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- Herausgeber: John Wiley & Sons
- Kategorie: Fachliteratur
- Sprache: Englisch
If leaders aren't integrating their digital offerings into a philosophy of Customer Success, they will be defeated in the next decade, because technical excellence and other traditional competitive advantages are becoming too easy to imitate. The Customer Success Economy offers examples and specifics of how companies can transform. It addresses the pains of transforming organizational charts, leadership roles, responsibilities, and strategies so the whole company works together in total service to the customer. * Shows leaders how their digital implementations will make them more Amazon-like * Helps you deliver recurring revenue * Shows you how to embrace customer retention * Demonstrates the importance of "churning" less Get that competitive advantage in the most relevant and important arena today--making and cultivating happy customers.
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Seitenzahl: 535
Veröffentlichungsjahr: 2020
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Table of Contents
Cover
Foreword
PART I: Why Customer Success Became Standard
1 Customer Success: What It Is and Why It Affects Everything
Making and Selling Aren't the Only Things That Matter Anymore, Dad
The Business of Business Is Helping People
Why Customer Success Is About More Than Happy Customers
So Why Do You Need This Book?
Customer Success and the Economy
What You Can Expect from This Book
The Ten Laws of Customer Success
2 Customer Success: It's Not Just for Silicon Valley
Six Steps for Customer Success Adoption
The Internet of Things and the Six Layers of Customer Success
Summary
3 The Customer Success Job Market Is Taking Off
The Demand Side: What Should Hiring Managers Expect?
The Supply Side: What Should Candidates Expect?
What Is a Customer Success Manager, Exactly?
The Rise of Customer Success Operations
Summary
4 Reason #1: Customer Success Stops Churn—The Silent Business Killer
Churn: How Do You Measure It?
Why Does Churn Happen?
Summary
5 Reason #2: Customer Success Is a Growth Engine—If You Move from Defense to Offense
The New Framework: The Helix Model of Revenue Growth
Double-Click #1: Customer Success Drives Expansion
Double-Click #2: Customer Success Drives New Logo Growth
Double-Click #3: Gross Retention Drives Revenue Growth
Summary
6 Reason #3: Your Customers Want It
Anything to Add about the Client Experience?
Your Employees Care about Client Outcomes, Too
Summary
7 Reason #4: Even the Money People Are in Love with Customer Success
Investors Are Doing the Math
Why VC Firms Love Customer Success
Why Private Equity ( PE ) Firms Love Customer Success
Why Research Analysts Are Scrutinizing Customer Success
Summary
PART II: Baking Customer Success Into Every Aspect of Your Business Model
8 It Can't Be Delegated
I'm Sorry, I Need to Own What Now?
I Want to Be a Great Customer-centric CEO: What's Step #1?
Why Culture Isn't Enough
Summary
9 Product: Design from the Start for Customer Success
Why Do Product Teams Need to Change?
The Five Principles
The Path Forward
The Scaling Problem
The Cost Problem: “CSM of the Gaps”
The Revenue Problem
Product and CS: The New Sales and Marketing
Summary
10 Marketing: Your Job Doesn't End with the Lead
Marketing in the Helix
Step #1: Align on the Customer Journey
Step #2: Adopt Shared Goals
Step #3: Share Data
Step #4: Collaborate on One-to-Many (“Tech Touch”) Communications
Voice of the Customer
Summary
11 Sales: Customer Success Is Your Differentiator
1. Focused Markets Mean Rep Capacity Models Alone Don't Work
2. Focused Markets Enable Advocacy
3. The Renewals Eventually Get Big
4. Expansion Is the Only Way to Make the SaaS Model Work
How to Make Customer Success an Asset to Sales
Who Owns the Customer?
Collaborate with Your Partners to Boost Revenue Even Further
How Can Sales Help Customer Success?
Summary
12 Services: Go from Hours to Outcomes
The Old World of Services
Reconciling Services with Product-Led Growth
Nailing the Hand-off
Generating Strong “Time to Value”
Capturing Data
Driving Services Sales
Summary
13 Support: Go from Reactive to Proactive
The Division of Labor between Support and CSM
Get Visibility into Client Data
Give Visibility into Escalations
Support Teams Can Be Proactive, Too!
Collaboration with R&D
Ticket Deflection
Career Paths for Support
Summary
14 Finance: The New Scoreboard
What “Bang” Should I Be Aiming For?
Gross Retention versus Net Retention
Three Dimensions to the GRR-versus-NRR Problem
Do I Optimize for GRR or NRR?
How Many “Bucks” Should I Spend, and Where?
How Should We Spend the Bucks?
How Should We Account for CS?
Summary
15 IT: The New Mission for the CIO
IT: An Essential Partner to Customer Success
Three Reasons Your Customer 360 Is Stuck in the 1990s
Summary
16 HR: Happy Employees Take Better Care of Customers
Why the Customer Success Job Is Hard—And Why That Matters
Your Teammates Are Clients, Too
Applying Servant Leadership in CS
What Does This Mean for a Chief Customer Officer?
Summary
17 Avoiding Customer Success Silos
Avoiding Silos around Feature Adoption
Avoiding Silos in Customer Feedback
Summary
PART III: Implementation Issues
18 The First Step: Launching CS in an Established Business
Empower a Leader for This Transformation
The Decisions You'll Need to Make
Articulating the Benefits to Other Departments
The Value of Journey Mapping
Five Lessons from Failed Customer Success Programs
Summary
19 Leadership: What Kind of Leader Do I Need for Customer Success?
The Next Generation of Customer Success Leadership
The World's Top CS Leaders Are Doing These Four Things
What Type of Leader Is Best for My Stage?
