Not Just For Breakfast Anymore

Customer Success: Like beer, it's not just for breakfast anymore. In fact...What the hell is Customer Success anyway and why is it so tailored for SaaS and Technology?

As I continually work to build Portland Customer Success, I host MeetUp after MeetUp, attend OEN events, Portland Business Alliance luncheons, TAO Happy Hours and one thing rings true: Customer Success as a business strategy is not very well understood.

This isn't a surprise considering as a discipline CS is still a baby. We're just learning to walk from a crawl and thus we shouldn't expect others to have the same comprehension levels as say...Marketing? Sales? Support? Product? C-Suite? Anything? No other org is a baby like CS...We're the New Kids On The Block (NKOTB For Us Real Fans) and it's our job to evangelize the discipline. At the very least we should get some killer shorts, an awesome haircut and steal Sonny Crockett's jacket.

Two questions I hope to clear up in this article... 1: What is and is not Customer Success? and 2: Is it just for SaaS, or could we implement CS methodologies and strategies outside of the technical, SaaSy world?

What Is and Isn't Customer Success? I find most folks feel Customer Success is like this image. A happy hug between a vendor and a customer. A loving look of admiration from one to the other. A beautiful relationship between two humans brought together by destiny to build something great. One loves the other because they help solve a pain point. It's "soft skills" and "relational"...All of which is important and necessary - so although I won't say this isn't CS...I will say - It's a MUCH smaller % of what makes CS critical than most realize. Yes, CSMs need to build incredible relationships and solve their customer's pain points. Yes, retention is numero uno on the CS KPI chart but unfortunately...This is blocking and tackling stuff. This is basic. This isn't going to generate exponential (or even any extra) revenue. This isn't a business strategy. This is just going to protect the revenue you have. Great. We kept what we earned. Good job. You're supposed to do that. Now what? There must be more to it, right?

Of course there is...In fact - There are two very important revenue streams we're missing: Expansion & Advocacy.

Expansions are the cross-sell/up-sell strategies we're all so familiar with. If you are providing your customers with a killer product and amazing service it should always be in their best interest to buy more of it. Expansion into more of your offerings should only provide them more value. That said, anticipate their expectations will go up because the more they spend, the more they should expect. So...sometimes maybe additional expansion isn't the right lever to pull. Sometimes...like rarely ever but sometimes. If that is the case, there's additional unpacking necessary to figure out why. For example: have they been under-satisfied for some time now? If so...maybe don't raise any expectations until you've sailed over the bar repeatedly and regained their trust. Is the additional product or service fully baked? Are they not exactly an "early adopter" style customer? Probably don't want them to buy that "bleeding edge" bell or whistle - probably want to work with a bit more agile customer in your base. Regardless...Expansion and Customer Success are like peas and carrots. Although, it's a bit more advanced than the Retention KPI, we're still not talking about a cutting edge, extreme revenue generation mechanism that Customer Success could and should drive.

That KPI is Advocacy. Advocacy is the promised land of Customer Success driven growth within your organization. Not only are you going to Retain and Expand your customers...You're going to partner with your customers to get NEW customers! New customers via Customer Success Advocacy have a much smaller Customer Acquisition Cost (CAC), vastly higher margins, close at a ridiculously increased rate, generally are more satisfied and "stickier" to your organization because they already have a sense of congregation. They came to you from a satisfied customer, someone they trust and know, so for them and their direct relationship with you as a vendor...you're the bees knees on day one. They automatically begin with a higher sense of trust in you, that's why they bought in the first place. So, as a Customer Success organization, we're setup for our own success in ways traditional sales and Net-New customer acquisition will never be able to create. Retention and eventually Expansion will be way easier to implement for customers acquired via other customers. For all the same reasons they start from a psychologically more positive position than traditional Net-New, we have the inside track in helping them become wildly successful via our offerings. I've previously written about this concept in my Helix Model article (minus the psychology). A great Customer Success leader will get really creative in how they incentivize their greatest customers to bring in new business. Every new customer you can bring in through CS Advocacy is (almost) immediately profitable. It's the closest thing to On-Premise/Up-Front cost software sales as we'll ever see again in this SaaS future we all face. Lifetime Value goes through the roof, CAC decreases exponentially, the cost to serve should even be less than a traditional net-new - and thus your margins skyrocket.

All of that said...Does this really apply only to SaaS and Tech? Why? Isn't everything a subscription now? Your clothes. Your food. Your entertainment. Your car. Every industry is moving to subscription based recurring revenue models. So every industry should practice Customer Success. I don't know any market space today that survives (and certainly doesn't thrive) on single purchase customers. Everyone needs a customer to come back over and over and over until they recoup the CAC and with any luck make a high enough LTV to be profitable on more customers than not. That's the long story short: Attain enough revenue from your customer base as a whole, to pay for itself. Ideally in a huge way. This is what I'm doing in Portland. Taking Customer Success out of Tech and SaaS and applying proven and defined methodologies to other industries. Everything is a subscription today. Luckily for those of us in CS, that means every business better be thinking of recurring revenue and how to unlock their margins. Of course all while helping Marketing retarget to the most successful verticals and spaces. Handing off warmer leads to Sales. Providing roadmap insights and Product feedback directly from the users. Not to mention surfacing Business Intelligence and data-driven suggestions to the C-Suite via Customer Health Scoring.

Customer Success: Not Just For Retention and Expansion Anymore - Innovative leaders put CS firmly in the center of their business strategies and allow the cross-departmental expertise to make everyone in their organization better. Including the customers and partners. All the while, driving revenue and overall company performance through the roof.

Phew...Who needs a beer? I mean breakfast. Cheers!