Evaluating the Customer Journey
Where does the customer journey start and end? In actuality, It begins from the time the customer is a prospect and is considering a solution for their pain point. The journey ends at the completion of that customer relationship, which can be a lifetime journey till either company no longer exists, they move on to an alternative solution, or the pain transforms into another need. Marketing Automation covers the journey of converting a lead to a customer, and from there onwards, Customer Success is in charge of the journey.
I come from the Marketing Automation world and was in the front seat when this category exploded. At the time, Marketing Automation adoption grew at an astonishing rate. Today, Marketing Automation is used by 42% of companies, CRM / Sales Automation systems by 54%, while Email Marketing technology has the highest adoption. It’s a mature category with a huge number of vendors serving this space, which has exploded exponentially in the last few years.
Relative to Marketing Automation, Customer Success is a newer category. As it is still evolving, most of the roles and responsibilities of professionals in this category are still to be clearly defined. There’s also a confusion whether it’s a philosophy, a culture, a title, or a platform! It can possibly be all of the above… Customer Success often takes up where Sales and Marketing leave off, ensuring that the customer knows how to use the product to their best advantage. They also take on the daunting task of deepening and broadening the customer’s engagement with the product or service.
It’s always been fascinating that Customer Relationship Management has been more about lead management. In recent times, another trending term, Customer Data Platform, which is a marketer-managed system that creates a persistent, unified customer database, that is accessible to other systems has also come about. This perhaps reflects the obsession around customer acquisition within most organizations. While there’s a constant pressure to acquire new customers or new logos, sustainable customer happiness is frequently an afterthought, especially since It is surprising to notice the incredible influence a happy set of customers can have on a company’s growth. A good example of this phenomenon is Atlassian, whose growth was largely driven by word-of-mouth and customer referrals.
Many marketers might look on in disbelief upon hearing that Customer Success will evolve to be a bigger category than Marketing Automation, but here are four reasons to support this claim:
1. The Impact of Happy Customers
Happy customers often spend more, return for more, and share more about their great experience. Wall Street and public stock buyers have also realized the importance of churn in SaaS companies. There is a great research report out from one of the leading investment banks describing the factors that drive public company SaaS valuations. While the top factor impacting the multiple on revenue is growth rate, they clearly show how both retention and upsell are strong secondary factors. Their analysis shows that an incremental 2% increase in retention leads to a 20% higher multiple, and an incremental 2% increase in up-sell leads to a 28% higher multiple.
2. The Number of CS Jobs vs. the Number of Marketing Jobs
If you search on LinkedIn, you will find 7000+ Marketing Automation jobs vs. 240K+ Customer Success jobs. The numbers already speak for themselves!
3. The Growth of Subscription Economy
We know ourselves how many subscription products or services we use professionally, as well as personally. Customer Success can harvest more revenue from those established accounts via the Pareto Principle and prove it’s worth much more effectively than Marketing Automation can. You can quantify the costs benefit analysis using basic metrics and see that SaaS and subscriptions are the way of the future, and thus, so is Customer Success!
4. Customer Success will Subsume Customer Support, Training, Professional Services, Account Management, Customer Advocacy
Software is eating the world, subscription is eating software, and Customer Success is eating subscriptions. The reason is simple, your customers are not in the business of using your software. They have a business to run, issues to solve, and people to manage. Habits take time to form. It takes 21 continuous days of use to form a habit. Without Customer Success, there’s no habit formation. One can argue that the product should be designed in such a way that makes it necessary to use, which is really only possible in rare scenarios. This is why the importance of Customer Success will only grow. Organizations will feel the need to consolidate all of their customer interactions in one place and the current splicing of the customer journey into the various buckets of Customer Support, Training, Professional Services, Account Management, Customer Advocacy is unintuitive and many times, unproductive. These groups do not always share information, and may either be independent groups or clustered with Marketing or Sales. A more natural fit is to house them in Customer Success, as all these functions contribute to customer happiness. I am confident in making the bold statement that eventually, all of these functions will be consolidated under Customer Success.