It’s time to look at the future of Customer Success (CS). This is critical for CS leaders as the SaaS industry continues to evolve, and the financial markets (public and private) are placing an ever focused lens on profitability. As this intensifies, CS will evolve itself in one of two ways. If it can figure out how to measurably impact shareholder value, it will become a strategic function worthy of strategic investment. If it cannot, it will become an enablement function/cost center that will be limited in its capacity.
Therein lies the core point; CS has to start focusing on shareholder value, which will invariably come down to how it can impact company growth in a highly leveraged way. In the Cloud world we live in today with access to incredibly detailed information about customer usage, we can make an enormous leverage impact on growth in three very measurable ways: Improved Renewal Rate, License Expansion, & New Product Sales.
The leverage comes from two angles. First, the data allows us to be incredibly surgical in how we target any program associated with the three items above. No longer do we have to invest in teams of people virtually “walking the halls” to figure out what is happening with the customer.
Second, armed with this data, we can approach the customer in an advisory-based capacity to outline what they need (not what we want to sell them), and the benefit it will provide. This enables us to create and close opportunities in days and weeks, instead of months, without an expensive marketing/sales investment.
There are already many Cloud companies who are already operating in this model, but they arrived at it by their fundamental design. They aren’t inventing a Customer Success organization after the fact, but rather designing the company to operate around CS from the beginning. These companies are primarily ones with products geared towards solving individual or group problems, rather than complex enterprise solutions. Their customer journeys are intensively focused on satisfying a very small number of personas in a very individualistic way. However, this should not diminish the highly leveraged impact on they are making on shareholder value from the start.
Some interesting research is now being published on this topic, see here.
A next logical question which has already been raised by some of my insightful colleagues is why these, and not more customer related measures like NPS, or referenceability? This is where the initial framework comes in that will make clear why just NPS is not the answer, and also help define the types of programs you need to implement to affect shareholder value.
The way to start is to address the understandable concerns that many bring up to my approach. And that is…am I suggesting that we turn CS into a “sales” organization? That is not what I am asserting, and wouldn’t make sense at all.
What I am actually suggesting is exactly the opposite. It is not about SELLING anything. Rather, it’s about creating the conditions for the customer to WANT and NEED more of your product, which you will either field as an inbound request, or through targeted conversations based upon data analysis of usage trends (See my previous post).
Remember, customers buy your software because they want it. They are eager to solve some particular personal/group/enterprise business problem. At the point of becoming your customer they are eager, excited, and energized, not skeptical, frustrated, or apathetic. If we focus our efforts on helping them achieve their desired outcomes with a high degree of satisfaction, they will WANT and NEED to use more of our products faster than they would otherwise.
With this context, why should we focus on Renewal/Expansion/New Products and not other extremely critical items like NPS or referenceability?
I guarantee each one of us could sit in a room with our colleagues and identify 100+ programs that will positively impact customers. No matter the level of funding there is for Customer Success, it will never be anywhere near enough to execute on even 10 such programs. We are lucky if we can do 3-5 in a broad and meaningful way. We have very critical choices to make, and the lens we use to make these choices will define the size and type of Customer Success organization we build and impact we make. As an offside, there is another discussion that we can have that centers around viewing CS as a set of people or programs.
I default to looking at everything as a program. As a program we can clearly define and evaluate impact and costs, and constantly adjust or discard. We can also critically look at how a program can be run with the smallest number of people or none at all. Having “people” be the organizing principal will restrict your thinking and flexibility.
My way of making these critical choices is to laser focus on the ultimate outcome I am trying to achieve. After, identify the set of core drivers to that outcome. Finally, choose the programs that will impact the drivers. Let’s use a very simple example to illustrate.
Note that some of these drivers and programs will be outside of the direct purview of CS. It is our responsibility to make sure we are aligning the company, not just the people in CS, to programs that will drive shareholder value.
Herein lies my central thesis on the future of CS. We can choose top level metrics that impact shareholder value, or we can choose top level metrics that we can only loosely tie to shareholder value. For example, many of us do some kind of NPS survey. We could tie CS to a top-level metric of increasing NPS.
Is it good to increase NPS?
Of course, no one would argue that. Having NPS as the top level focus will create a set of programs focused on the contributing factors to poor NPS. I can guarantee some of these will have zero impact on shareholder value.
On the other hand, by tying metrics to shareholder value, it will force us to laser focus on programs that will, as a byproduct, greatly increase other metrics like NPS and loyalty. If we focus on programs that lead customers to want and need more of your products, they will be amazingly happy and loyal.
Let’s Do That!
I am not suggesting we stop doing NPS surveys, or monitoring and managing referenceability. These are critically important data points and tools. Instead, shift the bulk of your very precious investments to focus on shareholder value, and NPS et all will be a natural byproduct.
About the Author
Tom Weeks is an executive at Apigee where he is maximizing digital Success by enabling/supporting customers. He has broad experience in system integrators, traditional ISV’s, and SaaS companies. He was an executive team member in 3 very successful liquidity events (most recently Skire by Oracle and Business Objects by SAP). He has built and managed global sales teamsand has broad product experience across Mobile/API’s, Business Intelligence, EPM applications, ERP, CRM, Collaboration and eProcurement with knowledge across a variety of industries.
See his full LinkedIn profile here.