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CHAPTER 1

Welcome to Your Journey

Customer Success is ...?

Customer Success is quite simply a business imperative to truly, consistently and perpetually know and understand your customers.

You may be confused and feel that this concept is already well known and adopted by businesses and indeed has been for many decades. After all, hasn't the phrase 'Customer is King' been around for, like, forever?

This is true. We have paid lip service, for a very long time, to saying that the customer is always right and that we must be 'customer-centric'. I have known many businesses who have this as one of their business values.

However, do we truly embody the practice or are we just creating the 'spin' required to fool customers into thinking we really care? In reality, our own profit margin and cost reduction exercises have always been the highest priority.

With the transition from perpetual licence to subscriptions (see below), the technology world can no longer afford to be blasé about this topic.

It is literally life or death for your business, if you are not fully and demonstrably committed to knowing and understanding your customer. Return on Investment (RoI) has also been crowned as being king and for your customers; this is absolutely a key objective. It is imperative you can support the delivery of their business objectives and prove your contribution to them and their RoI.

In a business economy where customers have freedom of movement more than ever before, the urgency for embracing Customer Success is a reality.

Nothing is more important to Salesforce than customer success ... And that's why I believe being so committed to the customer is more important than it's ever been ... because it's really this culture that's driving us forward.

Marc Benioff, CEO, Salesforce

This is the reason that the specific discipline and category of Customer Success has been created. It is also the reason that it is under the glare of a bright spotlight and is one of the fastest growing career opportunities.

The power has truly shifted from the vendor to the customer. This is the case for Business to Business (B2B) and Business to Consumer (B2C) and across all industries.

Customers demand results and if they are not happy, they can and will move their business elsewhere at a moment's notice.

There are no more lifetime tie-ins brought about by hefty cancellation penalties or seriously large upfront capital expenditure.

No longer can the vendor blot the ink dry on a contract and then walk away without giving the customer another glance.

We have to support them, we have to care and we have to deliver business objectives.

Again, you may feel that each function within a business already has a handle on this, but isn't it true that we're all working in silos, focused on our task and our responsibility?

Who is working across all of those functions to ensure there is collaboration, alignment, consistency and a focus on ensuring that everything being done has the customer front of mind?

The answer is the Customer Success team and the Chief Customer Officer (CCO).

Origin stories

Customer Success has its roots in the SaaS world (see below). Think of all the services which are delivered via the internet these days – Box, MS Office365, G-Suite, Slack, Survey Monkey, Dropbox, Trello, etc. All of these are software, delivered remotely as a service. Some are free, some always paid for or where premium offerings are paid for, via subscription – consider Amazon Prime, Netflix, Spotify, etc.

What is Software (or anything) as a Service?

In the good old days of Information Technology when hardware was prohibitively expensive and the internet and 'cloud' didn't exist, IT companies made the majority of their income from the sale of the hardware and software alone. This would be paid upfront, as capital expenditure.

The subscription element existed as a comparatively low value (and mandatory) annual support and maintenance contract. If you opted out of this payment, you would forfeit your right to any vendor-provided support and would not receive any product update releases.

The customer took on all the capital expense and the risk of the transaction, the project and the ongoing administration:

• Hardware capital expenditure

• Software capital expenditure

• Annual maintenance and support contract

• Hardware maintenance costs

• Project implementation costs and responsibility

• Perpetual administration

For even the smallest of projects and companies, this undertaking would cost thousands, hundreds of thousands or even millions as an upfront, non-refundable investment.

The vendor rubbed their hands with glee before the ink was dry as they walked away with no responsibilities. Even if their software didn't perform terribly well or even as sold, the supplier was under no obligation to resolve the problems. If you hadn't purchased the annual maintenance and support, then the provider had no responsibility to support you as you weren't using the 'supported version'.

The customer would be dissatisfied and no doubt a detractor but no one cared as the supplier had already received all the income upfront and the customer was stuck with their investment.

See also 3.2 Customer Health (Net Promoter Score)

As the customer would be expecting and tracking a project RoI, they would need to wait at least until the original expenditure had been depreciated in accounting terms to a nil/residual value. For such a large and costly project, this would generally be over at least ten years. Then and only then, could the customer consider walking away and try to find a more suitable alternative solution.

