One fundamental truth that dictates the growth and scalability of a business in the SaaS industry is that it takes many months to recoup the Customer Acquisition Cost (CAC) and reach the profitable stage at a unit economics level. As a result, in order for the company to succeed, clients must continue subscribing and renewing their contracts.
Customer Lifetime Value is an essential SaaS measure that comes into play here (LTV). It shows how much income a customer can generate for a company over the course of their relationship. There are several measures a firm can take to maximize a customer’s LTV with the correct data and a proactive plan.
Customer Relationship Management (CRM) and Customer Success (CS) platforms are the most frequent technologies used by SaaS organizations to execute this objective, However, only one of them is essentially prepared to do duties at scale.
According to a study, 20% of SaaS firms, particularly small and midsize businesses, rely on their CRM to manage all customer life cycle duties, which is insufficient for their Customer Success role.
This blog will explain the difference between CRMs and Customer Success tools, as well as why having a specialized Customer Success solution in your Customer Success IT stack is critical.
The primary function of a CRM
Depending on a company’s aims and relationship with its customers, Customer Relationship Management can be defined in a variety of ways. However, it is commonly understood to refer to any activities or technologies used to manage a company’s interactions with its customers. A tool that has developed from spreadsheets to assist in engaging customers with your business by providing a single rational system that makes collecting and maintaining customer data much easier.
Typically used for obtaining, evaluating, and managing client information, as well as establishing marketing plans and maintaining good customer relationships.
How is a CRM tool different from a Customer Success tool?
Customer relationship management (CRM) is a tool that aids firms in cultivating relationships with potential consumers and converting them to paying customers. It gives businesses a uniform view of consumer data and helps them at every stage of the sales process. Companies may manage leads, track client progress, increase sales effectiveness, streamline procedures, and manage opportunities with the help of this essential sales tool.
A Customer Success tool, on the other hand, is software that is developed with built-in tools to give you a comprehensive view of your customers and their account status. These technologies provide insights into a variety of indicators, allowing your customer success team to understand whether consumers require additional support or where possible pain spots exist.
CRMs, in a nutshell, are customer relationship management systems that focus on the transactional stage of a client relationship. Customer Success Platforms are designed to look at the entire relationship and the constant supply of value. Traditional relationship management solutions, while useful, lack the elements required to foster long-term growth. As a result, a CS Platform is an essential tool for any SaaS organization.
A CS platform, unlike a CRM, encompasses the whole customer life cycle, not just the transactional sales pipeline. A sophisticated CS platform, like a CRM, will include automated efficiencies and data analytics capabilities. But unlike a CRM, these features will be focused on tracking customer health, cultivating customer relationships, and making sure customers are successful with your offerings. Firms that focus on developing a deeper understanding of their customers consistently outperform their competitors, according to statistics.
Can a Customer Success function be managed via CRM?
The practical answer is “no,” given the fundamental contrasts between what aspects of the customer journey CS and CRM are supposed to handle. This does not, however, prevent CRM developers from attempting to integrate Customer Success into their systems.
Small CRM platforms may have a CS component in the form of plug-ins and app connectors that basically add CS capability to the core product. Customer Success tools may be developed as a more integrated element on other platforms with more resources. This technique is demonstrated by the Salesforce Customer Success Platform. Salesforce is a sales-oriented CRM at its core, but it claims to be a full-featured Customer Success ecosystem by integrating a slew of other customer journey capabilities around it.
In reality, this adds to the already sophisticated and expensive platform’s complexity and expense.
Challenges that a CRM tool can’t solve
Customer Success tool helps simplify workflow management
The Customer Success department has a unique workflow that cannot be replicated by a CRM. Let’s have a look at how this works. CRMs struggle to derive insights from product usage data and other data because they are primarily used to monitor transactional relationship data. When striving to automate procedures like onboarding and renewal routines, this presents a hurdle.
Customer Success systems are designed to give your CS staff the workflows they need to succeed – all while requiring little to no technical knowledge. These platforms, in fact, support these workflows right out of the box.
They help you manage, automate, and scale your operations at every stage of the client lifecycle, enabling proactive involvement. Automating these operations has a significant benefit in terms of enhancing efficiency. In fact, they enable your staff to handle more accounts without having to hire more people.
Touchpoint Monitoring and Product Adoption
Customer success management software can provide information on whether a product is being used appropriately or on a regular basis, as well as whether licenses are being used or whether they are at risk of being downgraded. A CRM, on the other hand, is unable to do so because it is not designed to track such information.
The term “touchpoints” refers to a customer’s interaction with a product. Customer success tools examine this data thoroughly, regardless of whether the model is tech-touch or high-touch. A CRM can’t provide data on touchpoints.
Customer Success tool helps with much more data analysis
Overall account health score – Product health, service health, relationship health, financial health, and other characteristics- is examined by CSM software. This means you’ll have all the information you need, from onboarding through advocacy. CRM is unable to examine certain components of client data.
Customer success management software provides insights into customer account health, resulting in benefits such as better understanding customer wants and providing actionable alerts to increase retention. Customer relationship management software alone will not be enough in this situation.