QUICK LINKS:
- Primary Role of Customer Success
- The Customer Success Life Cycle
- Top Three misconceptions about Customer Success:
- Customer Support Metrics
- Product Usage Metrics
Customer Success: An Introduction
As a businessperson, you must have heard the term Customer Success or CS in your daily life. Maybe you are even planning to execute a customer success program currently or planning to organize a team to concentrate on your CS strategies. Organising a Customer Success process Is not rocket science neither you can take it lightly. Organizing Customer Success is like challenging the very foundation of your own company. As a business owner, you have to interact with your customers and find out an innovative way to restructure your departments.
The process of customer success may take a lot of your time. Moreover, you may face many challenges along the way. On your way, there will be many traps, which you need to maintain distance. In this Guide, you will get immense knowledge about the process of Customer Success. We have created this guide with the help of business legends who possess years of experience in the field and works with several SaaS companies. This guide will help you to create a successful roadmap for your Customer Success. Whether you are an experienced person or a newbie, this guide will be a great help for you.
1. What is Customer Success?
Providing a concise definition of Customer Success would be risky for many companies. This is such a broad subject that if we try to fit it in a small frame, then it may cause negative implications for some organizations. In our journey to customer success, we will discuss every aspect of it. In this article, we will use essential concepts from many renowned experts and discuss the importance of Customer Success.
Customer Success Definition
As per the statement of Lincoln Murphy, Customer success is the positive outcome of a satisfied customer when he/she interacted with your company. A customer always has a specific desire regarding the result of your product and services. Customer Success is achieved when you successfully fulfilled the desire of your customer with your quality service and user experience. Murphy doesn’t put all emphasis on customer success as the main priority, but he refers to all the interactions a customer has with the marketing, sales and other team members of the company.
Aaron Ross and Jason Lemkin did not agree to the above point. According to them, the market has changed. The initial purchases experience of a product by the customer serves no longer the real journey of customer success. However, they suggested an alternative hourglass shaped model. The model states that a vital portion of revenue resides in adoption, retention, expansion, and advocacy.
Buyer to Customer Journey
According to the theory of Murphy, Lemkin, and Ross, customer success is not only meant for SaaS companies. Any company, be it B2B, B2C, product or Service based, can achieve great success, if it helps its users to achieve their desired outcomes. Existing satisfied customers play a significant role in revenue generation for the company through upselling, cross-selling and referrals.
However, compared to companies from other field, SaaS companies should focus more on Customer Success. SaaS companies run on the subscription-based business model. A SaaS company should always be alert to their customers. A customer can cancel his/her membership at any point in time and move to a new service provider. As a business owner, you must keep your eyes and ears open. It is crucial that you work on the misunderstandings that might trigger your customers to move away.
Why is Customer Success Important?
In this subscription-based world, customer success can either make a SaaS company or break it. All SaaS companies should make customer success their core operating philosophy. A well-executed customer success will lead to higher customer lifetime value(CLTV), negative churn and Maximized growth, which in return will create a smooth customer success journey.
The journey of customer success adapted a lot from the hourglass pipeline from Ross and Lemkin. However, when it comes to transitioning a customer through the buyer and execute a customer success journey, the companies consider a different perspective rather than following Ross and Lemkin’s.
Primary Role of Customer Success
Every customer is different. You can expect the same level of satisfaction from every customer. While one customer might benefit from the Saas application and the others may not. So, you may focus on those buyers who have potential to benefit from your products and services. At the same time, it is better to move away from bad-fit customers before receiving any negative word of mouth.
During the buyer journey, a customer success can help you a lot. It also assists you in increasing your revenue by increasing sales. The best way to generate revenue is to create an ideal customer profile or ICP and assign characteristics to it. Some components, which you can include, are revenue, region, vertical, employee headcount, technology and size of customer base. With using these characteristics, you can filter out those companies that perfectly fit for your solution in your journey for customer success.
Role in Onboarding & Adoption
In the customer success process, onboarding plays the most strategic part. In this phase, a buyer tries to interact with your company as a customer. In most cases, the buyer wants to reap the benefits of the service that your provides. A customer success journey cannot be achieved without a stable adoption phase. Try to make a good impression that will result in retaining your customer as a subscriber. You can also use an innovative online service, often used for video onboarding. It works fast and simply, with high-quality protection from fraud. A satisfied customer in return will try new services and give good feedback about you to their friends and colleagues. Try to avoid a bad reputation, as it will only lead to churn and tarnish your business status.
