What Is Customer Success?
Customer success has become a buzzword for marketing departments of all shapes and sizes. But it’s so much more than that. Helping customers succeed is not a new idea, but many companies are implementing customer success as a proactive standard of business and marketing operations in recent years. So, what exactly is customer success, and why is it such a hot topic?
Let’s use you as an example: Your business needs effective sales and marketing to be successful. But in today’s competitive market, customers have endless options, so sales and marketing alone aren’t enough to maintain continuous growth. So, what are the most successful businesses today doing to succeed? You guessed it: customer success!
Customer success is the effort a business takes to help its customers succeed with its product or service. This means ensuring that customers are using a product or service to achieve a desired outcome, whether it’s a business goal or a personal milestone. Customer success teams take a proactive approach to help customers use their product more effectively so they can achieve their top goals, including:
- Reducing churn
- Increasing sales and revenue
- Increasing customer loyalty and retention.
For SaaS and many other subscription-based businesses, customer retention is vital for growing their monthly recurring revenue. After all, increasing customer retention by only 5% boosts profits from 25% to 95%! Customer success increases the chances that customers will stick around when they are successful with a product.
Why is Customer Success Important?
The truth is that acquiring a new customer can cost five to 25 times more than retaining an existing customer. And with the great risk of customer churn in a highly competitive SaaS market, customer success is critical. When customers successfully use a product, they’re less likely to switch to a new provider; this is especially true when they’re also receiving excellent service.
It’s safe to say, the growth of SaaS and subscription-based business models is one of the biggest driving factors for the increased attention on customer success. Instead of selling one-time deals to customers, an increasing number of companies are selling monthly subscriptions. With the need to justify renewing every month, customers need to see value and success from using the product.
When a company falls short, only 1 out of 26 unhappy customers will contact customer support to complain, and the rest churn. So, a business stands to lose a lot if they’re not in contact with their customers, asking for feedback and ensuring their customers successfully use their product.
By proactively identifying and eliminating potential customer problems before they arise, customer success gives your business a better chance of retaining more customers. Customer success can reduce churn, increase renewals, and drive revenue in the upwards direction when done right.
Customer Success vs. Customer service
To be clear, customer success is not the same as customer service or support. There are several differences between the two, but an easy way to differentiate them is:
- Customer success is proactive
- Customer support is reactive
So, customer service and customer support teams respond to inbound communication and requests from customers. Whereas the customer success team proactively works to eliminate customer issues or problems before they arise.
How to Achieve Customer Success
Instead of completing a sale and letting the customer aimlessly use your product, the immediate goal should shift to ensuring your customer finds value in the product or service and continuously sees results. The customer success team’s focus should be on strategically developing a great relationship with the customer.
Savvy companies don’t leave the customer’s success to a roll of the dice. Instead, they brainstorm and plan a customer success strategy to:
- Understand the customer’s wants and needs for their product or service
- Discover each customer’s goals
- Develop strong relationships
- Work with the customer to ensure success
The customer success team is the point of contact for anything the customer needs throughout their product use. There are some things needed to make customer success work well, such as:
- Knowledge of when and how customers are using the product.
- A good understanding of each customer’s business and goals.
- Available experts to guide customers on how they should use the product to succeed.
Identify Churn and Take steps to Prevent It
Monitor metrics like the lifetime of a customer, usage frequency, renewal rates, and time of churn to identify when and why customers are churning and take steps to prevent it. The main reason customers churn is that the product or service isn’t meeting their needs. Therefore, the best way to reduce churn is to identify customers who are at risk of churning early, so there’s time to implement customer success interventions to get them to stay.
A customer survey can reveal valuable insights into the customer’s success and allow the customer success team to improve overall customer satisfaction. Other valuable metrics to track customer success include:
- Frequency of usage (how often the customer uses the product or service)
Customer support metrics should include data such as:
- The number of customer support requests: Customer support requests could be through calls, emails, social media, in-app, SMS, or website.
- First-contact resolution rate: Customers want problems resolved in as few contacts as possible, with one being the goal.
- Average time to resolve a customer support request: Let’s face it, advanced technology has made us all a little spoiled, Millennials especially. We just don’t like to wait to get help with a program or app, so the quicker the resolution, the increased happiness and success of the customer.
It’s a great idea to conduct exit interviews with customers who have downgraded or churned to get more insights into motivations than brainstorming solutions. Besides customers’ needs or expectations not being met, other top reasons for customer churn include:
- The customer no longer needs the product
- Customer find lower-cost alternatives that meet their needs
- Customers went with a competitor
- Poor customer service experiences
Companies can identify any red flags that indicate a customer is at risk of churn by studying the usage patterns of previous customers who have churned or downgraded.
Customer Success Management
Customer success management oversees the customer success team. That group helps develop and maintain effective strategies to proactively help customers achieve success to gain a large following of loyal clientele and reduce churn.
Customer success management is crucial to the success of an organization since it directly impacts customer retention rates and the rate of cross-sells and upsells.
Key Responsibilities of a Customer Success Manager:
- To ensure customers are getting the help needed to get the most out of the product or service to increase client retention
- To analyze the feedback to get a better understanding of areas that need improving, then implement changes to achieve total customer success
- To help develop the organization’s customer success strategy that will keep customers actively engaged
- To proactively encourage customer feedback, whether it be through direct questioning or customer surveys
- To hire, train, and motivate customer success representatives on the best practices for client engagement and retention as well as the use of the product or service
- To assist in the development of future products that will increase revenues and add to the customers’ success
- To segment the customer base by certain factors, such as subscription type, product adoption, and business size, so the customer service team can better help customers succeed
- To analyze retention rates, so they know the effectiveness of the customer success strategy
- The internal organization of a customer service team should be based on the needs of the customer and team, the size of the organization, and the complexity of the product.
Form a Successful Customer Success Strategy
Yes, all B2B and SaaS companies with subscription-based plans should have Customer Success strategies in place. But every company needs customer success, not just B2B and SaaS. Whenever there’s a risk of frequent customer churn, the difference in having a customer success strategy or not can make or break an organization.
Customer success strategy isn’t one size fits all. Every company will have its own approach. Some organizations have a separate department dedicated to customer success, while others combine the discipline within all areas and departments.
The Final Word
Customer success is critical to scale a business. If a customer gets value out of a product because it meets their needs, they’re more likely to renew. On the other hand, if the product doesn’t satisfy a customer and their needs are not met, or they receive poor service, there’s a high chance the customer will churn in this extremely competitive market. Having a dedicated team that solely focuses on customer success and implements effective strategies will increase customer retention and revenue.
Are you in need of a customer success team to keep your customers and take your business to the next level? Then contact Awesome OS to get started today!