The LAER Effective Company
Many TSIA member companies have evolved their own version of the LAER framework that defines the supplier view of the customer life cycle. A common thread between 90% of these organizations is a well-defined charter that includes at least two of three common charters outlined in our framework: Adoption, Expansion and Retention. While we see many new capabilities and practices starting to emerge it is important to stop and ask if we are doing these new motions cost effectively or perhaps even more important, efficiently.
As customer success continues to “break glass” throughout the traditional organizational models, here are 5 expectations we would seek in the LAER Efficient Customer Success organization:
We expect to see Customer Success organizations to have a three-tiered ROI and funding model that is inclusive of monetized customer success offers, financial responsibility, and the tie back to lowering overall sales costs. As we learned after polling approximately 500 attendees in a at our last TSW conference and through our own studies, almost half of Customer Success organizations are funding at least a portion of their organization through a for fee offer set.
We see the ability to have Customer Success own a revenue number, giving back valuable time to Sales teams to explore more complicated expansion opportunities and hunt for new customers. In these cases, we expect a lower Sales and Marketing cost to help contribute to overall profitability.
Almost half of Customer Success organizations are funding at least a portion of their organization through a for fee offer set.
An important question to ask amongst your leadership team is, “Do we fully understand how to help our customer realize specific value from their technology and have we created success plans and playbooks accordingly?” This is clearly a differentiated but not common practice, and that is why it is listed here as it is an evolution towards LAER Efficiency.
Less than one-third of Customer Success organizations both map the customer journey and align customer success plans to that journey. Moreover, we must ask ourselves if we are hiring the CSMs with the right skills or training them up to truly understand how to deliver against the promise of the technology that was made during the sales cycle. I look forward to expanding on this discussion at our next conference to help frame the customer success alignment towards vertical outcomes. Collectively, we need to move beyond the “basic” view of playbooks that could be ported to any Customer Success organization. We need to deliver best in class experiences with industry specific outcomes to deliver against the promise that our customers deserve.
When we look at public data and compare economic models of traditional companies that continue to obtain most of their revenue from one-time purchases, like hardware or a software license vs. those that are more subscription-heavy, the Sales and Marketing costs are 15 percentage points higher with the recurring revenue model. Upon further inspection, we see an account executive still have quota responsibility for the contract renewal 37% of the time. We must strive to put the right resources at the right point in the customer journey in the most cost-effective way.
As we discussed in the 2018 State of Customer Success paper, the year over year trend in how much automation existed in workflows dropped from 2017 to 2018 by 3%. Obviously, that is headed in the wrong direction, and there are now more than 30 customer success workforce platforms that can help you with this. At TSIA, we continue to see “do it yourself” models though dominate the landscape with a blend of CRM, business intelligence, and workflow automation. The number of Customer Success organizations that use homegrown solutions has continued to range in the last three years between 60-70%. To that end, I am really looking forward to listening to Informatica’s Ashok Gunasekaran share his case study at TSW titled, “AI-Driven Adoption in Customer Success.” Ideally, we should strive for and adoption framework that provides the next best action in that delivers on optimized customer and employee experience.
The number of Customer Success organizations that use homegrown solutions has continued to range in the last three years between 60-70%.
TSIA published results earlier this year to understand how OEMs (original equipment manufacturers) were working with their partner community. There is a significant disconnect between the metrics and practices that the partner community develops and delivers vs. what OEMs are doing in a direct engagement. Often, these are in direct conflict with one another and do not complement one another.
TSIA has found three levers that stood as a good starting point to enable your partner community to stand up their own customer success capability. These include: enabling partners through education, avoiding channel conflict, and providing tools that allow the partners to scale more effectively. We saw OEM growth rate (not partner) soar 10 percentage points higher when effectively delivering against these capabilities.
I want to encourage you to join us on October 15-17 in Las Vegas for our fall Technology & Services World conference, where we have same amazing speakers lined up to discuss Customer Success practices and capabilities. There is content here for almost any company from case studies from hardware manufactures, healthcare IT providers, and of course, software and SaaS companies. Here is just a sampling of some of the awesome content that you will see in just a few weeks.
"Achieving 99% Customer Retention and Creating Customers for Life in the Healthcare Vertical," presented by Carina Edwards, SVP, Customer Experience and Corporate Development, Imprivata
"Iron Sharpens Iron," presented by Jared Raftery, Manager, Global Partner Enablement, Cisco Systems. This is a case study focused on Cisco empowering its partner community.
"How a Hardware Vendor is Driving Customer Success with Software," presented by Adam Rypinski, Sr. Director, Customer Success, Juniper
"Employee Engagement: Passion Can’t Be Found in Your Head, It Lives in Your Heart," presented by Chris Holm, Director, Customer Success, Ellucian
"Building a Magical Customer Success Team," presented by Mark Schaefer, Director, Customer Success, Microsoft
"Culture: The Core to a Successful Adoption Strategy," presented by David Sakamoto, Head of Customer Success, the Americas, Cisco Systems
"Making Customer Success a Company-Wide Imperative at Tableau," co-presented by Tableau’s Jenny Beazley, Customer Success Programs and Operations, and Chris Bates, VP, Global Customer Success
"Leading with Legendary Success in the Sales Process," presented by Neil Senior, VP Global Customer Success, Mimecast
I look forward to seeing you there!
Read more posts in the LAER Effective Company series:
Post Date: September 13, 2018
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.
The Technology Services Industry Association (TSIA) is dedicated to helping services organizations large and small grow and advance in the technology industry. Find out how you can achieve success, too. Call us at (858) 674-5491 or we can call you.