Batman. Spider-Man. Superman. The greatest characters never go out of style. But that doesn’t mean they don’t need updating periodically with a new remake. If these heroes of the big screen don’t stay up to date and relevant, they risk becoming forgotten artifacts of the past.
Many of the world’s greatest companies find themselves in a similar situation today. They’ve built fantastic, profitable businesses and established well-known brands. As the old saying goes, if it ain’t broke, don’t fix it, right?
In a world where SaaS and tech are transforming businesses with recurring revenue models and subscription-based products and services, even the most established enterprise players need to adapt. Traditional on-premise, contract-based relationships are being replaced by cloud-based, flexible subscriptions. But this is more than just a revenue transformation.
The power dynamic has flipped from vendors to customers. Customers have more control than ever before, and companies that don’t build their offerings with the customer at the center will be left behind, sooner rather than later.
But you know all this—you’re the hero who has decided to save your company with the superpowers of customer success! The only way you can save the day is to get customer success up and running quickly, with the organization’s support. Here’s how to make that happen.
Customer success is a team effort, more Avengers than Batman. It requires seamless alignment across the entire organization, not just the rank and file, but also among top executives and even the board of directors. Ideally, customer success will be represented in the C-suite by a Chief Customer Officer (CCO), or an equivalent position.
But alignment is more than just having a seat at the leadership table. A truly aligned organization means that everyone in all departments is actively participating in efforts to deliver value to customers. Getting this kind of broad-based alignment can seem daunting, but if you start with a few key functions, it will go a long way.
Assembling an Organization-Wide Team
For Sales, the biggest change in a customer success model is the need to sell to the right customer, instead of just any customer. New acquisitions are great, but if the churn rate is too high, it is wasted effort. Customer lifetime value (LTV) is now more important than quarterly sales. And word of mouth—think Net Promoter Scores (NPS)—will generate more high-quality leads than cold calling ever did.
Customer Success generates the data and insights that Sales needs to target the ideal customer profiles. This should be a tight partnership, with both parties benefiting from revenue growth. Sales and Customer Success should also work together to set realistic customer expectations for the post-sale product experience.
It used to be that Product focused on features (and usually, the more features, the better). In an environment where success was driven by acquisitions, that made sense; if Sales could wow the customer in the demo with a lot of cool features, it didn’t matter how much customers used them after the sale. All that changes in a recurring revenue model.
Now, every customer interaction with the product contributes to its overall success or failure. That means Product needs Customer Success to understand how best to improve and evolve the experience for customers. You can win Product leaders over by demonstrating how a dedicated Customer Success team can generate continuous competitive insights that Product designs can use.
Somewhat surprisingly, the strongest ally in the C-suite may be the CFO—if you can deliver quantifiable results. CFOs follow the money, so it is smart to show the revenue impact of churn. If you can use data, models, and competitive assessments to show how Customer Success can keep customers happy and generating revenue, the numbers will speak to themselves.
Winning over the CFO can be huge for making Customer Success a financial priority. Increased budget will lead to technology investments, increased headcount, and a louder voice at the leadership table.
With Executives, Think Big
Executives are big picture thinkers, which is a perfect fit for customer success. That’s because customer success is more than just a strategy, it is a philosophy. If you can sell “the big idea” that keeping customers happy is a company-wide priority, you’ve already won half the battle. Then it is just a matter of showing each of your partners how they can contribute, and figuring out a way to tie their metrics to customer success.
Evaluate the State of Your Capabilities
Customer data is the lifeblood of customer success. Does your organization have the capabilities to gather, organize, and distill vast amounts of information on how your customers use your product? And do you have a platform that allows not only dedicated Customer Success professionals, but others in your organization like Sales and Marketing, to use the data? Armed with the right tools, you can prove the ROI of customer success initiatives immediately. In fact, companies that are investing in CS and CS Operations are reporting the highest Net Revenue Retention. That starts with the right solutions.
In customer success, content is core. Onboarding materials, in-product guides, thought leadership guides, and community-generated content all keep customers engaged and learning about the product so they maximize its value for their own business. When transitioning to a more robust customer success model, you need to assess whether you have enough content creation resources within your organization that you can tap into, and to what extent you need to recruit dedicated resources.
We’ve already discussed the change in mindset that Sales will have to undergo during the transition to a customer success model. What about their processes? Customer success requires a smooth post-sales transition, so solid communication channels need to be put in place. And don’t forget, the partnership should be a two-way street, with a virtuous feedback loop of information on the customer experience returning to the sales force.
At a high level, reducing churn is the primary goal of customer success. But you might have other goals, like increasing customer referrals, improving your ratings on marketplaces, or increasing customer lifetime value. The key at the beginning is to set a baseline, both internally and externally.
Down the road, that baseline will inevitably move, but in the beginning, you’ve got to start somewhere. The good news is that some customer success is way better than no customer success at all. Once you actually start working with customers and understanding what drives retention and upsells, you’ll be able to start moving the needle much more quickly than you expected.
A good place to start is with the Health Score. There is no one way to measure customer health; it is made up of multiple data inputs. Some common types of KPIs used to amalgamate a Health Score include:
- Adoption (usage of the product)
- Length of time as a customer
- Last touch (i.e., how long since engaged with the customer)
- Total spend
- Survey results
Other important KPIs, from a financial perspective, are:
- Lifetime Value (LTV)
- Cost to Retain a Customer (CRC)
- Cost to Expand a Customer (CEC)
These are good starting points to connect your efforts more directly with revenue, which is especially important when you are first launching customer success.
Get Ready to Save the Day
Once your organization is committed to customer success, the next step is to execute. As revenue grows, internal stakeholders should coalesce around the philosophy, processes, metrics, and organization. To a certain extent, the outcome will be organic and hard to predict—and that’s OK! Customer success is an art as well as a science.