Often, customers would be so entrenched in the process which had been implemented, the cost of re-engineering was prohibitive, so they stayed locked into the original project and therefore, supplier.

Due to this financial lock-in, vendors were able to make a sale, get the contract signed and then effectively walk away. They didn't need to worry about customer satisfaction or loyalty as those who had signed on the dotted line were already trapped. Advocacy and case studies have always been helpful sales tools but in a world of customer naivety and reliance on the salesperson as the subject matter expert, they were much less valuable or needed. In addition, there were many fewer channels through which to broadcast your dissatisfaction so bad reviews travelled slowly.

The tables turned with the advent of the internet. Communication and education became much easier for everyone. Sales teams were no longer the 'experts' to whom we turned to understand technology, processes and projects.

Customers started to educate themselves with the information which flooded the internet, communicated more easily with their network through email, networking sites such as LinkedIn and social media, and ultimately demanded more from their suppliers.

The advent of the 'cloud' and vastly reduced cost of hardware and data storage meant companies were able to absorb the cost of storing the software and your data on their own servers. This created a flood of entrepreneurial and trend-setting companies who inundated the market with Apps which were free to use and gave the consumer the flexibility to use and discard at their own will and whim. This, in turn, led to the subscription economy: these companies realised they needed to monetise their Apps and software so premium services were offered to encourage users to upgrade and pay for the software.

This created a mindset in us all that we should be able to pick and choose where we spent our time in technology and even more so, have flexibility when it came to our business spending. Ultimately, the purchasers in a B2B relationship forced traditional companies to re-consider how they delivered their technology.

To begin with, traditional companies continued to deliver on-premise (where the purchaser bought all the hardware and software and took all the risk) and it was the more entrepreneurial, new start-up businesses which embraced the SaaS model (where the customer takes none of the risk and all of the control as they can walk away after a very short, if any, notice period).

One of the earliest adopters and indeed forerunners of the SaaS companies was Salesforce, who supply a CRM (Customer Relationship Management) technology service, within the cloud and therefore as a service.

And so, we circle back to the origin story ...

There is a majority consensus which believes the modern birth of Customer Success should be attributed to Salesforce who were early pioneers themselves in the subscription model. They were one of the first companies to offer their software as a service.

In 2005, there was Good News and Bad News at Salesforce. The good news was that the company was acquiring new customers at a stunning rate. The Bad News: customers were churning in horrific numbers. Like Bruce Cleveland (Siebel: see below) before them, Salesforce's executive team quickly realized that bringing in new customers couldn't be the end of the story, that there was no way to add enough new customers to survive if they were leaving in greater numbers.

Salesforce didn't invent Customer Success as a new profession, but the company quickly built what was then the largest CS department in the industry. The group was (and still is) called Customers For Life, and while it was not responsible for renewals, up-sells or cross-sells, it was specifically chartered to address customer retention by increasing user adoption.

Mikael Blaisdell, Founder, The Customer Success Association, Customer Success analyst and advisor

Through Mikael's research, he has established that the first department with the label of Customer Success was also a CRM technology company. They were a traditional on-premise company but with a target of 100% referenceable customers, so they understood the importance of successful implementations and knew that, ultimately, customers would drive higher long-term revenue. This introduces us to my golden mantra of Their Success = Your Success.

This occurred in 1996/7, almost exactly a decade before the much publicised Salesforce.com story occurred in 2006.

In addition, chronologically, Siebel was the first on-demand business to recognise the need for a post-sales team to concentrate on retaining and expanding their signed customer base through ensuring they were gaining value and success from the service. In 2005, Bruce Cleveland established and labelled his requisite department, Customer Success management with a mission to increase usage, help customers be successful so that they would remain loyal, remain with the company and expand their contract.

To be or not to be, that is the question

There should be no such question or hesitation. Customer Success should and must permeate all activities undertaken by your entire business, no matter the size or maturity.

The 'new' philosophy and profession of Customer Success is here to stay and many people are still scratching their heads over the concept or are yet to catch up with the frontrunners to even understand that this imperative exists in today's business world.