What's Hot in the Job Market
CS Leaders Won't Be Successful on Their Own
Trends in the Customer Success Executive Search Market
Summary
20 Organizational Structure: Should Customer Success Be Part of Sales or Its Own Org?
1. Hire a VP of Customer Success
2. Consolidate “Post-Sales” Under a Chief Customer Officer
3. Customer Success > Customer Success Management
What's in a Name?
Should CS Report into Sales?
Where Does the CRO Role Fit In?
Summary
21 Roles and Responsibilities: Who Owns Renewals and Revenue?
CSMs Owning Renewals: The Arguments in Favor
CSMs Owning Renewals: The Arguments Against
Executive Ownership versus CSM Ownership
CSMs Owning Expansion: When Does This Make Sense?
Where We Net Out
What about Upsell Specifically?
A Final Word on the “Trusted Advisor”
Summary
22 Budget: How Much Should I Spend on Customer Success?
Fail #1: Underfund Customer Success
Fail #2: Stretch Customer Success Thin in Budget
Fail #3: Mixing Entering and Exiting Costs in Budget
Fail #4: No Business Case to Support Your Budget
Fail #5: Bad PowerPoint to Support Your Budget
Fail #6: Customer Success Not Being in the Right Part of the Financials
Fail #7: Hire CSMs with No Ops Support
Fail #8: Not Talking to IT in Your Planning
Fail #9: Not Aligning with Sales and Marketing in Budgeting
Fail #10: Not Investing in Developing the Team
Fail #11: Not Leaving Room for Experimentation
Fail #12: Not Investing in Systems
Fail #13: Starting Budgeting Too Late
Summary
23 Monetization: Should I Charge for Customer Success to Boost Profitability?
When Are You Ready?
What Are You Selling?
How Should I Roll It Out?
How Should I Price My CS Offering?
How Should I Measure Success?
Summary
24 Metrics: How Do I Measure Customer Success?
The Fast Way to Measure Customer Health
The Advanced Way to Measure Customer Health
Next Steps
Correlation versus Causation in Customer Success
Summary
25 Scaling: How Do I Grow Customer Success without Throwing People at It?
Customer Success and the Rule of 40
How Do You Get Your Company to Break Even or More?
Ten Ways Innovative Leaders Are Scaling Customer Success
Summary
26 Technology: What System Do I Use?
Is Customer Success Art or Science?
Project Plan: What Does a Best-in-Class Evaluation Process Look Like?
Evaluation Team: Whom Should I Involve Internally in the Evaluation Process?
Business Case: How Do I Define the TCO and ROI for This Project?
Vendor Research: What Are the Available Options?
RFP: What Functional and Platform Requirements Should We Look for in a CSM Platform?
Solution Presentations: What Should We Cover During Our Reviews with the Vendors?
References and Proof of Concept: What Steps Should We Take to Vet Our Preferred Choice?
The Importance of Getting This Decision Right
Summary
27 Professional Development: How Can I Develop My Leaders and My Team?
For the CSM
For the Director or Manager of CSMs
For the VP of CS
For the Chief Customer Officer
How Do I Train My Team on These Skills?
Ten Questions CEOs Should Ask Their CCOs
Summary
28 Inclusion: How Can I Create a Diverse Team?
Why Inclusion Is Specifically Important in Customer Success
Customer Success May Help Increase Diversity
Summary
29 Next Steps to Take
If You're a CEO
If You're a CS Leader
If You're a CS Practitioner, or if You Want to Become One
Notes
Acknowledgments
About the Authors
Index
End User License Agreement
List of Illustrations
Chapter 1
Figure 1.1
Figure 1.2
Chapter 2
Figure 2.1
Chapter 3
Figure 3.1
Chapter 5
Figure 5.1
Figure 5.2
Figure 5.3
Figure 5.4
Figure 5.5
Figure 5.6
Figure 5.7
Chapter 6
Figure 6.1
Figure 6.2
Figure 6.3
Chapter 7
Figure 7.1
Chapter 9
Figure 9.1
Figure 9.2
Figure 9.3
Figure 9.4
Figure 9.5
Figure 9.6
Figure 9.7
Figure 9.8
Chapter 14
Figure 14.1
Chapter 18
Figure 18.3
Figure 18.4
Chapter 20
Figure 20.1
Figure 20.2
Figure 20.3
Chapter 22
Figure 22.1
Chapter 23
Figure 23.1
Figure 23.2
Chapter 24
Figure 24.2
Figure 24.3
Figure 24.4
Figure 24.5
Figure 24.6
Figure 24.7
Figure 24.8
Figure 24.9
Guide
Cover
Table of Contents
Begin Reading
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THE CUSTOMER SUCCESS ECONOMY
WHY EVERY ASPECT OF YOUR BUSINESS MODEL NEEDS A PARADIGM SHIFT
NICK MEHTA
ALLISON PICKENS
Copyright © 2020 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) 646–8600, 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/permissions.
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. Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.
For general information on our other products and services or for technical support, please contact our Customer Care Department within the United States at (800) 762–2974, outside the United States at (317) 572–3993 or fax (317) 572–4002.
Wiley publishes in a variety of print and electronic formats and by print-on-demand. Some material included with standard print versions of this book may not be included in e-books or in print-on-demand. If this book refers to media such as a CD or DVD that is not included in the version you purchased, you may download this material at http://booksupport.wiley.com. For more information about Wiley products, visit www.wiley.com.
