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- Herausgeber: John Wiley & Sons
- Kategorie: Fachliteratur
- Sprache: Englisch
Automate your Customer Success efforts to reduce churn and increase profits
In Digital Customer Success: The Next Frontier, a team of trailblazing Customer Success professionals and digital entrepreneurs delivers an insightful discussion of the next stage in Customer Success management. In the book, you'll discover how to design and deploy touchless and automated digital interventions that help your software users learn and grow as they use your product and unlock the value trapped within it — without ever needing to reach out to a live Customer Success Manager.
The authors provide a detailed “How-To” guide to Digital Customer Success that explains how you can meet the needs of your customers, investors, and team members. You'll explore the basics of the authors' original Digital Customer Success Maturity Model and the core tenets of how to get started. After that, you'll find:
- Explanations of the ideal organizational structures to enable Digital Customer Success management
- Case studies and examples from real companies blazing new trails in Customer Success
- Critical success measurements and metrics you can use to determine if your company is on the right track or if it needs to reorient
Perfect for managers, executives, directors, founders, entrepreneurs, and other business leaders involved in the sale of digital and software products, Digital Customer Success is also a can't-miss resource for Customer Success professionals, sales leaders, marketers, product development professionals, and anyone else with a stake in reducing customer churn and increasing revenues.
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Seitenzahl: 346
Veröffentlichungsjahr: 2024
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Table of Contents
Cover
Table of Contents
Title Page
Copyright
Foreword
1 The High‐Speed Evolution of Customer Success
The Human vs. Digital Dilemma
How We Got Here
From Churn Busters to Revenue Boosters
CS Has Become a Company‐Wide Imperative
Escape from the Twilight Zone
The Peloton Paradigm
The Time Has Come for CS to Reinvent Itself
Summary
Notes
2 Durable Business Strategies to Fuel Long‐Term Success
CS Is a Durable Growth Engine
Make Customers the Center of Your Universe
Summary
Notes
3 Digital Customer Success Is a Strategic Program
The Quest to Scale
and
Improve Value
From Tech Touch to Bionic CSMs
Digital CS Defined
Integrating Digital CE with Digital CS
Launch Your CS Program with Digital
Your Community as a Third Place
Where Are You on the Spectrum?
Testing Your Digital CS Program
Summary
Notes
4 The Digital Customer Success Maturity Model
The Three P's of Digital CS Success
You Can Occupy Multiple Levels of Maturity
Okta's Journey to Digital Maturity
“Perfect Is the Enemy of Good”
Summary
Notes
5 Launching the Proactive Phase of Your Digital CS Program
Self‐Service Enablement
Four Steps to Better Self Service
Unqork Uncorks the Power of a Customer Hub
One‐to‐Many Customer Communications
You Don't Build a Relationship with an Inbox
Digital‐Led Onboarding
Digital‐Led Onboarding: Best Practices from Samsara
Summary
Notes
6 Evolving to the Personalized Phase
Closed‐Loop Feedback Programs
What Problem Are You Trying to Solve?
Automated Advocacy Programs
Prescriptive Adoption Journeys
Strangers in a Strange Land
Summary
Notes
7 Evolving to the Predictive Phase
AI-Driven Risk Management
Programmatic Value Realization
Optimized Expansion Selling
The Role of AI--Today and Tomorrow
Summary
Notes
8 Launching Your First Digital Initiative
Choose a Single Life Cycle Moment
Measuring Impact
Beware of Scope Creep
Which Customers and Personas?
Use Different Channels
Choose Channels Best Suited for the Target Audience
Keep an Eye on Your Bandwidth
Strive for Runaway Accretion
Ready to Scale?