WIth onboarding intelligently and prioritizing faster wins, your customer success team must minimize the time-to-value for new clients. To start this, first, you have to figure out how your products could be beneficial for your new clients. After that, develop new milestones for success. The new milestones will assist you in striking the right chord between high tech and high touch engagement points and provide support accordingly. High tech includes engagement points includes guided tours, targeted help, feature callouts, etc. High touch engagement comprises kickoff calls, end-user training, onboarding sessions, etc.
Role in Driving Retention
Your revenue growth can face a drastic impact with a slight difference in churn rate. Retaining a customer is far less expensive than acquiring a new customer. An existing customer is someone who has already integrated your product with his or her business processes and has a fair idea about the value your offer. Retaining existing customers is always a challenge, as your competitors will always try to lure your customers away by enticing them with lucrative solutions.
You have to stay prompt and proactive regarding the needs of your customer. Rather than waiting for feedback from your clients, it’s better to monitor the progress of your clients. Figure out if the new update is working fine. Enquire your clients about their satisfaction level with the new function.
Try to detect all the small and significant symptoms of churn and take necessary actions. It’s crucial that you have to drill down to the level of your user and analyze the interactions of your customer, with your products.
Role in Driving Expansion
A satisfied customer is always hungry for more. A satisfied customer will more like to upgrade its subscription for additional advantages such as additional licenses, functionality or seats. When the business of your client starts to grow, he/she will try to purchase complimentary features or services. Now, facilitating the additional needs of your customer is your primary objective.
Establishing an ideal customer success team is necessary. A Customer Success team have a deep understanding of the needs of each user. They assist each user by recommending them the products or features, which will benefit the user the most. Relying on the intelligence of the user, the Customer Success Teams or CS teams act as trusted advisors and make relevant recommendations to formulate the right expansion package.
Role in Driving Advocacy
If a customer managed to enjoy a spectacular experience with your product, then it is more likely that he/she will recommend his friends and colleagues about your service. You have to keep in mind that, each interaction with your customer is an opportunity to create an advocate. With proper communication with your client, you can generate high-quality leads for your business.
The Customer Success Life Cycle
A streamlined customer success process can offer two types of effects on your business. The first effect will stabilize your sales pipeline. The CS process will allow you to avoid bad-fit customers and you can target best-fit customers more who have highest expected CLTV. As you filter out all bad-fit buyers at an early stage, it will become easier to study the journey of your customer success program.
When you combine your customer success life cycle with the best-fit customer base, it will help you to generate more revenue for your business. When your customers are benefitted from your logical expansion, onboarding, and need-driven product iteration, they will most likely provide high-quality referrals for your business.
3 Misconceptions about Customer Success
Nowadays, all SaaS and non-SaaS organizations are practicing Customer Success programs. What most organizations do not follow is that CS is a continuous process. It is wrong to assume that CS is some silver bullet, which can be, utilize once to rectify all customer related issues in one go. To set a business apart from competitors, companies must focus on releasing the full power of CS. While short-term CS can satisfy the need of customers at an initial stage, but it fixes the issues on a long-term basis.
Here are the top three misconceptions about Customer Success:
1. Only one department is required for Customer Success
There is no doubt that every business should follow customer success. When it comes to housing and reporting customer success, it became debatable. Will it be ideal to report the customer success data to Sales or marketing? Some report CS directly to the CEO while other suggest reporting to the Chief customer or Experience officer. According to most SaaS companies, CS is processed to manage the relationship with existing and new users. No matter which method companies choose, it is impossible for CS specialists to satisfy customers on a daily basis if the rest of the workforces does not involve themselves in the CS process. For example, the marketing and sales team must focus on attracting best-fit customers while the product team works with CS team to develop the features according to the demand of customers.