Library of Congress Cataloging-in-Publication Data is Available:ISBN 9781119572763 (Hardcover)ISBN 9781119572756 (ePDF)ISBN 9781119572732 (ePub)
Cover Design: Hayley CromwellCover Image: Carlo Nasisse | Hed Hi Media
Foreword
“The term Customer Success has become a buzzword in today's business world.”
The statement that I wrote four years ago to begin the foreword of Customer Success: How Innovative Companies Are Reducing Churn and Growing Recurring Revenue now seems antiquated in 2020. After all, Customer Success is light years past buzzword status these days.
In 2016, most people in the business world, even those in cutting-edge, pure-play SaaS companies, were unfamiliar with the concept of Customer Success. It was crystal clear that the economy was rapidly changing. The old model of customer service—reactive, costly, bare-minimum customer service—was no longer going to work now that customers were holding all the cards.
Nick, Dan, and Lincoln's book was the perfect book at the perfect time. It gave forward-thinking leaders a blueprint to adapting to the changing market. It taught them the necessity of Customer Success as a strategy and an organizational function. It gave them the tools to create a Customer Success Management team from scratch and to lay a path to grow their careers in an emerging field.
Four years later, dog-eared copies of that book are on the desks of tens of thousands of leaders and practitioners of Customer Success around the globe. I've even seen it on several CEOs' shelves! It's been translated into four languages and has helped fuel a movement that's become one of the fastest-growing emerging jobs on the planet. There's a pretty simple reason for it: churn.
As the subtitle of the book suggests, Customer Success was focused on two deeply intertwined topics: “Reducing Churn and Growing Recurring Revenue.” It was about staving off the silent killer of subscription businesses and developing a defensive strategy.
In 2016, most people still didn't understand Customer Success beyond customer service. Where customer service is a necessary but reactive aspect of customers successfully using a product, Customer Success involves a more holistic understanding of a customer's business objectives. If you were in Customer Success four years ago, it's easy to imagine you spent a lot of time just explaining your job and its value.
Today, nobody needs to be convinced of the value the customers create for their business or the business imperative of proactively nurturing and deepening those relationships. But what's the next step? Why this new book? Why now?
It's become clear that too many businesses stopped reading after “Reducing Churn.” The conversation ended with, “I'm not selling anything.” In far too many cases, they stopped at Customer Success Management.
As Nick and Allison make the case in this book, Customer Success has a second phase of evolution that goes far beyond churn and far beyond CSM. In this new evolution, Customer Success is infused into every part of your company and is fulfilled in every interaction between every team member and customer—at every level.
Customer Success 2.0 isn't a defensive strategy. It's all about the offense—unlocking your customer's huge, hidden growth potential through people, processes, and technology built for 2020 and beyond.
There's a quote from Steve Jobs that I love: “You have to start with the customer experience and work backward to the technology. You can't start with the technology and figure out where you are going to try to sell it.”
I think the same is true with books as well—you have to start with the reader and work backward to the book. In 2016, the reader was a Customer Success neophyte, likely learning about the need for a new way of business for the first time. But in 2020, the reader of Customer Success 2.0 already knows the imperative. They know how to run a CSM team. They know how to fight churn.
But they need to know how to scale Customer Success across the entire organization; how to go from Customer Success to customer growth; how to build Customer Success into the product itself; how to unify customer data; and most importantly, how to bring humanity back into technology.
I look forward to seeing well-worn copies of this book on the shelves of the next generation of Customer Success innovators.
Maria Martinez
Executive vice president & chief customer experience officer at Cisco
PART IWhy Customer Success Became Standard
1Customer Success: What It Is and Why It Affects Everything
When you are finished changing, you are finished.
—Benjamin Franklin
What really matters in business? Every day we receive hundreds of emails, calls, and meeting invitations; knowing what's important can be a challenge. And every 24 hours, the world around us changes in infinite ways. Dissecting the most important trends can be hard. If you're like us, picking out the signal from the noise is a huge chunk of the job of leading a business. And it can be overwhelming.
That quest for what matters most in business brought both of us to the field of Customer Success, from different starting points. We'll each tell the story of how a discovery of Customer Success pushed our own thinking on what mattered in business. And we think these stories will resonate with you. Let's start with Nick.
Making and Selling Aren't the Only Things That Matter Anymore, Dad
When I was 8 years old, I vividly remember a “take your child to work day” with my entrepreneur dad. The thing I recall best from that event is him saying, “Nick, there are just two jobs that matter in business: the jobs of the people who make the stuff you sell and the jobs of the people who sell the stuff you make; everything else is overhead.”
As oversimplified as that may sound, my dad was accurately describing the business model of pretty much every major corporation from 1900 to 2000. Making stuff and selling stuff drove the global economy. The sale was a one-time activity, and anything “post-sale” was a cost to the company (customer service centers, repair people dealing with broken machines, fleets of company vehicles, etc.). My dad's advice fared well for me in my early career as a leader in enterprise software.
Then in 2008, during the depth of the financial crisis, I was hired to run a company where we sold our software “as a service” (SaaS). I was finally in the cloud! I remember my first day meeting the employees and recalling my dad's advice. I wanted to immediately talk to the leaders of Sales and Engineering, the people who “sold stuff” and “made stuff.”
I also met Steve, the person responsible for making sure our existing customers were successful. I thought to myself at the time, “Great. Steve's got that covered so I don't have to worry about it.”
