Customer Success Mastery: A Definitive Guide To Reduce Churn, Increase LTV, and Improve the Customer Experience

High-performing companies excel at keeping their customers .

They apply strong customer success strategies to achieve greater success. Take Apple, for example. After my girlfriend and I took her nieces to an Apple Vision Pro demo, we were blown away and returned weeks later to try it ourselves. The Apple staff made the experience so enjoyable that it strengthened our brand loyalty (and made us happier to spend our future dollars there).

The top companies consistently go the extra mile to exceed customer expectations.

This article is a high-level blueprint for reducing churn, increasing customer LTV, and improving the customer experience.

You’ll learn:

1. The Tony Hsieh Way: How Zappos hit over $1 billion in sales by focusing on customer happiness.
2. Salesforce Pioneering the Customer Success Movement: How Salesforce nearly avoided company suicide and emerged as Customer Success pioneers.
3. Fundamental Customer Success Frameworks: You’ll learn six reasons why you should focus on customer success right now, 10 unbreakable laws of customer success, and the five customer journey lifecycle stages that’ll empower your buyers to achieve peak impact (and maximize your profits).

Let’s get your company where it deserves to be?—?at the top.

The Tony Hsieh Way: Building a Billion-Dollar Empire by Putting Customers First

“80% of management teams felt they delivered a better customer experience than rivals?—?but only 8% of customers agreed.”?—?Bain & Company

Many companies claim they’re customer-centric, but only a handful live it.

“The customer comes first” is a catchy platitude that companies yell from the rooftops. They believe it’ll enhance their public image and make their brand more appealing to potential buyers. However, genuine dedication to customer-centric values is reflected in a company’s culture, behaviors, and budget allocation.

This is one reason I admire the late Tony Hsieh as the CEO of Zappos.

He guided the company to success throughout the 2000s and crossed $1 billion in gross sales. His secret formula was simple: Put customer happiness first.

For instance:

• Zappos would pay employees to quit during the initial training period. This ensured new hires truly aligned with the company’s culture, comprising of people who truly cared about the customers’ experiences.
• While many businesses cut back on customer service expenses, Hsieh invested more in it. Zappos offered free shipping both ways, a 365-day return policy, and 24/7 phone support.
• If they didn’t have a customer’s desired item, employees were encouraged to send them to competitors. Reps would personally locate a store selling the specific shoes a customer wanted. Sometimes they’d even offer guidance on seemingly unrelated things (like giving hotel and restaurant suggestions).

These initiatives were costly in the short term.

As you can imagine, this clashed with Zappos’ board of directors.

Shareholders preferred financial performance above all else?—?ultimately, they wanted a financial exit through an IPO or acquisition. But Tony felt this would’ve destroyed the customer-centric philosophy responsible for Zappos’ success in the first place. He refused to let that happen. So in 2009, he structured an “acquisition” deal with Amazon that helped him preserve the company’s customer-centric ethos. It was an all-stock transaction that allowed shareholders to exchange Zappos stock for Amazon stock, making Amazon the sole shareholder.

The deal was valued at $1.2 billion?—?it helped Amazon expand its footprint in the online retail sector, and it gave Tony and his team more freedom to run Zappos their way.

His innovative approach to customer-centricity continues to influence organizations today.

Dr. Doom & Salesforce: The Birth of the Customer Success Movement in B2B?SaaS

Just as Tony Hsieh’s customer-centric philosophy grew Zappos into a billion-dollar empire, Salesforce built its own billion-dollar enterprise and pioneered the “customer success movement.”

In the spring of 2005, Salesforce CEO Marc Benioff gathered his top executives at an offsite meeting in the serene coastal town of Half Moon Bay. The company seemed to be doing great. They had a successful IPO the previous year, nearly 20,000 customers had purchased their CRM solution, and their market cap reached $500 million. Everyone was celebrating Salesforce’s success.

That is, until David Dempsey delivered a presentation that earned him the nickname “Dr. Doom.”

Dempsey was tasked with bringing Salesforce to the European market, and he’d already been working at Salesforce for 5 years.

He stepped up to the podium to share a concerning observation: Customers were leaving the business at 8% per month. This meant that almost every customer was churning within a year. It became clear that Salesforce was in a death spiral. Thankfully, they didn’t punish Dempsey for being the bearer of bad news. Instead it set into motion initiatives that solved their churn problem (and saved the company).

