TSIA Research Journeys are our initiative to solve today's top problems plaguing the tech industry. Join us as we launch discovery research, develop practical theories, and deliver industry-validated, board-ready insights designed to guide and empower every tech company.
In the realm of customer success, organizations face a pressing challenge: how to achieve sustainable growth, drive adoption, and secure the necessary funding to ensure success in the long run. It's a complex puzzle with multiple dimensions, but one key aspect that warrants investigation is the role of monetization.
Does monetization truly benefit customers? Does it contribute to additional revenue generation, such as expansion and retention? And perhaps most importantly, are customers willing to pay for a monetized offering? These questions form the foundation of this research journey track, as we seek to uncover the truth and gain valuable insights.
At the heart of this Research Journey lies a central problem: How can you invest in customer success to improve adoption, expansion, retention, and customer satisfaction while boosting revenue? By exploring the relationship between monetization and customer outcomes, we aim to address critical concerns and provide actionable insights for customer success professionals throughout the industry.
In this journey, we will explore the risks of not tackling this challenge and introduce our research methodologies. With findings in hand, we hope to empower every technology services company with the insights they need to thrive in a dynamic and competitive market. But we can’t do it without you.
By participating in our Research Journeys, you become part of a vibrant community that seeks to push the boundaries of what's possible in the tech industry. Together, we can navigate the challenges that SaaS and all tech companies face as they work toward profitability, uncover hidden opportunities, and pave the way for success.
So jump in with us as we:
- Define the Problem: We can start tackling the business challenge by clearly identifying it.
- Launch Discovery: With polls, surveys, and interviews, here’s where we dig deep into the facts and contributing factors.
- Develop the Theory: With data in hand, our researchers and analysts can start developing and/or enhancing frameworks.
- Guide the Industry: Correlations to financial results lead to conclusions that will help your organization figure out if monetizing customer success is the right move for you.
Define the Problem: Monetizing Customer Success
Customer success has emerged as a crucial factor for organizations aiming to build long-term relationships with their clients. However, many businesses overlook or will not even consider the importance of monetizing customer success—a decision that can lead to significant risks and adverse consequences for both you and the customer.
In this article, we will explore the potential dangers of neglecting customer success monetization and highlight why organizations should prioritize this aspect to transform their operations from cost centers to profit centers.
The Risks of Neglecting Customer Success Monetization
Neglecting the monetization of customer success poses significant risks to an organization, such as:
- Defunding: One of the most immediate risks associated with not solving the problem of customer success monetization is the possibility of those teams being defunded. In challenging economic conditions or instances of departmental mergers, organizations may face financial pressures that can result in reduced or eliminated funding for customer success teams. This could lead to a lack of resources, decreased customer support, and ultimately, a negative impact on the business's overall success and a negative impact on the customer experience.
- Missed Revenue Opportunities: By failing to monetize customer success, organizations may overlook valuable revenue streams that can significantly contribute to their bottom line. Customer success teams possess unique insights into customer needs, preferences, and pain points. Leveraging this knowledge and building monetization strategies can unlock upselling, cross-selling, and subscription renewal opportunities. Neglecting these revenue-generating avenues means leaving money on the table and hindering the company's overall financial growth. It also means giving your competitors an edge.
- Stagnation as a Cost Center: When customer success is not monetized, it often remains confined to a cost center designation within the organization. This limits its perceived value and potential for growth. By failing to showcase the financial benefits and return on investment (ROI) of customer success initiatives, businesses may struggle to secure the necessary assets, expand their teams, or gain executive support. Consequently, the customer success function may remain stagnant, unable to realize its full potential in driving profitability.
From potential defunding to missed revenue opportunities and stagnant growth as a cost center, the consequences of not prioritizing customer success monetization can be devastating. By embracing a strategic approach to monetization, businesses can unlock the full potential of customer success, driving financial growth and transforming their operations into profit centers.
Embracing customer success monetization is not just about financial gain; it is an investment in building stronger customer relationships and securing long-term success in the competitive marketplace. It is also about recognizing that one offering will not meet all of your customers' needs. Each of your customers will have different expectations for their journey with you.
