Overarching point: The goal of Customer Success is to proactively impact customer lifetime value (CLV) – profit earned over the duration of the relationship from delivering promised business results to the customer. To accomplish this:
- Work with the customer to establish long-term and short-term goals for business results. Establish milestones in support of those goals.
- Define internal business outcomes for goals such as retention, upsell, cross-sell, etc.
- Run periodic “success programs”
- Run event-triggered “success plays” based on deviations from monitored health indicator targets, the representation of which is a “Customer Success Scorecard.” Plays may serve to preempt or recover from problems.
Stage 1: New / Onboarding
- Success programs: (a) provisioning, setting up accounts, importing data, etc. (b) Onboarding sponsor kick-off to define goal, scope, timeline, and key milestones (c) Onboarding users via training on how to use the system to meet their business goals
- Success plays: (a) onboarding not completed within x days (b) only y% of users trained (c) low/high onboarding satisfaction or feedback (d) customer unable to use product
- Customers are onboarding until they can use the product on their own. Or, if measurable, until they get to first value.
Stage 2: Growing / Nurturing
- Success programs: (a) quarterly business reviews with the customer champion (b) driving new/existing feature adoption (c) sharing best practices esp. via case studies (d) reporting usage information (e) reaching out proactively for feedback (f) upsell prior to renewal, esp. if approaching 100% utilization (g) cross-sell prior to renewal
- Success plays: (a) Too few/many users (b) too little/much utilization cumulatively or relative to trend (c) insufficient feature adoption/usage (d) under-delivery of client business value (e) late payment (f) low/high customer satisfaction survey results or feedback (g) departure of product champion or key users (h) too many support ticket/escalations (i) users affected by a service outage (j) users affected by a security breach
- Business reviews with the customer should include: (a) review of value delivered, preferably with ROI (b) capacity utilization, esp. to signal the need for upsell and cross-sell (c) per user usage patterns (d) review of features being used and suggestions for further features that could be used to increase value.
Stage 3: Renewal
- Success programs: (a) upsell at renewal (b) cross-sell at renewal
- Success plays:
- In many cases the renewal decision happens long before the renewal date. Beware since your competitors get active early.
Stage 4: Cancelled
- Don’t fall into the trap of spending all your resources on at-risk customers – both their value and your win ratio will tend to be low.
Building the Team
- “I strongly believe that the most effective positioning is a CEO reporting relationship in the form of a Chief Customer Officer or VP of Customer Success.”
- Over-time, seek to specialize roles for each of the following: (a) CSM – success programs & success plays, relationship management, analysis and reporting (b) Account Manager – Commercial management of renewal, upsell, and cross-sell (c) Customer Education & Training manager who may be part of Marketing (d) Support manager who is technically-focused (e) Customer Success Operations manager focused on technology, people, and processes optimization
- The ideal CSM has a combination of (a) sales background albeit with a light touch (b) customer support background (c) project management skills (d) in-depth product & business value knowledge
- While it is true the CSM does a lot of training, she does not have a lot of time for content creation.
- Some portion of the compensation for CSMs needs to be variable and a function of revenue.
- Customer success should have a close working relationship with the Product team. At a bare minimum, CSMs should participate in feature planning sessions. However, Customer Success should not request an endless number of features.
- Customer success should have a close working relationship with Marketing since CSMs have deep insight into what features drive the most value.
- Train yourself and your team to treat all subscriptions as “trials,” working with clients to deliver on the promise of results.
- Managing customer success is a portfolio management and optimization activity rather than a pipeline management, project management, or customer support management activity.
- Create baselines for metrics on which to improve upon
- The hard part for a Customer Success organization is to focus on the right activities for the right segment and prioritize the ones that will have the greatest impact
- Success plays are completely based on customer measures (was customer able to log in?) rather than internal measures (did we send password recovery email?)
- An important lesson that I’ve learned: sometimes you have to break down the reactive cycle by making a tough decision and an aggressive move to a proactive mode of operation.
- The role of the Customer Success team is to be the advocate for the customer within the organization. This means following up on requests for internal changes, seeing them through to completion, and conveying success to the customer.
- When emailing customers to introduce new features, personalize by referencing usage in the subject line (and body)
- Customer success management tools should provide (a) data aggregation inclusive of internal and external information (b) signalization (c) workflow-triggering
- It is all too easy to have customer retention costs (CRC) run away from you unless you track it closely.