Salesforce elevated “customer success” from a mere concept to a formal organizational structure.

They introduced tangible frameworks that would shape how they retain customers and increase their long-term profitability?—?and many businesses followed suit.

Why Customer Success Is Important Now

“In traditional businesses, the customer relationship ends with the purchase. But in a subscription business, the customer relationship begins with the purchase.”?—?Tien Tzuo, CEO of Zuora

Today, more than ever, we find ourselves at a critical juncture where customer success isn’t just beneficial?—?it’s essential for continued business success.

Here are six reasons why Customer Success is more important than ever.

Reason #1: Customer success is a passive growth?engine.

“One of my big litmus tests for a product I’m going to promote is that I want it to grow on its own. Meaning, that if the only way a company grows is from advertising, and when it stops advertising it goes down… I don’t like that. I like to have passive growth.”?—?Alex Hormozi

Many businesses focus on acquisition to compensate for a bad product or weak customer success practices.

For example, if only 5% of your customers refer more business and 10% churn, then you need to bring in another 5% through acquisition strategies just to maintain your current customer base. But let’s say 20% of your customers refer and 10% churn. At this rate, your business will passively grow 2x without the need for acquisition.

Pairing a strong customer success operation with a great product makes this a reality.

Reason #2: Customer success retains customers and creates second-order revenue.

Jason Lemkin, ex-CEO of Adobe Echosign, coined the phrase “second-order revenue.”

In systems theory, a second-order consequence is an outcome that occurs after the immediate or first-order consequence of an action. Consider a company that makes customer satisfaction a priority. Initially, this effort might not directly increase profits. However, because the customers are satisfied, they are likely to keep buying in the future (and refer others). This continued loyalty brings in recurring revenue for the company.

And companies that increase customer retention rates by 5% increase profits by 25% to 95%.

Reason #3: It’s more cost-effective to retain existing clients than to acquire new?ones.

Depending on the industry you’re in, acquiring a new customer can be anywhere from five to 25 times more expensive than retaining an existing one.

You must put time, energy, and financial resources into acquiring customers. And if you have a marketing and sales team, you’ll need to pay them for their efforts too. These costs vary depending on how complex your acquisition process is?—?advertising, SEO, sales funnels, webinars, copywriting, educational material, in-person events, SDRs, sales closers, and so on.

Fewer resources are required to retain a customer.

Reason #4: Power has dramatically shifted from the seller to the?buyer.

The subscription-based business model shifted power from the seller to the buyer.

If customers stop getting value, then they’ll leave you and switch to a competitor. Now, the customer relationship begins after the initial purchase. This means that the long-term success of a business relies on customer lifetime value (rather than a one-time sales event).

And this puts pressure on businesses to provide recurring value to achieve recurring revenue.

Reason #5: Customer success applies to more than just subscription businesses.

Even in a non-subscription business, repeat business is key.

Customer success is just another way of saying “loyalty creation,” and this is fundamental for every business. There are two types: Behavioral and attitudinal. Behavioral loyalty is simply helping customers achieve the outcomes they’re paying you for. It focuses on creating a rational impact. On the other hand, attitudinal loyalty is when you create an emotional bond with customers, leaving them with memorable and shareable experiences.

Both are powerful. But attitudinal loyalty will produce raving fans.

Reason #6: Customer success drives business improvements across the entire organization.

Customer success can drive business improvements across marketing, sales, and the product roadmap.

Customer advocates emerge from a strong customer success strategy. These advocates provide social proof through testimonials, reviews, and case studies.

And social proof is one of the best marketing and sales tools at your disposal. You’ll be able to give your marketing team excellent material for attracting prospects’ attention. You’ll also be able to accelerate deal cycles, as your customers’ success stories can nudge prospects to buy. And let’s not forget about the additional sales you can bring in from getting existing customers to buy more stuff.

In terms of the product roadmap, Customer Success Professionals are on the frontlines gathering raw feedback from the voice of the customer. You can leverage these insights to make strategic tweaks to your product?—?changes that will truly resonate with your customer base and deliver more value.

