Over 25X. That’s how much more value is generated over a customer’s lifetime than in the year when the customer is acquired, according to a recent BCG study of leading software as a service (SaaS) companies. No wonder CEOs believe that developing long-term customer relationships is critical for success. It’s far more profitable to retain and expand an existing customer relationship than to develop a new one. Many companies, therefore, are trying to shift from the transactional process of making one-time sales of products and services to processes—such as selling subscriptions and memberships—that help build relationships.
Although subscriptions can be effective in many industries, software companies have been among the first to pioneer this model in the form of SaaS. Unlike traditional software companies, which focus their money and time on making fresh sales, SaaS firms sell subscriptions that enable customers to use their software products for specified periods. And to ensure that this arrangement delivers results, SaaS companies are using a new customer engagement model backed by a novel organizational function: the customer success (CS) function. In this article, we will examine the CS function by drawing on the lessons we have learned from our work in the software industry.
Subscriptions Demand a New Customer Engagement Model
Two changes occur when companies sell software subscriptions rather than licenses that authorize customers to use software in perpetuity. First, the risk of adopting the product shifts from the buyer to the seller. After a one-time sale, only the customer loses out if its employees don’t use a product for which it has paid. With a subscription, however, the seller loses out if a customer doesn’t renew, since the customer acquisition cost is usually higher than the revenues earned in the initial subscription period. And the renewal will happen only if the customer has adopted the product and captured value, as measured by hard numbers or qualitative assessments. Ensuring adoption is therefore in the seller’s interest.
When companies move to a subscription-based sales model, the risk of adopting the product shifts from the buyer to the seller.
Segundo, o foco da criação de valor no modelo de assinatura muda de uma venda única para um relacionamento, o que cria oportunidades para vender adicionais para clientes existentes. Por exemplo, um fornecedor de software que oferece assinaturas triplicou suas receitas de um cliente, expandindo o uso do produto do fornecedor, que vende novos recursos e produtos de venda cruzada-todos em apenas quatro anos. O novo modelo de engajamento do cliente, chamado
The special elements involved in building relationships have led companies to rethink how they manage customers, as they shift from one-time transactions to a lifetime process. The new customer engagement model, called Land e expandir, consiste em quatro ações principais:
- Aternando o cliente, que se refere ao processo de adquirir os clientes
- Adopting the product, which is about ensuring that the customer uses the product
- Renewing the subscription, which relates to keeping the customer after the initial subscription expires
- Expandindo o relacionamento, sobre o crescimento da pegada do vendedor, aumentando o uso do produto do cliente ou vendendo as novas ofertas do cliente
Many companies describe the change as a shift in mindset from buying before adopting to adopting before buying. Some SaaS vendors push this further by deploying “freemium” models, in which the customer doesn’t pay anything until its adoption of the software crosses a threshold that it has agreed to in advance with the seller.
Optimizing the Customer Success Function
Existing customer-facing functions, such as Serviço de marketing, vendas e pós-venda , concentre -se muito pouco em impulsionar a adoção do produto e em gerar valor durante a vida útil de um cliente. Em resposta a essa falha, os líderes de mercado criaram uma função CS cujo principal objetivo é impulsionar a adoção e otimizar o uso do produto, maximizando o valor para o cliente, aumentando a satisfação do cliente, impedindo a rotatividade e impulsionando a expansão dos negócios do vendedor com o cliente. Essa função garante uma vitória para o cliente e o vendedor, maximizando o valor do vendedor aumentando o valor do produto para o cliente.
An effectively designed CS function will maximize value for the seller by increasing the product’s value to the customer.
A maturidade da função CS varia amplamente na indústria de software. Em algumas empresas, ainda está em sua infância, pois os executivos pensam nas opções básicas de design; Em outros, o desafio é otimizar os recursos que já existem. Em nossa experiência, por mais que a função CS possa ser madura, as empresas de sucesso usam seis alavancas para garantir que ela gerem resultados. (Consulte a exposição.)