2. Customer Success = Customer Support
This statement may not be entirely incorrect as CS teams are responsible for supporting users as well as cross-selling and upselling products to the users. The primary function of a traditional support team is to attend the issues of a customer. In traditional support, the team focuses on the problems after it takes place. However, a CS team focus on anticipating the issues beforehand and make sure such issues never happen again in future. In traditional support, the team focuses on selling their products to a customer without realizing the need of the user. A CS specialist performs in-depth investigation regarding the customer needs and then recommend appropriate upgrades and adjacent solutions.
3. Only NPS and Customer Satisfaction Surveys are the only requirements for a Customer Success team
There is no doubt that NPS and Customer Satisfaction Surveys provide valuable information about customer’s feedback about your product. However, if you use only a limited approach towards customer success, then your customer success team will soon become blindsided. To identify accurate insight of a survey’s question, you have to an in-depth analysis of the matter. With a survey-only tool, you can only measure a specific answer to all your survey segments. What it lacks is to monitor the behavior and interactions of different segments. It also does not show the trends and correlations of the segments.
2. Developing a Customer Success Strategy
After considering the effectiveness of Customer success and figuring out why it matters, you must be thinking about how to plan a suitable approach to establish and execute a customer success strategy. Every SaaS business requires a different approach based on its business model, stage of growth, customer base, size of operation and budget. Still, you can use some elements to build the foundation of you CS Strategy.
In this article, we have designed a 6 step CS Strategy which is readily adaptable and applicable to your business. Building a well-tuned and aligned customer success plan according to your company mission will be your first step. The next steps will put more emphasis on developing a success roadmap that analyzes the valuable segment of your business and indicates the results at each milestone.
Step 1: Define customer success objectives
This step includes the necessary decision you must take with each segment. Even though your customer retention numbers may dive, it’s crucial that you let go your bad-fit customers or at least put them in low-maintenance accounts. You can guide your bad-fit customers to choose any other products or subscription plans with high-tech engagement points.
Best-fit customers are those customers who have benefited from your product in the past. In your path towards customer success, you must put all your best-fit customers by analyzing correctly. According to the theory of Murphy, best-fit customers (Also known as vectors) can be divided into three categories.
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** Negative Vector:**
Lack of product training or improper onboarding experience is some of the leading cause of a negative vector. If not taken proper action then there is a high probability that a negative vector is going to cancel his/her subscription. As a company, you must focus on keeping your negative vector out of the churn danger zone within an average period of three months.
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** Neutral Vector:**
A neutral vector is that client who might be happy with your service but doesn’t have the intention to renew its subscription from you. To convert a neutral vector into a positive vector, you have to try your level best to convince him/her within six months.
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** Positive Vector:**
A positive vector is always ready for logical upgrades. Moreover, a positive vector welcomes cross-selling and will happy to recommend your service to her/his friends. You must focus on maximizing your annual revenue with a positive vector along with increasing your quality referrals.
Step 2: Establish customer success metrics
Let’s talk about the process of measuring customer success. Using absolute numbers, you can get a sense of the increase or decrease in customer success metrics such as total number of issues, number of users and revenue. However, with percentages and ratios, you can understand the relationship between different aspects of CS such as its efficiency and effectiveness. Using data from both the category can result in an overall consideration and comparative performance. It will also assist in evaluating the versions of product and growth of customers.
Step 3: Link company culture and mission
While formulating customer success, your primary aim should be to escalate your customer success plan on a continuous basis. That can only be achieved by taking your company’s culture, missions, and foundations into account. So before jumping into Customer Success strategy, make sure all your department are customer-centric. If you find any gap, then try to fix that gap and ensure all your department centers around customer success.
Step 4: Ensure alignment and accountability
When it comes to an understanding and implementing customer success, it is essential that all department heads and their staff shares an equal knowledge of Customer Success. Demonstrating direction support from C-Suite is a faster way to realize all your employees about the importance of CS. With C—suite, you can deliver your message about CS to your employees and distribute specific Customer Success tasks to each team. Then your team who interacts with customers can further assist you in providing performance measuring data.
Step 5: Develop your blueprint
This step will help you to figure out enough information about your target customers. You can use that information to find out the way to move your customers from one stage to another customer success journey. With proper analyzing skill, you can also find out the decision-making points of your customers.
Some essential questions worth finding answers for are:
Step 6: Segment wisely
After finding the correct answers from the previous stage, you can easily define your segments along with detecting the difference between best-fit and bad-fit customers.
