I’ve always been intrigued when I hear customer success professionals refer to customer experience as customer success.
A lot of that has to do with the fact that customer success professionals believe customer experience is a subset of customer success. Customer Experience professionals, on the other hand, believe customer success is a subset of customer experience.
The Customer Experience vs. Customer Success debate has been an interesting one.
Parallel Paths
Customer Success, defined, is the relationship between a vendor and its customers with the goal being to make the customer as successful as possible with the product so as to increase customer lifetime value (CLV).
The Customer Success Association has a similar view:
Customer Success is 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 products.
And, Technology Services Industry Association (TSIA) defines customer success as the intersection between the promise of a supplier’s technology and customer’s desired business outcome.
Customer Experience, defined, is the product of an interaction – customer journey, brand touchpoints the customer interacts with, and the environments (digital and physical) the customer experiences – between an organization and a customer over the duration of their relationship.
Forrester defines it as “every interaction, or touch point, your customer has with your brand. It not only includes the what’s (the interactions) but also the how’s (perceptions, feelings) the customer experiences”.
Gartner describes customer experience management as “the practice of designing and reacting to customer interactions to meet or exceed customer expectations and, thus, increase customer satisfaction, loyalty, and advocacy.”
For me, Customer Success is a subset of Customer Experience for a few reasons:
Customer Experience is strategic.
Because customer experience involves all interactions a customer has with a brand, it takes the entire organization to ensure great experiences that drive value and growth.
A company’s customer experience strategy must align with its corporate strategy to impact the bottom line and be successful. As a result, all teams across an organization must work together to execute on this strategy.
Those organizations that are customer experience leaders invest a lot of effort to ensure that customer experience is embedded in the culture; there is a clear and consistent customer experience vision driven by the top that is communicated, understood and embraced by every employee; employees are engaged so they are committed to the organization; and customer feedback is integrated throughout the organization.
Customer Success has been transactional.
As the successor to account management, customer success has been transactional.
Customer Success has been a means to drive customer adoption of technical products in SaaS and other companies that utilize the recurring revenue model. Also, these companies have adopted customer success to strengthen relationships with the customer. And, they create frameworks and processes to onboard, nurture, retain and expand customer accounts to drive CLV.
Customer Success has been product-centric.
The focus is to ensure the customer is successful with the product to reduce churn and drive revenue. And, customer outcomes reflect that. Being product-centric comes with its own set of limitations. For example, it tends to create siloed organizations that compete for customers.
Yet, we’re in the experience economy. And, customers are no longer buying products and services, they are buying experiences delivered via products and services. Thus, customer outcomes must transcend mere product success.
The Road to Convergence
Customer Experience and customer success have been viewed as two completely different disciplines.
But, thanks in large part to the transformation surrounding customer success, customer success is starting to converge with customer experience.
In my 2017 trends post, I stated that we were going to see customer success become a key growth driver in 2017.
TSIA stated that this growth is due to three factors:
1. Recurring Revenue is SaaS and subscription-based companies’ bread and butter.
For these types of companies, customer retention is the only way to growth. That’s because if a company doesn’t convince customers of its value, these customers will churn. And too much churn is a killer.
According to Retently, there are three leading causes of churn: lack of effective onboarding, weak relationship building, and poor customer service. Together, they account for 53% of all churn.
Of these, poor onboarding leads to the most churn. Churn is very much at risk during the first year because a company could lose more than 50% of its customer base during that time.
A large part of customer success focuses on onboarding.
Onboarding is one of the most important milestones in the customer’s life. In fact, it may be the most important milestone, as it sets the tone of what the relationship could become.
Statistics have shown that a formalized onboarding program can reduce churn rates by 25% or more. SaaS Capital pointed out that a 1% difference in churn can have a 12% impact on company valuation in 5 years.
2. It costs less to keep a customer happy.
It can cost 5-25% less to keep a customer than get a new one. And, a company can increase profits by 25-95% by raising retention rates by as little as 5%.
3. Businesses Need to Show Immediate Profit.
The pressure is on to show a quick profit and favorable CLV. And, return on investment must be clear at each stage of the customer’s journey.
High-growth companies realize that customer success is the front line to impact whether a customer stays or goes.
They realize customer success is no longer a product-centric endeavor, with focus on churn management. It is now a customer-centric one, with focus on driving growth.
Thus, those companies that include customer success as a major growth strategy and deliver experiences to keep customers win.
Will Customer Experience and Customer Success Converge in 2018?
I predict that 2018 will be the year customer experience and customer success converge. The focus will be on defining and deepening customer outcomes. And, this will enable complete convergence.
To enable convergence, customer success needs to go outside of the product. I was thrilled to hear at SaaStr ANNUAL 2018 conference last week SaaS companies preaching this. It’s one thing to be successful while engaging with the product, but it’s being successful outside the product that drives true loyalty and advocacy. Combining the what and the why is key. The what is the product, the why is the purpose in which you are you using it, the outcome you’re trying to achieve. Another indicator of convergence is many customer success software solutions are moving to a more customer-centric model.
To drive convergence, customer success will start embedding more emotion analytics and metrics into its framework. This will have two results – it will (a) enrich the customer feedback it receives and (2) help customer success understand how underlying emotions drive customer outcomes so as to generate deeper customer outcomes. Customer Experience will focus more on the specifics of onboarding (to combat churn), retention, and expansion in the customer journey to help align customer metrics to business outcomes in order to drive deeper customer outcomes.
Convergence will also occur at the customer journey level. Customer journey mapping will expand in 2018. More companies will invest in customer journey mapping. More teams will use customer journey mapping. And, customer journey maps will go into more depth. The result will be that customer success journey maps will morph to look more like end-to-end customer journey maps.