Focus on Customer Success as the Function’s Primary Purpose
The CS function’s primary purpose is to ensure that the customer becomes more successful by using the company’s product. It achieves this objective by driving the customer’s adoption of all of the functionality offered by the product to which it has subscribed. The primary goal of a customer success manager (CSM) is not to increase customer renewals or to expand business with existing customers, but to ensure that the customer executes business processes successfully by using the seller’s product.
That said, helping a customer succeed is bound to result in desirable outcomes such as retention and expansion. If the CS function consistently drives product adoption and demonstrates the product’s value, the subscription’s renewal may well follow without any drama. But if the CS function doesn’t deliver positive business outcomes for the seller, it won’t last long. To survive, it must generate ROI through higher customer retention and expansion.
Use Leading Indicators to Drive Accountability
It is crucial for the CS function to increase recurring revenues from existing customers by reducing customer churn and by increasing upselling and cross-selling. According to a BCG–Gainsight study, renewal rate and expansion rate are the two metrics most commonly used to determine CSMs’ variable compensation. But because retention and expansion are lagging metrics, many companies also use leading indicators such as adoption. Almost half the companies in our study reported rewarding CSMs on the basis of adoption rates.
Adoption is a powerful metric because it reflects the CS function’s main responsibility and is the most accurate indicator of renewals. It’s a broad term, however, and companies need to specify what it means in each context. In order for adoption to be an effective gauge, it must include calculation of a value that will provide early warning of a churn risk. The metric should be specific to a company and its products and to a customer cohort because the values that indicate churn can vary significantly from one situation to another. For instance, Hubspot, an inbound marketing and sales platform, believes that the leading indicator of churn is use of less than 5 of the software’s 20 features during the first 60 days after purchase. At Slack Technologies, which has developed a collaboration hub, the leading renewal indicator is whether a client sends at least 2,000 team messages.
Create a Tight Engagement Model
To successfully operate a subscription business, companies must define clear-cut customer engagement models, drawing up distinct roles and identifying handoffs at each stage of the customer life cycle.
Because the CS function focuses on driving adoption, it owns all the activities related to adoption—including adoption planning, measurement, proactive training, and usage guidance—as well as business outcome planning and reviews. However, the function’s responsibilities extend throughout the customer life cycle; they don’t end after adoption. The responsibilities differ from stage to stage and from company to company, but we’ve observed a few common models at each stage.
Um negócio de assinatura bem-sucedido depende de ter modelos de engajamento de clientes claros.
Nas renovações, observamos dois perfis. Um inclui responsabilidades como monitoramento e gerenciamento de contratos; execução da renovação; e monitoramento, sinalização e gerenciamento proativos de renovação. Esse perfil é mais comum em empresas jovens e em empresas com empresas de assinatura menos maduras. Nesses casos, o CS é responsável por gerenciar o risco de retenção e apoiar o gerente de renovação. Como os CSMs estão conectados aos proprietários e administradores dos processos de negócios dos clientes, eles obtêm informações valiosas sobre como cada cliente usa o produto e, por extensão, se o cliente provavelmente renovará sua assinatura. O CSMS pode elevar uma bandeira se um cliente parece improvável que renova sua assinatura; Eles também podem identificar medidas de mitigação e iniciar ações em associação com a equipe de gerenciamento de contas. Quem possui o que no processo de expansão é uma das perguntas que debatemos com mais frequência com os clientes. Nesta área, vimos três perfis, que diferem na execução da negociação e da transação. Nos três perfis, o CS é responsável por identificar oportunidades de expansão. Os gerentes ou vendedores de contas entregam o relacionamento com o CS, que lida com todas as negociações relacionadas ao vendedor e à venda cruzada. Em outras empresas, a equipe do CS se mantém na adoção e um papel distinto de vendas pós-aterrissagem gerencia a renovação e a expansão. Nesse caso, a função CS trabalha em estreita colaboração com o gerente de vendas e o vendedor inicial para garantir a integração eficaz de novos clientes. Na maioria das empresas, a função CS se