June 13, 2017
As more technology companies move toward new “as-a-service"/subscription revenue business models, customer success continues to play a big role in this transition by preventing customer churn and securing crucial recurring annuity streams. But how do you know which stage of development your organization is at, and what is the end goal? To answer that, TSIA has developed the Customer Success Maturity Model, which allows companies to see where they stand against their peers and spot potential ways to improve as they move through the stages of their organizational maturity.
In the first part of this two-part series, I discussed the top 5 questions about customer success: what it is, how it’s performed, when it happens, why it’s important, and who is responsible for delivering it. With those core elements established, the next step is to find out which capabilities your team will need in order to grow, face challenges and problems, find solutions, plan work, and ultimately deliver results for your customers. These capabilities can include such things as establishing their charter, ensuring effective technology adoption, developing prescriptive playbooks, monitoring customer success metrics, just to name a few. However, the priorities for developing these capabilities will be different for each customer success organization depending on their level of maturity.
With those core elements established, the next step is to find out which capabilities your team will need in order to grow, face challenges and problems, find solutions, plan work, and ultimately deliver results for your customers.
In the 1960’s, Dr. Bruce Tuckman developed a model of group development which listed the phases needed for teams to advance, which fell into 4 categories: Forming, Storming, Norming, and Performing. In TSIA’s Customer Success Maturity Model, we’ve applied this concept as it relates to customer success.
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TSIA's Customer Success Maturity Model
TSIA's Customer Success Maturity Model
In this stage, we see technology suppliers just starting to make the pivot toward new “as-a- service”/subscription-based revenue business models. This means that companies that are currently in a legacy model where dollars are received from customers up front are now suddenly moving toward a recurring revenue theme. In this phase, companies are just beginning to understand the importance of combatting churn, as customers are now paying gradually over time only for what they consume. Typically in this phase, there’s no real formal customer success team in place, no adoption plans, and what “customer success” means for the company is just starting to be established.
Here we see customer success starting to be considered as more of a theme, and is run as a project or series of projects where funding is supplied on a project basis. In this phase, we also see some establishment of voice of the customer and customer feedback programs, such as customer effort score, CSAT, or Net Promoter Score. There also might be a leader of customer success or customer experience, and oftentimes they are matrix managing other resources in the company. However, customer success organizations in this phase of development show limited signs of organizational alignment to technology adoption initiatives, so TSIA research refers to this stage as “thematic” customer success.
In this phase, we also see some establishment of voice of the customer and customer feedback programs, such as customer effort score, CSAT, or Net Promoter Score.
At this point, one of the three key charters of customer success has been established, whether that’s adoption, retention, or expansion. There is some level of automation relative to the information being gathered from the product, which can be used to understand who is logging into the system and how frequently they are accessing the technology. In this stage, technology adoption is still considered to be low. There may be more proactive customer success initiatives, such as customer journey mapping, quarterly business reviews, or a formal onboarding program. Finally, there may be a group of individuals, commonly referred to as customer success managers, that are primarily reactive in nature and help with escalation management.
Finally, this is the stage where a technology will exhibit more than one or all three charters of customer success, including adoption, retention, and expansion. The technology is being effectively adopted by customers, and how their business outcomes are being impacted by the technology are being measured and quantified. There are documented customer success plans, workflows, and playbooks established that align to value-, event-, or time-based triggers. Customer success teams and initiatives might also be monetized and funded at scale, with costs split between sales, marketing, and customer success. With this funding model, there is tracking of customer acquisition costs (CAC), customer expansion costs (CEC), and customer retention costs (CRC). Finally, there is a more proactive customer success manager (CSM) role that reports into a customer growth team.
No matter what stage your customer success organization is in, TSIA is here to help you make sure you’re able to successfully make the pivot from your current legacy model to the new subscription-based business model. Contact us today to find out how! In the meantime, I encourage you to check out my free 8-minute mini webinar where I go over the concepts illustrated above, as well as the 5 common questions around customer success. Watch the webinar here On-Demand.
Organizational capabilities that technology services businesses must master
Phil Nanus, is the vice president of customer success research for TSIA. In this role, he works closely with member companies to deliver research and advisory programs focused on helping them optimize their customer success organizations and effectively deliver customer outcomes. Throughout his career, Phil has held various positions related to enterprise software and IT services, including global leadership roles in customer success, support, professional services, managed services, and cloud services. Prior to TSIA, he was the vice president of customer success at Infor, where he led a team of Customer Success Managers (CSMs) focused on driving customer adoption of their technology.
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