But what I learned over the four years of running that company was that the SaaS business model had fundamentally shifted power to our customers. They weren't “buying” stuff anymore, they were renting it. This changed the way I needed to operate as a CEO. Making and selling still mattered a lot. But our customers now had the “power of the purse.” If they weren't satisfied, they could leave us at any time. As the CEO of this customer-powered company, I ended up spending way more time with Steve than I did with his counterparts in Sales and Engineering.
And that shift that I observed toward customer-centricity is why I was excited to join Gainsight and help launch the company in 2013, with our mission being to enable businesses to embrace Customer Success as the leading strategic differentiator of the next phase of the economy. And if you follow me online, you know I am fired up about the Customer Success movement!
But, that's not just my story and my irrational enthusiasm. That's an industry story—actually, that's the entire economy's story. Up until now, the history of business can be condensed down to two phases: the making stuff phase (starting with the industrial revolution), followed by the selling stuff phase (the Internet has pushed this last phase by making it possible to market your stuff globally, instantly, constantly). Now we've moved into a third phase. We still need to make and sell, but that's not enough. Our customers in the modern economy are looking for success—for their goals to be achieved—not just for “stuff” to be purchased.
And if you're reading this, it's probably your story, too. You may be dealing with “vendors” that don't seem to have a clue about what you really want. You might be running a sales organization and realizing that the end-of-quarter heroics can't go on much longer. You may be in the Customer Success profession and trying to get your company to wake up to the movement.
But no matter who you are, you probably cringe at the tools and systems you use at work, only to hop into an Uber or Lyft and be magically whisked wherever you want once you step outside of the office.
In short, we all know the story needs to change.
The Business of Business Is Helping People
Here's how Allison found herself at the dawn of the Customer Success movement, which fundamentally changed her outlook on business.
When I was in college, I spent much of my day poring over ancient philosophical texts, searching for the secrets of “the good life” and for the pillars of a healthy society. Like my peers, I hoped to do good in the world in some way. When an internship on Capitol Hill proved to be more about mailing form responses to constituents—leveraging a mechanical contraption to replicate my Senator's signature—than creating innovation, I realized that my eagerness to build things that helped people might be better suited at that point for the private sector.
Two subsequent jobs in management consulting and private equity investing offered an incredible bootcamp in business knowledge and membership in a community of talented, inspiring people. But something nagged at me. How could I translate the skills I was learning into the positive societal impact that motivated me at my core? In an attempt to get back to my roots of trying to “do good,” I recruited a friend to help build a tech product with the aspiration of helping industrial workers—often underdogs in our economy—showcase their skills to get jobs more easily. But the market wasn't ripe. I was back to the drawing board and told myself I was too naive to think that business could be anything but that—business.
Soon after, I met Nick after my old investment firm led an early funding round, when Gainsight had about 30 customers in a new market called Customer Success. As I learned about the industry, I soon realized that this was a new group of underdogs. Here was a fledgling community of people—many of them women—who knew they had greater value than their companies and investors recognized. Tectonic shifts in the market were in their favor. They just needed some support.
I soon joined their ranks as I took on the Customer Success team at Gainsight. We incubated ideas for how to make our own customers successful and shared the results of our experiments—the good and the bad—with the CS community in hundreds of blog posts and podcasts. (In one experiment, we accidentally sent a “welcome email” to all of our clients, even the tenured ones. Whoops.) We also learned a great deal from our clients and other friends in the field, who conducted their own experiments and gave feedback on our ideas as well.
The biggest learning—to my happy surprise—was that doing good didn't have to be at odds with building a great business. In fact, it could be a differentiator. Genuinely helping your clients propels stronger revenue growth, market leadership, profitability, consistency, employee retention, and valuation multiples—as we witnessed across the Customer Success community. Now the underdogs (CS professionals) were helping other historical underdogs (clients) and generating incredible business results.
So back to the question: What really matters in business? Doing good for the human beings who are your clients.
That might sound soft. But actually, it's the hard reality of business today. This book is about how to compete and win in an ever-more-challenging business environment. Notably, it's not about “making your clients happy.” It's about making them successful so that you can succeed. Let's discuss what we mean by that.
Why Customer Success Is About More Than Happy Customers
Not surprisingly, the Internet is the reason for the change in the relationship between customers and businesses. Everyone knows the basics: whether we are at home as “consumers” or at work as “businesspeople,” we demand a great customer experience. This concept is so commonly said that it's now trite.
But in some ways, talk of customer experience or “making customers happy” is missing the core point. The power of the Internet didn't just empower customers to be “satisfied.” Customers in the modern world demand that their goals are achieved. The fancy management consulting term for this is desired outcomes.
What do we mean by outcomes? Well, whenever anyone, a consumer or a businessperson, looks at doing business with another company, they have a goal in mind. Maybe they are on a trip and trying to get from one part of a city to another. Maybe they are hoping to get in better shape. Or perhaps they are an executive looking to drive more engagement from their teammates.
Whether you consider B2C (business-to-consumer) or B2B (business-to-business), the trend toward outcomes is unstoppable. If you are on a trip in New York, Uber and Lyft turn a product (car) into an outcome (getting you from point A to point B). If you are on a health kick, Peloton turns a physical device (bike) into a subscription service (spinning training—with great music!). If you are the executive at work, Workday turns a category of “Human Resources Software” into an SaaS solution.
In all these cases, customers are no longer stuck with the vendors they bought (sorry, Dad!) because technology has transformed the category for customers. They have choice. They have mobility. They are now at the core of the business model. Just as Copernicus showed us that the Earth isn't the center of the universe, vendors are now realizing that clients are at the center of theirs. Figures 1.1 and 1.2 illustrate this change.
