Customer Success 2019 - The CXO Guide - March 2019 - Regalix
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March 2019
The CXO Guide
Customer Success 2019
www.regalix.comThe emergence of customer
success as a formal discipline
The early days of customer success as a formal discipline can be traced back to the
mid-2000s. After having invested significantly in customer acquisition programs,
Software-as-a-Service (SaaS) vendors were faced with a major problem: customers
found their products to be complex and difficult to understand, which led to lower
levels of adoption and usage, and a higher level of churn. To address this problem,
companies began to invest in teams that focused on helping customers to adopt
their products so that they could derive more value from them.
Success in the early days led businesses to invest in customer success teams to
preemptively tackle the growing churn problem. Vantive and Siebel were among the
first companies to adopt customer success formally. Since then, customer success
has emerged as an important discipline in the software industry. As noted in a study
by Regalix (‘The State of Customer Success 2018’),1 72 percent of organizations in the
technology space have a customer success strategy in place. According to a McKinsey
study, SaaS vendors who invested more in customer success initiatives aimed at
churn reduction achieved top-quartile revenues.2
While customer success has its roots in the SaaS world, it is widely adopted across
industries today.
A simple definition
Customer Success (CS) can be defined as the function responsible for managing the
relationship between an organization and its customers. The goal of CS is to make
the customer as successful as possible, which in turn improves customer lifetime
value for the company.3
How companies are benefiting
Consider the following statics:4
• Organizations with a dedicated CS team have at least a 10 percent
boost in retention than those without.
• On top of that, 10 percent of organizations with a dedicated ‘Account
Manager’ role see another 5 percent bump in retention.
• Companies with CS departments also see up to 27 percent less gross
churn than those without.
2 The CMO Guide to Customer Success 2019Clearly, businesses that invest in CS are doing something right. In fact, as shown
by the HubSpot Customer Survey Q2 2017 report, growing companies are more
likely to prioritize CS than stagnant or declining ones (Figure 1).
Figure-1
Growing companies prioritize customer success
Growing companies are more likely to prioritize customer success
Please rate the following statement in terms of importance for your company:
Making the company’s customers successful
Very important Important Neutral Not important
70%
49%
36%
25%
14%
3% 2% 1%
Company revenue
Company revenue is
is growing
stagnant or decreasing
Source: HubSpot5
Best practices
Here are some suggested best practices that we believe will help take CS to the next
level:
Choose your customers wisely
A key element of CS is choosing the right customers. It is not about delivering CS to
every customer who buys a product, but rather thinking strategically about whether
the customer has the highest probability of achieving success with the product. It’s
called the ‘success potential.’ Accordingly, there are six criteria to assess a customer’s
success potential:6
• Technical fit – Will the solution work in their existing environment? Do
The CMO Guide to Customer Success 2019 3they need to purchase or acquire new technology for the solution to
work?
• Functional fit – Do their requirements map against the features of the
solution or services provided?
• Resource fit – Does the customer have enough resources (time, staff,
money, and commitment) to invest in making this solution work well
for them?
• Competence fit – Does the customer have enough expertise (or are
they willing to acquire the expertise needed) in order to make the
solution a success?
• Experience fit – Is the company able to give the customer an experience
that is appropriate for them?
• Cultural fit – Is there synergy between both companies – at a belief,
moral, and cultural level?
The fact remains that no matter how much time, effort, and resources are poured
into some engagements, the results will never justify the investments made. It is not
an efficient use of resources. Typically, successful customers have the potential to
provide at the very minimum three leads in one cycle – renewal, expanded deal, and
new logos. Ensuring the success of each customer is critical to the revenue that the
company earns. Spending time on customers that for some reason or the other, will
never be able to realize the full potential of the solution, is a loss of revenue.
It is important to segment customers, not just on their deal size, but also the position
they occupy on the maturity scale, the type of goals they are trying to achieve, and
their success potential. This will help businesses scale their operations and make
efficient use of their resources.
