Finance:Customer success
 | This article contains wording that promotes the subject in a subjective manner without imparting real information. (March 2017) (Learn how and when to remove this template message) |
[relevant? ]}}
Customer success, customer success management, or client advocacy refers to the process of enhancing customers' satisfaction while using a product or service. As a specialized form of customer relationship management, customer success management focuses on implementing strategies that result in reduced customer churn and increased up-sell opportunities. The primary objective of customer success is to ensure customers achieve their desired outcomes with the product or service, consequently leading to improved customer lifetime value (CLTV) for the company.
Metrics
| Metric | Description |
|---|---|
| NPS[1] | "Net Promoter Score" is a management tool that can be used to gauge the loyalty of a firm's customer relationships. It serves as an alternative to traditional customer satisfaction research and is claimed to be correlated with revenue growth. NPS is calculated by subtracting the percentage of detractors (those who give a score of 0–6 on a 0–10 scale) from the percentage of promoters (those who give a score of 9 or 10), with the resulting score ranging from −100 to 100. |
| CSAT[2] | "Customer Satisfaction" is a score that indicates how satisfied a customer is with a specific product, transaction, or interaction with a company. The term "CSAT" is most often used in the context of a "CSAT score", which describes a numerical measure of customer satisfaction. CSAT is typically measured by asking customers to rate their satisfaction on a scale, such as 1–5 or 1–10. |
| CES | "Customer Effort Score" (or "Net Easy Score") is a single-item metric that measures how much effort a customer has to exert to get an issue resolved, a request fulfilled, a product purchased/returned or a question answered. |
| Churn[3] | Churn rate, when applied to a customer base, refers to the proportion of contractual customers or subscribers who leave a supplier during a given time period. |
| Health score[4] | Health score is a metric that measures the overall health of a customer account or relationship with a company. It takes into account various factors such as customer engagement, product usage, customer feedback, and financial data to provide a holistic view of the customer's health and likelihood to renew or continue doing business with the company. |
Key sub-functions
Customer success (CS) teams perform several key functions, which include:
Technical enablement
The scope and level of effort (LOE) for technical enablement can vary greatly, ranging from a few hours to many person-years. Almost every software solution, and generally any innovation, requires some level of initial setup and enablement.[5] This activity is also referred to as Initial Implementation or Customer Onboarding and Initial Engagement. This step typically follows the initial sale of the solution and any add-on components, and is often governed by a statement of work (SOW) defining the deliverables, timeframe, and commercial structure for the engagement. In many organizations, the team responsible for this function is referred to as professional services.
Knowledge enablement
Knowledge enablement involves providing customers with the knowledge needed to make the best use of the solution, which can sometimes be a separate function from technical enablement. Formal and informal training, customer-to-customer relations (such as community sites), and self-service knowledge systems are all part of this function.
Identifying growth opportunities
During the contract lifecycle, the customer success manager (CSM) has direct access to conversations related to the client's business growth. As a "trusted adviser", it is a key function of the CSM role to identify expansion opportunities, either in terms of feature or function expansion.
Identifying churn risk
Utilizing a customer health score is crucial for identifying churn (or lost revenue). As the main point of contact for accounts, the CSM has visibility into the possibility of churn or canceled accounts. The CSM can intervene when needed to help decrease the likelihood of a lost account.
General account management
Although customer success is a more comprehensive approach to account management, a significant portion of the day-to-day responsibilities falls under the "account management" title. The CS team manages the business relationship between the customer and the provider. This function works in parallel with the technical teams and collaborates with the customer to ensure they best utilize the provider's capabilities, as well as expand and improve them. The team works to increase adoption of the solution, ensure contract renewal and expansion, and manage executive relations, which includes acting as an advocate for the customer to various groups within an organization.
Customer success managers
Presently, the customer success function within most organizations is embodied in the customer success manager (CSM), client relationship manager (CRM), or client strategy consultant (CSC) job titles.
Customer success managers (CSM) act as the main point of contact and as a trusted advisor for the customer from the vendor side as they are the ones ultimately responsible and accountable for that customer's success.[6] The function may share many of the same functions of traditional account managers, relationship managers, project managers, and technical account managers, but their mode of operations tend to be much more focused on long-term value-generation to the customer. At its heart, it is about maximizing the value the customer generates from utilizing the solutions of the vendor, while enabling the vendor the ability to derive high return from the customer value. To enable that, the CSM must monitor the customer's usage of and satisfaction from the solutions of the vendor, identify opportunities and challenges from the way the customer engages with the solution and take action to help resolve challenges and foster expansion of the usage as well as the value from the solutions (to both sides) over time.
As a consequence, relentlessly monitoring and managing the customer health is a key success factor for every CSM[7] as well as the need to deeply understand the drivers of value the customer gains from the solutions provided by the vendor.[8] Without such deep and timely understanding of these two aspects of the customer, the CSM would not be able to act effectively.
In young organizations where the total number of employees (and customers) is small, the CSM may be the first employee of the customer success team.[6] As such, they will be responsible for most of the functions described above, which over time may be fulfilled by more specialized team members. Ownership of commercial responsibilities by CSM vary among companies. While some believe a CSM's neutrality from sales or commercial conversations may make a customer more likely to respond to and engage with a CSM, others view the ownership of the commercial relations as natural to a long-term relationship between a vendor and a customer and more empowering to the CSM.