Customer expectations are higher, customer power is greater, and holding onto customers is harder because they have so much choice. Thatavailability of options has changed the way customers think about vendors, and it has upended the way you have to act if you want to retain your customers. If you're not operating from a customer-centric playbook, you will lose. Your strategy should help you make sure your customers are actually using what they bought from you, that you are giving them the sort of customer service they demand, that you are expanding the relationship, and in the course of all of this, making your customers your advocates.
Figure 1.1
Figure 1.2
Do all this and you'll join the companies that are growing most rapidly through Customer Success. Shrug it off and we can guarantee you the market will pass you by.
So Why Do You Need This Book?
Our first book, Customer Success: How Innovative Companies Are Reducing Churn and Growing Recurring Revenue, laid out the basics of the Customer Success approach to business. If you read our first book, you're probably wondering why—or even if—you need another book on the same subject.
New fields change a lot. Remember how we thought about the Internet in 1999 versus now? Besides cat pictures, pretty much everything else is different.
In the same vein, Customer Success is evolving rapidly. Think of our first book, Customer Success, as the foundation of Customer Success practices. But what has fundamentally shifted is Customer Success has gone from a job function to a company-wide movement. We predicted this in the first book, and in this edition we'll share many examples of the idea becoming reality. And in this book we are going to argue that that movement is changing the nature of our economy overall.
Customer Success and the Economy
That's a pretty bold claim, we admit. But what's happening in this third wave of the economy is that the power is fundamentally shifting to customers. If you think about it, power is all about who has the upper hand. In the first phase of the economy (“making stuff”), products were novel. Think about Henry Ford coming to your town and driving by everyone else on horses and buggies. The product itself was novel.
But consider products today. If you want to buy marketing software for your office, you have thousands of solutions to choose from. Looking for meal delivery? Choose from Grubhub, Doordash, UberEats—the list goes on. Trying out a new subscription clothing service? Google the concept and find hundreds of alternatives. Want an intelligent speaker? Choose from Google, Amazon, Sonos, and many more. Remember when Fitbit was really novel? Now tracking is built into everything.
Then the economy shifted to “selling.” With lots of choices, the challenge was finding what you wanted. One big innovation in this front was retail. Walmart made it so you could get the products you wanted in your neighborhood. Telesales allowed you to buy from a catalog through the magic of your phone (think about how dated that sounds now). Shipping companies like UPS and FedEx let you get packages to your door. And Amazon, of course, took all this to the next level.
But think again about the choices you have in how to buy. The number of options is almost intimidating. Amazon Prime Same Day? Instacart? Walmart delivery service? Maybe 3D print the object in your home? Do you want to buy via mobile or web, or maybe through your smart speaker? Selling stuff is no longer differentiated.
With infinite choice in products and infinite ways to buy, the scarce commodity is now the customer. So making sure the customer is successful isn't just a job or a strategy—it's truly the economy.
In this first chapter we'll take a quick look at Customer Success just to establish the basics.
A Little History Lesson: Customer Success vs. Customer Service vs. Account Management
Here's where the shift from old business thinking to current-day practices really comes into focus.
Customer Service has always been and continues to be an important part of business. When a customer needs assistance, how can you help them quickly, effectively, and empathetically? Similarly, Account Management in some businesses is required to help customers find more ways to do business with the vendor (“sell more stuff”).
But Customer Service and Account Management aren't sufficient. The missing link in the new economy is that the customer makes their decisions about whether to stay with the vendor or spend more based on whether their outcome was achieved. So you need to get them to that outcome. However, in many companies, Customer Service is there to react to client needs, and Account Management is ready to sell, but no one is proactively getting the client to value. (You will hear the word “proactive” a great deal in Customer Success circles.) After the client has purchased and before they are ready to buy more, who is making sure the customer keeps moving forward? Customer Service is ready to pick up the phone when it rings, but who is taking the initiative to call the customer to help them achieve more? You might think that Account Management is the “outbound team,” but their focus is different. Kevin Meeks, Vice President, Global CSM and Renewals, at publicly traded data software company Splunk, phrased the difference succinctly. “When I think of account management, I think of commercial selling. When I think of success management, I'm thinking about advocacy and things we're doing to make the customer successful, without a focus on short-term sales.” Customer Success is the missing link that helps your clients achieve their desired outcomes.
A true, company-wide focus on Customer Success ensures that your customers reach their goals through using your product while having a great experience. In order for that to happen, you need three things: (1) an organization waking up every day and thinking about driving more value for customers, (2) a set of company-wide programs to help address issues across the company that impede Customer Success, and (3) a culture that reinforces that the customer is at the center of the company.
Why Customer Success Isn't Optional
Customer Success is a natural outcome of massive changes in the economy, including but not limited to the following facts:
Globalization and technology have dropped the barrier to entry for businesses.
Lowered barriers to entry allow new entrants to disrupt almost every established category.
New entrants have created lower-friction business models, which makes it easier for customers to try and buy—especially with shorter-term pricing, granular consumption, and easier deployment.
This lower friction makes it easier for try-and-buy customers to say “Bye!” and leave—which means customers have more power and choice than ever before. And they choose to stay with vendors who deliver the outcomes and success they want.
The only real question you have to address regarding implementing Customer Success–focused practices, then, is whether your business will react quickly enough to survive.
And if you're not motivated yet, let us try the carrot and the stick, because both apply in Customer Success.
