What is customer success – the ultimate guide

What is customer success?

Customer success is a method for ensuring customers reach their desired outcomes when using an organization’s product or service. (Gartner).

Alternatively, it’s a long-term, scientifically engineered, and professionally directed business strategy for maximizing customer and company sustainable proven profitability. (Customer Success Association)

At Forsta, we consider customer success as an approach to customer satisfaction that’s centred around the relationship between the customer and the organization and focused on making sure both parties are happy with the outcomes of that relationship.

The goal of a customer success program is to make the customer as successful as possible – and that success is defined differently at each organization, and by each customer. It might be reduced process time, or increasing the number of deliverables achieved per quarter, for example. Finding what defines success for your customer will require you to get their full story. From gathering, to bringing to life, to sharing and using the information to improve your performance. This deep knowledge of your customer will drive their success because you understand their human experience. Sounds complicated, but remember, your north star in this process is what value you are bringing to customers (Forrester).

The first step is to define what customer success looks like for your customer, and this will vary depending on their desired business outcomes as well as their approach to the relationship between them and you.

Once you’ve defined what success looks like, you’re in a good place to define and deliver on each of these aspects:

1. Technical delivery and implementation
2. Knowledge enablement
3. Growth opportunities
4. Identifying churn risk
5. General account management

Customer success concepts

Because every organization is different, and every customer unique, it’s hard to define core concepts for a product customer success program. But some have tried!

Sam Hilgendorf offers these four simple concepts to define customer success capabilities.

1.     Your organization’s definition of customer success
2.     Trusted and knowledgeable customer servants
3.     Tools that identify trends and perform analytics
4.     Goals and metrics that show impact

Once you’ve defined exactly what customer success looks like for your customer, you can move onto building these three capabilities.

Of course, you can’t run a customer success program without a customer success team. So, spend some time figuring out who in your organization is already helping customers achieve their business outcomes. That way you can define the required knowledge, skills, and temperament for an ideal customer success team member, also known as account managers in some organizations. As you build out your customer success team this framework will help you to hire the right people more easily.

Now you’ve got your people, it’s time to sort your tools. A productive customer success program needs a solution that can build out and maintain customer profiles, store lifecycle data, and offer analytical capabilities to identify both at-risk customers and opportunities to increase customer lifetime value.

When your customer, your people, and your tools are all in place, you need to decide what metrics will best show how your program is working. These could be customer lifetime value and retention, or the metric that ties to your definition of customer success.

Why is customer success important?

Your customers are more than ever able – and willing – to switch vendors at the drop of a hat, or the mere suggestion they’re not getting great value. The methodologies behind customer success are gaining more momentum as companies increasingly focus on ensuring customers use products and get value from them. Think of how many apps get purchased, downloaded but never actually used… For B2B organizations, this can represent millions in revenue that’s about to go out the window – because they’ve not checked how their products are used, and if they deliver the value their customers expected.

Every organization is looking to improve customer retention and CLV (Customer Lifetime Value), but they sometimes lose sight of the fact that this goal can only be achieved if the customer sees value and agrees your product or service is helping them achieve the goal they had in mind when they made the initial purchase. Only then will they stay or renew, buy more, and maybe even recommend others.

What is the definition of customer success management?

Customer success management is a combination of all the processes an organization has in place to strengthen the relationship it has with its customers to reduce churn, improve share of wallet, and even drive new revenue.

How does customer success work?

There’s no shortage of methodologies and business books that cover the topic, but your Customer Success model must have some key elements in place for it to deliver results:

• A defined and clear customer engagement strategy, including the right processes and technology to underpin this engagement
• A dedication to hire the right team members (often called CSM’s – Customer Success Managers), committed to delivering success for their customers first and foremost
• A culture of empowerment within an organization with access to the right information, in real time, including customer feedback and financial history

What technology can be used for a customer success management program?

A successful Customer Success Management program usually uses multiple technology solutions within your organization, to empower the right people to nurture a relationship with their clients based on trust, credibility, and a clear understanding of the goals they’ve put in place to define business success.

Such technology solutions usually include:

• CRM system
• Voice of the Customer solution
• Marketing automation

What is crucial here is making sure your customer success managers can see the entire customer journey. By consolidating information from all customer touchpoints, your customer success managers can focus on delivering value to your customers, that’s in line with their business outcomes.

