The CXO Guide Customer Success 2019 - Regalix...The early days of customer success as a formal discipline can be traced back to the mid-2000s. After having invested significantly in

The CXO Guide

Customer Success 2019

www.regalix.com

March 2019

2 The CMO Guide to Customer Success 2019

The 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.

The CMO Guide to Customer Success 2019 3

Clearly, 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).

Growing companies are more likely to prioritize customer success

Figure-1

Growing companies prioritize customer success

Making the company’s customers successful

Company revenue is growing Company revenue is

stagnant or decreasing

Please rate the following statement in terms of importance for your company:

70%

Very important

49%

36%

14%

1%

25%

3% 2%

Important Neutral Not important

Source: HubSpot5

Best practicesHere 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


they 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.


Figure-2

Journey map wealth management

Stage Research

Goals

Activities/touchpoints

Opportunities

Legend Moment of truth Experience Value to customer

Decide on a service/account which works best for me

Ask for advice or recommendation from family and friends

Make an appointment with an FA Contact FA and finalize investment plan

Receive check-in call from FA Meet with FA to review account performance against investment plan to ensure it’s on track

Learn about services/accountoptions at current and competitor banks

Open my account with theselected firm

Grow my investment account Easily adjust investmentapproach as needed

Evaluate and compare Commit Use and monitor Refine and review

Research investment services/account options at current and other banks

Meet with my current banker

Provide jargon-free wealthmanagement information or links within the info to definitions of the terms being used

Provide comparision view ofwealth management services/accounts

Receive and review investment plan from FA

Receive application approval

Transfer funds from different accounts

Meet with FA to walkthrough the account set-up and services

Meet FA to discuss needs, goals,and dreams

Receive and review investments plan from FA

Compare investment plans gathered from severals FAappointments

Look up FA references andcredentials online

Manage and monitor the account

Receive monthly accountstatements/notices

Call FA when I don’t understand something about my accountactivity/statements

Meet with FA to refine investment approach if a live event has occurred

Receive refined investment approach for approval

Review and approve refined investment approach

M

L

Pre-qualifier questionnaire providescustomers with time to think throughtheir goals, needs, etc. prior to theinterview

Educational short video to help customers understand investing and process to open accounts

H

H

Account application is pre-populatedbased on questions asked at preliminary FA meeting

FAQ for account-opening processand funding

M

L

Ability to view investment planagainst current account performance

Reduce financial jargon in account statements

H

M

5-minute online education video, which explains graphs and charts,portfolio, etc.

L

New FA transition period neededprior to current FA leaving

Tools which allow the customer toexplore investment options/approaches

H

H

H

Educational webinars or videos

HighPositive Neutral NegativeMMedium

LLow

L

Source: tandemseven8


A 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.


Figure-3

The emergence of Customer Success 2.0

Customer Success 1.0 2.0Customer Success

Focused on churn reductionand risk management

Emerged from SaaS companiesfocused on complex businessapplications

Recognizes customer successcan be a growth engine

Used by companies across a range of B2B sectors to change the approach to customer lifecycle management

Customer success is becoming a growth engine that extends beyond Software-as-a-Service (SaaS) business

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.


Many 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

Identify

Link customer outcomes to capabilities and intrinsic characteristics of customer success managers

Embed data-based view of desired skills into recruitment process

Identify untapped pockets of talent with advanced analytics and external networks

Develop customer- learning journeys that build capabilitiesover time, taking individual starting pointsinto account

Create certification programs that reflect skill levels and create paths to progress

Create career pathsthat offer meaningfulrewards and progressionfor mastering skills

Use data to identify andsupport talent at risk ofleaving

Companies that want to build a world-class customer success organization must create a talent engine that has four pillars

Attract Build Retain

Source: McKinsey & Company10


Picture 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.


Transparency

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


86 percent of buyers would be willing to pay a premium for a product or service that offers them a better customer experience.17

Deeper 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.


Some 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.


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 aheadCustomers 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.


References: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


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/


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

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About RegalixRegalix 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.

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The CXO Guide Customer Success 2019 - Regalix...The early days of customer success as a formal discipline can be traced back to the mid-2000s. After having invested significantly in