Along with 'What is Customer Success?', C-Suite executives and many others are also asking 'Why would we invest in it?' 'Is the return going to be worth it?' 'What is this Customer Success "trend" all about anyway?!'

I enjoyed this post on LinkedIn which was shared while I was writing this chapter, by a member of the European, Middle East and Africa (EMEA) Customer Success community, Orkun Türkmen, in which he observes:

Customer Success Management is like teenage sex: everyone at a Software-as-a-Service company talks about it, almost nobody really knows how to do it, everyone thinks everyone else is doing it, so everyone claims they are doing it ...

As suggested in this post, Customer Success has its roots in the SaaS world, primarily B2B although all the principles are valid for B2C, and almost all businesses, come to that!

Venture Capitalists (VCs) are refusing to even consider investing in a SaaS start-up unless they can demonstrate they are invested in and sustaining a solid Customer Success department.

The reason for this is that there needs to be a department which is completely focused on driving and tracking predictable recurring revenue. Predictability is safe, stable and what the analysts are looking for.

Without Customer Success focused on retaining and growing customers, recurring revenue becomes an unpredictable black hole of churn, i.e. rapid loss of customers.

Without Customer Success, your Sales team needs to find new customers to replace the customers who do not feel compelled to stay with you. This means you will always be chasing your tail, rather than maximising the opportunity of retaining and growing your existing customers, at a fraction of the cost.

All companies, particularly those whose revenue model is based on subscriptions, should be very focused on customers, their outcomes and success as this is intrinsically tied to the company's own success.

Customer's Success = Company's Success

Their Success = Your Success

Customer Success = Customer Growth

Customer Growth = Revenue Growth

In a world where the customer is once again and more than ever, in control, every person working in B2C and especially B2B should also be thinking about what the customer wants.

This is what concerns those of us immersed in the world of Customer Success, it's what keeps us awake at night and full of joy when we see customers not only remaining with us but:

• Growing their use of our product

• Influencing the direction of our product and programme

• Advocating our services on our behalf

• Providing case studies and references

• Bringing new customers to our door

Your revenue growth engine

Your existing customer portfolio base is your most efficient route to creating and maintaining a powerful revenue growth engine.

It is estimated that the cost of acquiring a new customer is between five and twenty-five times higher than it costs to retain an existing one.

It therefore makes sense to maximise the lifetime value of your existing customers. It is far cheaper and much more rewarding.

A 5% increase in your retention rates can increase profits by 25% to 95%

Bain & Company

These supremely important facts should be kept handy whenever you're asked to justify why Customer Success deserves any investment, let alone investment anywhere close to the scale of a Sales team. Customer Success, despite the shift in perception around customer focus, is still seen as the poor relation, with an ability to perform miracles on fumes alone. Fight your corner and get the investment you deserve to deliver that stratospheric growth at reduced costs relative to new sales.

To be clear, the task of maximising customer lifetime value is the job of everyone in an organisation. Without doubt, everyone has a part to play: Sales, Marketing, Product, Senior Management, Support, everyone!

There needs to be an aligned and cohesive approach with a transparent and validated belief in the organisation's commitment to customer focus and orientation.

See also 1.2 Foundations and Beliefs 3.3 Demonstrating Value

Customer Success can be visualised as a traditional process These are some of the inputs:

Figure 0.2: Customer Success Inputs

This is the 'processing' or activities for which the CS team are responsible:

Figure 0.3: Customer Success Processes

These are some of the outputs:

Figure 0.4: Customer Success Outputs

These are the inner workings of your growth engine and these are the expectations:

For the customer: they will have an expectation of what they will get from your service and how it will support their business goals, objectives and targets. It is imperative you discover, understand, capture and agree what these are and most importantly, how you will prove and measure this.

For the company: sustainable value generally boils down to customer retention and scalable growth through your customer portfolio which ensures a lower Customer Retention Cost (CRC) than Customer Acquisition Cost (CAC). This is achieved through organic growth made possible by your existing customer base expanding, the referrals from this base, and pollination due to champion users taking your service with them, when they move jobs to potential new customers and bringing you on board (aka second order revenue).

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Excerpted from "The Customer Success Pioneer"
by .
Copyright © 2019 Kellie Lucas.
Excerpted by permission of Practical Inspiration Publishing.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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