concentra na adoção, e o vendedor responsável pelo desembarque do cliente possui o processo de expansão. Quando uma empresa acha que é provável que um acordo seja adquirido, pode trazer o CSM para conversar com o possível cliente, dando ao cliente uma compreensão mais profunda do que pode esperar se comprar uma assinatura e quanto o vendedor cuida de seus clientes. Na entrega, o gerente do CS pode tentar conhecer o novo cliente e entender como planeja usar o produto, iniciando assim o processo de construção de relacionamento. Para suporte técnico, a função CS deve aprender a escalar problemas para o nível adequado para resolução rápida e acompanhar as equipes técnicas quando as coisas dão errado. Independentemente do design específico que uma empresa escolhe, criar um modelo de engajamento de clientes claramente documentado em funções e estágios do ciclo de vida é fundamental para o sucesso. A capacidade da função CS de medir o uso em tempo real - e identificar clientes felizes e infelizes com base em insights dos dados de uso - permite que a função seja eficaz e, a longo prazo, econômica. Sem orientação baseada em dados sobre qual cliente se envolver em qual tópico, o impacto do CS e o ROI que ele oferece podem não ser o mais alto possível. Hoje, os CSMs podem usar informações dos dados de uso para identificar as ações que precisam tomar para lidar com um cliente em risco. As empresas também podem obter informações das métricas de criação de valor em tempo real. No geral, três métricas distintas são relevantes:
The other profile arises in established SaaS companies, which often have in place a renewal manager role that owns the execution of the renewal process. In such cases, CS is responsible for managing the retention risk and supporting the renewal manager. Because CSMs are connected to the owners and administrators of customers’ business processes, they gain valuable insights into how each customer uses the product and, by extension, whether the customer is likely to renew its subscription. CSMs can raise a flag if a customer seems unlikely to renew its subscription; they can also identify mitigation measures and initiate actions in association with the account management team.
CS also plays a role in helping customers expand their use of the company’s products and services—a role that involves upselling and cross-selling. Who owns what in the expansion process is one of the questions we most frequently debate with clients. In this area we’ve seen three profiles, which differ in the execution of the negotiation and of the transaction. In all three profiles, CS is responsible for identifying expansion opportunities.
In some companies, the CS function owns the customer and manages both renewal and expansion. Account managers or sellers deliver the relationship to CS, which handles all negotiations related to upselling and cross-selling. In other companies, the CS team sticks to adoption, and a distinct post-landing sales role manages renewal and expansion. In this case, the CS function works closely with the sales manager and the initial seller to ensure effective onboarding of new customers. In most companies, the CS function focuses on adoption, and the seller responsible for landing the client owns the expansion process.
At the landing stage, the CS function’s responsibilities are less critical. When a company thinks that a deal is likely to go through, it may bring in the CSM to talk to the would-be customer, giving the customer a deeper understanding of what it can expect if it buys a subscription and how much the seller cares for its customers.
Finally, the CS function has a minor role to play in the product delivery and support phases. At delivery, the CS manager may try to get to know the new customer and understand how it plans to use the product, thereby commencing the relationship-building process. For technical support, the CS function must learn to escalate issues to the proper level for speedy resolution and to follow up with the technical teams when things go wrong.
Although various models exist, the scope of the CS function depends on the customer, the nature of the product, and the scale of the business. Regardless of the particular design that a company chooses, creating a clearly documented customer engagement model across functions and life-cycle stages is critical for success.
Act on Real-Time Value Creation and Usage Data
It has always been a good idea to make customers successful, but that objective becomes mission critical with subscriptions. The CS function’s ability to measure usage in real time—and to identify happy and unhappy customers on the basis of insights from usage data—allows the function to be effective and, in the long term, economical. Without data-based guidance on which customer to engage on what topic, the impact of CS and the ROI it delivers may not be as high as they could be.