Map the customer journey
Customers are not looking to buy products; they are looking for solutions to solve a
problem. As pointed out by Lincoln Murphy, author of the book, ‘Customer Success:
How Innovative Companies Are Reducing Churn and Growing Recurring Revenue,’
CS focuses on ensuring that your customers achieve their desired outcome through
their interactions with your company. He further explains, “Rather than saying ‘with
your product,’ the focus is on all of the interactions your customer has ‘with your
company;’ starting at the earliest touchpoints of marketing and sales, moving through
closing and onboarding, and continuing through their entire lifecycle with you.”7
Understanding the customer’s expectations at every touchpoint and delivering on
those expectations is the cornerstone of a long and fruitful relationship.
4 The CMO Guide to Customer Success 2019Figure-2
Journey map wealth management
Stage Research Evaluate and compare Commit Use and monitor Refine and review
Goals Decide on a service/ Learn about services/account Open my account with the Grow my investment account Easily adjust investment
account which works options at current and selected firm approach as needed
best for me competitor banks
Activities/ Ask for advice or recommendation Make an appointment with an FA Contact FA and finalize investment Receive check-in call from FA Meet with FA to review account
touchpoints from family and friends plan performance against investment
Meet FA to discuss needs, goals, plan to ensure it’s on track
Manage and monitor the account
Research investment services/ and dreams Receive and review investment plan
account options at current and from FA Meet with FA to refine investment
Receive monthly account
other banks Receive and review investments approach if a live event has
statements/notices
plan from FA occurred
Receive application approval
Meet with my current banker Call FA when I don’t understand
Compare investment plans something about my account Receive refined investment
Transfer funds from different
gathered from severals FA activity/statements approach for approval
accounts
appointments
Meet with FA to walkthrough the
Look up FA references and Review and approve refined
account set-up and services
credentials online investment approach
Opportunities M Provide jargon-free wealth H Pre-qualifier questionnaire provides M Account application is pre-populated H Ability to view investment plan H New FA transition period needed
management information or customers with time to think through based on questions asked at against current account prior to current FA leaving
links within the info to definitions their goals, needs, etc. prior to the preliminary FA meeting performance
of the terms being used interview
H Tools which allow the customer to
explore investment options/
L Provide comparision view of H Educational short video to help L FAQ for account-opening process M Reduce financial jargon in
approaches
wealth management customers understand investing and funding account statements
services/accounts and process to open accounts
L Educational webinars or videos
L 5-minute online education video,
which explains graphs and charts,
portfolio, etc.
Legend Moment of truth Experience Value to customer H M L
Positive Neutral Negative High Medium Low
Source: tandemseven8
The CMO Guide to Customer Success 2019 5A customer journey map can be a helpful tool in this endeavor. It typically outlines all
the interactions that a customer has with your company (Figure 2). A journey map is
built from the customer’s point of view and not from a business process perspective.
It highlights the customer’s experience, and what they think and how they feel, as
they interact with your company across multiple touchpoints. Armed with all this
information, your CS team can create a CS plan that they can take across all
touchpoints to optimize the customer experience along the entire customer journey.
Foster growth
The primary business function of the CS team is to ensure that customers realize the
value of the product throughout their journey with the company, right from the very
first interaction that they have. For this, it’s necessary to have a clear engagement
strategy for each leg of the customer journey. For instance, while deploying a solution,
companies should ensure that the installation happens rapidly and there is seamless
integration with the customer’s existing systems. In the early stages of adoption,
they should offer an efficient onboarding process to train the customer. At any point
in the customer journey, easy access for support should be made available across all
channels and devices. Finally, during renewal, companies should identify in advance
which accounts are at high risk of churn so that they could resolve any pending
issues to ensure a seamless renewal process.
