There’s more to Customer Success than delivering customer outcomes. The discipline embraces the idea that success for customers means success for everyone including manufacturers, service providers, partners, and other stakeholders. Times are changing—subscription services are giving customers more power over where their money goes. If they want to keep up, Channel parties need to adopt a customer-centric mindset to drive success throughout the Channel.
"The entire fabric of the Vendor-Partner relationship is going to change as a result of the Customer Success movement."Chris Doell VP of Customer Success at OpenDNS
Would you believe us if we told you that even though your Channel ecosystem is generating revenue, it could still be in danger? It’s no longer enough to measure Channel Partner success solely on a transactional basis. With the rise of SaaS businesses and the recurring revenue model, it’s more important than ever to ensure that everyone in your ecosystem is set up for success. There are three constituents involved in any Channel business relationship:
Each of these parties will have their own definitions of success, unique to their role in the Channel and their own business goals. As the market evolves, Customers are starting to expect a more personalized experience from Partners and Vendors. In short, the pressure’s on. Channel Partners are experiencing a shift in the way they sustain their relationships. There’s greater pressure on Vendors to deliver outcomes to Customers and this puts pressure on Partners to shift their focus from a transactional business model to a more diverse environment of solutions. This could mean investing more in Customer Success or adding recurring revenue offerings. But Partners don’t carry the burden alone—they expect Vendors to enable them to drive these new initiatives in more meaningful ways without draining their budget. Adopting a Customer Success strategy across your ecosystem can seem complicated at first, but it’s crucial for Channel health. Whether you’re a Partner or a Vendor, if you don’t address these changes now, you’re in danger of becoming irrelevant in today’s new economy.
It’s important to align goals across the businesses in your ecosystem so everyone knows what they’re striving to achieve and can then be held accountable. As we mentioned above, each constituent will have their own goals and definitions of success. So, we’ve put together three overarching goals that will contribute to ecosystem health while remaining broad enough to supplement the individual goals set by each party in your Channel. In each relationship, the parties want to achieve their business’ revenue goals, maximize their return on investment, and establish a foundation for predictable and sustainable growth. If Vendors and Partners operate with these goals in mind, they’ll experience individual and ecosystem-wide success.
"By 2020, customer experience will overtake price and product as the key brand differentiator."
The growing popularity of the subscription-based business model has put terms like churn, Customer Success, and customer experience into the spotlight. In order to achieve their revenue goals, Vendor and Partner organizations must adopt these new disciplines. Businesses that rely on recurring revenue give Customers the freedom to decide where they want to spend their money. Once a customer’s contract is up, they can resign for another contract term or take their money elsewhere. Their decision relies heavily upon the ROI and experience they’ve had during the length of their contract. Companies who lag behind in adopting customer experience and Customer Success best principles can experience lower revenue.
Enforcing a customer-centric strategy can be the answer for most organizations, but in order for it to be your ace in the hole, Vendors and Partners need to be aligned, cooperative, and transparent. This can get complicated for Partners working with multiple Vendors. In these cases, Partners can either adopt programs from their most strategic Vendors or implement their own Customer Success strategies.
Partners will need to embrace the shift to recurring revenue because as Vendors make the transition, they’ll likely want to build a Channel of businesses using the same model. In a survey of CRN’s Top 100 Channel Chiefs of 2017, over 36% of channel leaders said they want to, “increase the amount of recurring revenue going through partners” and 30% said they want to “migrate partners to cloud solutions.” Partner organizations may be accustomed to selling large, one-time revenue deals, so this shift forces them to learn to sell either multi-year subscriptions or find ways to capture the “lost” revenue. This could be through new offerings or offerings from additional vendors. These changes present opportunities and risks for Vendors and Partners— while new offerings may result in a higher margin for the Partner organization, the cost to drive this change across their organization can also be significant. But, with proper planning and alignment, the positives can far outweigh the negatives and help all parties achieve their revenue goals.
Partner programs are transforming with the introduction of cloud and subscription-based businesses. These new offerings bring with them new incentives and definitions of success for Partners. Businesses who are able to pivot are reaping the rewards. Transitioning to a recurring revenue model can spur Partners to redefine their route-to-market strategy. This can be done by introducing new Channel programs, revamping existing ones, or aligning with new Vendors. Enterprising Partner organizations may see these new programs as a way to differentiate themselves with their Customers and prospects. In the same survey of CRN’s Top 100 Channel Chiefs, they agree the following actions are priorities for 2017:
"[A manufacturer’s] best bet is to take a page out of the SaaS vendors’ playbook and deploy a customer success function.""The Manufacturer’s Dilemma" by Geoffrey Moore Venture Partner at Wildcat Venture Partners
The idea of an optimized customer lifecycle is quickly gaining popularity within customer-centric businesses. Expanding focus beyond the initial sales cycle enables organizations to maximize the LTV of a Customer or Partner. Mapping the customer lifecycle can also increase the efficiency and efficacy of the upfront investment made to secure the relationship, also know as Partner Acquisition Costs and Customer Acquisition Costs. It’s a big decision to engage in a business relationship, and every organization navigates this process differently based on their internal, business-specific drivers. Because of the variation between processes, buying decisions are occurring throughout the entire lifecycle and, if left unattended, can manifest as high rates of attrition in a company’s portfolio.
Another way for Vendors and Partners to maximize ROI is by optimizing their portfolio mix. A good place to start is by redefining what “success” means for your ecosystem. Once determined, you can either roll it out to existing solutions or retire them and introduce new solutions into your portfolio that align with your “success” goals.
