinal loyalty or, in her case, more appropriately, emotional loyalty (because the discussion did include tears). And that’s the kind of loyalty we all long for in our customers.

The Subscription Tsunami

Customer success sounds like a catchy phrase your marketing team might come up with, doesn’t it? Or a mantra some PR firm concocted for their CEO to make it sound like she really does care about customers. But in today’s recurring revenue businesses, customer success is much more than a catchy phrase or a slick marketing campaign. It’s a necessary part of any subscription business, as Mr. Benioff and Salesforce proved, and it requires investment, attention, and leadership. It’s not lip service around “putting customers first” or “the customer is king.” Those phrases sound good but such campaigns often start off with a bang and then fizzle quickly unless they are driven by a passionate and charismatic leader (like Tony Hsieh) or by a business imperative. Customer success, as we’ll discuss throughout this book, falls squarely into the latter category. It does not require a passionate or charismatic leader, although that helps, because it’s nothing less than life or death in the subscription economy.

Real organizational change in business is rare. Think about our organizations today—sales, marketing, product development, finance, and services. Those have been the fundamental components of an enterprise for hundreds of years despite the enormity of change within the business world during that time. One could argue that human resources is new, but the reality is that it was always being done, just not led by a separate organization. As far as fundamental organizations go, information technology (IT) might be the only truly new invention in the past 70 years, driven obviously by the ubiquity of technology in every aspect of our jobs. Customer success is the next big organization change. As with IT, customer success is becoming a thing because something else is changing—in this case, the business model. Subscriptions are all the rage. From software to music to movies to diet programs. The way to the heart of investors and the public markets is to establish a business that creates monthly recurring payments from lots and lots of customers. If Wall Street and the investment community love something, so do the CEOs. If a business is not subscriptionable, it is probably becoming pay-as-you-go, which has all the same characteristics and imperatives. Subscriptions are obviously not new, but the movement of existing businesses from a nonsubscription business model to a subscription model most certainly is. Everyone is searching for a recurring revenue component to their business model and, ideally, the whole business, not just a component. This 15-year-old movement started with the software world, but the splash caused by that boulder is rippling across virtually every other industry, too.

Thus, the need for this book. The subscription tsunami is well under way and having a massive impact on the software world. Customer success is one of the secondary waves being drawn in behind the tsunami. But customer success is not only a new organization but also a philosophy sweeping its way into nonsoftware, nontechnology, and non-B2B companies. It may not have been referred to as customer success until recently, but it’s happening everywhere, as witnessed by the Apple story, driven by technology and the availability of information (i.e., the Internet). No matter what kind of business you are in, now is the time to understand what to do about this wave. Let’s start by exploring the origins of customer success in B2B software because that’s where this all began.

Software — Siebel versus Salesforce

In those days BC, it was common for a software deal, such as the Siebel one approximated in Table 1.2, to be a multimillion-dollar transaction. It was also common for that initial deal to constitute more than 50 percent of all the money the vendor would collect from that customer over its lifetime. In the earliest days, before software maintenance fees, that percentage might even exceed 80 or 90 percent. Contrast that with the Salesforce example (AC), and you’ll begin to understand point 2—the realization of LTV from each customer over a much longer period.

It’s not hard to grasp what happened and why. Let’s say I’m the CEO of a software company, and I sell you my solution for $3 million. I’m well aware at that point that all of the additional money I will collect from you over your lifetime as my customer is maybe another $500,000. Given that reality, your value to me diminishes dramatically the moment your $3 million is in my bank account. That’s not to say that I, or any past or current CEOs, don’t care about customers. Of course we do. As we all know, customers have value beyond what they pay us—references, case studies, word-of-mouth, and so on. But that additional value, even if you include the future monetary value that comes from the purchase of more products, licenses, and maintenance fees, does not change the fundamental viability of my business. I can still survive, even thrive, based exclusively on my ability to continue to sell new customers for that same price. I may care passionately about my customer’s success, but if it doesn’t matter to the bottom line whether they get value or even use my solution, then I’m highly unlikely to invest significantly in ensuring their success. It was this reality that led to the birth of the term shelfware. That was just a cheeky way to describe software that wasn’t being used by the customer. That still happens today by the way. SaaS did not solve the adoption problem by any means. It just matters a lot more now than it did back then.