For CSMs to fulfill the responsibilities of their role, they must be empowered by an organization's executive team to navigate freely among all parts of an organization.[9] This maintains the CSMs credibility with the customer as an effective resource. In organizations where CSMs are just another level of abstraction or a "screen" between the customer and the resources they need, the credibility of the CSM is compromised and the customer experience eroded which may result in a customer not renewing or expanding their business with the vendor. Furthermore, lacking the top-down support will deprive the CSM the ability to garner the right resources needed by them to complete their jobs.
Virtual customer success managers (VCSM)
Virtual customer success managers are remote points of contact for customers and monitor the success of customers, providing important feedback.
Background/history
Every company that sells products or services to customers has functions responsible for managing customer fulfillment and relations. In traditional businesses, these functions are most commonly referred to as "fulfillment", "post sales", or "professional services".[citation needed]
In the technology sector, companies have been developing, selling, and enabling software solutions for many years. At most of these companies, the function responsible for managing customer relations was often called "account management", "operations", or "services".[citation needed]
As the business world evolves into new fields, the method of delivering software to customers changes as well. One of the most significant changes in recent years has been the emergence of software as a service (SaaS[10]).[citation needed]
SaaS is a subscription-based method of delivering software solutions, moving away from the "old" model of granting a perpetual license that allowed customers to own the solution and use it as they saw fit, while being responsible for its operation. With SaaS, companies offer their products as services instead of physical objects, transitioning the economy to a subscription model.[11]:2 Customers "rent" the solution for a specified period and the vendor provides not only the solution itself but also the supporting infrastructure.
This new model represents a fundamental shift in the engagement between software vendors and their customers. In the traditional "enterprise software" model, customers buy a license for the software and pay the vendor upfront, regardless of actual usage. In the SaaS model, customers pay a (much smaller) recurring fee for the software.[12] Consequently, the software vendor must ensure that the customer is using the solution and seeing value from it to continue receiving payments. This shift in the software industry's operating model highlighted the need for a dedicated function within the company to ensure the success of its customers.[13]
This emerging function is now referred to as customer success (CS).[citation needed]
Although the trend towards SaaS has been ongoing since the beginning of the 21st century,[14] the understanding of the need for much stronger focus on customer success and therefore the creation of the field of customer success only began around 2010–2012.[15]:183
The CS function is responsible for retaining and growing the business that the sales team has secured. Case studies show that companies with strong CS teams outperform peers with weak or no CS teams in a multitude of financial criteria including customer retention (also measured by "churn", which is the opposite of retention), revenue growth rates, gross margin, customer satisfaction, and referrals. In fact, customer experience is the greatest untapped source of both decreased costs and increased revenue in most industries, but only if companies take the time to understand what underpins it and how they can benefit financially from improving it.[15]
References
- ↑ Net Promoter, 2021-04-02[circular reference]
- ↑ Customer satisfaction, 2021-04-02[circular reference]
- ↑ Churn rate, 2021-04-02[circular reference]
- ↑ "Customer Success – Health score". https://partenero.com/vendors.
- ↑ Rogers, Everett M.. Diffusion of Innovations, Fifth Edition. Free Press, 2003 Chapter 9
- ↑ 6.0 6.1 Nirpaz G., Pizarro F., Farm Don't Hunt: The Definitive Guide to Customer Success, March 2016, p. 91
- ↑ Mehta N., Steinman D. and Murphy L.: Customer Success: How Innovative Companies Are Reducing Churn and Growing Recurring Revenue. Wiley. February 2016, Chapter 8
- ↑ Mehta N., Steinman D. and Murphy L.: Customer Success: How Innovative Companies Are Reducing Churn and Growing Recurring Revenue. Wiley. February 2016, Chapter 7
- ↑ Mehta N., Steinman D. and Murphy L.: Customer Success: How Innovative Companies Are Reducing Churn and Growing Recurring Revenue. Wiley. February 2016, Chapter 14
- ↑ bebusinessed (2017-01-03). "The History of SaaS" (in en-US). https://bebusinessed.com/history/the-history-of-saas/.
- ↑ Forrester Research, Inc. An Executive Primer to Customer Success Management. April 2014
- ↑ Wood J.B., Hewlin, Todd and Lah Thomas, B4B: How Technology and Big Data are Reinventing the Customer-Supplier Relationship, 2013 P 152-3
- ↑ Bliss, Jeanne. Chief Customer Officer: Getting Past Lip Service to Passionate Action. Wiley, 2006 P. 5
- ↑ Barret, Larry (27 July 2010). "SaaS Market Growing by Leaps and Bounds: Gartner". Datamation. QuinStreet, Inc.
- ↑ 15.0 15.1 Manning, Harley and Bodine, Kerry. Outside In: The Power of Putting Customers at the Center of Your Business. Forrester Research, 2012
External links
- What I do & how much I make – Khan Academy's YouTube video about a customer success manager
 |  |