Convergence will also go a long way to bust silos. This unified, customer-centric approach will enable more collaboration among teams. And, as a result, it will drive even more growth.
I’m not at all certain that there will be a convergence. As you note, customer success is largely a tactical extension of the selling process, and is largely focused on product (or service) delivery. Experience is more strategic, emotional and holistic, beginning with understanding what the customer wants and needs and then providing it on a sustained, institutionalized basis. They are related, to be sure, but different enough that the sales support elements of success will be challenging to embed into the enterprise culture the way experience and value can, and should, be.
Hi Michael. Thanks for commenting. The signs are there – customer success software is becoming more customer-centric, customer success journey maps are starting to morph into more of a CX journey map, customer success starting to go outside the product, etc. A long way to still go – I grant you that – but some great changes are on the horizon.
Not sure that it will be a good thing for Customer Success Management (CSM) to merge into or be subsumed by CX.
CX has become an all-singing-all-dancing strategy, philosophy, movement that means whatever people want it to mean. By definition, since CX includes everything else (according to its proponents), CSM is a subset.
I think CSM will have a longer and happier future if it remains focused on helping customers achieve their outcomes, which will improve loyalty/retention. That’s a key part of what CX should be about, of course.
More than two years ago I suggested that CSM might be considered “training wheels for CXM” (http://customerthink.com/customer-success-management-training-wheels-for-cxm) and not in a bad way. I like the practicality and more narrow focus on what really matters — customer retention/loyalty.
Thanks for your comment, Bob. I like the Customer Success as training wheels for CX concept. There are a number of things lumped into CX, like Customer Success, Customer Marketing. Keeping them separate under the CX umbrella is creating siloes within CX, which we’re already seeing. We need to bust any silo or keep them from forming. CX and Customer Success convergence is already happening. How much further convergence is going to happen this year remains to be seen.
I see this issue differently, so if I may, a counterpoint. In this context, success is defined by the customer, and not by the vendor. As provider, I can influence my customer’s opinion of success, but I cannot tell them what it is or what it should be. (well, I can, but I’d be wasting my time.) And for those reasons, I certainly can’t honestly claim I’ll ensure it. There are simply too many consequential variables regarding success over which I have no control. Not little control – no control. So from a risk perspective, I think focusing on customer success, admirable as it might be, presents an impossibly high bar. The same for CX: there are lots of things I can do as a seller to influence my customers’ happiness, but I cannot control external events unrelated to my product that occur before, during, and after use.
The challenge becomes bridging the gap between a vendor’s baseline claim “product performs according to specification,” and the customer’s assessment that their outcome was unsuccessful. Does it make sense for companies to absorb every bit of risk in between these two extreme points? I can’t provide a definitive answer, but I’m skeptical that it would be good advice to say “sure- take this on.”
The second issue is one that I see frequently: that it costs more to acquire new customers than it does to retain them. While this might be true in some situations, it’s impossible to extrapolate this assertion across all industries, and more importantly, I question how much this point really matters. The decision to grow revenue through customer acquisition and/or customer retention is a strategic matter, involving opportunities, risks, and trade offs. If the business model demands account growth, then devote more resources to new account acquisition. If it demands growing revenue per account, then concentrate on that. Just don’t let cost drive the decision – except in the rarest of instances.
In fact, companies can incur huge customer retention costs compared to acquiring new accounts. For example, companies that specialize in small batch production face immense hurdles scaling to large production runs. When customers get successful and graduate beyond test marketing, it can be better to acquire new accounts rather than attempting to get involved in a capital-intensive retention strategy: Expanded plant, expanded global logistics, different support competencies. All it takes is money – lots and lots of it!
I think the advice given by Amy Gallo from the article you linked to is especially insightful: “Before you assume you have a retention problem, consider whether you have an acquisition problem instead. “Think about the customers you want to serve up front and focus on acquiring the right customers. The goal is to bring in and keep customers who you can provide value to and who are valuable to you.” In my experience, the root cause customer churn is attributable to incongruity between the company objectives (develop customers who we are likely to serve well and will become valuable, long term), and sales objectives (capture revenue, no matter what!).
The goal of Customer Success is to create Customer Value (see Customer Success association website). CX in its original avatar was CSat, now trying to be everything else. Yes, the Customer needs a good experience, but not unnecessary experiences, and he needs to succeed, but at what? From a Customer point of voew success is creating more value than your competition
Nice post Sue,In my opinion, there is very difficult to envision CX taking over CS. Two reasons: CS is about delivery is about the experience of making your customers successful practically, involve sales, ( strategy and tactics) engagement, R&D, product, services, delivery and management account’s in some companies. Professionals in CS can become easily great leaders in CX, however the opposite is very hard to assume will ever happen. One is almost a “practical theory that works” the other practical delivery and involve much more abilities than any CX professionals have based in what I observed in the CX environment. I am not saying that there are not well prepared people, which can do it, but so far theory is reigning in CX more then practicality in several regions. Specially, and unfortunately in some associations. The Customer Success Association for instance is much more about practical insights, really different strategies and discussions to “Get Things Done” and to enable professionals with tools and added value as to instigate positive discussions, as David Allen said in his great book, also i find the CS association is much more open, inclusive, multicultural and really delivering value for their subscribers in several sectors. I loved the fact that they care about inclusions of others, collaboration and how to ensure customers are having the right experience in all phases of CX from on boarding till delivery and renewals…. I am a believer that practical hands on work always wins or better do not lose, in certain aspects. To your point I believe that both yes are intrinsically connected (CX and CS) and impacting each other but none will take over the other, and if ever happen, will be CS taking over CX. Hope my thoughts helps R
Thanks Andrew, Gautam, Ricardo and all for commenting! The post discusses converging, not merging. There is a difference.