What is the reason that makes an organization a bad-fit organization for you?
Completing all the above steps, you will have a fair idea about your most valuable segments. Now you can apply necessary steps to foster the success of your best-fit customers and off the board all your bad-fit customers.
3. Customer Success Metrics
Metrics can be described as a bridge between your customer success strategy and the data generated by your Users. Now a user data is created whenever a user interacts with your company, your products, upgrade your products or cancel his/her subscription. You can use this information to figure out various aspects of your business, but it is also crucial that the data must be in easily readable format.
Business Metrics
Business Metrics are essential for your business, as they inform you about the financial health of your organization along with revealing the source of revenue. A significant part of the revenue is coming either from your loyal users or recently acquired customers. It also mentions the stage of Customer Success Journey, in which you start earning revenue. Business Metrics also provides you hard-core data about your product performance and user sentiment by measuring customer health.
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** Customer churn rate**
What to measure: It includes customers who cancel or downgrades their subscription
Best practices: For most SaaS businesses <5% is a common goal
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** ** Revenue **churn rate **
What to measure: Percent of revenue lost from users who canceled or downgraded the subscriptions.
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** Customer Lifetime Value (CLTV) **
What to measure: expected revenue generation from an account, for the company
Best Practices: revenue is expected in increase during the retention, expansion and advocacy stages.
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** Customer Acquisition Cost (CAC)**
What to measure: cost to acquire a new client
Best Practices: With more positive word of mouth, the cost to acquire a new customer will decrease with time
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** Customer Health/td> **
What to measure: use “red, yellow, green,” health indicators to have the high-level view of potential churn risk
Best Practices: out of all green customers, around 90%+ are healthy.
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** Monthly Active Users (MAU) **
What to measure: users’ logging into a product/month (in percentage).
Best Practices: more than 95% falls into ideal customer segments
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** Annual Recurring Revenue (ARR) **
What to measure: yearly revenue generation from all customers (in percentage).
Best Practices: corresponding revenue expected to grow faster than your top competitors did.
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** New Customer MRR **
What to measure: Monthly revenue received from new clients
Best Practices: It will regularly improve.
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** Net MRR churn **
What to measure: Monthly revenue you lost from churned clients
Best Practices: try to maintain negative value
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** Expansion MRR **
What to measure: Monthly new revenue generation on a monthly basis by current customers
Best Practices: At least offsetting the churn and enough to negate net MRR churn.
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** Trial Conversions **
What to measure: percentage of clients who converts from free trial to paying
Best Practices: the goal should be for at least 50 percent
Customer Support Metrics
You customer success manager not only help you to anticipate all the requirements of a user they also can assist you to execute the customer success process smoothly. However, there will be specific situations when even your efficient CS Managers even face tricky questions and bugs that might require immediate attention. Established a customer support metrics can help your CS managers to understand all the critical issues and will assist them to measure the period at which they can rectify such problems. With the above indicators, it offers you a tremendous opportunity to identify the defective function of your products and assist your CS managers to take appropriate product decisions. Some essential product changes often include adding new touch points, releasing new versions and modifying the existing versions.
**Tickets **
What to Measure: Number of tickets generated per user
Your Target: decrease in tickets with every update in products and touch points
**Tickets per Feature Category **
What to Measure: tickets per feature category (in percentage)
Your Target: decrease in tickets per feature category with every update in products and touch points
**Repeat Tickets **
What to Measure: what are the percentage of queries that are not rectified after issuing a ticket for each time?
Your Target: As per IFC, it should be below 25%.
**Average Time to Ticket Resolution **
What to Measure: Average time is taken to solve one query of a user.
Your Target: depends on the complexity and product, but ideal time should range between 4 to 24 hrs.
**Customer Effort Score (CES) **
What to Measure: how hard it is for a user to use a product or a specific feature of a product.
Your Target: decrease Customer Effort Score with every update in products and touch points
Product Usage Metrics
Its unexpected from a user to provide you every information that helps you to streamline the customer success process. To know every tiny behavioral pattern of your customer, you have to pay more attention to how they utilize your product. You have to monitor the specific pattern of their usage and try to improve that spot area. If you didn’t find any recent product usage data of any of your user, then it means that the user stopped finding your product useful and planning to move out soon.
