Over the past couple of years, a new position has been showing up in the open job listings throughout the SaaS/Cloud community.
The new role reflects the growing awareness that customer retention is a core requirement.
The signing of the first contract with a customer is a only a milestone, not a resting place. “Shelf-ware” or underutilized products are no longer an option. As a result, software vendors are now realizing that they must take a far more proactive role in ensuring the success of their customers.
But understanding that customer retention is a year-around effort, a commitment that requires a dedicated executive is only the beginning. There is much more to Customer Success Management than just establishing a new box in the overall corporate organization chart.
The work of the Customer Success Management Initiative, opened with two focused surveys. Further insight was gained through extensive interviews, ongoing online conversations in the CSM Forum and from in-depth review of a wide range of published content. The webinar presentation will include the research findings to date on the current-state of what SaaS/Cloud firms are doing in the areas of the Strategy, Process, People and Technology of Customer Success Management.
Attendees will receive a complimentary copy of the white paper when it is published in March.
Advance registration for the webinar is required, and space will be limited.
From the earliest beginnings of the transition to the Cloud, doomsayers were predicting that either the new model would fail – because “the channel” wouldn’t like it – or that the day of the channel itself was over. There were a variety of reasons being quoted, but the major point was the change in the profit model over to incremental income streams. With no up-front burst of profit from sales of perpetual licenses, it was claimed, there would be no funds to pay adequate commissions to partners, etc. Here we are years later, and the channel has not gone away in the SaaS/Cloud world. Its role may have been redefined in some areas, but partnering in the Cloud remains a basic reality. Why?
There are some very good reasons why it is in the best interests of both vendor and customer to have 3rd party partners involved in the ongoing relationship. The critical driver is the imperative of customer retention. If the contract is terminated or not renewed, the money stops. If the end comes within the first year, before the customer acquisition cost has been recouped, what was a profitable relationship instantly turns into a net loss. The success of the customer in fully adopting the application and receiving value from its use is therefore necessarily too vital a matter to be left to chance or the customers’ own resources.
Covering the Bases
Not every software vendor is able or even wants to cover all of the potential service bases in the new business model. The vital point is not who provides what service to ensure the longevity of the customer relationship, but that the services are available and effective. The presence of competent partners extends the value of the application to the customer, and therefore encourages the continuance of the relationship to the benefit of all concerned.
While it might seem that some aspects of providing software as a service to customers are necessarily limited to the vendor due to access to sensitive information or resources, there are many examples of very trusted relationships between vendors and channel partners. It is not at all uncommon, for example, for an implementation or integration partner to have direct access to the application source code. That same level of confidence can be built to justify giving a partner access to application monitoring tools so that they can see what their customers are doing with specific features, etc.
Intimacy + Expertise = Trusted Advisor
Traditionally, the channel partner has always been viewed as being closer to the customer. That was the key advantage that the partner brought to the three way relationship. If anything, the shift to the Cloud has increased the importance of that closeness, since the operating realities of of the new model argue against fielding large sales teams. The result is a loss of intimacy; where sales are made over the web, it’s not uncommon to have a situation where the large majority of customers have never met anyone from the vendor in person. That’s a serious risk scenario. Application features & functionality, and price, are too easily duplicated by the competition. In-depth relationships, on the other hand, are not easily matched – they take skill and time to build and nurture.
As the new Customer Success Management profession continues to develop, the demand for qualified people is becoming intense. One major Cloud company recently told me that they literally cannot find enough people to hire and are therefore actively talking with their channel partners about assuming additional roles. Others are finding that the best source for new CSM’s is former implementation consultants of large implementation firms. As noted earlier – it isn’t how you fill the role that is the key, it’s that the role be properly filled.
About the Author
Mikael Blaisdell, publisher of The HotLine Magazine, brings 30+ years of experience in the strategy, process, people and technology of customer support, retention and profitability to the emerging profession of Customer Success Management. He is also the moderator of the CSM Forum on LinkedIn. Read moer about The Customer Success Management Initiative, sponsored by Totango.
Do you know how to measure your Customer Engagement? Our SaaS Dashboard can easily do that for you! Try it now for FREE
In the traditional software market, it has often seemed that the only thing that a vendor felt they really needed to know about a given customer was how to get their signature on the initial contract. The bulk of the profit to be realized (and the source of the Sales’ commission!) came up-front from the sale of the perpetual licenses. After that had been accomplished, the barriers to switching were presumed to be high enough to keep the customer tied to the vendor for some time.
