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What is customer success?
Making Customers More Successful Is Key to Business Growth. Customer success is an organizational function that helps customers get maximum value out of a product or service, while working closely with sales, marketing, and product to achieve that goal. What is customer success? Like sales and marketing, it is a revenue-generating team. Customer success provides proactive outreach aimed at increasing upsells and cross-sells, positive word-of-mouth, and successful outcomes for customers.
Most teams measure overall success by based on individuals’ success.
But when it comes to customer service, customer support, and customer success, businesses shouldn’t give in to the ease of only measuring success as the outputs of the team. These numbers, like CSAT score, support rep NPS, and the number of cases resolved, are important numbers to measure, but they don’t always tell the full story.
What is customer success?
Even more important than measuring the outputs of customer-facing teams is measuring the output of the customers — namely, measuring if customers are successful and deriving value using products or services.
Customer success is the next growth engine for businesses. Now that marketing and sales best practices are well-understood and recognized as engines for growth, it’s time to tackle the next frontier.
We believe that investing in your customers’ success will grow your business as quickly as sales and marketing — instead of thinking of your customer service team as a necessary cost center — and we have the research and data to back us up. Read on to learn how the philosophy of customer success has evolved, the impact it can have on your business, and how to execute it.
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Making Customers More Successful: Your Business’ New Growth Engine
In a recent survey of nearly 2,000 consumers and business leaders across the U.S., the U.K., Ireland, Mexico, and Colombia, we learned a few interesting things about how businesses view their customers’ success — and how consumers view the businesses they interact with.
We weren’t surprised to learn that growing companies are more likely to prioritize customer success than companies with stagnating revenues.
Customer Success: What It Means, Why It Matters, and More
Over the last decade, cultural trends, customer expectations, and business realities have combined to compel more and more businesses to prioritize customer success. Companies understand that, for customers to continue growing their lifetime value, they first need to feel successful with the product.
However, a lot of confusion has sprung up around how to ensure customers are successful: Are there specific metrics one needs to follow? Is there a playbook that companies can adopt to ensure success? Similarly, is customer success any different from other functions, such as customer support?
Below, we share an overview of everything you need to know about customer success.
What is customer success?
Customer success is the effort a business undertakes to help its customers be most successful, both with its product and in their own business operations.
However, it is no longer sufficient to assume that the company as a whole will take on customer success management; for your customers to shine, you’ll need someone (or a team) to be wholly focused on it. Dedicated customer success teams take a proactive, data-led approach to helping customers more effectively use a product.
Depending on the structure and maturity of the team, it may handle everything from trial user engagement through renewal. This comprehensive approach helps businesses reach several top-level goals, including:
- Increasing renewal sales and revenue.
- Inspiring customer loyalty and retention.
- Boosting lifetime customer value and annual recurring revenue (ARR).
- Reducing churn.
Customer success increases the likelihood that users will stick around by maximizing their mastery of the product. For subscription-based businesses, that’s a vital component of growing monthly recurring revenue (MRR). For companies that don’t follow that particular model, the value of customer success shows itself with leading product insights and word-of-mouth marketing.
However, customer success experiences overlap with other customer-facing functions, such as customer support, customer experience, and even account management. As easy as it is to talk about what customer success is, it’s equally important to distinguish what it isn’t.
Customer success vs. customer support
Many customer success teams report through the same structure as support or service and exhibit the same customer focus, but there is at least one key difference.
Customer service and support are primarily reactive, meaning they respond to a customer or user after an issue has occurred. Customer success is proactive in that they try to anticipate and address needs before customers ever reach out.
Here’s an example Ryan Engley, VP of Customer Success for Unbounce, shared that exemplifies the difference between customer success and customer support in practice:
“A customer may email the support team about their landing pages and say, ‘Hey, I need help implementing a sticky navigation bar. How do I do that?’ They’ll jump in and help them figure out the code to set up. What is customer success? A conversation with the customer success team, on the other hand, might start with, ‘Why is that something that you think you need? Let’s talk about your bigger strategy.'”
Another key difference is the metrics that customer support and customer success use to determine success. Customer support uses metrics like:
- Time to response
- Customer satisfaction
- Handle time
- First response resolution
Customer success teams typically take a different approach and use metrics like:
- Expansion rate
- Churn rate
- Average MRR
- Customer health
While there may be some overlap between teams, customer service is primarily focused on metrics at an email level, whereas customer success works at a relationship or lifecycle level.
