Customer Success is an organizational culture that values promoting the maximum desired outcome for the customer at all stages of his journey with a company/brand. However, making the relationship permanent and lasting with the company.
"Customer Success is when your customers achieve their Desired Outcome through their interactions with your company."Lincoln Murphy, world reference in Customer Success
This strategy is applied throughout an organization by the Customer Success area, managed by Customer Success solutions or platforms under the responsibility of the Customer Success professional, the famous CS.
Uncomplicated or complicated? Well, the important thing is to understand that the term Customer Success has several definitions according to the context that is being addressed. And also, that it is not just a post-sales strategy or just another gourmetization of an old marketing term.
How did Customer Success come about?
It all started when companies in the Software as a Service (Saas) segment brought a new business model in which customers have the freedom to buy or cancel a service/product according to their needs, without contractual obligations that force customers to stay in a business relationship that does not satisfy them.
This freedom has changed consumer habits, giving more power of decision and making customers more demanding, not only in the act of acquisition but much more in the post-sale of their purchases. Requiring IT companies to be more concerned than ever with the retention and maintenance of customer relationships at all times during their relationship with the company. To increase customer satisfaction and reduce contract churn . From there, a new growth hacking technique for business was discovered.
Why invest in Customer Success?
The main benefits of using Customer Success are to promote increased customer satisfaction rates, reduce churn, increase the Lifetime Value (LTV) of the customer base to generate higher revenue retention, and accelerate the company's growth.
This strategy when properly applied works as a bilateral revenue source: by keeping customers you generate a recurring revenue and these same customers start to increase their average tickets in upsell and cross-sell processes. Besides being a source of new revenue by acting as promoters of the company/brand.
Retaining a customer is 5 to 7x cheaper than getting a new customer.
Research shows that the use of Customer Success can bring many financial benefits to the companies that apply it.
- Every 5% customer retention can lead to a 25% increase in a company's revenue (Bain & Company);
- Sales rates for an already won customer are 60-70%, while for a prospect only 5-20% (Invesp);
- 4.2% increase in annual company revenue (Aberdeen Group);
- 5.6% increase in sales revenue in the customer base (Aberdeen Group);
How to apply Customer Success in practice?
To obtain the results of customer success it is essential that all members of the company have in mind the end goal, who will be responsible for performing each task, what will be the platforms and systems of work to achieve the goals with high performance and all employees are motivated to promote the best experience during the entire customer journey with the company.
The company-wide vision must be customer-centric and implemented in all internal processes. To apply the methodology it is important to follow the following steps:
- Adopt the customer centric and indirect sales mentality;
- Study the customer's buying journey and create CS actions for each stage;
- Identify the real goals of your customers;
- Segment customers by sector to ensure the appropriate experience in each process;
- Segment the customer portfolio by growth potential and customer NRR;
- Implement the customer success strategy in your team, and ensure that everyone knows what is expected individually from each employee and as a team;
- Implement customer success tools and platforms to help map the progress of strategies and decision-making;
- Create the customer success roadmap with all the goals in the short and long term;
- Train and empower your team to develop Customer Success competencies such as attentive listening, non-violent communication, persuasion, technology skills, and emotional balance;
- Analyze the results to ensure that the customer has everything needed to succeed, tools, support, and knowledge;
- Adapt customer success strategies your customer base grows to continue promoting customer success.
How does the Customer Success area work?
The Customer Success area is responsible for ensuring that all customers achieve their desired results with the company's product or service, and that customer success techniques are executed daily and proactively by all employees in all areas of the organization.
The organizational structure of the Customer Success area is relative to the size of the company and the automation resources used, as a reference this is the structure at Gigantic:
Customer Success Manager or Head of Customer Success: is responsible for ensuring customer success. After closing the deal, the sales team transfers the customer service to the CS team. The Customer Success Manager will be responsible for the following activities:
- Customer onboarding;
- Training of the client and his team;
- Frequent follow-ups with the whole team and with customers;
- Analyses of results periodically;
- Proposing process or solution changes to the customer;
- Gather feedbacks from customers about the solution and company;
- Relay customer feedback internally to all involved areas;
- Encourage upsell and cross-sell, if it makes sense for the customer to get the desired result.
Customer Centric: when the company's DNA has the customer as the central element of its business plan, spreading the thought on the customer and his wishes to all the company's activities.
Customer/consumer journey: the customer's path in the relationship with a company/brand, from the first contact until the post-sale or end of the relationship.
Upsell: is the acquisition of a higher level of the product or service contracted by a customer and increasing the average ticket for investment in the company.
Cross-sell: is the purchase of a new product or service from a client, which can be complementary to the service already contracted, and consequently increase the average ticket of the client's investment in the company.
To better understand Customer Success, it is necessary to understand other complementary concepts:
Customer Support : The support is a reactive area that the customer triggers when there is a need for resolution of a specific problem.
Customer Experience: is the perception of value and satisfaction of the customer in every interaction with a company/brand. This is an essential part in conquering customer success.
Employee Experience: is the culture of Customer Success applied to the employee, applied in practices associated with employee valuation as training for individual training according to their functions with principles of value delivery as the culture of customer success and career plans for greater retention of talent economy of internal resources and excellence in project execution.
What tools are used in Customer Success (CS)?
The first step is to understand all the internal processes of the company. What problems and needs need to be solved and select functionalities that should be automated with platforms that help in each step of the process according to the sales funnel.
For the CS area to be able to assess and identify everything that is needed to achieve customer success and see new opportunities for customers and the company, at Gigantic, we use some platforms that together allow a detailed look at the entire customer journey:
How to calculate the benefits generated by Customer Success?
The customer satisfaction index can be evaluated in many ways, but to understand it in detail you need to combine direct CS tracking with the following KPI assessments:
Churn reduction (cancellation rate) : This is the term used for a metric that indicates the number of customers who cancel contracts during a given period.
CHURN RATE = Cancelled contracts (monthly) x 100 Active customers from last month(monthly)
Lifetime Value (LTV): Known as LTV, it is the average revenue that the customer generates during the time they stay with the company. The longer the customer stays doing business with the company, the greater the profit for the business. The goal of Customer Success is to increase this customer lifetime value, i.e. to ensure that each customer stays with the company longer. To understand if your customers are bringing profit to your company, just use the following formula:
LTV = Average Ticket (monthly) / Churn (monthly)
Many other metrics can be used according to each company. Some other KPIs help for Customer Success performance analysis, such as:
Net Revenue Retention (NRR): financial metric calculating the revenue or percentage of customers that the company obtained in a given period.
Upsell and cross-sell rate measures the amount of customers who upsell or cross-sell.
Average revenue per customer: how much revenue each customer brings to the company.
RMC= Consumers of the product or service (monthly)/ Customers (monthly)
Net Promoter Score (NPS): percentage of customers who recommend your services. This is the world's most widely used metric, that question we have all answered at some point:" How much would you refer our company to your friends, from 0 to 10?"
NPS = %promoting customers (grades 9 and 10)
%detracting customers (grades 0 to 6)