Everything you need to know about creating healthy customers for life.
It’s one of the biggest buzzwords in B2B, but unlike other fleeting terminology, “Customer Success” isn’t going anywhere. In fact, it’s becoming one of the most important factors across all types business—the difference between a company going broke and achieving mega-growth.
"Success consists of going from failure to failure without loss of enthusiasm."- Winston Churchill
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. At its core, that’s what Customer Success is all about: ensuring your customers achieve their desired outcome while using your product. Of course, pulling that off requires people, processes, and—most importantly—data.
After all, how can you help your customers succeed using your product if you don’t know when, why, and how they’re actually using it. That’s why Customer Success requires:
Leveraging these three aspects, a business takes a “proactive, holistic, and organization-level approach” to ensuring its customers—including those who use the product and those who benefit from its use—“continually and increasingly receive value from your product over the course of their lifetime as a customer,” Lincoln Murphy explains in this Sixteen Ventures article.
In a nutshell, Customer Success is about a business being proactive, while customer service is about being reactive. Customers have problems, so they submit tickets, send emails, and make phone calls. Hopefully, the service or support team resolves those problems, and customers continue on their merry way. That’s customer service. It’s focused on the case-by-case and the here-and-now.
As for account management, that’s a dated concept from the agency era. Account managers woo dissatisfied customers and handle problems as they arise. Like customer service, it focuses too heavily on case-by-case interactions, and it’s still very much like customer service: reactive. Additionally, the account management mindset is different than Customer Success. It’s all in the name: account managers manage accounts—the money coming in—not the success of the customer who has the account.
"The difference between Customer Success and Account Management is the difference between a backyard telescope and the Hubble."
Customer Success is the successor of account management. It’s evolutionarily superior. It pinpoints problems—and opportunities—happen by collecting and leveraging as many data points as possible about the customer. Furthermore, Customer Success informs strategy; it helps businesses better understand the customer experience and lifecycle so they can improve it. On top of all that, Customer Success team members truly focus on the customer and how that customer can succeed, as opposed to only focusing on how the company can succeed. It’s a mindset shift that reaps big rewards for everyone.
As stated above, Customer Success helps companies better understand the customer experience, which is the way customers use your product and/or services from their perspective. In short, customer experience focuses on the how. Alternatively, Customer Success focuses on the ways in which customers use a business’s products and/or services from both the customer’s and the company’s perspectives with the purpose of:
In the technology industry, the days of locking customers in for life with contracts and technological barriers—à la traditional enterprise sales—are over. Instead, customers hold the power. As Tomasz Tunguz, venture capitalist at Redpoint, explains in this post:
"Businesses face renewal sales processes constantly. Each time a customer sees the monthly or quarterly or annual subscription payment, they wonder, should I be paying for this? Renewal conversations occur with much greater frequency than with perpetual software sales."
Tech businesses that can manage these renewal conversations better are able to grow faster and require less capital. And Customer Success provides the insight, organization, and team necessary to have the most productive, meaningful, and successful renewal exchanges.
Tech businesses rely heavily on inbound marketing strategies. That means online reviews play a huge factor in lead acquisition. Meanwhile, recurring revenue models require companies to initially create a minimal viable product (MVP), and then through an iterative process—typically, driven by user feedback—improve that product over time. Couple user feedback with reviews, and you’ve got positive and negative product commentary flowing more freely than ever before, which means purchasing and churn decisions happen faster than ever before, too.
Customer retention requires a nimble team of experts who can not only predict churn, but also stop it. That involves lots of training, educating, and positioning. Furthermore, Customer Success teams glean a wealth of valuable feedback from customers. When they combine that information with the customer health data, they can inform product and development teams of proactive enhancements and additions. Customers will have resolutions to problems they didn’t even know they had yet. No problems? No reasons to leave.
At the 2015 Gainsight Pulse conference, Jason Lemkin, the managing director of Storm Ventures, said:
"Customer Success is where 90% of the revenue is."
Customer Success evangelist Lincoln Murphy concurs in this Forbes article, stating:
"The majority of the revenue from your relationship with a customer happens post-sale."
That’s because with technology companies, opportunities abound to upsell and cross-sell. Customer Success provides a mechanism for not only creating these chances, but capitalizing on them.
Let’s break it down in terms of a hundred hypothetical dollars of revenue:
As you can see, the costs associated with acquiring a new customer often outstrip the revenue you’ll generate in year one. That’s actually pretty common in the subscription business model, and it’s all because of year two. Look at the costs associated with retaining that customer. They’re rock bottom. It’s almost all profit. That kind of ratio could continue for years with a solid Customer Success effort. This graph doesn’t even include expansion (upsell and cross-sell) or second-order revenue (advocacy). Strong retention provides a hard, high floor for growth in the subscription economy. Customer Success is the only way to operationalize that retention.
We’ve already talked about how Customer Success requires implementation of technology and real-time visibility into your customers’ “health,” which is a combination of usage data and contextual inputs. Beyond that, it requires an organization-level approach and an actual team of people to execute the strategy and use the technology. But what does all of that mean operationally? Customer Success works thanks to three components working in tandem:
Let’s break it down:
A Customer Success solution consists of two components:
The software connects with your business’s customer relationship management (CRM) software and your actual product. From there, it monitors product user activity and CRM inputs. And through intelligent algorithms, the software maps trends, reports stats, and makes predictions. Additionally, it allows Customer Success teams to add context from phone, email, chat, and in-person interactions.