Customer success vs. account management
Like customer support and customer service, account management (AM) teams offer reactive help to customers who reach out and ask for it.
They handle customer problems after they arise — and do so for a particular set of dedicated customers. Typically these are higher value accounts or accounts that have the potential to grow and expand meaningfully within the foreseeable future.
While both account managers and customer success teams focus on the customers’ overall health, AMs do so through the lens of money. As their title implies, they manage accounts by growing them and bringing in revenue to the business.
While some customer success teams may emphasize revenue and MRR, it’s not usually their whole focus.
Customer success vs. customer experience
Customer experience (CX) is another function that’s grown over the last decade, and it’s easy to confuse with customer success.
The chief difference is that customer experience teams focus more on how customers use a product and view it from the business perspective. To do this, customer experience teams may do the following:
- User testing
- A/B product testing
- Customer interviews
- Product and licensing surveys
- Aggregate insights from customer-facing teams
While customer success can offer profound insights and influence most of these activities, they are not responsible for aggregating feedback from any data point besides directly from the customer. They also are not ultimately responsible for deciding what to do with those insights, outside of interpreting how they may use them to make customers more successful.
Success teams seek to understand why customers use a product, and they use data (aggregated and interpreted by the customer experience team) to proactively help customers be more successful.
Why is customer success critical?
One of the most significant driving factors in the rise of customer success is the growth of SaaS and subscription-based business models.
Instead of selling big, one-time deals to customers, more and more companies are moving to a subscription model. In that model, products need to prove their value before every contract renewal. Renewal hinges on helping customers continually see value and success with the product, since there’s almost always another competitor or version of the product that customers could choose.
However, customer success is universally beneficial for every company, even without the renewal and contract cycle. Data shows that for every one customer who contacts customer support, 26 customers with a problem don’t reach out. Those are all customers a business stands to lose if it doesn’t fix its problems, as research also shows that 91% of those who don’t complain simply churn instead.
By proactively eliminating potential customer problems and recognizing customer needs, customer success gives your business a better chance at retaining those other 26 customers.
When done effectively, customer success can reduce churn, improve retention and renewals, and drive revenue. Beyond those substantial fiscal bonuses, customer success also gives your company essential insights into how and why people use your product.
Customer success drives intimate customer knowledge, which ultimately creates a healthier, more risk-resistant customer lifecycle.
Key responsibilities of a customer success team and manager
We’ve talked a lot about the fantastic value that customer success adds to a company but not the functions through which it does so. Here are a few essential functions that almost every customer success team is responsible for.
Some companies choose to focus on a one-to-many onboarding strategy using email campaigns, in-app onboarding, or a webinar series. Other companies may prefer a more hands-on approach and schedule “kick-off” calls with every new paying customer. They discuss the customer’s needs and expectations for the product and build out an implementation plan over an onboarding period.
Depending on the size of your team or your ability to scale, one approach may make more sense for your business than the other. What is customer success? For instance, if you are a small team that is growing quickly, you may not be able to hire enough people to talk to every single new customer.
Whatever approach you take, onboarding is a crucial function of your customer success team. Ensure that, right when the customer starts paying, your team guides them on best practices and which parts of the product will be most beneficial to them in which order.
Assisting in renewals
As we noted above, there are vital differences between account management and customer success. In some companies, customer success may be wholly responsible for renewals — handling everything from getting the contract negotiated to signing it.
However, customer success is generally better suited to lending assistance to the renewal rather than managing it entirely. After all, customer success managers are best suited to helping customers find success, not increasing sales or boosting MRR.
Use your customer success team to consult with your renewals or account management teams on which features or upgrades might be helpful for the customer based on their stated goals with the product. Then, use them to add some legitimacy to the renewal process.
Your customer should trust your success team unequivocally, or at least more than they would trust a salesperson they haven’t worked with directly for very long. Use the trust and user knowledge your customer success manager has to make the renewal negotiations easy.
Monitoring customer health score and product usage
Your customer success managers are typically at the front line when it comes to your customers’ relationships with your product. Unlike support, they build ongoing connections and are constantly hearing what is or isn’t working.
