February 10, 2017
With subscription-based XaaS business models on the rise, more technology companies are realizing just how important it is to maintain good relationships with their customers if they're to secure a solid recurring revenue stream. To do this, they are shifting their primary focus away from their products and onto the customer by helping them achieve their desired business outcomes with their products and services in an initiative known as "customer success." In this post, I'm going to go over some of the basics of this concept by answering some of the more common questions around customer success, as well as provide additional resources that you and your organization can use to see how customer success fits into your daily operation.
Customer success is about helping your customers achieve a goal with your technology. More specifically, it is the intersection between what a supplier says their technology can do and the business outcome the customer hopes to achieve with it. Today's customers aren't buying the latest tech simply for its shiny new features, but are instead investing in products and services that will solve their biggest business problems, which can vary from company to company and industry to industry. In essence, the supplier is making a promise to help the customer solve the customer's problem, and the customer is investing in that promise by purchasing the supplier's product or service.
[Customer success] is the intersection between what a supplier says their technology can do and the business outcome the customer hopes to achieve with it.
The primary goal of customer success is to enable effective adoption of technology, which in turn leads to increased renewal rates and expand selling opportunities. For any technology vendor that has sold hardware or software maintenance, these recurring revenue streams have always been top of mind. But as an industry we are paying more attention to evaluating churn, because new XaaS models force us to pay attention to the recurring revenue. Customer success projects and teams ensure that customers are going to stay on the platform by making sure they extract the most value from the existing technology subscription.
The goal of customer success is to enable effective adoption of technology, leading to renewal and expansion.
Customer success is delivered through time, event, and value-based interactions between the customer, the supplier, and the supplier's technology. Primarily, these are prescriptive motions that allow for a preplanned response. For example, a customer success manager (CSM) can engage with a customer via a quarterly business review (time-based), or as customers achieve predetermined milestones (event-based). Further, CSMs implement effective adoption strategies of their technology purchase that will meet and exceed their customer's business goals (value-based).
Customer success is delivered through time, event, and value-based interactions between the customer, the supplier, and the supplier's technology.
Customer success requires prescriptive customer engagement throughout the life cycle between the supplier and the customer to ensure the promises of the suppliers' technology are realized. More frequently, we're seeing customer success teams get engaged even prior to the close of the sale. Constant communication between customers and suppliers along all stages of their relationship ensures that customers are able to receive a consistently positive experience with their technology solution, have any issues resolved as they arise, and create game plans for achieving any new goals going forward.
The people whose primary responsibility to ensure customers are receiving the most value from their investment are members of customer success organizations and are commonly referred to as customer success managers (CSMs). However, the goal of customer success doesn't have to just be the responsibility of a specific department, but can be an overarching theme within your organization.
Whether you've already established a customer success organization within your company or are looking to start, here are some other customer success resources that further illustrate the concepts above and can help you get started down the right road to helping your customers achieve their desired outcomes.
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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