All these improvements drive acquisition, growth, and customer loyalty.

10 Proven Laws to Reduce Churn, Increase LTV, and Improve the Customer Experience

Now that we understand the importance of customer success and its role in business growth, let’s delve into the principles that govern the post-sales journey.

Customer Success by Nick Mehta, Dan Steinman, and Lincoln Murphy explores this topic thoroughly. They compiled 10 laws of Customer Success, each authored by different experts. These unbreakable laws will help you turn customers into raving fans who can’t wait to buy from you again.

Here are the 10 laws:

Law 1: Sell to the right customer.

Dave Kellogg, a successful thought leader in the enterprise software space, once claimed that “ninety percent of all churn happens at the time of sale.”

If you’re selling your product or service to the wrong customer?—?the one who doesn’t need what you’re offering or isn’t quite the right fit?—?then you’re setting yourself up for failure. It’s like starting a complex puzzle with the wrong pieces. You’ll waste money while taxing your team’s time and ability. And this is why the Acquisition and Customer Success teams should be aligned.

If you sell to the wrong customer, the Customer Success team will just inherit accounts that are likely to churn due to a mismatch of expectations or needs.

Law 2: The natural tendency for customers and vendors is to drift?apart.

Imagine two boats side by side in the middle of a lake?—?one is you, and the other is the customer.

Due to the natural currents of change and external forces, these boats will naturally drift apart if left unattended. Ideally, you’ll want skilled rowers in each one, dipping and rising their oars together to keep the boats aligned. This coordinated effort ensures both parties navigate the waters in unison.

In practice, you can do this by figuring out where customers might churn and deploying playbooks to keep them happy.

Law 3: Customers expect you to make them wildly successful.

Customers are holding you to high standards?—?they want solutions that’ll help them reach their goals with more certainty, speed, and ease.

There are three things you need to know before helping customers be wildly successful. First, get clear on the key metrics they’re using to measure success. Second, determine if they’re achieving success with those metrics (or on the right trajectory). Finally, audit how enjoyable their experience is along the way.

Failing to understand this will make you less equipped to help your customers become wildly successful.

Law 4: Relentlessly monitor and manage customer?health.

Good customer health boosts your chances of renewals and upsells.

Poor customer health, on the other hand, reduces these opportunities. You’ll want concrete ways to measure customer health?—?product adoption, engagement, survey scores, and so on. Proactively monitor it. Then act to manage churn risk when a customer’s health is low.

And make sure to do this relentlessly.

Law 5: You can no longer build loyalty through personal relationships.

Your customer success strategy has to mirror the value received from the customer.

You simply can’t afford to throw high-touch CSMs at every customer (especially ones who aren’t paying for premium solutions). It’s not cost-effective, so you must build customer loyalty without relying solely on personal relationships. This means you must build value through one-to-many vehicles?—?specifically with your lower-touch and tech-touch customer segments.

Some of these vehicles include email campaigns, webinars, community, user groups, events, and a well-designed product.

Law 6: Product is your only scalable differentiator.

A well-designed product or solution is key to customer retention.

And customer success is perfectly positioned to support this. By building programs that drive community, engagement, and customer feedback loops, you’ll better understand how your product is being used. These insights empower you to make product tweaks and changes that will add more value.

Such efforts turn customers into raving fans.

Law 7: Obsessively improve time-to-value.

Nowadays, customers expect to see value within shorter time frames.

If you take too long, they’ll go to a competitor who can deliver value quicker. Establish concrete success measures on day one. Then help your customers reach the simplest measure of value first (focus on the others later).

Every day matters, so obsessively improve time-to-value.

Law 8: Deeply understand your customer?metrics.

It’s crucial to understand the customer metrics responsible for increases or decreases in recurring revenue.

Detailed metrics provide valuable insights. The more granular your understanding, the better. Even a 1% increase in churn can significantly impact your business’ growth rate.

By deeply understanding your customer metrics, you can make informed decisions that enhance customer satisfaction and ultimately drive your company’s success.

Law 9: Drive customer success through hard?metrics.

While the previous law provides a holistic view for strategic planning, this one helps Customer Success Teams execute on targeted insights.