Beyond that, your customer success team is often responsible for managing and tracking customer health. The customer health score is typically a proprietary score built off of a combination of product usage, services usage, and login metrics. What is customer success? It is a great leading indicator for the customer’s likelihood to renew and can also, at a larger scale, show your company the most and least used areas of your product.
Your customer success team will be able to see right away if usage of a specific feature drops off. If they don’t hear that directly from the customers, they will see it within the customer health score dashboards.
From there, they may inform product and engineering, connect with your support team, or even reach out directly to the customer. This is a great way to ensure that everyone is abreast of the latest product usage and that no pesky bug goes unnoticed.
Providing customer insights to engineering and product teams
If a customer is dissatisfied, the first person that they’ll probably tell is their customer success manager (CSM). CSMs work hand in hand with your engineering and product organizations. Any time a road map changes or a new feature is about to hit your live product, CSMs need to be kept in the loop.
In exchange, your customer success team can often provide an excellent barometer for how useful a customer will find a new update.
When your product and engineering teams are planning for the next few quarters, it’s up to your customer success managers to successfully surface the most pressing needs expressed by their customers.
CSMs are the best at interpreting customer requests and packaging them in a way that’s understandable and helpful for your company.
Positioning best practices
While other teams may be more advanced in the technical aspects of your product, your customer success team should be the best at positioning how to make the most out of your product.
What this means is, even if they can’t necessarily answer the best API method to use to take a specific action in your product interface, a good CSM will be able to listen to what a customer is trying to accomplish as an end goal and determine if an API method is the best way to get there.
All of your other teams can answer the “how to do it” questions, but your customer success team is there to help your customers understand the “why” behind them.
Connecting the customer with necessary teams
Even though CSMs may not always be the folks equipped to answer the most technical questions, they certainly know where to find the people who are. Your CSM should serve as an operator helping to connect the calls from your customers to other parts of your company.
It’s nonsensical to think that a single person could fill out the role of professional services, your product team, and your support reps — especially if they are also helping to map out your customers’ usage and ideal product setup.
Rather than answering every question, CSMs should know who the best person is to answer those questions.
Say, for example, a customer reaches out about how to custom-build something using a more technical part of your product. It likely doesn’t make sense for your CSM to answer that question. Instead, the CSM would connect the customer with the person most skilled at that type of custom work, like someone from your professional services team.
You best serve your customers with a CSM who knows your company’s available resources and how to connect them with the customer in the quickest way possible.
If your customer can’t remember the last time they heard from your success team, your CSMs aren’t doing their jobs.
It’s up to your CSMs to set expectations and maintain an ongoing cadence of communication with any customers within their book of business. That cadence doesn’t need to be the same for every customer and will often differ in frequency depending on where the customer is in their life cycle and their current goals.
However, there should still be a regular and expected sequence of communication. Each time a CSM ends a meeting with a customer, they should have fully communicated the next steps and when the customer can expect to meet or talk again.
This is how your CSMs can ensure that they have a thumb on the pulse of your customers’ needs and goals and can quickly prevent any churn or issues with product usage.
7 tips for enabling customer success
Regardless of the size or scope of your company, there are a handful of things you can do to help your customers succeed — with or without a dedicated customer success team.
1. Make customer success an organization-wide goal and priority
Whether you have a dedicated customer success team or not, it’s essential to emphasize helping customers succeed across the organization. From sales and marketing to product and from senior leadership on down, customer success should be a goal and a priority for every member of your extended team.
One of the best ways to ensure that customer success is a priority is by educating your company on what customer success does and where its value is. Different teams will interpret data differently, so to ensure that you are conveying your message in the most viable way, speak the language of the team you’re talking to.
Product, for instance, may care about customer health score and ongoing expansion of product usage, while sales may care about the number of customers you are retaining and how much they are worth. Pick the metrics you use based on who you are talking to.
2. Emphasize customer success early on
Customer success is an organization-wide effort, meaning prioritization of customers and their needs has to be baked into your company’s culture. The easiest way to make that happen is to start early, from the very outset of your business.
For instance, you can encourage everyone in the company to sit in on kick-off calls or have your engineering and product teams conduct conversations with customers about new/beta products that they might be interested in.