Meet Your Customers Where They Are
Summary
Notes
9 Company‐Wide Digital Program Governance and Cross‐Functional Collaboration
Cross‐Functional Collaboration Gathers Steam
Collaborating through a Digital CS Programs Team
The Elements of Effective Collaboration
Appoint a Dedicated Leader
Getting Executive Buy‐in
Share Your Results with
Everyone
CS Technology and Data
Share Your Data
No Excuses
Summary
Notes
10 Optimizing Your Digital Toolkit
Community/Customer Hub
Automated Email and In‐App Messaging
CS Journey Automation
Summary
11 The Ability to Be More Human
Digital CS Is About Building Customer Loyalty
Do More
with Less
by Reinventing Your Organization
From Science Fiction to CS Fact
Digital Enables a More Human Experience
Notes
Acknowledgments
About the Authors
Nick Mehta, CEO, Gainsight
Kellie Capote, CCO, Gainsight
Index
End User License Agreement
List of Illustrations
Chapter 1
Figure 1.1 In the old Digital CS model, big customers got the human touch whil...
Figure 1.2 The new Digital CS model optimizes every customer's experience thro...
Chapter 3
Figure 3.1 In the new Digital CS model, the mix of digital‐led and human‐led e...
Chapter 4
Figure 4.1 The Leap to Digital is a leap toward greater CS efficiency and a b...
Figure 4.2 The three P's of Digital CS maturity: Proactive, Personalized, and ...
Figure 4.3 Although Digital CS maturity is a linear progression, your organiza...
Figure 4.4 Example of a welcome email from Gainsight.
Chapter 5
Figure 5.1 Example of a one‐to‐many customer communication from Gainsight....
Figure 5.2 Example of an onboarding checklist.
Chapter 6
Figure 6.1 Gainsight's flowchart for detractor management.
Figure 6.2 Sample email from Gainsight to acknowledge detractor concerns.
Chapter 7
Figure 7.1 Gainsight's AI-powered Sponsor-Tracking feature.
Figure 7.2 Gainsight in-app survey.
Chapter 8
Figure 8.1 Gainsight welcome email.
Figure 8.2 Example of a Gainsight onboarding checklist.
Figure 8.3 Three common types of org design for Digital CS programs.
Figure 8.4 Example of a Digital CS org chart.
Chapter 9
Figure 9.1 Qualtrics' scoreboard/tracker.
Chapter 10
Figure 10.1 We recommend that you consider all five use cases shown. Just don'...
Figure 10.2 Example of an automated CS journey playbook.
Chapter 11
Figure 11.1 Median free cash flow (FCF) margin of SaaS companies from Q1 2020...
Guide
Cover
Title Page
Table of Contents
Copyright
Foreword
Begin Reading
Acknowledgments
About the Authors
Index
End User License Agreement
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FOREWORD BYCHRISTINA KOSMOWSKI, CEO, LOGICMONITOR and FORMER CCO, SLACK
DIGITAL CUSTOMER SUCCESS
WHY THE NEXT FRONTIER OF CS IS DIGITAL AND HOW YOU CAN LEVERAGE IT TO DRIVE DURABLE GROWTH
NICK MEHTA
KELLIE CAPOTE
Copyright © 2024 by Gainsight, Inc. All rights reserved.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
Published simultaneously in Canada.
No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per‐copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, (978) 750–8400, fax (978) 750–4470, or on the web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748–6011, fax (201) 748–6008, or online at http://www.wiley.com/go/permission.
Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Further, readers should be aware that websites listed in this work may have changed or disappeared between when this work was written and when it is read. Neither the publisher nor authors shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.
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Library of Congress Cataloging‐in‐Publication Data is Available:
ISBN: 9781394205875 (cloth)
ISBN: 9781394205882 (ePub)
ISBN: 9781394205899 (ePDF)
Cover Design and Image: Mohamed Mubasil Kamal Musthafa/Gainsight
Foreword
By Christina Kosmowski, CEO, LogicMonitor
In the ever‐evolving landscape of SaaS, I've had a firsthand view of the transformative power of Customer Success. I believe Digital Customer Success captures the essence of this journey, resonating with the very core of my professional career leading Customer Success teams at Salesforce, Slack, and now as CEO at LogicMonitor.
The digital era we're navigating is not just about technology; it's about people. It's about how we, as leaders, harness digital tools to amplify human connections and drive meaningful business outcomes. With this book, Nick Mehta and Kellie Capote dive into that very intersection, highlighting how businesses can thrive by prioritizing Customer Success at the core of a scalable, digital customer experience.