Product Usage Metrics:
**Feature Adoption **
What to measure: Feature adopted in percentage
Your Target: Must increase in case of new customers. With existing customers, it should at least remain constant.
**Feature usage **
What to measure: frequency of usage of a specific feature by each user, segment, and account.
Your Target: Must increase in case of new customers. With existing customers, it should at least remain constant.
**Feature Churn **
What to measure: Percent of customers who don’t use a specific feature anymore
Your Target: use high-tech and high-touch engagement point to decrease the issues in coming future.
**Feature adoption by upper quartile **
What to measure: Total percentage of features used by your top 25% users.
Your Target: measure the upper quartile activity and identify the most benefited customers.
**Login activity by upper quartile **
What to measure: the login frequency of your top 25% users.
Your Target: measure the upper quartile activity and identify the most benefited customers.
Feature usage by upper quartile
What to measure: The usage/per-feature frequently of your top 25% users.
Your Target: measure the upper quartile activity and identify the most benefited customers.
**Product usage efficiency **
What to measure: The Level of competence a user have with your product
Your Target: Must increase in case of new customers. With existing customers, it should at least remain constant.
**Number of licenses/seats used **
What to measure: Number of seats or licenses claimed by an organization using your product
Your Target: Must increase in case of new customers. With existing customers, it should at least remain constant.
A closer look at Customer Success NPS
Net Promoter Score is a reliable and popular methodology used in the SaaS world to calculate the customer experience. Without an NPS, it would be futile to execute customer success metrics. In this methodology, users are asked few questions, and their answer is ranked from 0 to 10.
For example: On the scale from 0 to 10, how likely you will recommend our product to your friend or colleagues? The NPS score range from 0 to 10 which is obtained by deducting the % of detractors from % of promoters.
**Customer Success NPS **
**Promoters **
What to measure: percentage of Users who score 9 or 10.
Your Target: User % should be above 65%
**Passives **
What to measure: Percentage of users who scores between 7 and 8.
Your Target: Must decrease passive users and turn them into promoters.
**Detractors **
What to measure: Percentage of users who scores below 6.
Your Target: To keep detractors below 15%.
Various studies have confirmed that any company that possesses a high NPS can outdo its competitors by a factor of more than 2. Studies also state that, in a successful company, the average CLTV of promoters are supposed to be eight times higher than the detractors do. As a reason, a customer success team conduct NPS Surveys to gather relevant data regarding customer sentiments. The survey helps the CS team to identify those users who can be approached for upselling and cross-selling opportunities. Moreover, it also helps in opting out those customers who do not follow the company’s optimal customer success path.
The in-app method is the best way to execute an NPS Survey as it leads to high rate of engagement. As the in-app method is a “Zero moment of truth” method, the response of users is expected to be more. You can also tailor your survey accordingly to measure a particular aspect of customer experience. For example, you can add a comment section to gather additional feedback after a user uses a new feature or complete the onboarding process.
4. Customer Success Team
Without the involvement of the right people, you can’t expect your strategies and metrics to provide you the expected result.
So you must be curious to find out how to gather the best customer success team?
How would you make different functions to work with each other and enable them to customer growth from their ends?
There is not a one-word answer to these questions. It is still a debate among companies when it comes to housing the department of Customer Success. Which department should include the Customer Success department is still debatable. Reporting Customer Success information to the executive level is also a matter of debate.
Three types of reporting:
- ** Reporting into sales under the CEO**
- ** Reporting directly to the CEO**
- ** Reporting to a Chief Customer Officer**
Chief Customer Officer
Recently, the title “Chief Customer Officer” is emerging at a rapid pace. A Chief Customer Officer is a top position that appears at the top of the customer success org chart. They are typically responsible for handling the entire management of Customer Relationship. They manage Customer Relationship in areas such as marketing, editorial, product, and success. When it comes to managing customer interaction, they follow a singular vision. They also possess adequate autonomy to act on the more significant issues. They are responsible for defining goals, formulating strategies for best-fit segments and also engage key accounts at a C-level.
VP of Customer Success
The work of the VPs of Customer Success is to formulate tactical plans and operations, according to the strategies from CCO. Apart from improving workflows between teams, they also work their way to scale operations without hampering the user experience.