Having these individuals on calls helps give them a better experience and cultivate a culture of customer success. It also helps the customer feel important and valuable. Your efforts don’t need to be huge to be meaningful. Even an additional meeting with a member from a team who customers typically assume as “busy” can go a long way.
As the saying goes, the best time to start was yesterday — the second-best time is now.
3. Understand what success means to your customers
We’ve talked a lot about “success,” but what does it mean? Effective teams let the customers tell them what success looks like. Success with your product will look like different things to different customers, so it’s essential to let their definitions lead.
Many companies assume that the actions they want their customers to take are those they should base metrics on. Often, this is without any foundation in reality.
To best understand what success means to your customers, it’s important to have ears on the ground, listening to and studying what the customers are doing within the product. This is one of the critical roles of your CSMs.
Your company should be shooting to grow success as defined by the customer, not success as you assume or expect it to be.
4. Set customers up for success with proactive onboarding
The role of customer success starts from the moment someone becomes a customer.
Proactive customer onboarding ensures those new customers get started on the right foot. That includes setting up the product to best suit their needs, learning how to use the features they need, and getting comfortable with using the product more generally.
While a little extra hand-holding during the onboarding process can make a huge difference, it may not be practical for every company to offer high-touch customer success from the start. Instead, focus on how to get every new user and customer the same information in a consumable way.
If you don’t currently have the staff to offer that to every person using your product, try to figure out ways to tier it out. Perhaps that means offering in-app, checklist-style onboarding for free trial users and full, video kick-off calls for paying customers.
One of the most common ways to tier customer success is based on the amount of money that customers are paying. It makes sense that paying customers would get a more personalized experience than those using your free trial.
5. Track key customer metrics and share data across teams
As we mentioned above, customer success is highly data-driven. The metrics used within customer success can be very influential cross-functionally among teams.
Effectively prioritizing and sponsoring customers’ success includes tracking the right customer metrics and sharing that data across teams. Here are a few key customer success metrics worth monitoring:
- Customer lifetime value
- Repeat purchase rate
- Customer retention rate
- Customer retention cost
- Churn rate
- Customer health score
- Net promoter scre
- Customer satisfaction score
- Customer effort score
6. Build a customer feedback loop
Customer success isn’t a one-time project that carries over from one customer to the next. It’s an endeavor that requires constant updating and refining to serve customers better and keep up with a changing product.
Even a great strategy may need to be slightly tweaked for two customers from different industries or with different expectations.
After each conversation with your customers, ask them for insights on how your team is doing. What is customer success? That could mean the product itself, the experience your company offers, or even the direct relationship with the CSM.
Regularly asking and keeping a door open will ensure that, if something does go awry or starts feeling bad, they’ll feel comfortable telling you. You should constantly be iterating and refining your strategy based on customer insights and feedback.
Creating a loop that continuously brings in honest customer feedback is the best way to keep up with those changes and ensure you can remain proactive for the long term.
7. Define and identify red flags
When you look into your customer data, there are typically early warning signs indicating that a customer is struggling with your product. The customer success team’s job is to identify these red flags and find a way to proactively set struggling customers back on the path to success.
One of the best ways to do this is to use tagging within your help desk or, if advanced enough in your customer success strategy, sentiment analysis to automatically predict and notify team members of the potential issue. What is customer success? The sooner you can start identifying leading indicators and act on them, the better an experience you will provide.
Once you have a system to notify your customer success managers effectively, they will be more empowered to work directly with your customers to rectify any issues or provide needed education and help.
Part of the reason for these divergent priorities? We think it’s the old-school business belief that customer services teams are a cost-center — made up of employees and technology you have to spend money on in order to keep your customers happy and from walking out the door when you don’t meet their expectations. But we think this is a mistake.
Customer success is an investment in your business’ growth — not a cost-center. Customer success helps you engage and guide customers to help them grow into happy power users, and these satisfied advocates will recommend your brand and help grow your business as fast as sales and marketing.
We think the growing companies we surveyed understand that — because these respondents were also more likely to prioritize running the business in a cost-efficient way than businesses that were stagnating:
If you’re not convinced that customer success is a growth lever yet, consider the research and recommendations of global management consulting firm, McKinsey & Company, in a recent article.
The authors believe we’re entering the era of “customer success 2.0” — wherein businesses are focusing and investing in customer success as a way to achieve growth, and not just as a way to prevent customers from churning.
