If done well ‘Customer Success’ can help reduce customer churn and increase up-selling opportunities, writes John Cradden.
In most companies, the job of a customer support team is fairly clear cut: support customers in using their product or service and, in doing so successfully, keep them happy and loyal.
Very often, they’ll do this with the help of tools like CRM software.
“It’s much cheaper to retain existing customers than win new ones – but it’s also cheaper to win new business from them, too”
However, it’s become very common in businesses of all sizes to find teams of people with job titles that incorporate the term ‘customer success’.
But what is customer success, what kinds of sectors have embraced it and why is it arguably more important now for many SMEs?
Defining Customer Success
Customer success is a function that focuses on helping customers achieve success in using a product or service. If done well, it can help reduce customer churn and increase cross-selling and up-selling opportunities. To this end, a customer success team will often combine certain elements of a number of different functions in a company – namely customer support, account management and sales.
It’s also more common to see content success roles in technology firms, particularly those that selling subscription-based or consumption-based (eg. cloud computing) services where sales are based on continuous usage over a period of time rather than a once-off deal. This is where customer success management becomes much more important.
A 2019 study by Deloitte notes that customer success as a discipline started out simply as a churn-prevention team for SaaS (Software as a Service) businesses, and is now a growing discipline within the broader technology industry. “As customer success evolves, its focus is expanding from customer retention to managing the end-to-end customer journey, from developing better products to driving customer adoption, retention, and growth.”
Indeed, the key development in the customer success discipline in recent years, according to consulting firm McKinsey, is the focus on identifying growth opportunities with existing customers as well as reducing churn. After all, it’s much cheaper to retain existing customers than win new ones – but it’s also cheaper to win new business from them, too.
“By artfully drawing on a customer success manager’s intimate customer knowledge, companies can surface opportunities to provide relevant solutions and expand customer value. Companies could win big from this strategy, with McKinsey benchmark data suggesting that existing customers account for between a third to half of total revenue growth, even at start-ups.”
However, the discipline has also become a bit of a balancing act. A content success manager, according to one article in the Harvard Business Review “straddles the gap between service and sales, between company interest and customer interest, and between product expertise and customer insight. When done right, content success managers are a powerful growth engine.”
Another way to look at customer success is to see it as a proactive way of ensuring your customers are successful. Customer support, and even account management roles have tended to focus on solving problems for clients as they arise, which is essentially a reactive response. In this sense, good customer success pivots on the idea that your business success depends on your customers’ successes – helping them make the most of your product or services, whether that’s to make them more money or save them more time or resources, and keep them coming back for more.
Customer success and SMEs
Many SMEs might assume that customer success is something that only big businesses should do. But it’s important for small businesses too – and arguably more important because advocates argue that it’s all about depth, creating meaningful experiences for existing customers rather than be focused on acquiring new ones.
So how can you develop a customer success function in your business?
1 Define your customer’s success
The first step in building a customer success strategy is to define what success looks like – not for you, but for your customers. Naturally, what this success means for customers should involve your product or service. This will mean talking to them often, and keeping up a conversation that revolves around what problems they are trying to solve and how you can help them.
2 Define what this success means for your business
This is the other half of the customer success model, in that you define what your customer’s success might mean for your business. This could be as simple as sharing stories of your customer’s success and use them as part of your marketing strategy for your own business.
3 Hire or upskill the right people
A customer success team should be made up of people who are experienced in customer support and sales as well as product specialists. Ideally, what all or most of the recruits should have in common is traits such as adaptability, empathy, and a strong sense of ownership. However, if your budget is limited, the best thing you can do is coach your customer support agents to take up customer success as an added responsibility.
4 Define your customer success metrics
Like so many other parts of a business, customer success will mean nothing unless you’re able to measure it. This could be:
- The churn rate – a measure of what percentage of customers quit doing business with you over a given period of time.
- The retention rate – the percentage of customers who decide to stay with you over a specified time range.
- Customer lifetime value– the projected profit that you can earn from a customer for as long as they do business with you.
- Expansion revenue– the percentage of new revenue coming from your existing customers.
- Customer Satisfaction – a metric that measures customer happiness
- Net Promoter Score – a metric that segments brand loyalists from potential defectors.
- Customer Effort Score– a way to measure the quality of the customer experience.
- First contact resolution – the number of queries resolved in the first instance of customer interaction.
5 Use the right tools
Any company with a strong customer success function is likely to be using a range of tools, such as data software that mines how your customers interact with your product, tools to communicate with customers and internal teams so that everyone is on the same page, and even chatbots powered by artificial intelligence to take the load off customer support agents.
Indeed, for SMEs, it’s important to identify the right combination of tools that will help your customer success team to make the most of its resources.