Foreword by Michael Eckhardt
Andreas Knoefel has pulled together an incisive set of ideas — and actionable insights — in his series of articles focused on “Crossing the Renewals Chasm”. In my role as Managing Director at Chasm Institute these past 15+ years, I’ve seen a lot of writing on this topic of software renewals and Saas / subscription-based Customer Success imperatives. But Andreas’s clear “Deploy >> Nurture >> ROI” framing provides an actionable construct that is truly valuable to executives in the SaaS world — definitely worth a read, and more importantly, to engage and act on these ideas that Andreas has brought to life.
Chasm Institute — Silicon Valley Office
The continued proliferation of cloud-based solutions and the parallel shift to subscription-based licensing models is a difficult transition for many enterprise software companies. They constantly inquire about various issues like: How do I adapt my culture?; How do I align my Sales, ProServ and Support teams?; How do I better engage with my customer base?; How do I successfully retain my customers year after year? Some companies are adding Customer Success positions to address these issues, but fundamental changes in engagement with the customer and the services offered are required in order to cross the Chasm and achieve wide adoption in the Early Majority and Late Majority. The Chasm methodology by Geoffrey Moore and the Chasm Institute describes the Full Product as a prerequisite to cross the Chasm. The analogy of the Full Product becomes now the Full Service in the Anything-as-a-Service world.
This series of four articles accumulates my experiences helping several companies to Cross the Renewals Chasm with the six pillars of my Customer Success Readiness framework: Playbooks, Onboarding, Community, Productivity, ROI and Alignment. With the products, services and processes I advocate, you will learn how to increase your renewals rate, and maximize your market penetration. You will be able to see how your traditional model of Sales, ProServ, and Support maps into the new Customer Success model, and by the end of the series, you’ll have the opportunity to take a brief self-assessment to assess how far along you are at adopting Customer Success in your company, and measuring your Customer Success Readiness Index.
© 2017 Chasm Institute. “Used with permission by Michael Eckhardt, Director at Chasm Institute”
Customer Success in the Cloud 2.0
When the first cloud solutions appeared, the Early Market readily embraced them. There were no huge upfront investments in perpetual licenses or huge implementation projects. Instead, cloud services were deployed with little support and fanfare – users could make their customizations and be up and running quickly. The Early Market embraced a Minimal Viable Product (MVP) without the more comprehensive capabilities and services expected by thriving and maturing markets in order to engage and renew them year after year.
Unquestionable leaders like Salesforce have already “Crossed the Renewals Chasm” and are now the dominant players in their market. Most companies have to change how they create a long-term customer experience and nurture a high Lifetime Value (LTV), including perhaps even your organization! In the same vein, your organization must develop a comparable Full Service to appeal to the Early Majority and get through the Bowling Alley and Tornado stages to become the dominant player in your segment.
Many companies struggle right out of the gate. If we look at the customer journey, the highest abandonment rate is in year one. Therefore, it is imperative that organizations set up the PLAYBOOK and ONBOARDING foundations to support customers from the very beginning. Year one is critical to facilitate renewal in the second and third year, etc. and to maximize the LTV in order to offset the Customer Acquisition Cost (CAC).
The Six Pillars of the Customer Success Readiness Index
As your customer base matures, so must your entire Customer Success ecosystem, including functions from Sales to Implementation, Support and Marketing. The following 6 pillars of PLAYBOOKS, ONBOARDING, COMMUNITY, PRODUCTIVITY, ROI and ALIGNMENT describe the strategic framework that lead my F100 customers to sustained Customer Success across Professional Services, Customer Support, and Customer Success, and result in successful renewals at the end of year one and beyond.
Each pillar has four levels: UNDEVELOPED, EMERGING, EXPANDING, and ultimately CONQUERING, depending on where you are in your journey. The first two levels will be explored in the next article in this series, focusing on the aspects of Deployment, whereas the third article will emphasize the aspects of Nurturing. The final article in this series is geared towards the demonstration of ROI, the ultimate key to unlocking renewal revenue and maximizing the Lifetime Value of your customers.
The customer is the most important asset of any business. Today it is even more critical to define and implement a Customer Success framework that will allow you to support and nurture your customers. This initiative has to eventually include the entire organization. Appointing a head of Customer Success and developing a team is the first step for many companies. The above framework will hopefully help you to either get started or move to the next level. Three subsequent articles will explore each pillar, and help you determine where you are in your Customer Success Readiness and what you need to tackle next.