Ideally, your customer success solution should collect customer feedback data from each touchpoint, through any channel. It should also integrate seamlessly with your systems to deliver true insights on the customer experience. With that knowledge, your customer success teams can identify any at-risk customer relationships, further boost current positive relationships, and help drive your customer’s business outcomes.

What are the areas to consider in a customer success strategy?

A successful customer success strategy involves the following:

• Making customer success a key part of the wider business strategy. if it ends up as just another silo, it will fail. Think of your customer success team as ambassadors of your clients, internally driving a customer-centric culture across all departments. From sales, product management, marketing, finance, HR and others, an exemplar customer success team can help bring all your customer’s feedback and behaviour into a priority list of improvements across the entire organization.  
• Keeping the customer at the heart of everything you do. This means understanding how you can really help them achieve their goals and demonstrating value throughout the customer lifecycle. Although it’s important to understand key milestones like implementation or renewal, an effective customer success program should contain a proactive engagement strategy to keep you in touch with your customers.
• Defining metrics that accurately evaluate your customer relationship health. To measure Customer Success, we often look at renewal rates, up-selling opportunities, etc. But metrics like the Net Promoter Score (NPS)®, Customer Effort Score® or Overall Customer Satisfaction are also crucial. Finally, knowing how your customers use your product at a granular level and what feedback they’ve given you along the way (through surveys, emails, social media…), that information will really give you the organization what’s needed to prioritize actions and drive change.

How to build a customer success plan is different for most organizations. But following customer success best practices and defining how the program aligns to your business goals will be key to its long-term viability.

How to design a customer success team?

These are the nine key steps to build a powerful customer success team:

1.     Get senior leadership buy-in to invest in customer success (people and resources)
2.     Define strategy and key objectives of the customer success Team
3.     Define how the team will fit within the organizational structure
4.     Define the customer engagement strategy and all relevant processes
5.     Define key success metrics and how to monitor them (real-time dashboards, alerts)
6.     Hire the right customer success leader
7.     Hire and manage of customer success team members
8.     Define the reporting rhythm (usually quarterly) and format
9.     Act in line with customer success insights to retain clients
10. Review to make continual improvements, especially as changes in the wider business strategy may affect customer success objectives

Frequently asked questions – customer success

Can customer success apply for every business?

The approach behind customer success, and its mission to achieve your customers’ goals to achieve your own, fits most industries, across all regions. But customer success management as a practice has been developed to respond more specifically to the needs of B2B organizations, such as those that operate on a subscription-based model like SaaS software vendors.

Who needs a customer success strategy?

Any business that wants to make money and get results! This may sound flippant, but a customer success strategy can help any business. As we know, for everyone unhappy customer that complains, 25 leave. Reducing churn can have a profound effect on your bottom lin. For example, in financial services a 5% increase in customer retention produces more than 25% increase in company profit. And sometimes that increase soars to nearly 95%. Although that impressive statistic varies across industries, a good customer retention program will repay your efforts in spades.

What is the difference between customer success, customer service and account management?

First, let’s take the case of the customer service department. Its goal is usually centered around customer satisfaction, and therefore its role should be defined within a wider relationship-focused customer success program. But remember the critical goal of customer success goes far beyond satisfaction or customer need – it’s about achieving business outcomes for the client.

When it comes to Account Management, again it comes down to the goal. Account managers tend to be rewarded based on whether they can renew a contract or sell more products and services. While customer success programs deliver these benefits, CSM’s (customer success managers) keep a laser focus on the customer’s business outcomes, not those of their own organizations.

In short customer success doesn’t replace functions like customer service or account management. However, a strategic customer success plan includes these functions as part of the overall engagement strategy.

What is the difference between customer success and customer experience (CX)?

It’s the overall perception that customers have towards a brand based on the cumulative effect of all the interactions (positive or negative) they’ve had with this brand.  

A customer experience program seeks to understand and measure these interactions and improve them, to drive better business decisions and outcomes for the organization. Customer success is very much aligned with this goal, and CSMs play a key role in improving CX across all customer touchpoints.