Customer Success service is what truly makes the Customer Success solution a solution. It takes the software and builds upon it to become a true partner for businesses. The day of the stand-alone tool in tech business has passed. Now, companies need software and service. So, what goes into the service side? According to this Customer Success Association article, Customer Success solutions are “an integration of technology, Marketing, Sales, Professional Services, Training and Support into a relationship product for the SaaS/Cloud era.”
Customer Success literally makes or breaks a business, because it’s the act of proactively retaining customers and strengthening those relationships. Thus, Customer Success must permeate every aspect of your business, and your business must build a strategy that accounts for customers’ success. To determine that strategy, you’ve got to create a Customer Success map, which you can do by answering:
Once you have these answers, use them to fuel your efforts to incorporate Customer Success into every stage of the customer lifecycle. Need help? Check out Customer Success evangelist Lincoln Murphy’s 17 elements of the Customer Success lifecycle process here.
Once you’ve formed the Customer Success lifecycle, determine whether your organization can support it. (Here are a few examples of Customer Success-centric organization structures.) And then construct the right model for your organization.
The Customer Success team are the doers. They’re the people who will truly take your company from a reactive state to a proactive state. This team uses the Customer Success Solution to help:
Additionally, the team “ensures that all customers are fully engaged and getting the value that they expect” out of the training and onboarding, explains the Customer Success Association. Through all of this, the Customer Success team collects, analyzes, and uses data to “make the customers’ experience of the company a seamless, consistent whole.”
So, how does your company’s Customer Success team look? That largely depends on your organization-level approach and which Customer Success organization you best align with. According to Tomasz Tunguz, Customer Success departments include:
You can read more about it in this article, but broadly speaking, these teams include roles such as:
If you start searching online for Customer Success solutions, you’ll most likely encounter a lot of discussion about “B2B SaaS,” which might cause you to wonder if Customer Success software is only for subscription-based, business-to-business companies. That couldn’t be further from the truth. If you’re a business, then you have customers, and you should want them to succeed. That being said, Customer Success systems rely on data, so for the software to truly do its job, it needs something to track. For that reason, Customer Success solutions work for any business that offers a technology-based product or service, particularly one that collects usage data. Thus, your company doesn’t have to be SaaS or B2B.
Considering how prevalent post-sales strategy has become at the highest levels of companies from SaaS to Finance to Infrastructure and beyond, it’s safe to say Customer Success is here and it’s here to stay. Honestly, it’s not a question of if your company should be investing in retention, expansion, and advocacy, it’s how much you should be investing. Not every company is ready for a full-featured platform like Gainsight. Depending on how mature your business is, a simple, robust system of spreadsheets might be step one. At the other end of the spectrum is full-fledged automation at scale. The most mature companies can track thousands of customers’ health and reach out to them completely automatically.
That might not make sense for your company. We built a simple questionnaire that can analyze your Customer Success organization’s maturity and compare it to similarly-sized companies. It will help you get a wide view of your team’s readiness for full-service solutions and prescribe actionable next steps.
If you completed the Maturity Model (and you should) and you feel you’re ready to implement a software and services platform, you have several options. Obviously you’re about to read why you should choose Gainsight, right?
Not so fast. The truth is, many smaller and younger companies are attracted to Gainsight because of its best-in-class rules engine, triggers, processes, and features. Unfortunately, those companies often don’t have the systems and staff in place to thrive using Gainsight. It’s not exactly a plug-and-play solution. We put our money where our mouth is when it comes to Customer Success. If it doesn’t look like you’ll be successful with our product, we’ll be the first to tell you – even if that means killing a potentially lucrative deal.
On the other hand, many established enterprises have in-house development capabilities. They can build Salesforce triggers in their sleep. The tendency for post-sales organizations in these large companies is to “keep it in the family.” Naturally, we think Gainsight does it better and more efficiently. First of all, no homemade solution can touch our proprietary rules engine in terms of sophistication. It’s the core of our product and it really is the best available by far. Here’s a breakdown of the functionality of Gainsight:
You can ask Customer Success professionals from Adobe to Micro Focus to Cisco to Box to Apttus and on and on. But beyond that, the amount of day-to-day effort that goes into servicing and supporting a platform you produce yourself is a significant cost to consider. I encourage you to check out Gainsight’s Customer Success Platform Buyer’s Guide for more info on what’s available to your company.
Finding and selecting the right Customer Success solution for your business can be an intense, time-consuming endeavor. After all, Customer Success can make or break your business, which means the system you choose to manage it can do the same. That’s where Gainsight comes in. Our solution is ideal for mature, enterprise-level companies that have more than 50ish customers. Furthermore, our solution works best for companies that have many data sources and truly want to understand what all those sources are saying in relation to the customer. But that’s just the tip of Gainsight’s iceberg.
To truly understand everything we offer, check out our demo or schedule a sales call. Don’t think Gainsight is the right fit for your business? We can still help. Check out our Guide to Selecting a Customer Success Solution.