The field dealing with customer success is a discipline that has been around for more than a decade. However, it is only in the recent years that the technology industry has recognized the importance of customer success initiatives with the growth of Customer LifeCycle Management, mostly aided with CLM CRM technology.
Top business establishments those that are specializing in customer success analytics like Gainsight, ChurnZero, MindTouch, Customer Thermometer and many others have raised approximately more than $96 million in funding as of date, and this number is likely to grow as more companies like NomNom Insights, Optimove and others are entering this zone.
12 % amplification in brand advocacy doubles a company's revenue and its rate of growth.- Forrester Click To TweetPragmatically speaking, the combination of SaaS (Software as a Service) technology and Big Data has created the ideal cradle for heightening and maximizing customer relationships through programs on customer success, which has escalated the sudden interest in this field.
Customer success in the recent times has become completely analytics-driven and hence quantifiable, thanks to the advancements in big data technology, which has made predictive modeling of customer behavior possible nowadays. Additionally, SaaS is also flourishing with cloud based CRM software systems in consumers and enterprises adding value to customer success management with CLM CRM technology.
In the Software-as-a-Service space, customer success is essential, as the modern-day SaaS business model only performs if consumers are consistently achieving their business objectives speedily, which is a complete turnaround from earlier business for software.
What we mean to establish over here is that in the earlier software world, the cost to acquire a customer was recovered when a contract got signed. Therefore, suppliers and vendors of the software were never concerned whether their product or service was making their consumers successful since the item for consumption was already out of their hands. Hence, the concept of ‘selfware’ was introduced, whereby companies kept signing contracts, with little regard to customers feedbacks on the software being sold.
Unfortunately, with stellar growth in SaaS technology ‘shelfware’ does not exist in this fast-paced modern IT world. In the present times, if a company is not gaining value out of its purchase, it can and will terminate the contract at the end of a billing cycle, be it a year or after a month.
It is this modern concept that makes customer success management most crucial for any SaaS business, whereby happy customers implies growth in business, while unhappy consumers can mean complete degeneration of business growth.
So, how does success looks like in today’s SaaS space?
Well, there are several factors that signal a successful, data-driven customer success program. Here is a list of the main factors that drive customer success management in today’s world:
Churn is a killer in the SaaS zone, and so any customer success program should primarily address churn rates. This is because even a very little decrease in churn rates can lead to substantially higher returns. For example, just a 3% reduction in churn can lead to 30% higher multiple in valuations. Therefore, after implementation of customer success programs, the best indicator of its resultant effect is the decrease in churn rate.
The exact opposite term of ‘churn’ in modern businesses is not ‘acquisition’- but its ‘retention’. The cost to acquire a SaaS-based product’s customer, especially if it is an enterprise-level customer, can take even more than 18 months to recoup. Therefore existing customers for SaaS-based products eventually become more valuable and profitable for the company, since you have already covered their acquisition cost. Hence, if your company is successful in SaaS your company’s recurrent revenue from the existing customers will have greater value than for any new customer logos you can add to your brand’s website. Moreover, customer success programs should also highlight cross-sell and up-sell opportunities for your present customers, which obviously translate into increased revenue and sales.
According to a report published by Goldman Sachs:
“2 percent increase in up-sell leads to a 28 percent increase in valuation”- which is exactly why customer retention is another indicator of data-driven customer success programs in the SaaS zone.
Although this customer success metric is not very quantifiable, nevertheless an indicator of customer success done right is a gradual shift from ‘firefighting mode’ to proactive customer management protocols. Although most customer success programs in the present times are built to eliminate and fight against churn, true customer success when performed correctly does not just douse the fire during an emergency. A true customer success program rather teaches how your company can engage its customers, and squash issues become they turn dramatic, and encourages bringing the VOC (Voice Of the Customer) into the organization in a meaningful way.
The shift in Organizational Behavior
Lastly, the most prominent and perhaps the most subtle indicator of a successful customer success program is a change in your organizational behavior. What we mean by this, is that since customer success is a journey, is not inside the domain of a singular department in your organization, and can affect every other aspect of your business. Therefore, reduction in cost for acquiring new customers through brand advocacy is also another big indicator of customer success in the modern times.
According to Forrester research:
“12 % amplification in brand advocacy doubles a company’s revenue and its rate of growth.”
Takeaway
Therefore, companies that are aspiring to attain true customer success initiatives in the era of big data, throughout their enterprise, irrespective of whether any department is directly involved with customer interactions in the end, they must follow these above stated guidelines, since everyone in the organization ultimately benefits when the customer continues to do business with you.
