Attending the Gainsight Pulse 2019 conference was a clarifying moment for anyone uncertain if the customer success mandate has reached maturity. This year, more than 5,500 industry professionals, representing nearly all functions, made their way across the booths and presentation halls of San Francisco’s Moscone Center for a full week’s worth of customer success focused discussions, best practices and thought leadership. It became clear from the conversations we had with attendees that many have moved beyond the early trials of establishing, validating and expanding a customer success mandate and are now trying to solve complex business challenges ranging from human-first leadership to scaling customer success.
In order to address these complex challenges, we identified three key themes that resonated with us given our recent experience supporting clients through their customer success journey:
1. Finding the Right Organizational and Responsibility Alignment Between Sales, Customer Success, and Renewals
The addition of customer success into the customer engagement lifecycle has created a division of labor challenge across customer-facing functions, especially sales and the existing account management functions. Companies need to figure out the context of each role’s engagement with the customer (e.g. should customer success have any commercial discussions with customers or not), how these roles hand off responsibility and information to each other, and how can they do so in a way to maintain a single and cohesive voice to the customer. These decisions ultimately impact the compensation and rewards plans for these functions, as providers define how exactly they should be incentivizing customer success (should it just be on retention and customer health or should it include cross-sell and upsell credit).
Adding in the question of renewals responsibility makes this engagement model even more complicated. The question of whether CSMs should be responsible for managing renewals was discussed at great length but without a simple and universal answer. Some thought that under circumstances where the renewal process is straightforward, CSMs could directly manage the renewals process. Others thought under no circumstances whatsoever should CSMs manage any renewal process. Ultimately there isn’t going to be a near term consensus to this complex division of labor issue, and providers will need to create a solution that fits their own particular situation.
2. A Greater Need to Measure and Justify the ROI of Customer Success
Justification of customer success investment has moved beyond the theoretical and into the zone of hard KPI tracking. Providers are making a concerted effort to be more sophisticated in their tracking of retention improvement by segment, by geography, by CSM team, or by other metrics as their customer success functions scale. As one would expect from a mature operating unit, the degree to which customer success functions can expand their resources and investments is now directly tied to specific ROI expectations and results.
The discussion of ROI is directly informing another fundamental business decision regarding customer success: whether customers should be directly charged for it. Monetization of value-added components of customer success (whether sold as a higher touch engagement model, sold as part of a tiered subscription bundle with other value-added services, or even sold in an outcomes-based approach) are increasingly becoming the norm, and the shift from a cost center to profit center organizational mentality is only going to increase the economic discipline within the CS groups going forward.
3. Incorporating the Customer More Broadly into the Enterprise’s Activities (In Particular with Product Management)
“Being a human lead company” was a central message promoted at this year’s Pulse conference. There are many ways to unpack the meaning of this, but the most fruitful application comes to life with this anecdote: “We always assume customer success is about coaching customers to adopt a product or feature. What if the real solution should be to adapt the product to the specific needs of the customer?” This concept was illustrated by the notion that there is a gap between value delivered by the product alone and customer’s desired outcomes; a gap which has historically been filled by customer success teams. Layer on the fact that 75% of organizations believe themselves to be customer-centric, while only 30% of consumers believe this to be the case1. This difference in perception around which companies are customer-centric, and which companies are not was dubbed the ‘empathy gap’ by Andy MacMillan (CEO, UserTesting).
If organizations can begin to leverage the product itself to help deliver the target customer experience, they will be able to automate the journey and drive scale, enabling significant product-driven growth. Achieving this brings to light some sophisticated organizational and product development implications. Of course, customer feedback into the development process is not new, as any organization with a feature submission process or customer advisory board can tell you.
What may not be so obvious or common is the degree to which the customer success team can and should be collaborating with the product development team and process. The CS team’s front-line experience living with the adoption challenges and desires of customers and working through potential adoption plans and solutions to meet their needs, has a wealth of detailed user knowledge that even customers themselves may not be able to fully articulate. Although some providers are already syncing customer success and product, many are not doing this as systematically as they could. Course correcting this gap, especially as SaaS-based products move to regular and recurring release cycles, will be a big win for any maturing customer success organization.
If you’d like to discuss delivering on customer success in greater detail contact us.