by Dilip Popat and Mike Clargo
Customer Success Management is key to ensuring your products and services are used to their fullest potential and impact. How do you do that?
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Why customer success?
Over the last decade, cultural trends, customer expectations, transformation through Cloud technologies and business imperatives have combined to compel more and more businesses to prioritise customer success.
For software and service companies in particular, this is about growing their lifetime value. Specifically, it is about maximising the success of their customers in using their software products.
The business imperative
Cloud transformation, and the resulting move to software as a service, has created the imperative for software providers to invest in retention and expansion in order to increase lifetime value. This is because most customers consuming services through the Cloud are moving to subscription licencing models.
In other words, revenue is increasingly based on consumption and the resulting Business value. And, as a result, the Software provider is now having to understand the customer utilisation of their product and how they can improve that.
Measuring customer success
So, what are the key KPI’s that Software providers are having to focus on:
- Usage of the product
- Customer retention through Renewals
- Expansion of additional features
- Reducing churn
- Lifetime customer value and annual recurring revenue
- Customer loyalty and references.
Furthermore, there are key questions they need answered:
- What is their strategic intent behind the product they have acquired?
- What does success look like for the Customer in real business terms?
- What is the customers experience and maturity to deliver the change they are embarking on; across people, process and technology?
- What is the value we have attained to date and what is our plan to extend to the next phase
Building a customer success management capability
To impact those critical KPI’s, software vendors need a customer success management capability. One that is impacting the success of their customers in using their products. So what does that capability look like?
- Firstly, it begins with having a clear vision for Customer Success Management across the organisation. This needs to be led by the CEO of the software vendor. And it needs to provide clarity and purpose for all parts of their organisation.
- Secondly, we need to anchor this Vision in a customer obsessive culture right across the organisation. One that puts the customer at the centre. This culture enables an effective Customer success strategy
ensuring a customer success obsession
- Thirdly, the Customer Success Management strategy must build on the strengths of the organisation and clearly define the capabilities that are needed. Customer success is a multiyear journey and needs to be developed in phases that work for the organisation and their customers. This is best supported by a customer success maturity model. The partnership uses the model to set the strategy for each year and continue building on that.
- Obviously, leadership is key in role modelling this culture, inspiring a deep desire to really understand their customers and focus on making them successful using their software products. Leaders at all levels need to manage the Business based on customer success metrics, rewarding their people based on that and driving the right values and behaviours
leadership obsession
- Investing in having the role of a Customer Success Manager (CSM). Software products are evolving rapidly with new capabilities. The Cloud platform enables delivery of these new features at a much faster rate. Customers need ongoing help to adapt and realize value from these products. Customer value realization is the fundamental reason that keeps customers coming back. The CSM role accelerates the delivery of that value to their customers. The CSM is that deep functional expert with consulting type skills that facilities the customer to success.
- A customer engagement model that defines how the software provider leads the customer on this value realization journey. This model enables the Software provider, through the CSM, to deeply collaborate with their customers to understand the answers to a few key fundamental questions?
Through workshops (physical and or virtual) the CSM facilitates the customer stakeholders and their implementation partner to analyse those key questions through using a customer maturity model and developing a customer success plan. The plan focuses on the activities the customer needs to follow to get to those Business outcomes, and how the software vendor and the implementation partner support the plan
Following a holistic strategy in developing Excellence in Customer Success
How can Culturistics help Software vendors and their customers implement a customer success capability?
We have over 30 years’ experience in helping organizations across a range of capabilities that are key to supporting all of the above:
To explore this topic further, feel free to contact us. We find our own thinking is continually sharpened and enriched by the questions people ask, and by the discussions that emerge from it.