Throughout my career from CSM to CEO, I've learned that the key to sustainable growth lies in understanding and adapting to customer needs. This book echoes that sentiment and offers insights and strategies for anyone looking to excel in today's customer‐driven business landscape.
What I find most compelling about this book is its pragmatic approach to digital Customer Success. It's a practical guide drawn from the real‐world experiences of other CS practitioners. I've faced many of the challenges these authors and thought leaders from the Customer Success community have encountered, and through their lessons learned, readers will get a blueprint not only to navigate but also to lead in the digital age.
As you turn these pages, you'll discover why placing Customer Success at the heart of your growth strategy isn't just good practice; it's a business imperative. The book will equip you with the tools and knowledge to transform your organization, ensuring that your journey in Customer Success is as impactful and rewarding as mine has been.
Whether you're a budding CSM or a seasoned CEO, these pages hold the key to unlocking the full potential of your business and your career in Customer Success. My path has been shaped by the relentless pursuit of customer‐centric innovation, and this book offers the roadmap for others to do the same.
1The High‐Speed Evolution of Customer Success
It's a Friday night, and you've just arrived at your favorite corner bistro. Inside, the host warmly greets you by name before escorting you to a choice table. There, a familiar waiter smiles just before you suggest (as always) that there's no need to recite the specials. You'll have your usual entrée paired with a glass of your favorite varietal.
Now, this is what makes life worth living. It's not merely the food, though the food is spectacular. It's not merely the atmosphere and the view from your favorite table. No, what really keeps you coming back week after week, year after year, is the personal service, delivered by people who seem to genuinely care that you are having a wonderful experience.
In an increasingly impersonal world, a world where artificial intelligence (AI) informs you that “people who bought the pinot noir also purchased camembert and water crackers” and where “talking” with a customer service agent means interacting with a chatbot decision tree, who can blame you for craving a personalized experience—for wanting to go “where everybody knows your name and they're always glad you came”? Given a choice, wouldn't all of us prefer to be treated like unique individuals instead of data sets?
At Gainsight, our purpose statement is “to be living proof you can win in business while being Human‐First.” It's so easy to forget that the person on the other side of the video meeting isn't just a candidate, employee, alumni, prospect, customer, or investor—they are a human being first. We need to always remember that. But this raises a seemingly intractable question for every company in the software‐as‐a‐service (SaaS) sector and beyond: How do you scale a Human‐First customer experience?
Your favorite restaurant provides personalized service because the staff works at a single location every night, serving a small number of regular customers. In the beginning, the same is true of almost every tech start‐up. Many founders talk to each of their early customers themselves. I remember one well‐known founder who said, “I bring my laptop to the customer, watch them work, and code what they want.” But once the owner of the restaurant or the start‐up needs to scale, personalized experiences are often jettisoned in favor of a more efficient—and more impersonal—experience.
As business leaders, we recognize that we must scale up to build our companies, and the way to do this is through automated systems and processes. But must we also lose the human touch? Can't we find ways to efficiently scale without treating our customers like fungible cogs? Can we find ways to enhance the customer experience via automation?
The Human vs. Digital Dilemma
In the case of the restaurant, the answer is a qualified yes. Although most of us would not want to visit a restaurant in which we had to interact with robot waiters instead of humans, many of us would love to book our reservations online, pay the bill with our smartphone, and contact the restaurant in advance to let them know we're celebrating a special event so they can surprise us with a special gesture. In fact, we might regard these digital capabilities as a pleasant blend of human‐led and digital‐led customer service. On one hand, we would continue to enjoy the social and psychological benefits that come with human interaction. On the other hand, digital technology would enable us to dispense with the less pleasant aspects of the experience more quickly.
That said, there is a good reason why we “qualified” our yes. In the restaurant, significant parts of the customer journey cannot be easily scaled—if they can be scaled at all. For example, while some customers may be happy using digital tech to facilitate reservations and payments, others might prefer to walk through the door without a reservation and pay their bill at the cashier's station. Satisfying both customer segments would require that the restaurant continue employing a cashier or a host, despite the added cost. And unless the owner were willing to install a buffet, customers seeking self‐service would have to go elsewhere.
Why are we talking about restaurants in a book about Customer Success?