TSIA's Research Journey: Unveiling the Path to Monetizing Customer Success
The quest to monetize customer success is an ongoing challenge for organizations across many industries. To shed light on this critical topic, TSIA Research Journeys are delving into the strategies of small, medium, and large companies to provide invaluable insights into the correlation between monetizing customer success and key performance indicators. This article explores TSIA's research approach and highlights the areas of focus that will guide this journey.
- Inclusive Research Scope: TSIA Research Journeys encompass many companies, ensuring a comprehensive understanding of the monetization landscape. By inviting organizations of varying sizes and business models, we aim to capture diverse perspectives and experiences. Although there will be a greater emphasis on companies that monetize customer success, valuable insights will also be gleaned from those that have yet to embrace this approach entirely. This inclusive approach will enable us to provide practical guidance tailored to different contexts and maturity levels.
- Key Performance Indicators: To unravel the impact of customer success monetization, we will examine specific key performance indicators (KPIs) related to expansion rates, renewal rates, customer satisfaction, and net promoter scores. By analyzing these metrics, we aim to uncover correlations between monetization efforts and the successful outcomes of companies. Understanding how monetizing customer success influences these critical KPIs will provide organizations with actionable insights and data-driven strategies to effectively navigate their monetization journeys.
- Positive Correlations: This research will focus on identifying positive correlations between customer success monetization and expansion rates, renewal rates, and customer satisfaction. By examining companies that have successfully monetized customer success, TSIA aims to uncover how these strategies impact customer outcomes. Understanding the positive effects of monetization can equip organizations with best practices and benchmarks to guide their own monetization initiatives.
- Addressing Challenges: Along with highlighting positive correlations, this Research Journey will also highlight the potential pitfalls and challenges associated with monetizing customer success. By identifying negative aspects and potential roadblocks, we aim to provide organizations with the necessary guidance to navigate these obstacles effectively. Understanding the potential downsides will enable businesses to proactively address and mitigate risks, ensuring a successful monetization journey.
This Research Journey concerning monetizing customer success promises to unlock valuable insights for organizations seeking to drive revenue growth and enhance customer outcomes. By examining a diverse range of companies and focusing on critical KPIs, we will uncover correlations, best practices, and potential challenges associated with monetization efforts.
Armed with this knowledge, organizations will be equipped to navigate their own monetization journeys, capitalize on revenue opportunities, and build strong, profitable customer relationships. Stay tuned as TSIA's research unfolds, offering guidance and valuable insights to help businesses thrive in the evolving customer success landscape.
Timeline of This Research Journey
Define the Problem
By clearly identifying the business challenge, we can start tackling it.
May 2023
This Blog (Above): Unlocking the Path to Monetizing Customer Success
Does monetization truly benefit customers? Does it contribute to additional revenue generation, such as expansion and retention? And perhaps most importantly, are customers willing to pay for a monetized offering? These questions form the foundation of this research journey track, as we seek to uncover the truth and gain valuable insights.
At the heart of this research journey lies a central problem: How can you invest in customer success to improve adoption, expansion, retention, and customer satisfaction while boosting revenue? By exploring the relationship between monetization and customer outcomes, we aim to address critical concerns and provide actionable insights for customer success professionals.
Launch Discovery
With polls, interviews, and more, here’s where we dig deep into the facts and contributing factors.
May-July 2023
Listen to the Podcast: Meh-ga Insights from Gainsight
In TSIA's 50th episode of TECHtonic, our podcast that covers various topics related to the technology industry, we spoke with Nick Mehta, CEO of Gainsight, and Kellie Capote, Gainsight’s CCO, about what customer success looks like, both today and in the future. The conversation touched on a number of interesting points as they pertain to the future of customer success organizations in this unique economic environment.
Read the Quick Poll Insights: How to Approach Monetization of Customer Success
The 2023 How to Approach Monetization of Customer Success quick poll examined the variation in monetization approaches for customer success organizations. The results reflect how prioritizing adoption or profitability influences monetization strategies for organizations of varying scales. Head to the link to read the results in full.
