Customer success has become a hot topic in the technology industry, and with good reason. Technology companies are recognizing that it's essential to engaging, retaining and growing customer relationships over time. Each year, TSIA conducts a baseline survey to understand the current state and emerging practices for customer success. With the help of this data, we've created a list of recommendations for building a customer success function within your company.
What Type of Customer Success Organization Are You?
The first step in building your customer success organization (CSO) is to determine what type of CSO you'd like to have. To do this, you must first assess what defines “success” for your organization based on your company goals. Responses to our baseline survey showed us that many technology businesses can be divided into three charters.
- Adopters: Mainly focused on helping customers adopt company offerings.
- Retainers: Mainly focused on making sure the customer renews their relationship with the company.
- Expanders: Mainly focused on expanding account revenues.
(Click image to enlarge.)
A closer look at the operational priorities of organizations that fall under these three charters.
No matter which charter you choose, your organization is likely to be a mix of all three, but with one weighted above the others based on your company's target outcome.
Managing Your Customer Success Organization
After you've established your primary goals, you then must choose the type of people you'll need to hire to fill the role of a customer success manager (CSM), but this decision also depends on your company focus.
CSMs are different than traditional support staff, and if your company's charter revolves around expansion, for example, you're likely to draw a CSM from sales, because your goal is to grow your relationship with these accounts. When it comes to choosing the right person for the job, my advice is simple: once companies are able to determine the company charter (Adopter, Retainer, Expander), that hiring profile will become clear.
(Click image to enlarge.)
Where you find your ideal CSM depends on your company's target outcome.
Customer Success and XaaS
Many of the organizations who have participated in our baseline surveys are in the traditional products or service business models, but nowadays, many businesses are moving toward monetizing around the subscription, or “X-as-a-service” (XaaS) model.
As an industry, we're moving away from selling products and assets to selling technology as a service. Companies who monetize what customers are actually consuming are the ones who are experiencing the most top-line revenue growth. This is also why there is such interest and passion around customer success and the concept of adoption, because it's customer adoption that unlocks the ability for a business to move out of a solely product or service-based business model and provide outcome-based services.
Unlike traditional support models, XaaS is still maturing, and for many organizations, it can be hard to find the revenue to invest in this budding business model when products remain the primary revenue source. While it is an investment you absolutely must make in order to keep up with changes in the industry, fortunately it is one you can make using the same people that already exist within your organization.
A common question I encounter is, “What percentage of subscription revenue should go towards customer success?” The truth is, that range is all over the board, with no clear answer yet. We as an industry are going to have to figure out the ratio of how much you should invest, through first-hand experiences and additional research.
Actions Your Company Can Take to Optimize for Customer Success
TSIA has a free checklist of the top 5 actions your company can take in order to begin optimizing for customer success.This list can help companies who recognize the importance of customer success, but are still struggling with how to get started on their journey to creating a customer success function within their organization. Take advantage of these emerging opportunities to increase the value of your organization and facilitate customer outcomes, one step at a time.
Editor's Note: This post was originally published on 11/21/14 and has been updated with current information.