It's because the restaurant is a good analogy for the dilemma that many SaaS companies and Customer Success (CS) organizations are struggling to resolve—how to deliver, more efficiently and at scale, a Human‐First customer experience using digital means.
Informed by the speed, convenience, and seamlessness of their transactions with business‐to‐consumer (B2C) ecommerce retailers such as Amazon and Spotify, business‐to‐business (B2B) customers are increasingly demanding a speedier, more seamless, and more personalized experience when they purchase products and services from companies like yours. But however much you may want to fulfill your customers' wishes for “the B2C experience,” achieving that goal is easier said than done.
For starters, unlike one‐time purchases of books and AAA‐battery 12‐packs on Amazon, complex B2B SaaS products require that you and the customer devote considerable resources to onboarding new users—a process that (you hope) will lead to widespread product adoption, which, in turn, will help the customer achieve their desired business outcomes. If the customer succeeds in achieving their outcomes while having a pleasant experience, you succeed. You transform a one‐time purchase into a subscription that generates revenue for years to come.
Turning one‐off purchasers into long‐term customers—customers who then buy more products and services from you, as well as advocating on your behalf—is the “prime directive” of every CS organization.
Now for the dilemma.
Most CS organizations and Customer Success Managers (CSMs) are neither prepared nor equipped to deliver the personalized customer experience their customers want, at least not in a way that is cost‐effective and scalable. Although the tools for achieving this goal are available—in the form of new and emerging digital technologies—most SaaS companies are stuck. They are trapped in a twilight zone between CS systems and processes that are either completely automated and impersonal or completely human‐led and unscalable.
And never the twain shall meet.
In fact, some CSMs maintain (to paraphrase Anna Karenina) that because “happy customers are all alike, but every unhappy customer is unhappy in their own way,” the entire concept of Digital Customer Success (Digital CS) is oxymoronic. In their view, SaaS firms can opt either for robotic, dehumanized interactions with their customers (a “tech‐touch” approach) or for strictly human‐led interactions (the “high‐touch” approach). However, because every customer and stakeholder is unique, no “robot” could possibly deliver the personalized CS interactions that today's customers crave.
Use cases closed.
Never mind that not every customer is seeking a Human‐First experience at every moment or a digital‐first experience at every moment. Like the customers of our hypothetical restaurant, most of your customers are seeking human interactions at certain times and digital interactions at others. Thus, the Anna Karenina argument is a straw man argument. The human versus digital conundrum cannot be solved with either/or thinking. It can be resolved only by harnessing technology to design an optimum blend of digital and human CS motions for all your customers.
Technology has evolved a great deal over the past decade, and because of this, we now have a third CS model to consider—a model that can provide a personalized, human experience via digital‐first methods. For this reason, we believe every company should now be thinking about how (not whether) to deliver a digital‐first customer experience. But before we dive into this topic, let's briefly recap how we arrived at the current crossroads—the intersection of the Human‐First and digital‐first approaches to growth and profitability.
How We Got Here
From the moment the SaaS industry was born, it was probably inevitable that Customer Success (or something very much like it) would be invented. As soon as consumers were able to purchase, install, and use new software solutions without first having to wave goodbye to a substantial up‐front investment, a third era of economic history had begun.
As Nick argued in The Customer Success Economy,1 the first economic era was the “making stuff” phase, which started with the Industrial Revolution. The second era was the “selling stuff” phase, which was disrupted and accelerated when the internet made it possible to sell stuff globally. From 1900 to 2000, making and selling stuff was the business model of pretty much every major corporation, and it drove the global economy. A sale was a one‐time activity, and anything “post‐sale” represented a cost to the company.
We are now in a third phase. Although we still need to make and sell things, that is no longer enough. In the modern economy, customers are seeking success. They are seeking to achieve their goals, not just stuff to purchase. Therefore, helping customers realize their goals is now an imperative for many makers and sellers.
This new focus on desired business outcomes is why CS came into being. As companies moved from one‐time sales and perpetual license agreements to recurring revenue models such as SaaS, subscription, and cloud, the power dynamics between sellers and buyers shifted (almost overnight) from sellers to consumers. Customers are no longer wedded to the vendors they bought because technology has transformed the software category for customers. They have choices. They have mobility and lower switching costs. They are the center of the SaaS solar system.