Check Out an Industry Story: Gainsight’s Journey To Sustainable Growth
Gone are the days when companies can solely rely on future growth without considering profitability. As the era of zero interest rates comes to an end, the need to prioritize durable growth is beginning to trump the strategy to grow at all costs. And this pivot to profitability is now seen as a permanent mentality. Toward this end, companies are now encountering decisions that give them pause.
During the TECHtonic podcast episode “Meh-ga Insights from Gainsight,” Nick Mehta, the CEO of Gainsight, and Kelly Capote, the Chief Customer Officer of Gainsight, joined Thomas Lah, the executive director and executive vice president of the Technology & Services Industry Association (TSIA) to discuss why technology companies must shift their priorities to focus on maintaining sustainable growth.
Striking a Balance between Growth and Profitability
In the quest to remain competitive in today’s environment, companies are facing the challenge of striking a delicate balance between growth and profitability. Customer success organizations are compelled to reassess their strategies, scrutinize their operations, and identify areas of improvement.
The foremost priority for profitability relies upon retaining current customers. Mehta emphasized that “it’s cheaper to retain and grow an existing customer than to get a new one.” By fostering customer loyalty, companies can seize the opportunity to foster strong relationships and uncover possibilities for expansion within their existing customer base. This ultimately improves the overall profitability of the company and further drives efficient growth.
Customer success teams play a pivotal role in customer retention by ensuring customer satisfaction and facilitating the customer’s journey. As a result, executives are recognizing the importance of customer success capabilities for profitability. This realization has led to recommendations for three customer success capabilities, which some have hesitated or struggled to implement effectively.
The first recommendation involves companies adopting digital strategies, which Mehta argued that most have done in a very “fragmented and uncoordinated way.” Companies may be sending emails about new products to customers who are still in the onboarding process, all while the sales media team reaches out to existing clients. This lack of coordination can lead to the customer getting frustrated and unsubscribing from helpful email threads.
Mehta emphasized that digital strategy has evolved beyond simply sending mass emails. He stressed that direct messaging capabilities present an incredible opportunity to engage with customers on their own terms and personalize their experience. This type of outreach can streamline the customer journey by eliminating unnecessary obstacles and creating more opportunities for self-service options.
Monetizing Customer Success
Moreover, executive teams have historically hesitated to monetize their customer success capabilities. Although this is frequently touted as a best practice in the shift for sustainable growth, many believe that monetizing customer success will dilute their margins. However, this has proven time and again to be false.
In fact, Lah explained that many companies that have successfully implemented this monetization strategy have found a significant impact on their bottom line. As a result, such companies have experienced a notable increase in new net revenue. Lah illustrated how “the majority of SaaS companies have already incorporated customer success expenses into their subscription costs, lifting the margins on their core technology offers.
Shifting Roles and Responsibilities
Lah proceeded to address what he considers the most contentious recommendation, which revolves around the notion of customer success taking ownership of commercials - specifically at the the renewal and expansion stages. While some customer success organizations have shown reluctance to move commercials from sales to customer success, extensive research has shown positive outcomes. Companies that have implemented this approach have reaped improvements in both technology subscription rates, renewal rates, and growth rates.
The podcast highlighted concerns surrounding the implementation of these strategies can be addressed by uncovering two major fallacies: the idea that delivering value and focusing on revenue are not mutually exclusive, and the belief that customer success teams are not transactional.
Customer success teams consist of trusted advisors who can drive outcomes by understanding the customer’s needs. They have the ability to handle small upsells, expansions, and retention activities, and overall ensure the ideal customer experience.
Furthermore, companies must recognize that different revenue-generating activities require different levels of effort. Retaining and renewing is far easier than acquiring a new one. Once companies understand this, Mehta argued they can allocate resources more efficiently — such as having the sales team focus on new business opportunities while customer success teams handle retention and expansion opportunities.
Customer success organizations are witnessing a significant shift in priorities as they progress towards achieving sustainable growth. The era of growth at all costs is no longer viable with the current economy. And although such a shift has historically been met with hesitancy, companies stand to gain by recognizing the benefits of monetizing customer success and enabling customer success organizations to own commercials. By addressing these concerns while changing their mentality, companies can better navigate the fine balance between profitability and growth.