On the positive side, Customer Success creates a big opportunity for businesses in four dimensions:
Opportunity for Predictability:
Traditional “one-time sale” business models were great in one respect in that you got the client's money upfront. But on the other hand, you always had to find another client to win. The recurring nature of the Customer Success model means more stability in your business long-term. Because of that, shareholders love subscription and cloud financials and value them at higher levels than their comparable peers.
Opportunity for Growth:
Companies today have more levers to pull for sales than prospecting cold leads. They can grow by actually delivering on the vision they pitched in the sales cycle, which allows them to expand their existing client relationships and attract new buyers through warm referrals from happy clients.
Opportunity for Innovation:
Customer Success and the data you get from a deep client relationship allows you to grow your business like never before. Perhaps you offer software for small business management, and you then realize that your clients also have a challenge accepting payments. With the intimacy of the Customer Success model, you are able to more rapidly launch new offerings for your clients.
Opportunity of Balance:
Finally, we'll argue throughout the book that companies that adopt the Customer Success model are just better. They balance the needs of all of their stakeholders—customers, teammates, community, shareholders—in a way that works for everyone.
But if you're not motivated by that, let's look at the other side of the coin—the four risks of not investing in Customer Success:
Churn Risk:
Leaders of modern businesses are realizing their clients' fundamental expectations are changing. No longer do customers want a “product” or “service”—they want their problem to be solved. So your job has changed as a company. Moreover, in new business models like SaaS and cloud, customers have all the power. If they aren't achieving value or “success,” they will move on.
Capital Risk:
Investors expect you to invest in your clients, because they know that drives returns. Whether you're planning to raise money, go public, or run a successful board meeting, Customer Success becomes a corporate imperative.
Competition Risk:
Whether you adopt the Customer Success model or not, your competition will. And that differentiation will start showing in terms of the leaders and laggards in categories.
Employee Risk:
Employees increasingly want to join companies that truly deliver on a premise of bettering others' lives. The rise of purpose-driven organizations means that if you don't truly help your clients, your employees will go elsewhere.
What You Can Expect from This Book
The nature of the economy has changed drastically since Nick was a little kid proudly grasping a tiny, toy-filled briefcase with his dad, and even since Allison left the private equity world about a decade ago. Customers have more power than ever before. With the advent of cloud-based technologies, most customers can—and will—change vendors whenever they want. This is becoming as true in the B2B arena as it is in the B2C arena. Where does that leave you? You now have a clear mandate to make sure your customers succeed with your product or service. This new world compels you to put Customer Success at the top of your priority list.
Most of us over the course of our working lives have had a moment or two when we wondered why we're working so hard. We've certainly had plenty of those moments when crammed into an airplane seat, flying off for yet another round of meetings. We knew that work was about something more than making money, but we were told not to talk about those things.
Well, the business world is catching up. We're realizing that we can win in business while being “human-first.” Customer Success is simply realizing that your company is made up of humans, and your customers are humans, and you're all just trying to win together.
This book will help you figure out how to win, together with your clients. Part I focuses on the evolution of the Customer Success economy: What does it look like now and how did it get to where it is today? Part II explores the kind of company that this CS economy requires: What is required from every function? And Part III discusses implementation: What steps should you take to roll out CS at your company?
You won't just hear our point of view. You'll hear from dozens of CEOs, investors, chief customer officers, and other thought leaders on these topics—hailing from the diverse worlds of the Fortune 500, private equity, venture capital, and Silicon Valley—who offered to be interviewed so that we could share their perspectives directly with you.
We hope that by the end we will have planted a few seeds and also offered you some fertilizer to help those seeds grow. In other words, perhaps while reading this book, you'll reframe your view of business, even a little bit, and be on your way toward implementing Customer Success at your company.
If you haven't read our first book (or want a refresher), take a look at the recap below of the Ten Laws of Customer Success, a primer for what CS is all about. Otherwise, we'll see you in Chapter 2, where we'll look at how the Customer Success mindset is showing up in all sorts of areas outside Silicon Valley.
The Ten Laws of Customer Success
Here's a brief overview of the Ten Laws of Customer Success. For the full explanation and practical examples, head over to our website at gainsight.com/resource/the-10-laws-of-customer-success and download the booklet.
Law #1: Customer Success Is a Top-Down, Company-Wide Commitment
We introduced this concept in 2016, and we believe it even more strongly today. Customer Success is a true business revolution, and it's here to stay. Done well, it drives real value to your business's bottom line. If you're not on board yet, you will be soon. The demands of today's customers and changes to the economy mean that your company literally cannot survive long-term without making a solid commitment to Customer Success. Getting started is fairly easy as long as you keep in mind that Customer Success starts at the top. For it to work, it must be a company-wide commitment. The days of CEOs being able to say that customers are their top priority and then acting in exactly the opposite manner are over. By the way, this first law is the inspiration for us writing this book.
Law #2: Sell to the Right Customer
As a growth company, your entire organization must focus on selling to the right customer and being completely aligned with your product market fit (PMF). If your customer isn't the right customer, the impact on your organization can be disastrous. The wrong customers can inhibit your organization and take you away from efforts that drive success, efficiency, and scale. (On the other hand, occasionally a wrong customer can become a critical design partner to help you extend your use case and PMF—but only if you have honest dialogue with them and act on the feedback they give you.)
Law #3: The Natural Tendency for Customers Is Toward Churn
Customers and vendors start off their relationship like two boats side by side in the middle of a lake. If both boats are unoccupied, they will begin to drift apart. Eventually, it's highly likely that the two boats will end up far apart, perhaps even bumping into opposite shores.