Thanks to recent advances in data sciences, the process is changing from description to prediction and, increasingly, prescription. Today, CSMs can use insights from usage data to identify the actions they need to take in dealing with an at-risk customer. Companies can also gain insights from real-time value creation metrics. Overall, three distinct metrics are relevant:
- Criação de valor. A escolha do resultado, é claro, depende do tipo de produto vendido. No caso do software de compras, o resultado relevante é a redução nos custos; Na programação de mão -de -obra, é o tempo necessário para encontrar um substituto para um funcionário doente; Com o software de marketing, é o número e a qualidade dos leads qualificados no pipeline; e assim por diante. Para qualquer objetivo comercial, a função CS pode criar medidas simples de criação de valor. This key metric assesses the value that the customer generates by using the product to achieve a business outcome. The choice of outcome, of course, depends on the kind of product sold. In the case of procurement software, the relevant outcome is the reduction in costs; in manpower scheduling, it is the time required to find a replacement for a sick employee; with marketing software, it's the number and quality of qualified leads in the pipeline; and so on. For any business objective, the CS function can devise simple measures of value creation.
- Escala de adoção do produto. Este critério rastreia com que frequência o cliente está usando o produto - uma variável que muitas empresas tendem a ignorar. Os vendedores podem aprender muito sabendo se e por quanto tempo os clientes estão conectados ao seu software. Quando rastreamos os logins, ficou claro para nós que o número de logins de um cliente era um bom preditor da probabilidade de renovar uma assinatura. Por exemplo, o CSMS pode rastrear os recursos usados pelos clientes que retiveram e comparar aqueles com os recursos usados pelos clientes perdidos. A compilação de várias análises desse tipo pode ajudar a função CS a desenvolver um manual preditivo e recomendações, como garantir que a empresa tenha ativado certos recursos do produto, dado que os clientes que usam esses recursos invariavelmente renovarem. Todo cliente gostaria de receber a gama completa de serviços da função, mas entregá -los em geral não é econômico para os fornecedores. Consequentemente, a maioria das empresas considera eficaz fornecer CS de toque mais alto, com CSMs atribuídos a cada conta, na ponta do mercado, e usar CS de toque inferior, com automação e implantação baseada em alerta de CSMs, na extremidade inferior. Os dados de uso em tempo real ajudam os CSMs a identificar os clientes que não estão usando seus produtos ou os estão usando muito pouco. Eles podem tentar reviver a adoção do produto enviando a cada um desses informações relevantes para o cliente, mensagens de email e conteúdo no aplicativo, destacando os fatos de que o cliente não está usando o produto com efeito total (ou de forma alguma, conforme o caso), que o cliente não pode ser mais necessário, e que o cliente não se beneficiaria, não se beneficiaria de que não se beneficiariam dos recursos específicos. interações adicionais. Ao lidar com clientes um pouco mais altos, os fornecedores podem configurar um modelo CS baseado em alerta. Embora a intervenção inicial para eles possa ser a mesma dos clientes de cauda longa, a diferença na abordagem se torna evidente se o cliente não começar a usar o produto após receber comunicações automatizadas. Nesse ponto, para clientes de ROI superior, os vendedores podem criar um pool CSM, implantando CSMs para os clientes de maior risco e maior receita com base em alertas automatizados. Os CSMs menos impactantes são vistos como parte da equipe de suporte técnico da empresa de vendas ou da equipe de vendas. Embora os CSMs devam ter um bom conhecimento prático da tecnologia do produto, possuir o conhecimento do processo de negócios é ainda mais crítico para o papel. Os melhores CSMs geralmente conseguem o mesmo processo, para que possam se relacionar com os clientes, antecipar desafios, explicar as melhores maneiras de usar o produto para executar o processo e gerar valor para os clientes. Sua experiência ajuda a criar um relacionamento de consultor confiável com os clientes.
- Scope of Feature Adoption. CSMs can develop useful correlations and analyses by examining which features and functionality their customers use. For instance, CSMs can track the features used by the customers they retained, and compare those with the features used by lost customers. Compiling multiple analyses of this sort can help the CS function develop a predictive playbook and recommendations such as ensuring that the company has activated certain product features, given that customers that use those features invariably renew.
Design the Function to Cover the Customer Base
A company must set up its CS function to cover all of the company’s customer segments. Every customer would like to receive the function’s full array of services, but delivering them across the board isn’t economical for providers. Consequently, most companies find it effective to provide higher-touch CS, with CSMs assigned to each account, at the high end of the market, and to use lower-touch CS, with automation and alert-based deployment of CSMs, at the lower end.