In sum, customer expectations are higher, customer power is greater, and holding onto customers is harder. (Moreover, as SaaS products become more complex, customers who are not properly onboarded or continually counseled and supported are likely to become frustrated, resulting in lower adoption rates, lower usage rates, and higher churn.)
Today, customers aren't merely asking to be “satisfied” and have “great experiences.” They want to achieve their goals—and they expect you to help them do it for as long as it takes, even as those goals change over time. As a result, sellers and buyers have moved from largely transactional interactions to mutual, lifelong journeys. To ensure that the average journey lasts longer than a trip from your living room to the kitchen, you must cultivate strategic relationships with everyone who has a stake in ensuring that customers' business outcomes are achieved.
Because customers have changed the way they think about software vendors, you need to change your behavior if you want to keep them. You need to make sure they are actually using what they bought from you and getting the value they seek, that you're giving them the customer service they want, and that you're always looking for opportunities to expand the relationship.
Achieving these objectives is why Customer Success was invented.
At Gainsight, we define Customer Success as the concept of achieving business growth through a customer‐focused approach. We strongly believe that investing your company's time, money, and effort solely on the acquisition of new customers is a mistake. A sales‐only focus will not bring you the long‐term results you desire. To attain durable growth and profitability, you must focus on retaining your existing customers, expanding your sales to them, and transforming them into fiercely loyal brand advocates. The secret to achieving all of this is making sure your customers enjoy the experience you have promised. Toward this end, everyone in your organization must collaborate to:
Put customer needs at the core of everything, including the product roadmap.
Develop healthy and productive customer relationships.
Deliver an engaging customer experience.
Focus attention on meeting customer expectations.
Develop and track metrics that measure the customer's progress toward their desired business outcomes via the use of your products.
From Churn Busters to Revenue Boosters
As recently as 10 years ago, dropping the term Customer Success in the presence of a tech company founder, executive, or investor would probably have produced some puzzled looks. In 2013, when Gainsight was launched, CS was practiced by only a few dozen early SaaS companies, and you could have fit every CSM in the world on a single Boeing 747.
Since then, the number of CSMs has risen from roughly 500 to 250,000, and Customer Success is now well defined or present in 95 percent of high‐growth companies.2 And most of these firms aren't simply paying lip service to CS by squeezing a few people into a makeshift call center. They are employing skilled CS professionals by the hundreds to scale their businesses and increase net customer retention, expansion, and advocacy in the hope of increasing gross revenue retention (GRR) and net revenue retention (NRR).
Whereas many SaaS firms once struggled to understand why Customer Success even mattered, wondering “Why is this a thing?” most companies now get it. They understand, as Gartner recently reported, that
Customer Success Management is a crucial function for organizations with recurring revenue streams … [Customer Success Management] programs have become the standard enabler for businesses … to encourage customers to remain engaged and increase customer lifetime value for products sold via a subscription model.3
Forrester Research has concluded that “a well‐designed Customer Success program can yield a 91% return on investment over a three‐year period [by means of] improved customer retention, increased cross‐sell and upsell opportunities, great new customer conversion rates and reduced customer support costs.”4
Over the past decade, most SaaS firms have answered the basic questions about CS: What exactly does Customer Success mean? What type of people do you need? What other resources, technologies, and processes should you assemble to launch an effective CS program? If a company is still asking why or what, it is behind the curve. Today, most SaaS firms are focusing on how questions, such as:
How do I scale Customer Success?
How do I operationalize Customer Success?
How do I measure Customer Success?
How do I optimize my expansion?
This shift—from why and what questions to how questions—illustrates the amazing speed at which Customer Success has matured. In 10 years, CS has evolved from a purely reactive function, whose practitioners often relied on intuition and assumed best practices, into an increasingly proactive, consultative, strategic, and data‐driven discipline—a discipline that has become foundational to the success of thousands of companies.
