Customer success (CS) is a commonly-used phrase in business today, often confused with customer experience and customer service.
To put it simply, customer success is the accumulated success achieved by a customer, made possible through a mutually-beneficial relationship and collaboration between a software provider and its customers. But this definition doesn’t do the concept justice.
Below, we clear up the confusion around what CS is. We also explain how CS is dependent on, and interconnected with, an entire organization, both from a revenue and a collaboration perspective.
What does customer success mean today?
To understand what CS truly is at its core, it’s beneficial to first understand the evolution of CS, and why it has become so important today. Customer success is almost entirely contained within the realm of B2B SaaS businesses.
The idea of your customer being successful using your product is simple to grasp. To conceptualize it in the way it’s being used today, we must look at the birth of modern-day cloud computing.
Cloud computing becomes mainstream
Until 1999, computer software was sold on floppy, then compact discs, that were installed on a local computer.(1) When the software provider released an update, you received a new disc and installed the update yourself.
Then, something revolutionary took place. A sales executive from Oracle founded Salesforce, with a vision that in order to make powerful B2B software available to the masses, it had to be accessible through the internet.
An unexpected challenge
When B2B SaaS products became popular in the early 2000s, vendors began to face a problem. They’d invested significantly in acquiring new customers and growing brand awareness but hadn’t invested in customer training, nor thought about retaining these new customers and renewing their subscription-based contracts.
This frustrated customers as they were using complicated software but not receiving sufficient guidance on how to use it properly. High customer churn rates became rampant and this new method of delivering software was in jeopardy.
Customer success is born
At that point, customer success arrived on the scene. It was the tool early B2B SaaS companies discovered and implemented to resolve these issues and slow customer churn. They realized customers had to be successful using their products, otherwise their recurring revenue business model might not survive.
This planted the seeds that would grow into modern customer success and continue to define its evolution.
Defining customer success today
With that background in mind, here is a more nuanced definition of customer success:
Customer success is the end result of a multi-faceted, organization-wide effort to understand customer needs, challenges, and goals, then work directly with customers to meet and surpass those objectives.
This requires vendors to provide all the tools and education needed to ensure that customers: 1) understand the purpose of the product they’re using, and 2) know how to use it effectively to drive their own business success and revenue growth.
Customer success in 2020: Who needs it & why?
B2B SaaS companies need an internal customer success function. Today, many B2B SaaS companies have their own CS teams focused entirely on educating customers on how to successfully use their software as it relates to each customer’s specific use case.
Teams of customer success managers (CSMs) support customers on a one-on-one basis with the end goal of driving their business success. Each customer has a dedicated CSM that understands their needs, challenges, and goals. CSMs support and help each individual customer achieve their unique goals and in a way that aligns with their operating practices.
This is necessary given increasing competition in B2B SaaS. The companies leveraging success programs are pulling ahead of those that don’t. Customer expectations now obligate B2B SaaS companies to do so.
Why is customer success so important?
CS impacts the rest of your business in many ways. It provides numerous benefits and involves many moving parts. In short, it’s all interconnected and it starts with a vendor’s employee satisfaction rates.
Let’s unpack this web of interconnectedness.
Satisfied employees are more motivated to produce a high-quality work product. They pay more attention to customers’ needs, leading to a better customer experience.
When your company delivers a positive customer experience, it generates satisfied customers. They advocate for your brand and are loyal to it. They help expand your brand awareness through word of mouth advertising. This creates market trust and attracts new customers.
Organizations can deliver a better experience by leveraging the personal and historical customer data captured and stored in a unified CRM. A unified CRM provides many benefits, including the ability to drive customer success.
Customers benefit when a company uses a unified CRM through the increased quality of support and attention they receive from their vendor. Vendors benefit through higher rates of customer retention and lower rates of customer churn.
Customer churn and retention
The happier and more loyal customers are, the more likely they are to stick with your company over the long term. This reduces customer churn rates and consequently increases customer retention rates. Those two factors lead to further benefits for the vendor.
Increased revenue & business growth
When customer churn is low and retention is high, your company has a reliable source of recurring revenue. This is important to note because, on average, 83% of SaaS revenue comes from customer contract renewals.(2)
This sounds like an easy-to-navigate process, but it’s more complicated than it appears on the surface.
How does customer success work?
Customer success teams take the baton from sales once a new customer is acquired. CSMs’ first task is to conduct comprehensive customer onboarding programs, complete with extensive product training.
CS teams then continue to work directly with customers to ensure that success is achievable, scalable, and sustainable.
This requires customer check-ins, routine health checks, and a deep understanding of how successful customers are at any given point in time. It also requires CSMs to initiate additional touchpoints to ensure customers always have the tools they need and receive additional education when needed.
Customer success doesn’t start and end with onboarding, but rather it continues through a customers’ entire lifetime and relationship with the vendor.
What do CS teams do?
Ensuring long-term customer success requires CS teams to have customer success playbooks that define actions that should take place at given points in the customer journey. For example, each CS team should have a customer renewal playbook that is put into action when a customer’s renewal date approaches.
How a unified CRM facilitates success
A unified CRM facilitates customer success through automated notifications and trigger-based actions that are prompted by customer behavior.
At each touchpoint, CS teams step in—often in collaboration with other internal teams—to apply CS playbooks at each pre-defined point along the customer journey.
They collaborate with sales, marketing, customer support, account management, and more. In this way, customer success is a company-wide initiative that wouldn’t be possible without participation from other teams.
Continuing the discussion
You now understand what customer success is and have a high level of understanding of how it works.
Stay tuned for part two where we dive deeper into what you need to prepare for and launch your customer success initiatives.
Read more like this:
- 3 ways a CRM success plan can help you maximize ROI
- Restarting the customer journey
- Lead generation vs. customer retention
- Rethinking customer retention
1. “Introducing customer success 2.0: The new growth engine”, McKinsey and Company, 2018
2. “Customer success accelerates user adoption by rapidly creating product experts,” Mindbody, 2018