Customer success is no longer just a management term bandied around in meetings, it is increasingly being recognised by organisations globally as a way to assist clients to achieve desired business outcomes and manage post-buy relationships. Customer success drives growth through single minded focus on the customer.
The term was first conceived in Silicon Valley when Software as a Service (SaaS) businesses realised that the revenue lifecycles for their offering had completely changed. The rise of these cloud-based offerings meant that revenue increases were no longer achieved through license sales, but through product usage. It is no longer enough to just sell a product – revenue comes when the customer uses the product and continues to do so.
A customer success manager essentially helps customers generate maximum value for their business, while using your product or service. They walk a fine line between working for their clients and working for the company to create a trust-based relationship.
This capability that started in the SaaS sector is now becoming a critical customer engagement strategy for many industries. This is driven in part by pressure on procurement offices to shift the IT cost from capex to opex and businesses need for flexibility, meaning they are changing their go-to-market strategies to subscription-based models.
Customer success and industries
The implications are being felt across industries, not just tech companies.
Telecommunications: With the advent of Internet of Things (IoT) and edge computing, the increasing complexity of service offerings will put greater emphasis on the need for telcos to adopt a customer success model. Success managers that understand business needs should be involved in what is increasingly a business solution sale to resolve a business problem rather than devices and connectivity.
Agricultural: This sector has quietly adopted technology to drive reduced cost to serve, and innovations in the supply chain. Many already employ proxy customer success functions in the form of teams of agronomists and matrix account team structures. Structuring clearer customer success functions will enable them to better articulate customer benefits and allow sales and product teams to focus on innovation and new business.
Financial services: Customer success has many applications in the financial services sector. Automated customer success is driving personalisation in the health, wealth and general insurance categories by reducing cost to serve in the middle-to-lower value end while reducing churn. At the higher end of value, success functionality embedded in products can drive real-time alerts inside customer accounts, allowing the account teams to better service important clients.
Life sciences & health: Innovation in life sciences and the evolution of medi-tech will make success in the industries an essential service. Real-time alerts to monitor and manage health outcomes, device performance and lifecycle will become vital tools to encourage professionals to administer these solutions to consumers as well as to maintain relationships with pharmacists and health services.
As Telstra moves closer to SaaS model and offers a range of technology solutions, we are rolling out a customer success program across the enterprise segment of the business. Telstra’s customer success managers are not just another pair of hands, they bring innovative ideas and help our customers achieve their outcomes.
The four stage customer journey lifecycle
The relationship-driven customer journey lifecycle can be divided into four stages.
1. Acquire: the customer starts with a service
2. Adopt: the customer integrates your service into their business
3. Expand: the customer uses more of your service offerings, and
4. Renew: the customer renews their subscription with you.
In this model, organisations engage proactively with the customer over their entire lifecycle, using insights leveraged from data to work better with their customers. As customers experience success when working with you, this drives greater loyalty and advocacy, leading to higher customer retention and continued revenue growth.
The customer success function within a business is still in its infancy for many Australian companies. Many of these roles are either rebadged account managers or service managers with a mixed responsibility for renewals and sales targets. A true customer success manager role is integrated with sales and service with clear roles and accountabilities.
Success accountabilities include things like onboarding, product usage, product range expansion, increasing the number of product users within the client and can even be structured to link to client objectives. Structuring the success function clearly is important. When a customer success role becomes too far skewed towards fixing faults or resolving issues with a product it is often a symptom of a bigger issue inside the organisation such as a poor design or sales process.
For success to work it must be genuine. Functions that are constructed to glue a poor experience together usually fail. Customers become reliant on a costly channel just to use the product and businesses lose the growth benefits.
The key to driving customer success is to unpack individualised culture in order to create a collaborative culture. At Culture Amp sales and customer success managers work in tandem. Coaching and commercial conversations are separated, with customer success managers focused on adoption and customer outcomes while account managers facilitate renewals and expansion negotiations.
Transform to deliver effective customer success management
Customer outcomes should be at the centre of key performance indicators.
Customer success is founded on a proactive approach and organisational systems and data flows within a business need to be designed to help achieve this. The customer success function needs to work hand in hand with marketing, sales, service and technology to deliver customer personalisation and proactivity at scale.
There is much consideration given as to whether to position the role within a service, sales or product structure. The most important thing to determine is the best structural solution that will ensure true customer success is clear to the buyer of the product or service. This will vary in organisations as the organisational structure often follows how the executives see leadership and delivery being executed. Care must be taken to align the divisional and individual KPIs for the employees to ensure there is a single-minded customer outcome focus. If done well, and the roles and scale of the sales and service functions are adjusted to accommodate success, the creation of a customer success function should not increase cost to sell or serve the customer.
Organisations should consider sharing KPIs between sales and customer success across onboarding, retention and growth. Shared accountability avoids a situation where sales are structured with unfulfillable customer promises driving burden downstream into the business.
Where customer success is in place there is a clear home for troubleshooting with clients on how to get the best from a product or service. The sales function can then focus on acquiring customers and the service function on delivering service level agreements and fixing systemic issues with product functions. Success may even broker with the service function on behalf of the client, removing a frustrating need for a customer to have to work out whether the product is broken or if they are ‘using it wrong.'
To thrive as a customer success manager, it is important to develop deep product knowledge, be curious about product features to identify opportunities for improvement and provide best guidance to the customer.
Six principles to drive customer success
Customer success is a way of working and a way of thinking that should be fundamental to operations.
The six principles can be used as a framework to guide customer success activities, download our overview of how the customer and business can apply the principles and measure customer success.
Customer success is a companywide decision that shapes customer interaction as well as product and service delivery. As such, in legacy businesses it is large scale change. Existing businesses looking to implement customer success could start with a pilot in a product or service to understand impact. Once proven, this can be rolled out across the wider business by segment, product or industry – ensure the business is continually monitoring the performance of the function to adapt to learnings and measure success.
Monitoring can be done via customer success management tools and technology that gathers insights. Customer health tracking tools that notify customer success managers based on analysis and usage data must be implemented. These create a feedback loop to drive root cause analysis and product backlog to ensure any required changes are made.
Customer success is gaining momentum around the world because buying patterns have changed. Businesses are increasingly moving toward products and services that solve their business problems with best in breed, easy to implement usage-based solutions. These have limited risk and the reward is immediate through the business benefits of usage. COVID-19 has accelerated this trend significantly, as business continuity drove most organisations to quickly accept SaaS collaboration tools such as Microsoft Teams and Zoom.
As a result, multitudes of business who hadn’t tried this type of service before are now suddenly experiencing a success model in place. During COVID-19, these companies evolved their products and services to deliver on customer usage needs driving real time success. This type of nimble success management is now expected and organisations who do not embrace it will be left behind.
Customers expect you to be proactive. They know you have their data and they expect you to reach out and tell them how best to achieve their objectives. When you are in market with a new idea, or in our case a new way of doing an old idea, you need to work with clients to make the change and see the benefits.