Customer Success (CS) is a common term in business these days that is often confused with customer experience and customer service.
Simply put, customer success is the accumulated success of a customer made possible by a mutually beneficial relationship and collaboration between a software provider and its customers. However, this definition does not do justice to the term.
Below we clear up the confusion about what CS is. We also explain how CS is dependent on and connected to an entire organization from both a sales and a collaboration perspective.
What does customer success mean today?
To understand what CS really is at its core, it is helpful to first understand how CS has evolved and why it has become so important today. Customer success is almost exclusively contained in the area of B2B SaaS business.
The idea that your customer is using your product successfully is easy to understand. To conceptualize it as it is used today, we need to look at the birth of modern cloud computing.
Cloud computing is becoming mainstream
Until 1999, computer software was sold on floppy disks and then CDs that were installed on a local computer. (1) When the software provider published an update, you received a new CD and installed the update yourself.
Then something revolutionary took place. An Oracle sales representative founded Salesforce with a vision that powerful B2B software would have to be accessible over the Internet in order to make it accessible to the masses.
An unexpected challenge
When B2B SaaS products became popular in the early 2000s, providers faced a problem. They had invested heavily in attracting new customers and building brand awareness, but had not invested in customer training or thought about retaining these new customers and extending their subscription contracts.
This frustrated customers as they were using complicated software but not receiving adequate guidance on how to use it properly. High customer churn rates were rampant and this new way of delivering software was at risk.
Customer success is born
It was then that customer success came on the scene. It was the tool that early B2B SaaS companies discovered and implemented to solve these problems and slow down customer churn. They realized that customers needed to use their products successfully or their recurring revenue business model may not survive.
This was the cornerstone for modern customer success and the further definition of its development.
Define customer success today
Against this background, here is a more differentiated definition of customer success:
Customer success is the end result of a multifaceted, organization-wide effort to understand customer needs, challenges, and goals, and then work directly with customers to achieve and exceed those goals.
This requires vendors to provide all of the tools and training necessary to ensure that customers: 1) understand the purpose of the product they are using, and 2) know how to use it effectively to drive their own business success and sales growth to advance.
Customer success in 2020: who needs it and why?
B2B SaaS companies need an internal customer success function. Today, many B2B SaaS companies have their own CS teams that focus solely on training customers on how to successfully use their software in relation to each customer’s specific use case.
Teams of Customer Success Managers (CSMs) support customers one-on-one with the ultimate goal of driving their business success. Each customer has a specific CSM who understands their needs, challenges and goals. CSMs support and assist each and every customer in achieving their unique goals and in a way that is consistent with their operating practices.
This is necessary given the increasing competition in the B2B SaaS area. The companies that employ successful programs are ahead of those that don’t. Customer expectations now oblige B2B SaaS companies to do so.
Why is customer success so important?
CS affects the rest of your business in many ways. It offers numerous advantages and includes many moving parts. In short, everything is interconnected and starts with a vendor’s employee satisfaction.
Let’s unpack this network of networking.
Satisfied employees are more motivated to produce a high quality work product. They pay more attention to customer needs, which leads to a better customer experience.
If your company offers a positive customer experience, it generates satisfied customers. You stand up for your brand and are loyal to it. They help increase your brand awareness through word of mouth. This creates market confidence and attracts new customers.
Organizations can have a better experience by leveraging the personal and historical customer data captured and stored in a unified CRM. A unified CRM offers many advantages, including the ability to increase customer success.
When a company uses a unified CRM, customers benefit from the improved quality of support and the attention they receive from their supplier. Vendors benefit from higher customer retention rates and lower customer churn rates.
Customer churn and retention
The happier and more loyal customers are, the more likely they are to stay with your company for the long term. This reduces customer churn rates and consequently increases customer retention rates. These two factors lead to further advantages for the provider.
Increased sales and business growth
When customer churn is low and retention is high, your business has a reliable source of recurring income. This is important to note as an average of 83% of SaaS revenue comes from customer contract renewals. (2)
This sounds like an easy process to navigate, but it’s more complicated than it appears on the surface.
How does customer success work?
Customer success teams take over the baton as soon as a new customer has been won. The first job for CSMs is to conduct comprehensive customer onboarding programs with extensive product training.
CS teams then continue to work directly with customers to ensure that success is achievable, scalable and sustainable.
This requires customer check-ins, routine health exams, and a deep understanding of how successful customers are at any given point in time. Also, CSMs need to initiate additional touchpoints to ensure customers always have the tools they need and receive additional training when needed.
Customer success does not begin and end with onboarding, but rather continues over the entire service life and relationship between the customer and the provider.
What do CS teams do?
To ensure long-term customer success, CS teams need to have playbooks on customer success that define actions that should be carried out at certain points in the customer journey. For example, every CS team should have a customer renewal playbook that goes into action when a customer’s renewal date approaches.
How a uniform CRM promotes success
A uniform CRM facilitates customer success through automated notifications and trigger-based actions that are triggered by customer behavior.
At every point of contact, CS teams intervene – often in collaboration with other internal teams – to apply CS playbooks at every predefined point along the customer journey.
They work with sales, marketing, customer support, account management and a lot more. In this way, customer success is a company-wide initiative that would not be possible without the participation of other teams.
Continuation of the discussion
You now understand what customer success is and have a high level of understanding of how it works.
Stay tuned for part two as we dive deeper into what you need to prepare and launch your customer success initiatives.
Read more about it:
1. “Introduction to Customer Success 2.0: The New Growth Engine,” McKinsey and Company, 2018
2. “Customer Success Accelerates User Adoption by Rapidly Creating Product Experts,” Mindbody, 2018