Companies can cover the long tail of their customer base with automated processes. Real-time usage data helps CSMs identify customers that either are not using their products or are using them too little. They can then try to revive product adoption by sending each such customer relevant information, email messages, and in-app content highlighting the facts that the customer isn’t using the product to full effect (or at all, as the case may be), that the customer could use it differently, and that the customer would benefit from taking advantage of certain specific features.
If the customer still doesn’t increase usage, the firm may choose not to take any further action because the likely revenue doesn’t justify the cost of additional interactions. In dealing with slightly higher-ROI customers, though, vendors can set up an alert-based CS model. Although the initial intervention for them may be the same as for long-tail customers, the difference in approach becomes evident if the customer doesn’t start using the product after receiving automated communications. At that point, for higher-ROI customers, sellers can create a CSM pool, deploying CSMs to the highest-risk, highest-revenue customers on the basis of automated alerts.
Hire Peers as Customer Success Managers
The most effective CSMs are perceived as peers by the users and administrators of software products whose adoption the CSMs manage. Less impactful CSMs are seen as part of the selling company’s technical support staff or sales team.
The CS function demands domain knowledge more than it does technical or selling skills. Although CSMs must have a good working knowledge of the product’s technology, possessing business process knowledge is even more critical for the role. The best CSMs have usually managed the same process, so they can relate to customers, anticipate challenges, explain the best ways to use the product to execute the process, and drive value for customers. Their expertise helps create a trusted advisor relationship with customers.
The CS function demands domain knowledge more than it does technical or selling skills.
A capacidade de adaptar a proposta de valor a diferentes tomadores de decisão na organização do cliente separa um ótimo CSM de um bom. Por exemplo, ao falar com um chefe de departamento, um CSM deve liderar com o valor comercial, em vez de recursos funcionais. Ao conversar com os usuários finais, um CSM deve enfatizar o impacto do software nos fluxos de trabalho, como economia de tempo. Ao interagir com a equipe técnica, o CSM deve destacar o apoio que o vendedor fornecerá durante a adoção inicial e durante toda a vida do produto. A resposta depende da natureza do produto. Por exemplo, se dois produtos permitirem processos de negócios relacionados, um único perfil CSM poderá conter todos os requisitos de habilidade relevantes. Por outro lado, se a função CS deve suportar processos díspares, vários perfis poderão ser necessários. Torna -se então crucial estabelecer uma equipe eficaz. Nessas situações, ter um CSM assumindo a liderança no manuseio de uma conta, juntamente com os gerentes de conta e no gerenciamento da colaboração interna para garantir que uma experiência coordenada do cliente pareça funcionar bem.
Another frequently debated question is whether a company with a diverse product portfolio should develop different CSM profiles for each offering. The answer depends on the nature of the product. For example, if two products enable related business processes, a single CSM profile may contain all the relevant skill requirements. On the other hand, if the CS function must support disparate processes, multiple profiles may be necessary. It then becomes crucial to establish an effective team. In those situations, having one CSM take the lead in handling an account, together with the account managers, and in managing the internal collaboration to ensure a coordinated customer experience seems to work well.
Obtendo a função CS corretamente não é suficiente
The six keys we’ve discussed will help companies build an effective CS function, but they don’t guarantee product adoption by—or value creation for—customers. Driving customer success is the entire company’s responsibility. In our experience, customer churn can result from decisions that the sales function makes to maximize revenue generation in activities such as selecting clients and setting expectations during the presale process.
Successful organizations improve the likelihood of customer success by leveraging insights from leading indicators to optimize all of their functions. For instance, product management can adjust the product roadmap to take into account common issues encountered by customers that haven’t adopted the product smoothly; marketing can define leads linked to the attributes of customers that adopt quickly; and sales can align compensation plans to consumption and customer lifetime value. Companies powered by a well-structured CS function thus have the potential to drive new levels of customer value and to grow their businesses.
