A couple of years ago a Forrester analyst told me that “Customer Success Management” would be the next big thing. I’m beginning to think he may be right, but I have some concerns.
I hesitate to call CSM a “space” because it suggests that it’s a technology category like CRM. But it’s turned into that, and how. The conference was huge, with an array of vendors trying to show how they can support customer success.
What is Customer Success Management?
Let’s stop for a moment and answer an important question: What exactly is CSM?
According to The Customer Success Association (another sign that the idea is taking root):
All across the SaaS B2B industry, a new and vital role is being established and developed. The job goes by many names: Customer Success Manager, Client Advocate, etc., but regardless of the label, it’s about customer relationship retention and optimization. And the most effective way to keep your customers is to make them as successful as possible in using your technology product.
OK, so the core idea here is to operationalize customer loyalty. We need that, and technology can certainly help empower people with actionable data.
A few years ago for a loyalty white paper, I wrote about RightNow’s development of a “health indicator,” a dashboard of statistics on customer usage, training status and much more. The idea was simple and powerful: look for signals that show the customer is getting value from the solution. If some signals are “red” (alert) or “yellow” (caution) that’s a sign that the customer should be contacted.
RightNow (since acquired by Oracle) was a forerunner of the trend that is busting out now. Salesforce has also gotten behind the term in a big way, going so far as to brand itself as “The Customer Success Platform.”
I’m all for customer success, that’s really the core idea behind being customer-centric. But like all trends that gain momentum, it can evolve in surprising ways as enterprising vendors jump on the bandwagon.
Who’s Success Are We Talking About?
My main issue is whether companies are really committed to customer success, or is this just a customer retention program with a better name? I doubt that we would put “customer success” as a label on some the reprehensible “save” practices in the cable and telecom industries, where they make it very difficult to cancel. Their problem is waiting until the customer is upset and ready to cancel.
In B2B software, as cloud-based subscriptions become the norm, it’s patently obvious that keeping customers happy is the key to renewals. A few years ago I spoke with a former Salesforce.com rep who said they were mainly concerned about usage. Apparently more usage = more likely to keep using and continue the subscription.
That’s a decent starting point, but I would add that sometimes more usage is not a good measure of success. What about a tool that is used infrequently (think analytics) but when it is used it must deliver insights fast and with minimal effort. In that case, high usage could mean confusion and a poor design.
Furthermore, if you ask the customer/user how they define “success,” I sincerely doubt that they’ll talk about usage. Instead they’ll talk about their business goals, such as growing revenue, increasing efficiency, making better decisions,… or maybe even boosting the loyalty of their customers.
“Putting yourself in the client’s shoes”
One company taking a more holistic view of customer success is FiscalNote, a VC-backed (Mark Cuban among them) SaaS provider of “legislative and regulatory intelligence solutions that track, analyze and forecast legal data in real time, empowering policy and legal professionals.” Not being a policy or legal professional, I don’t know what that means, but apparently the company founders and investors believe it’s an important market.
Most companies invest in customer loyalty/retention after growth slows. Not so is the case with FiscalNote. According to newly minted VP of Customer Success Taj Chadha, CEO Tim Hwang wanted to ensure that the company was delivering value from the beginning. Good! Along with hiring Chadha, the company will be doubling its staff of three CSMs and investing in tools like Gainsight too.
Chadha sees his team’s role as “putting yourself in the client’s shoes.” While usage is one indicator, but they also consider the customers participating in training, time to launch, satisfaction/loyalty scores (e.g. NPS) — whatever they can attribute to the customer’s perception of value.
I think this is a classic opportunity for predictive analytics to figure how which indicators matter most, so staff can focus their attention.
Getting the Payoff
For the SaaS software industry, the payoff is obvious. First, plug the “leaky bucket” of customer attrition, which means less marketing required just to replace cancellations.
Second, and this is the next wave in my opinion, grow through referrals. One interesting vendor in this regard is Influitive, which helps mobilize advocates.
At FiscalNote, Chadha believes they will earn a payback on the CSM investment through client retentions, referrals and upsells. But that’s not all. His organization can also help improve the product by facilitating customer feedback.
A Practical Starting Point to Customer Experience Management (CXM)?
I like the core idea behind CSM and hope more companies approach it like FiscalNote. One thing that appeals to me is simplicity and focus — for now anyway. (Salesforce.com could muddy the waters by redefining CRM as CSM.)
Customer Experience Management (CXM), on the other hand, has become an all-singing-all-dancing Theory of Everything. As CXM proponents keep expanding and redefining what it means, it could scare off some executives wanting to take more practical steps with a clear ROI.
Savvy B2B marketing veteran and industry watcher Christine Crandell says she is an advocate, too. Why? To support the link between company treatment and customer loyalty, “Customer Success is a movement that people can understand and act upon.” CXM, on the other hand, “is too conceptual for many companies to wrap their arms around.”
So maybe CSM will be training wheels for a full CX transformation (a multi-year effort). That’s not all bad, you have to start somewhere. I just hope that companies start with a clear understanding that customer success should be defined in customer terms.
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