Director of Customer Success
Being the leader of the CSMs, the work of a director of customer success is to understand all the accounts on a deep level. Apart from that, he/she is also responsible for monitoring the overall customer health and ongoing trends. They also act as an intermediary between VP of customer success and chief customer officer to manage escalation and present urgent CS related issues in from of them.
Implementation Specialists and Onboarding Management
People with these roles are appointed to put all their focus on onboarding or implementing the CS process. This phase of customer success is known to be the most critical one as its main aim is to reducing churn and executing customer success accordingly. The team members accept the handoff from sales to CS and the forward an account to the CS manager after completing the onboarding process entirely.
Customer Success Managers
A customer success manager has to handle all the accounts on a daily basis. His/her primary work function involves in adequately execute the operational responsibilities handed over to him/her in the CS journey. To make specific recommendations, a customer success manager has to effectively monitors the health of customers, facilitates onboarding, build relationships with the users and have an in-depth analysis of the data. A large user based SaaS business includes two types of customer success manager named High-tech CSM and High-touch CSM. A high-touch CSM only works with fewer high worth accounts and work closely with top valued segments. The High-tech CMS handles more clients who generated to them through automated touchpoints.
5. Customer Success Software
To execute success strategy, you have to empower your customer success teams with a carefully chosen tech stack. There are extensive ranges of Customer Success solutions available on the market, and we will discuss some best of them along with their key features.
Customer Success Platform
Customer Success platforms are developed to assist you in your Customer Success Journey more thoroughly. They come with features such as data analysis, in-app user touchpoints along with a capability of in-depth segmentation. Their functionality differs from one platform to other. What may be suitable for one SaaS business might not produce the same result for different SaaS business.
Products:
UserIQ:
It includes features such as Data integration across product, customer success, and sales & marketing team. It comes along with spectacular features such as digital user engagement, and in-depth segmentation based on NPS surveys and product usage
**Client Success: **
It offers solutions in Customer analytics including customer health. Apart from integrated communication, product usage, and goal/milestone setting across segments, it also displays different steps of the customer journey
Gainsight:
It offers features such as Customer lifecycle management across segments. It gives a clear picture throughout the customer journey with data analytics and high-tech & high-touch engagement points.
**Bolstra: **
It contains valuable features such as Customer health monitoring and data drilling at the account level. Other features include task allocation to customer success managers, and contract and customer journey management.
Churnzero:
With Customer engagement tracking, customer intelligence, user segmentation, you also get features such as product interaction, and implementation of automated tasks.
**Kissmetrics: **
Data analytics across devices and segments focusing on marketing performance are its vital function. Its email automation, and conversion optimization features are something to think.
Strikedeck:
For efficient Customer data integration, high-level view & reports, and targeted engagement points, this software is the best.
Amity:
Features comprise of In-product engagement monitoring, customer health, and automated playbooks.
Heap:
Its In-app product monitoring and behavioral data capturing across segments and devices over time features are exceptional.
Optimove:
It comes with functions such as Predictive marketing analytics to understand user behavior and engage segments with multi-channel campaign automation.
Customer Success Tools
These tools are accessible to provide exceptional performance in one specific task. If you have a gap in your tech stack, you can use one of these tools to fill them up.
Product :
Drift: Ideal for a Live chat for a website with lead intelligence feature.
**Intercom: **
Provides High-tech & high-touch engagement with customers across channels like a website, in-app, email along with targeted messaging
Respondly:
Comes with Integrated team customer support via Twitter
Talkus.io:
With Live chat and email helpdesk via Slack
SatisMeter and Wootric:
For Collecting customer feedback (NPS) inside apps
Validately:
Perfect for Website and platform testing with your customers and the solution provider’s network of users
Mirror:
It is an excellent Mobile app testing with video logs to gather customer behavioral data and identify product issues
Conclusion:
We sincerely appreciate the valuable time you have provided us to read this article. Hope this guide offers you all the information regarding customer success process. For a sustainable customer growth for your business, we highly recommend all of you to implement customer success as your core operating philosophy. We wish you all success in life and hope you achieve the best possible outcome resulting in superior performances, negative churn rate and broad customer base with lifetime value.
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