Previously, the authors explain, “customer success 1.0” was led by software-as-a-service (SaaS) companies who invested in customer success to prevent massive customer churn as products and software grew trickier and more complex. What is customer success? Now, businesses are zeroing in on customer success not just to prevent customer turnover, but to help customers derive maximum value from products and services to make them successful.
But the transition to customer success 2.0 can be tricky, the authors explain. The transition is about more than simply hiring more customer support reps — it’s about properly training and scaling a customer success team to do it well, and it’s about getting the entire company on board with this new approach.
I asked the authors of the report about the imperative for businesses to invest in customer success.
“The future of customer success is as a growth engine. It’s critical for companies to view it as a differentiator rather than a risk management tool,” said Charles Atkins, associate partner at McKinsey & Company.
So, now that we’re all on the same page about the importance of customers’ success to growing your business, how do you actually do it? How do you help your customers help your business succeed? This blog post is by no means exhaustive, but we have three recommendations in common with the McKinsey & Company report authors that we wanted to call out as a starting point.
How to Make Your Customers Successful
- Invest in a Customer Service Program
- Prioritize Training and Retaining Excellent Employees
- Make Customer Success a Team Sport
1. Invest in a Customer Service Program
Dedicating time, energy, and resources to building and growing a customer service program is the first step to tapping into your customers as a growth engine.
This means spending time and energy conducting strategic planning and goal-setting, and perhaps most importantly, procuring headcount and budgetary resources to build and scale a team with top talent and innovative technology to support the mission of the customer service program.
As we’ve outlined here and in previous posts, that investment pays off — by investing in a strong customer service program, you can effectively address and resolve customer issues, offer proactive support and suggestions for achieving goals faster with your products and services, and eventually, by helping your customers succeed — and tapping into your happy customers and loyal advocates to serve as case studies, write reviews and testimonials, and create user-generated content that help bring in new customers.
2. Prioritize Training and Retaining Excellent Employees
In the McKinsey & Company report, the authors warn that talent can make or break a customer service program — because skilled customer support talent is sparse, and because many companies are unsure of what skills are needed to be successful in such a new and evolving space. They suggest building a talent engine focused on analyzing and learning from top-performing customer success managers (CSMs) to develop a training and education program that gives reps time in their schedules to attend classes and trainings to help them specialize and grow in their careers.
However, companies have some work to do on this front. Although 58% of growing companies we surveyed prioritized the retention of customer support reps, we also learned that only 42% of customers support reps who responded planned to continue a career in customer success — and just 19% of respondents with less than one year of experience planned to stay in customer success.
Investing in specialized training and education for CSMs and customer support reps is critical to building a talented team and minimizing employee attrition — another area growing companies prioritize more than stagnating ones. In our survey, common reasons for this lack of enthusiasm for career growth in customer success included feeling disempowered in their role, a lack of clarity on career paths and opportunities, not feeling valued within the company as a whole — which is where Step Three comes in.
3. Make Customer Success a Team Sport
Here at HubSpot, an acronym I read often is SFTC — or, “solve for the customer.” It shouldn’t surprise you to know that SFTC doesn’t just apply to customer support reps and CSMs — it’s a guiding principle for every single employee and team at the company.
That’s because every employee, team, and asset contributes to our customer experience — and whether it’s a good one or a bad one. The growth of inbound marketing — in the form of blogging, ebooks, templates, and social media — now means that your customer’s first interaction with your company isn’t a sales rep anymore. It’s more likely to be a blog post, a Facebook update, a Twitter poll, or a content offer. Before they jump on the phone, they’ll more likely chat live with a sales rep, or send a reply to an Instagram Story.
That means that, in order to reap the benefits of improving customer success, organizations need to get everyone on board — from the top, down. It’s about more than one function of one team — it’s an evolving business philosophy that’s re-setting the standard for providing an exceptional customer experience, from the first interaction to months after closing a sale.
In our survey, we found that growing companies were more likely to prioritize making customers happy than stagnating companies. If that sounds like a no-brainer, that’s because it is. Focus on customer happiness and experience as your guiding light for deciding how to scale your customer success program, and solicit and use customer feedback and loyalty data to figure out what’s working, what’s not, and how to adjust course.