We’ve been reflecting on the business value that Customer Success leaders are trying to deliver to their companies, as well as how to explain what Bluenose does to enable the same. While Customer Success started off as a way reactive way to battle churn, the discipline is quickly evolving, so it’s increasingly important to be able to quantify the benefits of Customer Success.
We came up with a simple framework to quantify the benefits of Customer Success by describing the sources of value: impact and reach. So, the mission of Customer Success is to maximize the value that comes from each. The diagram below outlines a few Customer Success activities that fall into certain segments as it relates to impact and reach. The upper right quadrant is the ideal state for a modern Customer Success organization.
Key question for quantifying Customer Success value: For the customers that you engage, what is the impact you’re making?
We’d argue that the impact ranges from low to high as you move from being reactive to proactive.
At the reactive end, Customer Success teams are typically “fighting fires” by triaging valuable customers who are threatening to churn. In fact, hiring firefighters is often the genesis of the Customer Success team.
The impact is low because once you’re in “save mode” you’ll save some customers but not all; some are so dissatisfied they can’t be recovered.
As your Customer Success team becomes more proactive, you can generate more value in three ways:
- Reduce churn by spotting and engaging at-risk customers sooner. There will always be customers at risk; the challenge is to engage them soon enough that you can fix what’s making them unhappy before it’s too late.
- Increase upsell and expansion revenue by ensuring widespread product adoption in accounts that you engage.
- Create advocates in the customer base that accelerate your new customer acquisition.
What’s needed to become more proactive?
- An Early Warning System that uses data to spot at-risk customers and drives interventions to prevent churn.
- A customer journey. Each customer should be measured according to the stage of the journey they’re meant to be in. If they’re not in those stages, what customer touches are triggered to get them there?
Key question for quantifying Customer Success value: What percent of your customers are you impacting?
As SaaS vendors grow, their customer base often stratifies into tiers – such as Tier 1/2/3 where Tier 1 customers are the largest contracts. Customer Success teams are often created to protect revenue in these Tier 1 customers. This of course makes sense given the revenue at stake. However, servicing customers with your people is an expensive endeavor. Thus, the Customer Success team will often get stuck only serving Tier 1 customers because of the people cost.
Sometimes, we see Tier 2 customers served, but with a “coverage model” of one Success person to 50, 100 or even 300 customers. You could argue that with this ratio, the role is all about customer “saves” and not much else. Last, the lowest tier is often called “unmanaged” because Success teams have no involvement.
As your Customer Success team extends its reach, you can create value in several ways:
- Reduced churn in lower tiers.
- Nurture lower tier customers into higher tiers through upsell / cross-sell.
- Improve NPS® or CSAT survey results through proactive service.
What’s needed to increase reach? Customer Success must work programmatically and at scale. Many of the concepts of acquisition marketing apply here: campaigns that target people with a specific and relevant call to action. This programmatic approach happens as a complement to the people resources deployed in your Success team.
- If an end-user has a licensed seat but has never used a product, the call to action could be to watch a brief video on getting started with your product.
- If an end-user has adopted your product, then the call to action could be to explore new features or even enroll in an advocacy program.
- If an end-user has replied negatively to a survey, then the call to action might be to speak to a “special” support person to help overcome their issues.
A caveat: targeting users appropriately is essential. If the advanced user is sent an email about getting started, it’s spam because it’s not relevant.
Summing it up
For Customer Success leaders, it’s vital to maximize your impact and reach. We’ve found that you can vastly improve your reach by moving from firefighting to a proactive mode. To improve impact, work programmatically and at scale. How you achieve both of these are topics that we’ll dive into in further blogs.