Customer Success has evolved throughout the years, from a strategy primarily focused around reducing churn, to a growth engine that is fundamental for long term profitability. But for tech providers, customer success is not always straightforward and easy to execute when operating in a channel. Which is why I recently chose to explore this further in an interview with Gainsight CEO, Nick Mehta and iasset.com CEO, Scott Frew.
First off, we discussed what has ignited the customer success movement amongst vendors. Put simply, it was a combination of two things. First of all, we agreed that simply having a great product or service is now no longer enough to keep customers in today’s hyper-competitive, increasingly commoditized technology market.
The second, and probably the greatest reason - is the shift to subscription and consumption models. Nick believes that - “changes in business models driven by changes in technology, has shifted the power to the customer. And what that’s done is, put the accountability on the vendor for making sure that customers are getting value. In this new model, where the customer is paying you as you go, per month/year or even based on consumption, the accountability for that outcome has now shifted to the vendor. And now vendors and also the channel, needs to learn how to do all that – kind of overnight”.
These circumstances have transformed customer success from a method to curb churn and increase renewals, to a comprehensive lifecycle strategy that places customer value at its centre. So, for vendors who - in most cases, do not have a relationship with the end customer, this proves to be quite a challenge. How do they drive customer success through their channel and influence their smaller or globally dispersed customers?
An effective customer success strategy requires the right people, processes, metrics and automation.
People and processes
As Nick Mehta pointed out, there are a lot of businesses out there that are still approaching this as way to boost renewals. But the renewal is at the very end of the process, frankly, the customer has already made their decision because the renewal is contested. They’re migrating to a completely different technology and you’re calling them up 30 days ahead of a renewal, they’re not even calling you back!
The companies that are really doing this right, are approaching it over the whole lifecycle, demonstrating value and achieving customer outcomes, so that once the renewal happens (at the end), it is a non-event. They are successful, because their processes are geared towards being proactive, not reactive, and they have the right people (e.g. Customer Success Managers) in place ensuring that the customer remains top priority.
Customer insights and advanced analytics are now an essential part of every customer success program. Gainsight’s Nick Mehta explains: “We historically measured businesses in a very transactional way - line items in our ERP systems. But were those orders new customers? Existing customers? Was it a customer that left and another made up for that? But what’s happened now, in the cloud and SaaS world is - we’ve adopted a different way of measuring the business. You still have revenue, profit etc, but you now have these new metrics around what we refer to as recurring revenue and a more customer centric view. Looking at the portfolio of existing clients – have they grown/shrunk in collective spend? Are they happy and growing with you or are they leaving and dropping your products? There’s so much information in there. When you get into that type of methodology, you start looking at different KPI’s. One of the biggest is the retention rate and net revenue retention. Key point here is, I’m not even including new clients in this calculation.”
Scott adds: “At iasset.com, our metrics is aimed more at the product level and reducing the complexities of selling solutions to the end customer through the channel. For example, ensuring they are billed correctly and on time (if consumption/subscription), or that they are upselling or cross-selling and getting the most value from the customer. So we help vendors, distributors and VARs be more proactive with their existing customer base, and enable them to optimize every potential opportunity within their installed base.”
It isn’t possible to do customer success economically or effectively, without the help of automation. “Set this as a core strategy inside your company and use automation to find ways to scale this, so you don’t need to kill your margins, you keep improving your margins and you scale your customer success at the same time. It’s not an either or”, says Nick.
Having the right data, being proactive and scaling across every single customer – no matter how big or small, throughout their entire lifecycle journey cannot be achieved manually or via legacy tools and processes. Your standard ERPs and CRMs may help to some extent, but they are designed for net-new orders, not managing customer lifecycles and channel sales. Understandably, until SaaS like Gainsight and iasset.com came along, there was no other choice but to try and adapt these tools to try and fit your needs. But, still doing so now would be like giving business away willingly to your competitors.
According to Scott, vendors who want to apply customer success through their channel, need to make it easier for their channel to execute on this strategy. This includes “connecting the dots” and identifying and creating priced-up opportunities ready for their partners to take to the customer: “I have taken one vendors’ retention rates from 22% to 94% over a period of 18 months, just by connecting the dots and giving them these opportunities.” But again, this cannot be done manually – you need a purpose-built platform to do it all for you.
It’s clear that customer success is here to stay. If you are not doing it well, I can guarantee that your competitors are. Don’t get left behind. Reach out to find out more about how your business can benefit from the iasset.com platform.