12 Dec 2022
Customer success is a vital tool for minimising churn and maximising the lifetime value of customers, particularly in Software as a Service (SaaS) and subscription-based business models. But what exactly is ‘customer success’? What does a customer success team do? And how can your business make the most of customer success technology and trends to build an effective customer success team? Propel answers all these questions and more in our guide to customer success.
Customer success (CS) is now a specific business function in its own right, whereby companies actively aim to boost the success of their customers by any means possible. Specialised customer success teams help customers to master their products. The point is that the more successful the customer uses those products, the greater their brand loyalty and, in turn, their lifetime customer value.
Although customer success may notionally resemble, and even overlap, some other customer-facing designations – such as customer service, account management and customer experience (CX) – there are some distinctions.
The main difference is that customer success teams take proactive action to provide insights and recommendations to customers. On the other hand, customer service or support teams (and account managers) tend to find reactive solutions after an issue has arisen. CX teams must also adapt and respond to customer feedback after collating and studying various data points at their disposal.
Another key difference is how these various business functions measure success.
Account management works towards the goal of revenue growth. CX is concerned with understanding and improving how a product is used, and a brand is perceived, with actionable insights drawn from various data, such as customer interviews and A/B testing. Customer service gauges success based on measures like customer satisfaction or handle time. Customer success revolves around the ongoing value of the customer relationship.
If customer success sounds like hard work, the rewards can compensate for the effort. This is especially true for the rising tide of businesses offering subscription-based services and Software as a Service (SaaS) business models. Each upcoming renewal date requires these businesses to have banked enough goodwill to persuade a customer to part with their hard-earned cash once more. This is where customer success mandates are pivotal.
Reducing churn and building customer retention are the positive outcomes of well-managed customer success programmes that all businesses can benefit from. In much-cited research by global management consulting firm Bain & Company, the paper’s author, Fred Reichheld, asserts that “a 5% increase in customer retention produces more than a 25% increase in profit.” Those figures were in relation to the financial services industry, but they underline the potential value of customer retention in general.
This brings us back to one of the core facets of customer success: proactivity. Customer experience research collated by Esteban Kolsky, former principal and founder of ThinkJar and now “Chief CX Evangelist” at SAP, found that “only 1 out of 26 unhappy customers complain. The rest churn.” This was corroborated by another of Kolsky’s statistics, which revealed that “91% of unhappy customers who are non-complainers simply leave.”
The key takeaway here is that those businesses that are most adept at proactively fixing problems stand the best chance of retaining the silent majority who will otherwise vote with their feet if their needs aren’t met.
The post-pandemic era has ushered in several trends in customer success. An increasingly digital business landscape has required customer success managers (CSMs) to become more agile, engaging and data-driven. Like many sectors, automation will likely play a crucial role in the scalability of customer success practices. However, given the customer-centric mandate, meaningful personalisation will still be paramount.
The growing importance of customer success could see CSMs work more closely with sales teams to provide a more joined-up approach to prospecting and driving growth opportunities. The insights and knowledge gained by customer success teams could also prompt more engagement at the C-suite level. CSMs may be increasingly called upon to provide strategic direction, helping to shape executive-level decision-making and business models.
Perhaps unsurprisingly, artificial intelligence (AI) will play a significant role in shaping the future of customer success. In fact, according to Bain & Company, AI has already moved on from providing mere insights and is now actively defining product development and customer engagement. “The potential for AI in customer success is promising,” said Bain. “AI can improve and automate functions such as customer segmentation, reducing churn, upselling, tailoring features, coaching sales reps, suggesting next best actions, and targeting service.”
Given the aforementioned need for, and benefits of, customer success methods in modern business, the following tips can help you to build the effective customer success team of the future:
While you know your product inside out, new customers will need a certain amount of time and hand-holding to understand its intricacies. This is where an effective onboarding process can pay dividends. From the moment the customer begins paying for a product, the customer success team should be on hand to provide guidance and best practice (via kick-off calls, webinars or email) to save the customer valuable time and resources.
Having a suite of reliable customer success tools in place can assist the scalability of your customer success programme. Automation can play a crucial role. For instance, automated ticketing systems can allocate customer requests to relevant members of the CS team. Meanwhile, standardised email templates can also streamline the communication between CSMs and customers, particularly during the vital onboarding process.
An essential facet of customer success is collating feedback from customers. Surveying customers at crucial stages of the journey can provide a wealth of helpful information. The key is to be consistent and balance being proactive and invasive. At the very least, it’s good practice to survey customers on completion of the onboarding process and – crucially – at the point of cancellation to understand what the customer needs to remain with the business.
Segmentation is a handy tool in the CSM’s armoury. This can be as simple as listing all the customers that provided negative feedback and all those that reported success. Then, having amassed this information, CSMs can reach out to those customers to understand why they reached those sentiments. The CS team can then provide the broader organisation with qualitative trends that help to inform customer personas.
Customer success should consider the voice of the customer. Due to daily customer interactions, CS teams are best placed to relay customer highlights and pain points organisation-wide. These can be measured using specific metrics, such as customer health score (a blend of product/service usage and login data to determine the likelihood of renewal and any technical issues) and net promoter score (a measure of brand loyalty).
Customer success isn’t just a fleeting marketing trend. CS teams have become the glue that keeps customers and brands together. Particularly where SaaS and subscription-based business models are concerned. Effective CS can differentiate between a satisfied, growing customer base and unsustainable churn. While CS requires human and technological resources to execute correctly, the higher cost is surely losing customers through indifference.
Propel exists to fuel potential by placing hires at Senior, head of and Management levels across all avenues of Marketing, Tech, Commercial, Product and Design. We have extensive experience placing high-level candidates in strategic CS roles, as demonstrated by our support to Ardoq and Openblend. Our deep understanding of the tech industry and the needs of CS teams make us ideally placed to support your CS hiring requirements.
Don’t hesitate to contact the Propel team for more information about what we do and how our tailored solutions for the tech industry can benefit your business. Get in touch today on 0203 965 6524 or email email@example.com.
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