You get what you measure. So it’s important to identify what matters and focus on those key metrics. Net retention is the most important one. But since it’s a lagging indicator, you should also monitor upstream metrics that influence it.

These include health scores, engagement levels, number of triggered actions, and so on.

Law 10: It’s a top-down, company-wide commitment.

Great companies have customer success in their DNA.

Putting customers first sounds good but isn’t always easy. Everyone must be in alignment?—?the board, CEO, and all departments within the company. Teams could even be rewarded and incentivized based on retention metrics.

Customer success is more than a department, it’s a company-wide commitment.

How To Apply Customer Success to the 5 Stages of the Customer Journey Lifecycle

Wayne McCulloch has over twenty years of experience in Customer Success, having worked at top companies like Salesforce and Google.

In his book The Seven Pillars of Customer Success, McCulloch highlights five fundamental stages of the customer journey lifecycle that occur post-sales: Onboarding, adoption, retention, expansion, and advocacy. Understanding these stages provides a strong framework for delivering customer success at scale.

Here are the five stages of the customer journey lifecycle and how to apply customer success principles to each one.

Onboarding: Stage 1 of the Customer Journey Lifecycle

“Customer onboarding is jointly defining a Customer Success Plan together and proactively guiding a customer to achieve value one in the fastest possible time.”?—?Wayne McCulloch

Onboarding is your first opportunity to start the customer relationship on a strong foot (or plant seeds of churn).

A major reason customers churn is due to not seeing the value promised by sales and marketing. A bad onboarding experience turns the entire customer journey into a game of catch-up rather than a game of leadership. It’s like starting a relay race by fumbling the baton. You spend the rest of the race trying to regain lost ground, expending extra energy just to catch up.

So what exactly does it mean to onboard a customer?

There are three key objectives:

1. Guide the customer through a Customer Success Plan. This is a blueprint tailored to each customer’s unique needs and goals. It encourages proactivity and defines the path to success. Developing success plans early in your customer relationships will prevent fires from starting and empower CSMs to provide maximum value.
2. Get the customer their first win. McCulloch calls this “value one.” It’s basically the first opportunity where you can deliver value after they’ve purchased your solution and is defined in the Customer Success Plan.
3. Help them achieve value one in the fastest time possible. Remember, obsessively improve time-to-value.

You’ll want to make the entire onboarding process feel easy for your customers.

Adoption: Stage 2 of the Customer Journey Lifecycle

“Customer adoption is achieving operational dependence, while simultaneously achieving business value by using the right features and functionality of the solution.”?—?Wayne McCulloch

Onboarding is a finite stage that ends once your customer achieves “value one.”

One of the main responsibilities of Customer Success is to eliminate churn. If you lose them, you lose future revenue for the business. So we need to create recurring value and help customers achieve multiple wins. Customer adoption is the next stage where you can gain leverage and accomplish this.

Adoption is an infinite stage?—?it requires constant effort to ensure customers keep gaining value and deepen their loyalty over time.

You’re trying to achieve two things with adoption: Reinforce operational dependence and drive value.

Operational dependence means your solution is something customers can’t live without (think Apple, Google, or Amazon). And it must also help customers maximize value and achieve the outcomes they want.

McCulloch highlights three key phases necessary for successful adoption:

1. Define the path to success. This is where your Customer Success Plan comes into play. Be willing to tweak the plan if a pivot is needed to ensure continued value and satisfaction.
2. Understand KPIs, value metrics, and triggers. Moments of Truth and Playbooks can be used here. Moments of Truth maps out the customer interactions along the post-sales journey?—?it tells us when we should be deploying playbooks. These playbooks are basically frameworks and procedures that address specific customer use cases.
3. Execute and ensure adoption happens. While you’re taking action, use Customer Health Scores to monitor your customers’ progress. These scores indicate the probability of retention and help Customer Success Professionals be more proactive.

Ask yourself, “Is the customer using the power of your solution to achieve their goals?”

Retention: Stage 3 of the Customer Journey Lifecycle

“Customer retention is the carefully orchestrated process whereby the customer chooses to extend their relationship with you.”?—?Wayne McCulloch

Customer retention is the most insightful metric that reveals whether or not we’re doing a good job.

As Customer Success Professionals, we’re tasked with sustaining customer value and building strong relationships. The long-term success of every business depends on it. The goal in this stage is to make sure there are no surprises at renewal time.