Interested in learning more? Check out the full podcast episode here: Meh-ga Insights from Gainsight.
Develop the Theory
With data in hand, our researchers and analysts can start developing frameworks.
August 2023
Watch the Webinar: Monetizing Customer Success
Join us September 12, 2023 -11:00 AM PT / 2:00 PM ET
Too often, customer success organizations are tasked to build a monetized offering without understanding the “why” and the “value” that they are trying to bring to their customers. To some organizations, monetizing customer success means creating offers and value. To others, it means increasing operational efficiencies. And to many others, it means creating revenue and survival to pivot from cost center to profit center.
This year, TSIA has conducted three distinct research studies to dive deep into the contextual understanding of customer success executives to understand how they think about and strategically approach monetizing customer success, how they first approach it from a strategy perspective, and perhaps most importantly, where customer success executives can make investments to drive additional value toward revenue growth, retention improvements, and customer satisfaction.
Join us as we continue on our latest Research Journey, Monetizing Customer Success, where we will share our research findings to help you better understand how to align your organization toward operational success in this challenging economy. We’ll tackle such crucial questions as:
- Will monetizing customer success continue to be a leading trend throughout the tech industry?
- What’s the most effective go-to-market strategy for monetized customer service offers?
- How do monetized customer success offers correlate to expansion, retention, and overall customer satisfaction?
We look forward to seeing you there!
Read the Poll Results: Navigating Monetization
Advancement toward monetization requires the examination of various moving factors, including which type of strategies most effectively shape go-to-market offerings and which involvement from major players are pivotal in designing successful monetized offerings. With that in mind, TSIA conducted the 2023 How to Approach Monetization of Customer Success quick poll to investigate how companies are approaching monetization at a comprehensive level. This paper will provide a high-level view of the poll results, assessing monetization practices across organizations of varying sizes.
Monetizing Customer Success: The Good and Bad Strategies
Insights from TSIA's 2023 Monetizing Customer Success Survey
Understanding which features to include in customer success offers is crucial to remaining competitive in an evolving business landscape. TSIA’s 2023 Monetizing Customer Success survey examined the diverse strategies implemented by companies and the corresponding effects on revenue generation and customer satisfaction.
The survey unveiled interesting trends among companies that are monetizing and not monetizing their services, while highlighting the shift towards certain key practices. Additionally, it pointed out practices that companies are not currently leveraging, along with the possible impact on overall success. The results from this survey can help inform strategic decisions for monetization and provide a roadmap to optimize service offerings. Click here to read the full results.
The Current State of Pricing Paradigms in Customer Success
Insights from TSIA's 2023 Monetizing Customer Success Survey
The process of determining pricing presents a multifaceted challenge for companies, necessitating a delicate balance between the pursuit of maximal profitability and the preservation of an established market position. Various pricing strategies, encompassing both traditional and more forward-thinking approaches, as well as cost-centric and customer-centric methodologies, can yield competitive advantages and disadvantages. The selection of an appropriate pricing strategy stands as a pivotal determinant in the success or failure of the company.
The 2023 Monetizing Customer Success survey examined the impact of different pricing strategies, including cost-based, market-based, value-based, and outcome-based pricing strategies. This paper aims to provide a high-level overview of the survey findings.
Guide the Industry
Correlations to financial results lead to conclusions. We’re ready to present our findings!
October 2023
Read the Report: 2023 Monetizing Customer Success
The 2023 Monetizing Customer Success Survey explored the current state of monetized Customer Success offers, including everything from how many companies are offering them, how they are priced, and what’s included in the offers. The goal of the study was to sift through the noise and figure out how companies can leverage monetized Customer Success offers, without succumbing to common pitfalls. This survey ran for a 1-month data collection period, with a target population of Customer Success and Offering Management Executives. The key findings include correlations between offer features included in both monetized and non-monetized offers, and how they relate to KPIs. Equipped with this information, Customer Success and Offer Management Executives will be enabled to design offers that lead to improved Attach Rates, Expansion Rates, and NPS.