Picture this:
Thinkific is a platform that customers can use to create and sell online
courses. As part of the company’s CS metrics, they track the number of
active enrollments each course has as a way to determine how successful
each customer is at using the platform and if it was helping them achieve
their goals. Alerts went out when a customer had not published a course or
if they had published a course but was not actively enrolling new students.
This alerted the business that these customers were not receiving any value
from the platform and may soon stop using the platform altogether. The
company surveyed these customers to find out what they thought about
the platform and how best they could help them reach their goals.
While reducing churn is profitable in itself, CS offers possibilities that go
well beyond churn reduction. According to a McKinsey report, several
recent trends indicate that we are at the beginning of a new era in which
many companies are focusing on growth as well as, in addition to containing
churn (Figure 3). McKinsey refers to it as ‘Customer Success 2.0.’ The report
goes on to conclude that by artfully drawing on their intimate knowledge of
the customer, companies can surface opportunities to provide relevant
solutions and expand customer value.
6 The CMO Guide to Customer Success 2019Figure-3
The emergence of Customer Success 2.0
Customer success is becoming a growth engine that extends beyond
Software-as-a-Service (SaaS) business
Customer Success 1.0 Customer Success 2.0
Focused on churn reduction Recognizes customer success
and risk management can be a growth engine
Emerged from SaaS companies Used by companies across a
focused on complex business range of B2B sectors to change
applications the approach to customer
lifecycle management
Source: McKinsey & Company9
In other words, by understanding the emerging needs of the customer, a business
can continually evolve solutions around its products that the customer can benefit
from.
Whether through upsells, renewals, or expansions, helping customers grow can
provide the organization with an opportunity to maximize the lifetime value of its
customers. This is what separates high performers from the rest and sets them up
for further growth. Their customers not only achieve their objectives, but they
experience the added advantage of having an extended team focused on their
success. Naturally, these customers not only become the company’s loyal customers,
but also its most vocal advocates. There is much truth in the popular saying, “When
your customer grows, you grow.”
Establish a company-wide focus on customer
success
Businesses often make the mistake of merely assigning CS to a department, but that
will not produce the results that matter. It limits the transformative power of the
discipline. For CS to produce the results that it is capable of, it must permeate every
aspect of the business and must be carried through the very DNA of the organization.
CS cannot be turned on or off like a switch. Either the business embraces it, or it
doesn’t; it’s an all-or-nothing scenario.
Some businesses mandate that every employee spends two weeks in CS so that they
understand what is at stake. Others ensure that CS is part of the orientation and
onboarding training that employees go through when they first join an organization.
The CMO Guide to Customer Success 2019 7Many insist that engineers, CXOs, managers, and all departments have periodic
direct contact with customers to ensure that they receive first-hand information of
their customer’s context and environment. Peter Strebel, Chief Marketing Officer of
Omni Hotels, and many others like him, consider it part of their job to be available to
their customers. Peter responds to customer emails as part of his daily routine. CS
must be owned by the CEO of the organization, while every department should have
clear accountability and CS metrics that they must meet. Organizations must map
the customer journey and experience with processes and outcomes for every
department. Equally important is the need to establish a CS-focused internal
structure, and cross-functional collaboration guidelines.
CS programs must extend beyond customer support to influencing the actual
product or service itself. The idea of customers as product managers is not a stretch
of the imagination. Ensuring that the solution is useful and relevant to the customer
is more important than ensuring that it has the latest features. It is also important
that there is a defined process to ensure that all customer feedback garnered through
the CS program is shared with all the teams.
Another element of establishing a company-wide focus on CS is hiring the right
people to champion it within the organization. Given the broad range of skills
required, where does a company start looking for these CS stars? Which skills are
more important? Does empathy trump technical knowledge? Finding the right
person depends entirely on the nature of the business as well as the nature of the
customer’s business. McKinsey suggests four pillars when it comes to tapping into
customer-focused individuals within the business.