CS has progressed from call‐center personnel responding to help requests and trouble tickets into CSMs who proactively collaborate with customers, as well as with Sales, Marketing, Product, IT (and more), to design, execute, measure, and monitor customer journeys that deliver the greatest possible value in the shortest possible time frame. CS has metamorphosed from a function focused on reducing churn—by promoting product adoption, addressing customer complaints, and forwarding requests for new features—into a function responsible for growing revenues by ensuring that every customer achieves their business goals via the product.
A decade ago, CS largely consisted of small firefighting squads whose members scrambled to rescue at‐risk accounts on an ad hoc basis.
Today, equipped with new digital tools and data‐driven methodologies, the best CS teams are intentional, proactive, strategic, and predictive, tracking leading indicators and lagging outcomes to improve revenue retention and growth.
CS Has Become a Company‐Wide Imperative
One sign of how far CS has evolved is the accelerating recognition among SaaS executives, investors, and consultancies that Customer Success is a company‐wide imperative—a core philosophy of how companies do business. Gone are the days when CS teams operated as a siloed function that “did stuff” to keep customers from eloping with competitors. These days, CS is widely viewed as a strategic pillar of the overall business—a means by which a customer‐centric mindset is transformed into a durable growth engine. There is awareness that everything must be driven by the voice of the customer because, in a subscription model, you're constantly earning (or losing) customers' business.
One result of this newfound awareness and recognition is the confidence many business leaders are displaying vis‐à‐vis their investment in CS, even in an unfavorable business climate. According to a 2023 survey by Bain & Company (Used with permission from Bain & Company).5
Although CS organizations saw increased budget pressure and slower growth during 2022 and early 2023, when CS headcount reductions
have
occurred, they have typically been in line with—or below—the reductions to broader company headcount. In fact, 75 percent of surveyed companies reported that CS
gained
, or at least maintained, its share of total company headcount.
Most firms now consider CS a net revenue‐generator, not a cost center. Unsurprisingly, firms that consider CS a cost center are more likely to make cuts to CS (30 percent) compared with those that consider it a net revenue‐generator (15 percent).
Monetizing CS is growing in popularity. Thirty percent of the surveyed companies offer paid CS coverage, with an additional 20 percent likely to introduce a paid tier in the next three years. Of the companies that currently offer unpaid, attached CSM coverage, 35 percent expect to begin charging in the near term.
Another sign of the growing importance and respect accorded to CS is the growing number of Chief Customer Officers (CCOs) who have been elevated to the CEO position in recent years, including Yamini Rangan, CEO of Hubspot, and Christina Kosmowski, CEO of LogicMonitor.
Escape from the Twilight Zone
That brings us back to the twilight zone in which many SaaS companies find themselves today—trapped between fully automated and fully human‐led CS paradigms.
Why should you care if you're stuck in this zone? Why shift to a third CS model that provides customers with a personalized, human experience, delivered by digital‐first methods?
You should care because, in the wake of the SaaS industry's recent troubles, executives and investors have concluded that durable business growth is the key to long‐term success. And which business function is best suited to play the role of the durable growth engine, given its track record of boosting customer retention, expansion, and advocacy? Customer Success. A well‐oiled CS organization—one that is efficient, scalable, proactive, and data driven (but with a human face)—can be a revenue‐generating machine.
There's just one problem. Relatively few CS orgs currently qualify as efficient, scalable, proactive, and data driven. Although many are dabbling with digital tools and tactics, most are taking an ad hoc approach, leveraging multiple tools and struggling to incorporate useful data because that data is siloed and/or scattered across multiple functions. The result? A disjointed customer experience, overlapping communications, and inefficiencies across the board.
Unsurprisingly, customers are frustrated with these uncoordinated experiences. And often, the people serving those customers are frustrated because they can't deliver the great experience the customer was promised. They want to do a great job, but they are stretched too thin because the current systems are manual and (often) not designed for the tasks at hand. So, your employees are frustrated, your customers are frustrated, and your investors are frustrated.
Another obstacle blocking the escape route from the twilight zone is the difficulty some CS teams are having in shifting from defensive strategies, especially those based on gut feelings and assumed best practices, to offensive strategies tethered to advanced analytics. Put bluntly, CS leaders need to accelerate the transition from squishy and artisanal relationship‐management practices to practices that are scientific, data driven, and industrialized, practices that can be readily replicated and scaled. CS players who are in the vanguard of this transition are already achieving remarkable things with data analytics.