Historically customer experience has been viewed as more strategic than customer success, seeking to improve the overall perception of a brand or an interaction. Customer success was until recently confined to a more tactical, product-oriented role within CX. But it has gained credibility when it comes to delivering real customer value and offers in many cases a more pragmatic road to improved customer experience for organizations struggling to infuse a customer-centric culture across all teams.

What is the difference between customer success and customer support?

The main difference here is that customer support is a reactive process, responding to clients as they report issues and solving them, usually at a specific point of engagement. Customer success should be built as a proactive process, seeking to show value to customers throughout their lifecycle.

In some organizations customer support sits under customer success. Clearly, solving customer issues is a critical part of delivering value, but customer success goes far beyond, and is measured by how the organization delivers against the client’s desired business outcomes.

What metrics can be used for customer success?

We define customer success as an organization’s approach to ensuring their products and/or services can deliver the right business outcomes for their customers. As such, there are several metrics used to evaluate the performance of the customer success team, and key success factors:

1. Customer satisfaction/loyalty: whether it’s NPS, Customer Effort, CSAT… this type of metric will give the CSM an understanding of the health of the relationship with his/her clients. Some critical touchpoints need to be included here, for example on-boarding, implementation, support call, renewal…
2. Usage metrics: this must be defined in line with your individual products, but an example is the number of user sessions per day, or how often decision makers access live dashboards. These metrics may pinpoint problems, at a specific customer interaction for example, that are preventing customers from achieving their goals
3. Renewal rate and/or customer churn: a key metric around an organization’s ability to prove value is whether the client has indeed renewed
4. Customer support issue resolution rate: how fast you respond to your clients’ issues is no doubt connected to the value they place in their relationship with your organization and how strong your client relationships are
5. Specific revenue metrics, like up/cross selling revenue, or share of wallet, will also be useful.

In addition, an ROI model built specifically for your products/services can also really help your clients measure the value they’re receiving from your products and services and will help them justify renewing and investing further with your organization.

Can customer success improve the renewal process?

Absolutely! The customer success approach is meant to demonstrate your company’s sustainable proven value to your clients throughout their relationship with you, thereby making the renewal process merely a formality. With a well-defined customer engagement strategy, the commitment to constantly strive to deliver in line with clients’ desired outcomes, a culture of vigilance for anything that might jeopardize those outcomes (regardless of silos), the conversation around renewals tends not to uncover many surprises.

Saying that of course there will be factors you have no control over budget cuts, M&A situation, your competitors’ efforts to acquire your clients (and their own way of promising value), etc. But a customer success management program will undoubtedly increase your chances.

Can customer success reduce churn?

A key factor in customers churning is lack of value (whether real or perceived) that your clients are getting from your products and services. Therefore, customer success management, with its mission to prove value at every stage of the customer journey, is primarily driven by the need to reduce churn.

It has been said that the cost of acquiring a new customer can be 6 or 7 times higher than the cost of retaining an existing one. This figure varies between industries, regions, etc. so we’ll take it with a grain of salt. But it is common sense that a focus on reducing customers churning (particularly high-value customers) will have an impact on overall revenue, regardless of the specific customer success methodology you’ve chosen.

Does customer success drive revenue growth?

Even if you focus simply on reducing churn, then customer success has a definite impact on revenue growth. Basically, churn erodes your ability to grow your business efficiently, by counterbalancing the revenue you’re getting from new customers. Retaining more customers will therefore help you build more revenue. This might seem basic, but it’s worth reminding to the large proportion of organizations out there still focused primarily on acquisition.

A productive customer success management program delivers more than increased retention though. By focusing on customer-centric measurement of value and ROI, it impacts revenue positively in other ways, for example by:

• Fostering customer advocacy and positive word of mouth
• Generating referral-based leads for the business (which usually boast a higher conversion rate)
• Demonstrating the ability to pinpoint opportunities for up/cross selling new products and services, or increasing usage
• Amplifying the voice of the marketing organization through case studies, PR, etc.

Conclusion

With the right processes and with buy-in at executive level, the customer success team delivers to its original objectives, in line with the overall strategy, and report on the defined success metrics.

With all that in place, it’s a win-win proposition for your organization and your clients. Sustainable profitability with a best-in-class customer success program is in your grasp!