Figure-4
Creating a world-class customer success organization
requires these four pillars
Companies that want to build a world-class customer success
organization must create a talent engine that has four pillars
Identify Attract Build Retain
Link customer Embed data-based Develop customer- Create career paths
outcomes to view of desired skills learning journeys that offer meaningful
capabilities and into recruitment that build capabilities rewards and progression
intrinsic characteristics process over time, taking for mastering skills
of customer success individual starting points
managers Identify untapped into account Use data to identify and
pockets of talent with support talent at risk of
advanced analytics Create certification leaving
and external networks programs that reflect
skill levels and create
paths to progress
Source: McKinsey & Company10
8 The CMO Guide to Customer Success 2019Picture this:
DealDash was started in 2009. In the highly competitive world of online
retailing, the company has been around for over nine years, due for the
most part to its highly successful CS program. In fact, the company’s culture
reads something like this: “Talk With, Listen To, and Understand Your
Customer. Treat Them As You Would Want To Be Treated Yourself.” The
company launches new features in conjunction with customer demands;
hires only customer-focused individuals; and insists that every single
employee, whether developer, marketer or CEO, speaks with one customer
at least once a week. During these weekly customer phone calls, employees
ask customers what they can do to make the customer experience better.
As a result, everything that the company does is backed by customer data
that is acquired through these regular interactions with customers.11
Impact of digitization
As with other industries, digitization has transformed the CS practice in recent
years. In a survey done by Gartner, 42 percent of CEOs said that ‘digital first’ is now
their company’s digital business posture.
Here are some ways digitization has impacted CS and the opportunities it affords:12
Personalization
In the past, customers were thought of as one entity with very little distinguishing
one from another. Today, customer experiences are highly personalized and attuned
to the nuances of specific individuals within customer organizations. According to
Frost & Sullivan, by 2020 customer experience will overtake price and product as
the key brand differentiators. The best way to provide fantastic customer
experiences is to personalize them. Plotting the customer journey from awareness
to onboarding, and onwards, businesses must realize that each customer is unique
and must be treated as such. Also, in the past, companies focused on the customer
journey until a purchase was made. Today, the customer journey never ends. Some
companies think of customers as being in two distinct groups – the decision-makers
and the users – and they are creating different strategies to engage with each.
Whether it’s walking customers through the advanced features of a product or
helping businesses deliver personalized emails, technology enables personalization
at scale.
The CMO Guide to Customer Success 2019 9Transparency
Much about CS has to do with building trust. One way to do that is to be consistent
and transparent in all interactions. This is true especially when customers call
customer support and raise a query or register a complaint. Technology has enabled
a system of transparency where customers are able to keep track of resolution steps
taken by the company regarding their issue, delivery of product, and more. CS teams
are also better prepared when talking with customers because they have the entire
history of the relationship easily accessible.
Scalability
Technology has afforded businesses the ability to explore CS tactics at scale. From
recording customer data and ensuring every customer interaction is stored, to
analyzing their public profiles on the internet and sourcing additional information
about them, CS platforms provide a 360-degree view of the customer. There are
tools that analyze data and let CS teams know when a customer is ‘at risk’ so that
corrective measures can be taken. Crunching data, sorting and grouping features
help CS teams draw insights from granular-level data that helps them make more
informed decisions at scale. Automation tools, artificial intelligence, and other tools
help businesses stay on track and engaged with their customers.
Intelligent discovery
Perhaps the most significant impact that digitization has had on CS is the ability to
draw deep insights about customers, which enables businesses to make informed
decisions. For example, one business scanned hundreds of variables using feature-
discovery algorithms and found that the three-month moving average of customer
storage usage strongly predicted which users would discontinue their services
within six months. Another business used machine-learning to mine customer data
to identify customers with the highest propensity to make a purchase, and created
alerts when customers entered this category. By integrating these insights into its
CS efforts, these businesses were able to increase customer engagement and obtain
a 5 percent increase in sales.13
By 2020, customer experience will become the key differentiator
in business; price and product will take a backseat.16
10 The CMO Guide to Customer Success 2019Deeper relationships
Technology provides businesses with the necessary insights and tools needed to
predict customer behavior. As a result, businesses can be more proactive when it
comes to engaging their customers. With access to more information and deeper
insights, businesses can engage when customers need it to happen, not just once a
year. A proactive business is in a good place to develop stronger and deeper
relationships with customers. Analytics also helps businesses identify products and
services that might accelerate value.
