We live in a subscription economy, thanks to the internet and cloud-based computing. Industries like media, entertainment, and telecommunications have fully embraced a subscription software model, while others, such as publishing, computer storage, financial services, healthcare services, transportation, and business-to-business (B2B) software, are moving in this direction.
What has also happened in parallel is the arrival of the "age of the customer." Customers have become more demanding, staying loyal to companies only when they deliver value. If you offer your products as services, you must manage customer relationships to make sure that your customers are satisfied and will stay loyal to your brand. You must do this to:
- Preserve revenue. Managing customer churn becomes increasingly important as you move out of an early-stage, high-growth mode. This is because focus shifts to more steady growth, and customer retention becomes a significant metric for financial success.
- Expand revenue. If a customer is obtaining value from their purchase, renewal and upsell conversations become easier. For example, you can collect data on how a customer is using a product to realize their business goals and use it to present the appropriate cross-sell and upsell to the customer.
- Boost customer advocacy. Good customer relationships lead to client referrals and advocacy. Brand advocates serve as a powerful virtual sales force for a company. Their spending on the company's products and services is typically twice that of a non-advocate.
Customer success management is an emerging organizational role for companies that offer products and services as subscriptions. Its mission is to proactively engage with their customers to ensure that they are realizing the economic benefit of their purchase. Customer success organizations use an array of company and customer data to create a "health score." Typical data used to calculate a health score include CRM data, billing data, customer support tickets, NPS from surveys, product usage data and more. The behavior of the health score at the company, subscription, and user level — its raw number, trends, and sudden changes — is at the heart of understanding and managing customer success.
Customer success management vendor solutions are fairly new — all the solutions have been on the market less than five years, and some are only a couple of years old. Despite their newness, they all share common attributes.
They offer ways to easily collect data by offering integrations to common CRM and ERP systems. They have configurable reports, analytics to help explore KPIs critical to your business success, and sometimes predictive analytics to help identify for example, key elements for churn, of customer profiles who are most likely to purchase additional products. They have triggers to alert you of a sudden change in an account's condition, such as a drop in a health score, a high number of support tickets, or poor survey results. And they have playbooks which are workflows which standardize and optimize customer-facing actions and incorporate best practices that allow business users to improve the scale and efficiency of their customer engagement processes.
Vendors such as Amity, Bluenose, Frontleaf, Gainsight, Preact, Totango, Sparked and ServiceSource are vendors in the Customer Success software category that operationalize the way you manage your customer accounts. You can also read my: Customer Success Market Overview report if you are a Forrester client to learn more about these vendor solutions,