So how do we increase the odds of customer retention?

Wayne McCulloch breaks down the conditions needed to achieve this:

1. You’ve successfully deployed strategies, activities, and playbooks. This entices customers to stay because you’ve helped them achieve their desired outcomes. It’s also essential to ensure they recognize the value they’ve received and the progress they’ve made.
2. The customer is in control and must choose to stay. They’ll base their renewal decision on the positive experiences and value they’ve received thus far. Retention is won upstream during onboarding and adoption.
3. A history of value isn’t enough. Customers who believe you can deliver future value are more likely to extend their relationship with you.

Losing a customer has larger ramifications than just lost revenue?—?you miss out on upsells, valuable feedback, and inadvertently strengthen your competitors.

Expansion: Stage 4 of the Customer Journey Lifecycle

“Customer expansion occurs when a customer finds value in your solution and grants you the opportunity to increase that value.”?—?Wayne McCulloch

Customer Success is a growth engine for expansion.

Every business aims to financially expand its customer relationships. By expansion, we’re referring to a customer advancing to the “next level” with your offer suite. These are upsell and cross-sell opportunities that continue to drive value.

Here are the four phases of a winning expansion strategy:

1. Identify and engage the stakeholders. This should happen throughout the onboarding, adoption, and renewal phases. Build trust, develop relationships, and create more interest.
2. Identify priorities and areas of improvement. Familiarize yourself with the customer’s challenges and priorities. Then do your research?—?create a knowledge base of market trends, use cases, and any resources that will help your customer.
3. Share (uptell) your research and findings with the customer. If you find windows of opportunity, share them with the relevant stakeholders (market trends, success stories, etc.). This will plant seeds for upsell or cross-sell opportunities.
4. Confirm financial viability and capture the CSQL. If a customer is financially qualified and interested in expansion, move them to the sales cycle as a Customer Success Qualified Lead. This is key. CSQLs demonstrate how Customer Success tangibly impacts revenue and profits.

Know the stakeholder, identify windows of opportunity, connect the stakeholder with your findings, and bring in more sales.

Advocacy: Stage 5 of the Customer Journey Lifecycle

“Customer advocacy is a competitive advantage for your company because it assists in the acquisition of new logos and solidifies existing customers through a multitude of assets and programs.”?—?Wayne McCulloch

Customer advocacy can happen at any point of the customer journey?—?during onboarding, adoption, renewal, or expansion.

And Wayne McCulloch points out 5 key benefits to it:

1. Competitive advantage. Customer advocacy demonstrates the truth of your company’s promises. Clear and honest testimonials, reviews, and case studies make your company stand out (showing potential clients what you’re truly capable of).
2. Accelerates deal cycles. Real stories from real customers are the best tools in your marketing and sales arsenal. They persuade the doubtful, speeding up the decision-making process.
3. Helps with retention. By sharing how others have succeeded with your solution, you encourage dialogue with existing customers. Seeing the tangible benefits others have achieved inspires them to continue engaging with your business.
4. Helps with expansion. Similar to retention, you can use success stories to introduce customers to additional products or services in your offer suite.
5. Provides insights. Testimonials, reviews, and case studies reveal what customers are actually thinking. This is useful feedback for improving your customers’ experiences (and the product roadmap).

Deploy strategies to identify, nurture, and engage customer advocates so they can promote your brand.

Where Do We Go From?Here?

You're falling behind if you’re not obsessing over your customers’ success.

Tony Hsieh and Marc Benioff didn’t just adopt this mindset?—?they built billion-dollar empires on it. Pivot to customer-led growth. Reengineer your processes, reshape your culture, and realign your metrics so that every single thing you do advances your customers’ success. Do this, and watch as your business transforms into a powerhouse of growth and profitability.

The future of business belongs to those who make their customers the main character of the story.

Original article published HERE .

Resources:

• The Seven Pillars of Customer Success by Wayne McCulloch
• Customer Success: How Innovative Companies Are Reducing Churn And Growing Recurring Revenue by Nick Mehta , Dan Steinman , and Lincoln Murphy
• Delivering Happiness: A Path To Profits, Passion, and Purpose by Tony Hsieh