A Bit Of Background
Companies have long had employees who focus on customer service and act to ensure good outcomes for their customers. Most of these people however have a transactional focus, whether it’s the support representative who solves a technical issue, the project manager who is around for the duration of a defined exercise, for example the initial implementation of a SaaS solution, or the specialist who comes in to assist with a particular objective.
In fact, in many cases the only long term relationships companies had with their customers prior to CSM was with their sales person (account manager) who generally was engaged with at least one eye on more revenue and who would usually lack the domain expertise or time to focus on driving good outcomes.
In software and tech companies who sold on-premise solutions for an up front license payment this nonetheless worked ok. The large upfront investment required in the licenses and usually the hardware to run it on generally presented such a big barrier to change, at least in the first few years, that that was all that was needed. It’s also a factor that the pace of change and innovation was slower 15+ years ago so if you’d done your homework and made a good choice you were less likely to see something more attractive a year later. So companies stuck with what they had bought and tried to make it work. Unless of course things got really bad: 15 famous ERP disasters, dustups and disappointments
Then SaaS and the start-up culture that started in Silicon Valley spread globally and changed the rules.
Firstly, no longer was a large up front investment needed. Whereas previously a customer might buy 5000 seats of a software solution for an on-premise deployment in order to secure volume discounts they could now buy 500 for a pilot on a one year subscription. If at the end of that year value was not delivered the amount to be written off was far smaller and often classed as operating expenditure (OPEX) rather than capital expenditure (CAPEX), an accounting distinction that makes saying goodbye to a vendor easier in these circumstances.
Secondly, the innovation coming out of places like Silicon Valley meant that viable alternatives, even more attractive alternatives, would likely have sprung up during the year and so making a switch could be more easily argued on the grounds of better functionality, pricing etc. Not that a company would want to do this every year of course but the cost to switch arising from the change to SaaS and increased innovation meant for those that wanted to switch it was far easier than before.
Something had to be done.
What Then Is Customer Success?
Google that and you’ll get a whole host of definitions. I’ve been in the field for getting on for 20 years and I’ll be honest I struggled to get through a lot of them. So while I will have a lot to say later about KPIs, hiring, frameworks, sizing teams, understanding your customers and smart ways for Customer Success Managers to get better at execution I’m going to confine myself here to the simplest and clearest explanation I can manage.
Customer Success Management is “any effort intentionally invested by a company to ensure its customers realise the maximum value available from their investment in the company’s products or services.”
Woah!, Isn’t that way too broad? Surely by that definition customer success management means:
- Improvements made to the product to make it easier to use – yep!
- A sales person taking the time and care to sell a customer exactly what they need – yep!
- A project manager not just managing an implementation but pushing back on decisions that are sub-optimal for the long term – yep!
- A CTO who sweats platform availability and integrity – yep!
- A customer success manager who uses a defined framework to help a customer access the collected best practices of the company – yep!
I could go on here.
By some definitions only the final bullet point is CSM and certainly a formal CSM function within your organisation is a great thing to have. What’s more I’ll be spending a lot of time on the CSM function in future posts but I’ll also be talking about the fundamental point that an entire organisation has a role to play in customer success management: moreover, truly great companies will put this perspective at the heart of how they operate.
So, this sounds hard and could be expensive. Why should we be thinking and operating this way across the company and why should we invest in a CSM function?
The why is easy. The rules have changed:
- Customers have more choice than ever before
- The SaaS or subscription model substantially reduces the pain of moving on from a failing solution or solution provider
- So customers are more mobile than ever before and will be ruthless about moving on if you fail them
And those are just the ‘negative’ reasons to fully commit to customer success. On the flip side of that are all the good things that come from truly satisfied customers:
- A straightforward renewals process
- Agreement to longer term contracts
- Expansion opportunities, either within the business unit (BU) you are sold into or within other BUs in the company
- Customers who are willing to provide case studies, to speak on your behalf at events and to act as prospect references
- They teach you customers do, all sorts, by willingly sharing their ideas, experiences and knowledge
- The sheer pleasure, and this is real, of being in a mutually respectful and productive relationship with your customers
So, in summary, it’s a whole company effort, it helps protect and grow your revenues, it educates you and it makes relationships fun.
What’s not to like about Customer Success Management?