Value co-creation
The companies that are winning today are those that are able to co-create with
their customers. Think Airbnb, Facebook, Cisco. These companies provide the
platforms and put customers in touch with each other to build a community around
their customers. If customers help shape the future roadmap of the product or
solution, they are invested in seeing it succeed.
Picture this:
Technology leader Cisco understands that the most powerful piece of
content that can convert a prospect into a buyer is a customer’s success
story. The company launched an advocate marketing community, ‘The
Gateway,’ in 2016 as a way of capturing CS stories and engaging their most
passionate customers. In 2018, Cisco wanted to take their engagement with
their advocates a little further. They posted challenges on The Gateway that
encouraged their advocate customers to upload testimonials, blog posts,
and case studies. They also encouraged longstanding advocates to share
how posting on The Gateway brought them increased visibility in their
professional networks. Cisco also offered exclusive rewards to advocates.
As a result, over 4,000 pieces of user-generated content were uploaded to
The Gateway in 2018. There were over 5,724 social shares of customer-
generated content, generating 33,041 clicks. Cisco achieved a level of
visibility that was near impossible without the help of their advocates.
86 percent of buyers would be willing to pay a premium for
a product or service that offers them a better customer
experience.17
The CMO Guide to Customer Success 2019 11Some popular CS platforms: The significance of data The success of a CS program depends on the ability of the organization to record, collect, and analyze data. While predictive analytics, artificial intelligence and a range of other technologies support businesses in managing their customer relationships, it is data that will be the key driver. Here are some aspects of data that need to be understood and managed: CRM and customer record management There are two aspects of record management to consider – one is easy data capture and the other is easy data access. Ensuring that employees record every customer interaction is critical to the success of any CS program. The quality of data about each customer determines the value of insights that will be derived. Employees concerned with CS should be able to have an overview of each customer from a single window. This may require data integration across multiple systems and data sources. Usage and engagement tracking Real-time access to data on usage and engagement will help CS teams identify opportunities and threats. Analytics built into the applications and platforms can alert the business to features that have high usage or those that aren’t used at all. It also helps identify customers who are ‘at risk’ or those who could be targeted by cross-selling and upselling initiatives. Usage metrics will help businesses determine the Return on Investment (ROI) and value creation for each customer. According to Groove, for every customer who complains, there are 26 customers who don’t say anything.14 They simply disappear. Usage tracking helps businesses find these customers and helps them address their issues before the customer vanishes. 12 The CMO Guide to Customer Success 2019
Customer intelligence
Businesses with a pulse on the happenings within the customer’s industry and within
the customer organization are better positioned to help their customers find
success. Intelligence garnered from analytics and customer data can help businesses
serve their customers better. It is critical that this intelligence is used in product
roadmaps, pricing strategies, and even go-to-market plans.
Customer feedback
Capturing meaningful customer feedback is essential to any CS program. Are
customers satisfied with the product? Have their expected business outcomes been
met? What’s stopping them from using the product more? These and other questions
need to be continuously probed so that relevant interventions can be made to
address them. Gathering customer feedback should be an ongoing process and built
into the CS program. It should not be restricted to a few touchpoints but should be
extended to all relevant touchpoints throughout the customer journey.