For example:
One vendor scanned hundreds of variables using feature‐discovery algorithms and found that a single metric, the three‐month moving average of customer storage usage, strongly predicted which users would discontinue services within six months. Another vendor mined its customer data using machine‐learning techniques to identify subsegments with the highest propensity to make a purchase and created triggers to alert them when customers entered this category. By integrating these insights into its customer‐success efforts, the vendor increased customer engagement and ultimately obtained a five percent uplift in sales.6
For a CS leader, this is the promised land—being able to show that your team is strategic and metrics driven; demonstrating that you're not merely reactive firefighters but proactive navigators steering customers on their value journey. You're leading them to renew, leading them to expand, and turning them into advocates who help bring in new logos. And you're able to prove this to senior management, as well as your Sales, Marketing, and Product colleagues, by connecting the dots from your team's activities to the leading indicators and lagging outcomes.
Historically, CS leaders have not used the kinds of metrics‐based business tracks that other revenue leaders employ to justify their activities and construct narratives that assign them credit for their good work.
This needs to change.
CS can no longer afford to be squishy. As a growth engine for your business, it can no longer rely solely on relationship‐building techniques, customer sentiment, and guesswork. CS must become industrialized, managed with the same level of operational rigor and predictability as Sales and Marketing.
The Peloton Paradigm
Because the preferences of B2B consumers are being driven by their B2C experiences, we've searched for B2C models that optimize the digital‐human mix in ways that will meet, or exceed, the evolving expectations of SaaS customers. As it happens, we have found just such a model. And it takes the form of what, at first glance, appears to be a souped‐up exercise bike.
Peloton and other digital fitness companies like it have changed the way millions of people exercise. As an extremely amateur Peloton rider himself, Nick has seen, firsthand, how the company has transformed the fitness industry. Whether he chooses to ride with the inspirational Ally Love or the hilarious Cody Rigsby, Peloton has revolutionized his personal fitness routine. It has also changed how both of us think about Customer Success.
How did people work out before companies like Peloton burst onto the scene? It seemed like there were only two routes. On one hand, you had highly self‐motivated people who woke up at 5 a.m. and headed straight to the gym for their personal workouts. They didn't need a coach. They didn't need a nudge. They seized the day, every day.
On the other hand, you had people with the flexibility and resources to hire a personal trainer. The trainer would coach them; design a workout routine for their body, lifestyle, and goals; and motivate them to keep at it every week.
What Peloton observed, however, was that millions of people didn't fit neatly into either of these categories, including those who:
Want to exercise but need a nudge of encouragement.
Want instruction, but don't have the time or resources for one‐on‐one training.
Want to work out in the comfort of their homes but don't want to feel isolated.
In many ways, Customer Success has sprung from the same dichotomy. In the older business model, you had two types of clients. You had your larger clients for whom you would do anything, including customizing your software. You were like their personal “software” trainer. Then you had your smaller clients. Regardless of whether they were motivated to “go to the gym” (use your software), they still paid you, so it was all good. In addition, many SaaS companies gave their large customers a high‐touch CS experience while giving the small customers a fully digital one. But this approach no longer works. Growing numbers of high‐touch customers want parts of the experience to be digital, and many smaller customers want parts of the experience to involve a human. Moving forward, you will need to be more dexterous about your segmentation strategies at both the customer and persona level.
Digital Customer Success is about using process and technology to better serve all your customers. One way that Peloton does this is through One‐to‐Many “Fitness Success,” which leverages the best “CSMs” (or Fitness Success Managers) in the world. These experts are inspirational. They motivate you. They entertain you. You couldn't imagine better personal trainers—and most of us could never access them one on one.
So what did Peloton do? They figured out how to scale these personal trainers to millions of people. Although the company's hardware—a connected bike with a nice screen—is a commodity, Peloton created a software platform with personalization in the form of choice and scheduling (and more) to connect the right Fitness Success Manager to the right clients.
Similarly, modern Customer Success is no longer just about high‐touch CSMs for your largest clients. Leading CS organizations are creating scaled or digital initiatives, which combine strategies such as:
Automating routine tasks like reporting, Quarterly Business Review decks, emails, and more to allow CSMs to cover more clients.
