Happy New Year!
Never has there been a more exciting time to be in Customer Success!
The industry continues to evolve and mature rapidly and the pace is only increasing.
It was not that long ago when companies once needed educating on the term Customer Success and what the function does.
Now, businesses across the board and in every industry, recognize that Customer Success is an operational imperative for their growth strategy and a key competitive differentiator.
This focus has caused companies, leaders and practitioners to collectively make great strides in advancing how customers realize value from their investments.
I view 2019 as an especially pivotal year of rapid advancement for the industry having witnessed step-wise improvements in the practice across the globe.
Vendors are diligently outlining their customer journey map to better understand customers - an exercise previously considered frivolous - developing their customer success playbook to better align to servicing their needs, and becoming more disciplined in the management and measurement of customer outcomes.
But we can’t rest on our laurels.
As customers get bombarded by an ever-increasing number of products claiming to solve their various challenges, Customer Success will continue to feel the pressure to operationalize and quantify the value proposition promised during the sales cycle in order to keep and grow customers.
So where do we go from here?
Below I reflect on some of the key Customer Success motions in 2019, the general challenges still plaguing the industry as well where I believe Customer Success needs to head in 2020.
SaaS Customer Success Best Practices & Where to Go Next
• Journey Mapping to Holistic Understanding: Customer journey mapping appears to be common practice now. Organizations are using these to better understand their customers to align servicing those needs accordingly. However, the majority of these maps are still very vendor centric, focusing specifically on product usage. These maps neglect to consider the customer’s total business and how they are trying to leverage the product to achieve business outcomes. The next step for improvement companies will want to focus on is mapping out the entire customer journey from the customer’s perspective. We need to be mapping the customer’s desired path, not product activities in order to have the holistic and complete understanding of the customer.
• Developing Playbooks to Support Intelligent Activity: Playbooks are being developed but they are still in their infancy. When customer journey maps are focused around product usage, plays tend to naturally support product activity vs intent. This often leads to disparate service interactions compelling the Customer Success Manager to react to customer inquiries vs managing the customer to outcomes. The objective of the playbook is to drive efficient realization of value and for that it needs to be based on an operational framework that is founded upon a holistic understanding of the customer’s total business and then align operational execution accordingly.
• Results-Driven Approach to Customer Management & Measurement: With the practice of Customer Success coming into its own, great strides have been made in repeating and scaling the discipline of customer management. Yet with all this progress, less than 20% of companies admit that they are efficient at managing customer journeys. The practice continues to use lagging metrics to focus operational attention. We need to manage the customer funnel analogously to sales and marketing. With DesiredPath’s industry-first metrics and benchmarks, we can, for the first-time post-sales, manage the entire customer funnel to forecast retention and expansion revenue. Vendors will want to know their customer journey cadence and velocity metrics to proactively forecast revenue and manage customers.
Some General Challenges
• Random Acts of Customer Success: Organizations continue to be plagued by firefighting and reactive saves to keep churn at bay. This robs time away from Customer Success Managers and other customer-facing roles to spend on proactively managing the customer through the journey. Worse, plays such as Quarterly Business Reviews, 120-day renewal planning and frequent check-ins become random acts of Customer Success done at the customer, not for them. Simply delivering these “random acts” will not cut it anymore. Leading Customer Success practices are looking for ways to actualize the value proposition into their playbook and maturity model so there is an execution path and narrative for driving ROI and expansion in a disciplined manner.
• Customer Segmentation: Customer segmentation continues to be misunderstood post-sales. Confusion lies in the belief that Annual Recurring Revenue (ARR or similar revenue metric) is key for segmenting. While this makes sense for sales, how much customers pay a vendor is not tightly correlated to what service they need to achieve success. When companies use revenue to solely segment customers they find that their account coverage models are not operating as efficiently as expected. A better way to scale operationally is to first group customers based on the adoption characteristics they exhibit so skill sets of resources can be aligned to accounts appropriately. Then layer in commercials to focus
• Sales Regaining Revenue Control?: At DesiredPath we have noticed the increasing trend of wanting to separate the commercial aspects of customer management from those of the trusted advisor role. Although no one-size-fits-all approach works for every company, we do tend to see the separation of these roles made more based on the power dynamic of revenue ownership within the business than from what’s in the customer’s best interest. We still fundamentally believe that owing revenue and being a trusted advisor are not mutually exclusive. There are pragmatic reasons for both combing or separating these responsibilities within roles. We believe that alignment to the customer’s desired path is still the most effective way to making the call here.
The Year of the Customer
2020 will most certainly be another rapidly moving year for Customer Success.
Companies are increasingly aligning their entire organization around the customer for improved cross-functional collaboration to drive value for customers and to be able to quantify that value for them.
That means Customer Success, typically at the center of this collaboration given their role in driving successful customers, will experience this shift and need to continue to improve how value is realized and quantified.
This appears to be the new frontier and something I have been thinking about a lot lately.
Value realization and quantification of value is difficult to determine and justify.
What resonates with customers and in a scalable manner?
I believe the answer lies in tying maturity models to value propositions and weaving those into the playbook so there is a narrative for driving Return on Investment (ROI) and expansion in alignment with the customer’s desired path for optimal operational effectiveness.
As the year unfolds, I will be sharing my thoughts with you as we at DesiredPath look to put into practice what we preach.