How could you change that natural tendency? Simple: Put a person in one of the boats and give them a pair of oars. Better yet, put people with oars into each boat. Change is the constant. People change in vendor and customer companies: Business models change. Products change. Leadership and direction change. And on it goes. Only well-designed, proactive interaction on the part of one or both companies will overcome the natural drift caused by constant change.
When your company makes a meaningful commitment to Customer Success, you also commit to counteracting that natural drift.
Law #4: Your Customers Expect You to Make Them Wildly Successful
Customers don't buy your solution just for its features and functions. They buy your offering (and buy into the relationship with you) because they want to achieve a business objective. They are assuming you will drive their success. And, by the time the sales cycle is complete, their expectations are really high. Don't waste time complaining about the fairness of this attitude; just acknowledge and work with it.
Delivering wild success requires you to ask three fundamental questions:
How does your customer measure success?
Is the customer achieving that value (or are they at least on a realistic path to achieving it)?
What's the customer's experience with you along the way?
Law #5: Relentlessly Monitor and Manage Customer Health
Customer Health is at the heart of Customer Success. It not only informs your actions, it actually drives appropriate action when used properly. Customer Health is to Customer Success what the sales pipeline is to a sales VP's planning info—the predictor of future customer behavior. So just as sales VPs manage through their pipeline, Customer Success teams must manage through customer health. Monitoring and managing customer health is a core activity for Customer Success teams. It must be done and done well—even relentlessly.
Law #6: You Can No Longer Build Loyalty through Personal Relationships
One of the values of modern technology is that it makes our products much easier to buy for our customers. This almost always leads to a “long tail” of lower-value customers who, in most companies, end up being ignored. The best companies will figure out how to effectively and efficiently manage this large base of customers.
Software-as-a-service vendors realize that they need to systematically create programs that allow for interaction between them and their customers. Most SaaS companies need to address how to service the largest portion of their customer base in a technically friendly way while at the same time reducing the need for labor-intensive ways of building relationships.
Depending on your product and service, you will decide how to create a customer experience that develops a connection with your company. Once outlined, that customer experience needs to be captured, driven, and continually refined by your Customer Success team. Keep in mind that customer experience must be a top company priority; it can't be delivered by individual relationships with your customers or even by a single department.
This reads like common business practice, yet most organizations do not have a cohesive plan (key word being cohesive) to deliver the optimal customer experience.
Law #7: Product Must Be Priority Number One
The key to customer retention, client satisfaction, and scaling the support and service organizations is a well-designed product that's combined with a best-in-class customer experience. Consumer technology has changed the way we work, as well as our customers' expectations. To ensure you have created a product that meets the needs and expectations of your customers, create a client experience team that focuses on building out programs in a client engagement framework—one that drives community among clients, encourages engagement at all levels and roles of the customer base, and provides clear feedback loops that inform product improvements. The data about product usage and adoption should be available to everyone—from the Product team to Marketing to Customer Success. In addition, increasingly Customer Success teams are using in-application messages and guidance in the product to scale their Customer Success operations.
It's also important to note that, in the new customer economy, we need to think very differently about how we build products. Gone are the days of big, monolithic applications. Today's world demands building blocks that enable the land-and-expand model. This is the only way to take advantage of the major investment we are all making in Customer Success.
Law #8: Obsessively Improve Time to Value
Why do people or companies buy? They think they'll get value from their purchase. If you're a consumer, this might mean spending a lot at a fine restaurant because you hope to get an outstanding meal. In that scenario, you find out pretty much right away if the expenditure was worth it: The food is either delicious or not. Based on that, you can decide whether you'll return.
But when you're selling business products and services, it's often tough to show value so close to the expenditure. Buyers know that, but they still expect to see value in a reasonable time frame. For SaaS vendors, that time frame is the length of the subscription: If the customer hasn't seen real value by the time renewal discussions begin, they're far less likely to renew. Working against the vendor is how long it might take to get the customer up and running with the solution. Obsessively improving time to value is the way to address this challenge.
And the time-to-value point is important throughout the customer lifecycle, not just in the initial onboarding phase. Every time a new release happens, for example, the process starts again in helping the customer derive value from the new features as quickly as possible. Obsessing over time-to-value needs to become a constant mindset for successful companies.
Law #9: Deeply Understand the Details of Churn and Retention
Successful subscription-based companies must understand the details of churn and retention in order to maintain and accelerate their revenue growth. Nothing slows your company's growth rate faster than having revenue from your installed base evaporate. As your installed base revenues grow, even a 1% increase in churn can make a huge difference in your company's velocity.
To sustain a subscription-based company for the long term, your company must grasp the concept of churn from the standpoint of understanding why and how often customers leave, and the concept of retention from the standpoint of why and how often customers stay. The earlier in your company's lifecycle churn and retention are addressed, the easier the problem is to solve.
Great companies will truly understand why customers churn (“It's just not working for us” or “We can't afford it” are not real reasons). They will also learn why customers churn individual products, which causes downsell (dollar churn).
Law #10: Customer Success Teams Must Become Metrics-Driven
As with any new business endeavor, maturity is required to ensure long-term viability. Well, that time has come for Customer Success, which is still relatively new as a formal organization within most enterprises. Repeatability, process definition, measurement, and optimization are the hallmarks of maturation. We see glimpses of these at more mature recurring revenue businesses, but there's still a long way to go for most.