The Birth of Software as a Service

In the fall of 1995, John McCaskey walked into the Stanford Bookstore in Palo Alto, California, and bought several books, Foundations of World Wide Web Programming with HTML & CGI, HTML & CGI Unleashed, and O’Reilly’s Programming Perl among them. At the time, McCaskey was a marketing director working for a company named Silicon Graphics (SGI). Despite his marketing title, McCaskey was an engineer at heart, and his new book collection had a purpose greater than simply a hobby. His intent was to reprogram an internal application, lightly used by the SGI marketing community, called MYOB (mine your own business). MYOB was a business intelligence (BI) tool, built on top of Business Objects. Its intent was to provide insights to the marketers regarding the sales of their products. As McCaskey’s version started to take shape, it became known as MYOB Lite.

That very same year, on the other side of town, Paul Graham, self-proclaimed hacker and future Silicon Valley icon, and his friends Robert Morris and Trevor Blackwell were starting a company called Viaweb. Viaweb was also the name of their application, originally known as Webgen, which allowed users to build and host their own online stores with little technical expertise.

Both MYOB Lite and Viaweb were wildly successful. MYOB Lite caught fire at SGI because of its ease of access and use and was quickly adopted and used by 500-plus marketers and executives. Viaweb, on the other hand, was a commercial success. By the end of 1996, more than 70 stores were online, and by the end of 1997, that number had grown to more than 500. In July 1998, Graham and company sold Viaweb for $50 million in Yahoo! stock, and it became known as Yahoo Stores. He went on to form Y Combinator, a wildly successful technology incubator, out of which has come many great companies including Dropbox and Airbnb.

In addition to their real-world success and the springboard they provided for their inventors, Viaweb and MYOB Lite had one other very important thing in common. The user interface (UI) consisted only of an off-the-shelf Web browser. Paul Graham referred to Viaweb as an application service provider, and John McCaskey’s application was simply a light version of a Business Objects implementation, sans Business Objects. In other words, Viaweb and MYOB Lite were two of history’s first SaaS applications. SaaS is today’s term for applications that do not require any client-side software. The only product needed to run them on the user side is a web browser. Today, there are thousands of SaaS applications. We use them every day—Facebook, Dropbox, Amazon, eBay, Match.com, Salesforce.com, and virtually every other software application developed in the past five years. But, in 1995, the concept was revolutionary and initiated a seismic shift in the software industry.

About Nick Mehta

CEO, Gainsight

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Author career and biography

Nick is the CEO of Gainsight, where he brings the right people together and puts them in the best position to win for customers, partners, employees, and their families. He’s a big believer in the Golden Rule, and he uses it to bring more compassion to interactions with others.

About Dan Steinman

CCO, Gainsight

Author career and biography

Dan is the chief customer officer for Gainsight. He is the author of dozens of relevant blogs, contributed articles, and Customer Success University created by Gainsight, and a recognized thought leader in the Customer Success world.

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About Lincoln Murphy

Founder, Sixteen Ventures and Customer Success Evangelist, Gainsight

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Author career and biography

Lincoln is the founder of Sixteen Ventures, a consultancy helping companies accelerate growth through Customer Success. He’s a prolific writer and international speaker on Growth and Customer Success.

About Maria Martinez

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Author career and biography

With more than 30 years of experience in business and technology leadership roles, Maria Martinez leads Salesforce’s Customer Success Group, which is responsible for helping customers achieve business value from their Salesforce deployments. Martinez’ organization encompasses the company’s Success Programs and Products, including Customer Success Managers, Architects, Cloud Implementation Practices, Accelerators, Innovation and Transformation Consulting, Renewals and more. In addition, she is responsible for the company's Latin and Central America organization.

Prior to joining Salesforce, Martinez managed Microsoft’s global services business, including professional services and customer support for the company’s business products. In her six-year tenure, Martinez led businesses to outperform revenue targets and to significantly increase Microsoft’s customer satisfaction rating. Before that, Martinez served as president and CEO of Embrace Networks, and she has also held senior leadership roles at Motorola and AT&T.

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