Performance metrics
There are multiple metrics that can be measured to gauge the performance of CS
programs. Depending on the type of industry and service category, businesses can
measure average revenue per account, customer lifetime value, churn rate, retention
ratio, customer health score, and more. According to the ‘State of Customer Success
2018’ report by Regalix, the most popular metrics used by organizations to measure
the performance of a CS program are renewals (mentioned by 68 percent of
respondents) and customer churn rate (mentioned by 55 percent of respondents).
Looking ahead
Customers are the reason why a business exists, so it isn’t difficult to understand
why CS is the perhaps the right fuel to drive businesses towards future growth and
profitability.
Gartner and Forrester predict that by 2020, 80 percent of the buying process will
occur without any direct human interaction.15 In such a scenario, businesses will
have no choice but to rely on the precise insights gleaned from disciplines like CS to
help them navigate their way to long-term customer relationships.
With all the hype surrounding technology, CS brings the focus back onto the
customer. As Professor Theodore Levitt of Harvard Business School had said, “People
don’t want to buy a quarter-inch drill. They want a quarter-inch hole!” And helping
people achieve that outcome is what will differentiate the winners in the future.
The CMO Guide to Customer Success 2019 13References:
1 https://www.regalix.com/wp-content/uploads/2018/02/State-of-Customer-Success-2018.pdf
2 https://www.mckinsey.com/industries/high-tech/our-insights/subscription-myth-busters
3 https://en.wikipedia.org/wiki/Customer_success
4 https://www.clientsuccess.com/blog/which-is-more-important-fighting-customer-churn-or-
growing-customers/
5 https://blog.hubspot.com/news-trends/customer-success
6 https://sixteenventures.com/success-potential
7 https://sixteenventures.com/customer-success-definition
8 https://www.tandemseven.com/journey-mapping/5-essentials-for-customer-journey-maps/
9 https://www.mckinsey.com/industries/high-tech/our-insights/introducing-customer-success-2-
0-the-new-growth-engine
10 https://www.mckinsey.com/industries/high-tech/our-insights/introducing-customer-success-2-
0-the-new-growth-engine
11 https://www.businesswire.com/news/home/20170913006614/en/DealDash’s-Key-Success-Custom-
er-Obsession
12 https://benhamouglobalventures.com/2018/01/17/digital-transformation-maturity-model-custom-
er-success/
13 https://www.mckinsey.com/industries/high-tech/our-insights/introducing-customer-success-2-
0-the-new-growth-engine
14 https://www.groovehq.com/support/customer-support-statistics
15 https://www.crn.com/blogs-op-ed/channel-programs/300083446/fueling-customer-suc-
cess-with-the-right-mix-of-digital-engagement.htm?itc=Refresh
16 https://www.walkerinfo.com/knowledge-center/featured-research-reports/custom-
ers-2020-a-progress-report
17 http://www.oracle.com/us/products/applications/cust-exp-impact-report-epss-1560493.pdf
18 https://econsultancy.com/reports/conversion-rate-optimization-report/
A/B testing is no longer the most valuable Conversion Rate
Optimization (CRO) method, with customer journey analysis now
taking its place.18
14 The CMO Guide to Customer Success 2019About Regalix
Regalix is a Customer Acquisition and Customer Success company that re-imagines
digital experiences across hi-tech, ad-tech, and retail domains. The company
has partnered with some of the largest global B2B organizations in their efforts
at customer acquisition, growth and retention. Regalix works with businesses,
supporting their customers through the entire journey, to deliver reliable products
and services in today’s subscription-based economy.
Regalix has a long history of creating award-winning ventures with enterprises
through co-innovation and idea-driven frameworks that inspire companies to think
different. Headquartered in the Silicon Valley — Palo Alto, California — Regalix has
offices in Europe and Asia.
For more information
To find out how we can help you, 2200 Geng Road, (US): +1 631-230-2629
please contact us, or visit us at # 210 Palo Alto, (India): +91 80-49445010
www.regalix.com CA 94303 Email: research@regalix-inc.com
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