Ultimately, the purpose of Customer Success, like any other part of a thriving company, is to achieve real business outcomes. Defining what success means both for you and for your customers, and then establishing clear metrics that will deliver that success, is a necessary part of accelerating the maturation process.
Remember: You can't improve what you don't measure. So establish your metrics, start measuring and responding to those measurements, and watch your Customer Success program deliver ever-increasing positive results.
2Customer Success: It's Not Just for Silicon Valley
In The Third Wave, Steve Case's bestselling 2016 book, the former CEO and chairman of America Online (AOL) predicted the rise of regions outside of Silicon Valley as technology became infused in more-established industries. The same trend that is pushing “digital transformation” everywhere is also creating the need for Customer Success.
As an example of Case's observation, consider Rockwell Automation. Founded in 1903 and headquartered in Milwaukee, Wisconsin, Rockwell originally produced motor controllers for industrial cranes. Today, over 22,000 employees work to achieve the company's mission to “bring the Connected Enterprise to life,” according to its website, through products ranging from process controls, to sensors, to safety systems. Customer Success has been fundamental to Rockwell's transformation. In particular, it has helped Rockwell transform the “services” that they sell around equipment maintenance and management from a reactive model to a more proactive one.
Nicholas Goebel, director of Global Customer Success at Rockwell Automation, explains how that happened at their firm: “We realized as a services organization that our contracts and our annual recurring revenue are the keys to our future success. We needed to have a Customer Success organization in place to drive our renewal rates. So we made organizational changes,” says Goebel. “We recognized that the real goal of the CS organization at Rockwell Automation is to make sure we help our customers adopt, in the most efficient possible manner, whatever service or software package they purchase from us. And we have to communicate to them the value that it's having on their operation. So we track whatever they deem most important along the life of that subscription or service contract, instead of waiting until the end to try to justify the value we bring to their business.” Defining what counts as value to the client, delivering against that, and demonstrating that value has indeed been delivered are three core CS activities that keep Rockwell's recurring revenue humming.
GE Digital similarly found a need for Customer Success, despite not having Silicon Valley roots. The subsidiary of storied industrial giant General Electric produces software and machine learning technology for industries that range from aviation to manufacturing to power generation. Customer Success is fundamental to defending GE Digital's subscription business. VP of Customer Success David Kocher made it a priority to develop a customer journey map, no differently from the way a Silicon Valley SaaS company would.
The journey map has five stages, from the buyer's journey into the customer's journey, all the way through to outcomes. It identifies the critical steps at each of those different stages—what the customer needs and what we need to provide. Those are the deliverables. We ended up with this 3D-looking spreadsheet that outlines what's happening, when, and who's responsible for it. It's so critical to have transparent communication and an internal agreement about the client journey. That way it would feel seamless to the client, even though there's underlying complexity.
Healthcare is another industry that has embraced Customer Success. Founded in 1997 and headquartered outside Boston, athenahealth has a network of more than 160,000 medical providers and 110 million patients and provides software and services to help providers manage their practices; athenahealth recognizes customer centricity as a business imperative. “We have two priorities: to demonstrate differentiated value to our clients and to deliver a good experience,” says Bret Connor, SVP, chief customer officer at athenahealth. “And, we have to do that while the world is constantly evolving. It's not news that healthcare is becoming more complex in how care is provided and how people get paid. Those dynamics mean that you must keep up from a Customer Success perspective. We have to be constantly learning and evaluating our performance. And we change the things that we monitor over time as the things that matter change. It's a nonstop process of monitoring, learning, and adapting to the changes so we can help our clients get good outcomes and ensure that patients are seeing better care.” Customer Success ensures that athenahealth as a company can continue to evolve as quickly as its clients.
Even the physical devices that keep us healthy can be transformed via Customer Success, as is the case at ResMed. Based in San Diego, ResMed offers cloud-connected devices that transform care for people with sleep apnea, COPD (chronic obstructive pulmonary disease), and other chronic diseases. In addition, ResMed offers a portfolio of comprehensive software solutions for providers caring for people in settings outside of the hospital.
For ResMed, Customer Success means supporting home medical equipment providers and other channel partners to help patients achieve better health outcomes, which is fundamental to the company's mission. ResMed's software remotely connects devices, enabling providers to better support their patients and ensure strong adherence to sleep and other respiratory therapies.
In 2016 the company launched a formalized Customer Success program to further support respiratory therapists with ResMed's software solutions, provide greater support for patients, and drive better therapy outcomes. Raj Sodhi, president of ResMed's SaaS business, points to the result: “Because of our approach, we've improved patient therapy adherence from a traditional 50 percent to as high as 87 percent. The patient and provider response is strong.” Moreover, the success of these solutions fueled provider profitability, which has in turn resulted in positive growth for ResMed. “ResMed has grown its business to be #1 in CPAP [continuous positive airway pressure] devices and our Customer Success program has been a key enabler; it has allowed us to scale our digital health solutions to become the largest global medical device telemonitoring business.”
As in healthcare, companies in the human capital industry embraced digital transformation and subsequently recognized the importance of driving outcomes for customers. ADP is one of these companies that is dancing to the Customer Success tune. The company was founded in 1949 and became a 58,000-person human capital management solutions provider. As they built more digital offerings over time, it became necessary for them to build a Customer Success initiative. Erin Siemens, SVP Client Success at ADP, was asked by her business unit president to design a CSM organization in 2018. At that point, Siemens and her team read the first Customer Success book that we published. They refer to it as “the bachelor's degree.” She says,
