I had the opportunity to sit down with Neil Jain of Waterstone Management Group and ask him about the challenges and opportunities in bringing Customer Success to Hardware companies.
Q. What are some of the challenges facing hardware companies today?
A. We are seeing a few key challenges in hardware.
First, hardware is becoming a commodity, which is increasing pressure on margins and causing customers to question the value derived from their maintenance contracts.
This is also driving the second challenge, which is companies wrestling with the need to reinvent themselves. Commoditization is forcing them to move beyond just selling hardware to offering full solutions that include software and services. Apple is a great example of this. Sure they make cool hardware, but the compelling value is in the user experience, the software (e.g., iTunes, iOS), and the services (e.g., App store, Facetime/iMessage, etc.).
Third, hardware companies are struggling to accurately forecast demand, especially when selling through a distribution network. As companies deal with thousands of customers, and often lack visibility into their purchasing patterns and/or an ongoing relationship with them, it becomes hard to accurately forecast what is going to sell next.
Q. As pressure grows for subscription models, including Software-, Platform-, and Infrastructure-as-a-Service, what changes must hardware companies make?
A. The rise of the subscription economy doesn't fit well with hardware providers that have historically been just "box pushers." One of the biggest adjustments that hardware companies need to make is in their selling approach.
Historically, hardware companies have taken a transactional approach where Sales is focused on selling units, attaching a maintenance contract and waiting for the next refresh cycle. In a subscription world, hardware companies must embrace a more relationship-based approach that is focused on enabling customer business outcomes. This Customer Success-driven approach requires engagement throughout the customer lifecycle, centered around any number of interactions, including high priority support tickets, customer escalations, quarterly business reviews, and/or contract renewals.
In addition, companies will need greater focus on attaching additional value-added offerings such as training, installation, environment diagnostics, etc. Not only do these services generate revenue, but they also strengthen the ongoing customer relationship.
Q. What are some ways that hardware companies can put Customer Success practices to work today?
A. Hardware companies have to manage a large number of customers, often with low touch and/or managed through a reseller. They often lack the visibility into their customer base, making it difficult to gauge customer health, upsell, and assess renewal risk.
We see hardware companies starting to identify key triggers within the customer environment to identify upsell and cross-sell opportunities. For example, at the enterprise level, resolution of a Sev 1 issue could trigger teeing up opportunities for more capacity, redundancy hardware, etc. For consumables, this could mean understanding when to sell more printer toner, PC replacements, etc.
In addition, with the advent of better information, hardware companies are getting more sophisticated at segmenting and predicting hardware refresh cycles and associated renewal risk.
Q. Should hardware companies look to software/SaaS for insight into Customer Success adoption?
A. Some hardware companies already sell or enable software on top of their hardware, including IBM, HP, and Juniper, so Customer Success is a natural fit there. But the opportunity goes beyond software; hardware companies need greater insight into their customer environments throughout the customer lifecycle in order to successfully move beyond selling boxes to providing solutions that deliver Customer Success.
The good news for hardware executives is that they don't have to reinvent the wheel - they can beg, borrow, and steal from software companies that are driving innovation and best practices in Customer Success. My colleague published a great read for any company that is just starting out, The Customer Success Imperative: The Time to Act is Now, which outlines practical advice around four priorities to drive Customer Success.
Q. How do you think Gainsight can help hardware companies?
A. As I mentioned before, hardware companies need greater insight into their customer environments throughout the customer lifecycle to deliver Customer Success. Gainsight's platform allows businesses to pull together a number of different data sources that provide insights into customer behavior, identify customer needs, and enable account managers to proactively drive customer value.
Within hardware companies, there are at least three different teams that can benefit from using Gainsight:
At the most basic level, hardware executives can gain a deeper understanding of customers, their environments, their engagement with the company, etc.
Second, renewal teams can leverage that data-driven understanding to reduce churn, assessing how customers are using their products and who is at-risk.
Lastly, sales and account management teams can use this intelligence to identify new sales opportunities, everything from additional licenses, to pull-through products, to replacement parts.
Technology is a critical component to scaling Customer Success capabilities and Gainsight offers a platform that companies can deploy quickly to drive value.
Neil Jain is a Partner with Waterstone Management Group. Waterstone is a boutique management consulting firm that helps technology companies and investors create measurable value by identifying and capitalizing on disruptive growth opportunities and by driving excellence in Services, Cloud and Customer Success performance. To learn more about how Waterstone can help you develop and execute your Customer Success strategy, please contact Neil at firstname.lastname@example.org.Sonam Dabholkar leads New Market Development at Gainsight. To learn more about best practices in Customer Success and how Gainsight's solution can help you drive Customer Success in your organization, please contact Sonam at email@example.com.