There are two sides to a portfolio-rebalancing strategy. For Vendors, it’s important to focus on quality versus quantity. Having clearly defined criteria for success will allow you to be more confident when pursuing new Partners. Vendors like Microsoft and Adobe Creative Cloud have pursued this strategy this year. For Partners, this is an opportunity to align with Vendor and solutions that give you a competitive advantage. With this new push for a more connected Channel ecosystem, this is also a great chance to find Vendors with goals that align with your business.
"Partners who are leading edge in customer success are seeing double digit increases in renewal rates and expansion rates leading to double or triple the lifetime value of a customer."Ed Daly Customer Success-Global Leader at Cisco
When investing in the Channel, it’s important to focus your efforts and budget on creating a solid foundation for future growth. As your Channel expands, it will get increasingly difficult to control so setting up processes early and aligning with Partners and Vendors on Customer Success will allow for manageable scaling. Making Customer Success a priority can reduce attrition, increase upsell and cross-sell revenue, and improve expansion revenue by encouraging growth from within your established customer base. At Gainsight, we call this the Helix and it represents how growing from within results in exponential growth.
One surefire way to leverage your customer base is by nurturing happy customers into becoming advocates. This is a great way to drive the Helix and gain new logos without increasing Customer Acquisition Costs. Each successful customer generates three revenue generating opportunities:
Setting these initiatives as a priority will give your Channel a strong foundation and enable future growth with significantly less impact on your budget.
"Understand what your business strategy and your partner strategy is and get started. Cause if you overthink it you’ll make no progress and we know you’re going to leave a ton of money on the table. You don’t want your competitors to get with these partners first to help them build the capability for their offerings and not yours."Ed Daly Customer Success-Global Leader at Cisco
Successful Channel partnerships share similar traits that put the focus on driving positive results:
To ensure your Channel strategy is on track to success, clearly define your priorities, segment your portfolio, and select your technology stack with care. Read on for a deeper dive on these three steps.
There is a common framework of Customer Success best practices that can apply to Vendors, Partners, and Customers, despite their differences. If you’re just starting your Customer Success initiatives, we recommend identifying your top three priorities so you can focus your efforts on what matters.
You want to provide each Partner with an experience that leads them to success but you’ll soon find out that the same approach won’t work with every company. In order to achieve portfolio-wide results, while remaining true to your business model, you need to segment your portfolio. This will make it easier to create segment-specific strategies tailored to these groups’ different needs. For example, you might find that certain businesses require one-on-one communications while others can be maintained at a low-touch engagement level. By segmenting your portfolio, you spend less time on wasted efforts while still giving each business what it needs to succeed.
Start small and simply—best practices recommend you begin with three segments and add segments where differentiation is critical. Consider the following criteria when aligning companies to your segments:
|I am a...||I am supporting...|
|Vendor||-||Although Partner segmentation is different from Customer segmentation and program tiers, Vendors may find correlations between the two.||One key to Vendor success is to take an active role in the success of the end-customer. Establish segmentation criteria for your Partner’s customers.|
|Partner||Partners who offer more than one Vendor or solution should categorize Vendors to clearly align internal processes and establish clear priorities for team members.||-||Enable Customer Success at scale by segmenting your customer portfolio based on the level of engagement they require (i.e., High Touch, Low Touch, etc.).|
Your tech stack, a term used to describe a set of technological solutions, can have a direct impact on the success of your Channel ecosystem. These are the tools you’ll use to drive, automate, and support your initiatives. Most stacks also include a data-gathering component that’s crucial for benchmarking and proving the effectiveness (or ineffectiveness) of your strategies. Your technology ecosystem might look similar to this:
Your final stack hinges on a lot of things—the maturity of your organization, your budget, your needs, etc. Before you sink your time into researching new tools, conduct a quick audit of your existing tech stack to see what you currently have at your disposal. There may be new applications for your current solutions that you have yet to consider, so ignoring this step could mean missing out on a diamond in the rough. This audit is also a good time to trim the fat—eliminating under-utilized programs will give you more budget for solutions that will hopefully result in a more satisfactory ROI. When your organization is ready to purchase a new tool, start by determining where it will fit into your technology strategy. If you’ve done your audit, you’ll likely know the gaps in your strategy and can choose programs that fulfill your needs. Without this forethought, you could be in for a long, fruitless ride. Purchasing tools before you’re ready for them can be a drain financially and a time sink for team members who support the solution. Thinking about your tech strategy beforehand will make the time you spend evaluating, onboarding, and ramping up well worth the effort.
Gainsight is a Customer Success Management platform that supports the initiatives in this guide and beyond. With Gainsight, you can enable ecosystem-wide transparency into customer data. Vendors and Partners alike will have the information they need right at their fingertips and the frameworks necessary to achieve success. Gainsight is robust enough to supplement the strategies of Fortune 500 companies and nimble enough for dynamic, high-growth organizations just hiring their 50th employee. It’s suite of features will help you to align priorities across your ecosystem, provide visibility and drive accountability, and engage meaningfully.
"Gainsight has enabled us to really have a prescriptive Customer Success approach in a pooled global customer model. And that has enabled us to scale in ways that we hadn’t thought was possible."Greg Stivers SVP of Client Development at SMB-Americas at Concur
"From an efficiency perspective, we have been able to manage 500% more customers per CSM as the team automated functions in Gainsight and used Cockpit to prioritize the right customers."Chad Horenfeldt VP of Customer Success at Influitive
"Year-over-year cloud revenue growth has improved more than 20% since we have invested in Gainsight. And our NPS scores in different lines of businesses have increased anywhere from five to twenty-five points."Mark Friedman SVP of Global Cloud Customer Success at Genesys