In the SaaS/Cloud sector and business model, there is no burst of up-front profit, and the barriers against churn are much lower. It can take many months, in some cases as long as a year or even more to recoup the customer acquisition cost. A customer who elects to end the relationship before that point can instantly turn what appeared to be a highly profitable deal into a dead loss. As a necessary result, the Customer Success Manager at a minimum must know a great deal about the customers’ business, and especially about the customer’s expectations and usage of the vendor’s application, in order to have any accuracy of insight about the real status of the relationship.
Looking for Answers
The beginning of the quest for knowledge is in determining what you need to know in order to function as an effective CSM (Customer Success Manager). What drove the customer to engage with your company and application? How does the customer measure success? Are they tracking their own progress towards those success goals and objectives? Are their individual users appropriately moving up the adoption curve of the application’s feature set? All of these core questions must be reliably answered, and on a continuing basis, but the need for knowledge doesn’t stop there.
Some of the answers will come from conversations with your customers. Others will be provided by your application feature usage monitoring resources – but here, too, you have to know what to look for. Which features are core to the application. such that there is something very wrong when a customer is not using them? If your monitoring tools haven’t delivered enough data to use in this regard (or even if you think they have!), go talk to the Support team reps. Ask the customers themselves what they consider to be the must-have features. What does the Sales team report as customer hot-buttons? How do prospects talk about their expectations? What does Marketing say about competitive analyses of the opposition’s products?
Are You Sure?
What you don’t know can very definitely hurt you in the game of keeping customers and increasing per-customer profitability levels. So can what you think you know. Cross-check the data and responses you get to your inquiries from different directions. If there is conflict, dig deeper. Why would some customers or respondents think that a given feature was vital and others not? Look for patterns, and matches with verifiable customer behavior. Look, too, for what doesn’t fit – and ask why.
About the Author
Mikael Blaisdell, publisher of The HotLine Magazine, brings 30+ years of experience in the strategy, process, people and technology of customer support, retention and profitability to the emerging profession of Customer Success Management. He is also the moderator of the CSM Forum on LinkedIn. Read moer about The Customer Success Management Initiative, sponsored by Totango.
Do you know how to measure your Customer Engagement? Our SaaS Dashboard can easily do that for you! Try it now for FREE
The research of The Customer Success Management Initiative is revealing that while many SaaS/Cloud companies are hiring individual Customer Success Managers, or even establishing entire teams of them, there is a wide range in the understanding the role. Given the lack of clear cut definitions, lines of authority and accountability, it’s no surprise that there would be an equally broad range in how the individuals and teams are equipped. After all, if your job is only about writing up case studies and customer references for use in marketing collateral, a telephone, laptop and perhaps a reasonable travel budget may be entirely sufficient. But if you’re truly charged with the responsibility for keeping customers and increasing their spending with your company, you’ll need much more.
A Question of Ownership
The first item on the CSM wish-list ought to be a clear charter. Who is to be responsible for what? What authority does the CSM role carry with it? Holding a professional (or anyone, frankly,) accountable for something over which they have no real operational control is a recipe for failure and turnover.
A “fire-fighter,” a customer retention specialist brought in only at the last moment to try to save a failing customer relationship, may only need to have the authority to make concessions within a determined range so that they know what they can and cannot offer to the customer. Their engagement will probably be of limited duration, and their performance metrics are likely to be based mostly on deals saved/lost statistics. However, if the customer retention manager’s responsibility also includes early detection of at-risk accounts, then Senior Management needs to provide appropriate access to data and tools to enable that aspect to be accomplished.
More than CRM
It’s an unusual company in this day and age that does not have a Customer Relationship Management system installed and in use. Unfortunately, in too many companies, the CRM system is really only about automating the Sales and Marketing functions, with a module or two for Case Management over in the Support group, In reality, there are three separate systems: Marketing, Sales and Support — that are designed and built for just those functions as individual activity areas. CRM systems are typically not designed for the Customer Success Manager, who needs to analyze a range of interaction data to detect patterns that indicate the actual health of the ongoing relationship between the customer and the company in time to do something about it when necessary.
An appropriate CSM system, for example, would alert the manager that a particular customer, one who perhaps represents 40% of the overall yearly corporate subscription income, was no longer using a key module of the product. This is not about a decline in simple logins and licenses, but in the usage of certain specific features of the application. Such a capability, vital to ensuring that a new customer is properly proceeding up the adoption curve, becomes even more important as a means of detecting an established customer that has started to disengage. To enable that insight, however, requires that you know which features of your product to track. That’s a subject for another day.
About the Author
Mikael Blaisdell, publisher of The HotLine Magazine, brings 30+ years of experience in the strategy, process, people and technology of customer support, retention and profitability to the emerging profession of Customer Success Management. He is also the moderator of the CSM Forum on LinkedIn. Read moer about The Customer Success Management Initiative, sponsored by Totango.
Mikael Blaisdell, publisher of 
