Why Customer Success matter?
After months of negotiations and marketing dollars spent, your sales team just closed and won multiple million-dollar contracts — congrats! It is now up to your team to deliver products and services. Who do you entrust this responsibility to meet the challenge and expectations of customers? Why Customer Success matter is ensuring you deliver on the promised value and returning a strong investment from acquiring those customers. Customer success is 90% where the revenue is.
Customer success matters when driving customer revenue churn and expanding revenue opportunities within your existing customers. The cost of revenue from existing customers is far lower than the cost of acquiring new customers. Having a strong retention rate ensures you have a baseline to monetize and expand value. The key is ensuring that the goals of customers are aligned with yours; when customers succeed, you succeed.
Recognizing the signals on when you need to rethink your customer programs
- Your revenue churn rate is higher than your acquisition rate
- Feature adoption is slow and customers don’t get to the “aha” moment
- Growth of your existing revenue is slower than the growth from new revenue
- A high volume of customer issues follow onboarding
Any of these signals should immediately jump-start your analysis in understanding what the underlying factors are. Here are 5 success factors when building effective customer success programs.
Meet customers where they are in their journey
The customer’s journey is about how customers navigate success and failures to bring their products and services to market. Many companies conflate the buyer’s journey with the customer’s journey. The buyer’s journey is a useful framework to align your marketing and sales efforts when presenting selling opportunities to your customers. It is not however the customer’s journey.
Using the customer’s journey enables companies to understand the challenges customers typically faced and how to meet them. It allows a team to design products and services in anticipation of those opportunities and failures while allowing you to stay ahead of customer’s needs. Having a clear definition of each of the stages along with owners and outcomes will ensure your teams operate in clear swim lanes while still being agile to challenges and growth. Your sales and CSM teams can work together on landing and expanding customers by engaging with each customer asking, “What are your market expansion plans and how can we support your growth?” This simple yet effective method of recognizing the stages your customers are in can better plan your customer touchpoints and target resources where needed.
Segment and differentiate your service
While we all want to provide the highest level of service to all customers, spreading your resources across customers does not drive deep engagement. Instead, focusing your resources on customers with growth potential enables your team to drive better customer outcomes. A customer segmentation strategy works best when it is aligned across an entire organization in delivering products and services. The segmentation strategy can be based on revenue and firmographics or based on product usage and engagement to define varying service levels. The strategy also includes clear sales revenue tiers, differentiated service levels for customer success, and resolution targets for engineering.
Once you have defined your segmentation strategy, implement clear service level objectives (SLO) for measuring the effectiveness of how you are servicing each of those tiers. These can be levels of responsiveness and resolution speeds for both your customer success and engineering teams. Sharing your SLO results transparently with internal and external partners will drive greater accountability and commitment to further improvements in service delivery.
Onboard and support customers
The goal in any onboarding program is to help your customer get to the “aha” moment as quickly as possible. Training and educating customers through a simple and effective onboarding program can help reduce customer churn. Whether your onboarding includes a CSM or a navigated tour of your product, the key is making sure your customer knows how to use the product and the value of your product is reinforced through repeated use. Having a clear outline of what customers should expect, the resources involved and when to activate features, accelerates the Time to Value and, moves customers closer towards being “hooked” by the product. To understand when your customers are “hooked”, measure the correlation between the time it takes for customers to use features and the value gained from its use. Measuring success will vary in SaaS products; whether your product saves time, provides ease in collaboration, or makes recommendations based on data, the objective is to understand how your product is used and when customers start recognizing value. To learn more, read my article on improving customer onboarding.
Your support team plays a critical role in providing timely support and resolution of issues while at the same time creating helpful content to preempt issues and reduce friction. Quick start guides that provide navigation help and resolution to common issues are a great way to start scaling a support team. Having a clear and transparent set of operating metrics focused on balancing resolution and effectiveness ensures your support team is not only resolving customer issues quickly but also implementing effective methods of reducing product issue drivers while further improving your product.
Implement your success strategy
Your customer success goal is to increase the value earned from your customers. Whether you choose a goal of increasing ARR or NRR, it is the responsibility of the customer success team to nurture relationships, align with the success factors of customers and expand the value with each of their customers. An effective CSM understands where their portfolio of customers are in their journey and is proactively engaged with those customers to help them navigate their challenges and success. Many customer success teams today use a customer success management tool to track their activities, measure customer health and report against their portfolio. The best teams are those that can prioritize activities based on customer health and where customers are in their journey. Adopt a framework that allows your team to organize their activities and allow them to make decisions on where best to spend their time. An example of a framework I use is Grow, Maintain and Defend.
Grow — customers that have the potential to expand based on where they are in their journey.
Maintain — customers that are healthy and operating with little need for intervention.
Defend — customers that are in need due to gaps in product and service and are a churn risk.
Create your team’s playbooks for each of these areas, outlining the activities and the engagement frequency will help your team plan their activities and measure the outcomes of their engagement.
Build your team
Start with WHY your company and customer success team exists. The mission of many high-performing teams begins with a larger purpose that provides intrinsic motivation. Most customer success teams operate at the center of customers, products, sales and issues; these teams typically face a daily barrage of issues and monetary compensation can only provide so much motivation. Once you have a clear mission statement, develop your objectives and key results based on the attainment of outcomes towards that mission. Hire individuals that have effective communication skills, good project management skills, and can develop trusted relationships with your customers. Invest in your CSM team by empowering them with similar skills and technology that are on par with effective sales teams. An effective customer success team can reduce churn, drive renewals and expansions while delighting your customers.
About the author: Shawn Lim. 20+ years experience working with large high-tech companies like Google, Facebook, eBay, as well as early venture startups. He has led several transformations in customer programs, improving customer onboarding and revenue expansions. He lives in the Bay Area outside of San Francisco with his wife and 2 daughters.