Dec 11, 2023
In this subsection from our full ‘So you want to be successful in Customer Success?’ paper, this former Rapid7 Senior Director of Customer Experience discusses the competitive advantage of an effective Customer Success function, the challenges with implementing a successful program, and the technologies Customer Success leaders can explore to enable the end-to-end process.
Skip ahead to:
- The trend towards Customer Success
- Creating the business case for Customer Success
- What’s holding leaders back from success?
- Exploring technology to enhance end-to-end process
- The competitive advantage of Customer Success
- How to share customer feedback with the rest of the business
There’s a real trend toward creating customer success teams in high-growth B2B tech businesses. What do you think has driven this?
I believe the change is largely due to a fundamental shift in the economics of software businesses. We are now part of a subscription economy. In the old perpetual, on-premise world, you might recognize 50% of a customer’s lifetime revenue in year one. Whether software vendors like it or not, those days are gone. In a subscription-based economy, you are more likely to see 16% of a customer’s lifetime value in year one. That data highlights the important role customer success functions have to play in delivering sustained lifetime value. Customer success isn’t just a ‘nice to have’; it plays an essential role in the predictability of your annuity stream. When you think about the objectives of B2B tech businesses, particularly in their early stages, they might be looking to win funding or drive towards an exit. Investors will look at core metrics around customer churn and make valuations around the predictability of reoccurring revenue. Customer success, when executed effectively, can have a measurable impact.
Technology businesses are also waking up to the economics of successful customers. The reality is that happy customers are four times more likely to refer your offering to others and seven times more likely to try a new offering from your business. In a world where your prospects are prioritizing outcomes over features, this level of customer advocacy is an essential growth ingredient for tech businesses.
How would you go about making the business case for investing in customer success?
In many ways, you should approach this as you would any other business case. Think about the key sponsors. Think about the objectives of the business. The key players that influence investment in customer success will sit right across the C-Suite. You must work closely with them to understand how the organization needs to be thinking differently. This needs to be positioned as a strategic investment, and as such, you should always be tying back to the high-level enterprise goals of the business. Understand where retention and growth play into your business model. If you are successful in delivering a measurable return, what does that mean to your CFO? How will that return help to reinvest into other priority growth areas of the business?
It’s all about outcomes and truly being able to measure and demonstrate the value of customer success. I think about the Weight Watchers analogy. If customers see results, they are far more likely to stick with the program. The discussion needs to shift towards how we help our clients see lasting success. Highlight the importance of specialization. If the business has invested heavily in new logo acquisition, what are our plans to farm and maintain that annuity stream? Getting and growing are two completely different skills, and organizations need to factor that into their interactions with the client.
What factors can hold customer success leaders back from implementing a successful program?
A large part of ensuring customer success programs flourish comes down to creating the right level of alignment. Roles and responsibilities need to be well defined both internally and externally. It’s about driving towards a place of ‘coordinated communication’ that culminates with your organization presenting a single joined-up voice to the customer. Focusing on the people and process elements is essential. You need to find those points of friction in your customer-facing processes. For example, I’ve heard of instances where clients are introduced to their new CSM on the same day a renewal is due.
This ties in nicely with my next point about being too focused on business outcomes when designing your engagement plan. Customers can see straight through a business that is interacting ‘when they want and how they want.’ Make sure you are reaching out about their goals, not about your organization’s goals. To avoid these situations, you need to clearly define what you want your team to be and how you expect the entire business to behave in all customer-facing interactions.
Customer success programs can also be held back by not securing the right level of executive sponsorship. You need customer success to have credibility within the business to really influence the result. I’ve seen interesting instances recently where senior sales leaders have spent time running customer success functions. I really welcome this because it typically provides instant credibility for the function. Often, that individual then moves back into the sales organization, leaving them better placed to engrain that culture of customer success within their teams. You need champions for customer success across your business; the more you have, the more successful you will be.
What technologies should customer success leaders be exploring to enable the end-to-end process?
There is a lot of great technology out there that can unlock the potential of your customer success team. For example, there are loads of great collaboration tools that can bring teams together to interact around topics and issues but they don’t work as well as a system of record. Customer success is a data-driven discipline. I’d suggest eating your greens first in terms of putting a solid data strategy in place. You need to facilitate that single view of the truth to understand all touchpoints and product interactions. That insight needs to be accessible across all parts of the business. You can’t build a frictionless process when data lives in spreadsheets and siloed systems.
Once you have a solid data and CRM strategy, you are far better positioned to leverage the insight provided by customer success platforms. The typical outcome you’d expect from investing in this space is great, data-driven prioritization. It will help you inform workflows, surface trends in product usage, and identify ‘at-risk’ clients. You can also open the door to areas like self-service because customers want you to understand who they are and empower them to be successful. That doesn’t necessarily have to equate to lots of face-to-face account reviews. Change the conversation towards enabling customers with their preferred method of interaction, not yours.
Do you believe that customer success functions help to create a competitive advantage?
Customer success is definitely a vehicle to create competitive advantage, and I think that comes from a shift in what buyers are looking for. Prospects no longer assess B2B providers as products with features; they look at outcomes and value add. They want to know how you’ve helped clients that look just like them. They want to understand what people in their sector are focused on improving and the results they are achieving. If you are doing the right things in customer success, then these invaluable presales insights become more readily available.
Another important thing to point out is that while business success is important, it’s also about creating professional success for our key contacts. That professional success creates champions and referrals wherever that individual goes in their career. Some boardrooms are seeing the value of customer success already, but there is room for growth. There are lots of organizations in the cycle of creating a function, but few have reached a high level of maturity. I mean that more in terms of tangible impact on the business. It’s interesting to see that some of the most disruptive SaaS vendors out there were born with customer success as part of their core DNA. This has posed challenges for the more established vendors with many legacy systems and processes to contend with.
How do you go about sharing customer-facing information/feedback with the rest of the business?
It’s important to have a strategy around what you want to learn. Be proactive. What are the low-value, painful interactions that your customers have with you on a regular basis? Make insight digestible to the business and put clear action plans around how you will execute against those themes. I’d always recommend following a listen and action model where you sit with the exec team every quarter and prioritize with their support. Where hard feedback needs to be delivered back to the business, it’s often helpful to tie things back to your brand promise. This takes away the finger-pointing. It’s not the fault of the sales team or the product team; it’s simply a case of the collective not living up to the brand promise. That makes for far more productive, meaningful, and strategic conversations that lead to executable actions.
More on building successful GTM teams
- Read the full 'So you want to be successful in Customer Success?' guide here.
- Learn how to attract the best B2B sales talent in just 7 steps here.
- Want to discuss the specific hiring challenges associated with building effective, successful GTM teams? Find out how we're helping hiring managers and talent teams connect with world-class talent.