Creating a virtual CSM through a digital‐first journey based on customer behavior.
Creating pooled CSM teams that aren't assigned to specific clients but instead intervene based on risk or opportunity triggers.
Peloton also creates personalized product experiences. The geniuses at this company realized that people don't always do what trainers want. Therefore, you sometimes need to encourage them. But the instructors can't communicate with every rider one on one, so Peloton uses the power of personalization to drive people toward the behaviors needed to achieve their goals—like noticing when you hit milestone rides and recommending rides based on your past interests. The company tracks all your habits and uses this data to ensure that you continue improving and engaging with the platform.
Finally, Peloton created a community. Although you may be physically alone on your bike, you never feel alone. You can join hashtag groups, compete on leaderboards, and give each other high fives. This makes you feel like you're riding alongside many other people.
The Time Has Come for CS to Reinvent Itself
The time has come for Customer Success to reinvent itself with an approach like Peloton's. The approach will embrace a custom blend of digital‐first and Human‐First strategies and use cases to increase the efficiency, effectiveness, and scalability of CS operations.
Already, SaaS businesses are exploring and adopting new ways to deliver more efficient and more scalable Customer Success. They include the use of in‐app guides to onboard new customers, walkthroughs to help clients try out new features, and surveys to obtain feedback from customers as they work—all in the service of improving and personalizing customer experience based on users' behavioral data. We are making progress, but we need to speed things up.
To do that, businesses and CS organizations must first realize that not every customer is looking for a human touch every day. You must understand that, at any given point in the vendor‐customer relationship, users may want to talk with a human or they may prefer to self‐serve. They may want content dripped via email, or they may prefer a choice of walkthroughs. As a new user, you may want to talk with a human CSM 100 percent of the time, but as you gain experience, you might prefer digitized learning journeys most of the time. Yes, every customer is different in their own way, but that is not a good argument for a strictly human‐led approach to Customer Success. Quite the opposite: It strengthens the argument for a hybrid approach. There are many different paths to the mountaintop, and Digital CS allows you to present each path to your clients and then let them choose which ones to follow.
Figure 1.1 In the old Digital CS model, big customers got the human touch while small customers got tech touch.
The traditional model of Digital CS segments the market into big customers and small customers. Big customers get the human touch, and small customers get one‐to‐many emails. (See Figure 1.1.)
This is no longer the correct approach—if it ever was. The right approach is the one that optimizes the customer experience and their ability to reach their desired business outcomes, right now. In the future, we believe many customer journeys might look something like Figure 1.2.
The journey starts with a welcome email, of course, but when users log on for the first time, they see an in‐app guide about how to use the product. It walks them through the steps of setting up everything, and because it notices what the user is doing, it can recommend future actions they may want to take. For example, the product may observe that the user turned on a particular feature—to which it responds by sending an email about that feature. Then the product may notice that the customer is focused on generating more revenue—to which it will respond with additional content tailored to that goal. Very likely, the customer will also be invited to connect with other customers on your Community platform. This will enable them to share experiences and learn from other customers about how to generate more revenue.
Figure 1.2 The new Digital CS model optimizes every customer's experience through a blend of human‐ and digital‐led motions.
A few weeks later, your digital tech might notice that the customer stopped using the product. Are they confused? Frustrated? Thinking of abandoning the product? You need to get them back onboard, so a CSM contacts the client to learn what the problem is. Once the problem is resolved and the customer is using the product again, a welcome‐back email is automatically sent. Next month, the user might receive an infographic displaying all the revenue they have generated since they began using the product again: “Congratulations! You're doing great things with the product!”
For those of you who use Spotify, this journey may seem familiar. As a user of the music app, you receive personalized lists of song recommendations, which you can share with friends and family. Spotify also generates a personalized playlist and tells you what you have been listening to over the past year, including your favorite albums. Spotify seems to know you as a person.
Consider what the previous scenario would mean for the CSM assigned to the customer. Thanks to the power of Digital CS, the CSM no longer has to spend hours on Zoom, training customers how to use the product. Neither will they have to send the customer a guide on how to set up the
