Building a scale CS operation

Delivering customer outcomes is the primary purpose of customer success in B2B SaaS companies. Delivering that at scale with a digital first approach meets the twin needs of customers that often prefer a self-service approach and the productivity companies need to deliver affordable service. This article explores the capabilities and roles needed to deliver scale CS.

Need help in building out your scale CS operation? Give us a call.

Personal musings on CS

I was pleased to be asked to discuss my thoughts about customer success by Dave Blake and Burke Adler of Client Success. We covered a lot of material in 45 mins including:

  • A review of the current state of CS and the challenges we face.
  • An introduction to product-led CS
  • Thoughts about where CS is headed.

The webinar was well attended and well received. If you didn’t get the opportunity to join us live, the folks at Client Success were good enough to record it. I have also added a copy of the slides for those requesting them.

Client Success webinar: April 2019.

Enjoy and, as always, use the comments to let me know what you think.

What does CS as a culture really mean?

I have read several things on LinkedIn and elsewhere proclaiming that real customer success is a culture, not a team.  I agree entirely but what does that really mean?  Here’s 15 things I think indicate a customer success culture at different stages of development of a B2B SaaS company.

  1. The business opportunity is defined in terms of the goal/value the company delivers to customers.
  2. The value it delivers to customers is central to the company’s raison d’être: it’s purpose, vision, mission. 
  3. Identifying the characteristics of customers that can, with the right support, achieve their goals is an important element of an ideal customer profile.  
  4. The company invests to build and maintain a  deep understanding of the goals, work and challenges facing its chosen customers. 
  5. Product-market fit is defined in terms of the customers achieving their desired outcome.
  6. Guiding the customer to their goal(s) is central to the product.
  7. The company constantly strives to deliver, profitably, a great customer experience. 
  8. The entire engagement cycle (marketing, sales and customer success) is defined in terms of the goals and challenges facing the customer at each stage and how the company helps solve them.
  9. An initial goal is agreed with the customer as part of the sales process.
  10. A robust, repeatable success process exists fro help key contacts in every customer achieve their goal.
  11. The company builds an understanding of the causal links between what the customer does, the success they achieve and its own performance.
  12. Guidance for customers goes beyond how to get the best from the product, helping them with process and organisational problems they face in achieving their goals.
  13. Progress towards and achievement of customer goals is a key metric for the company.
  14. Leaders make clear the relationship between customer outcomes and the work of everyone in the company.
  15. And for the brave … the company’s pricing is based on the outcomes it achieves.  

What factors do you think indicate a CS culture at work?

CS Strategy

This blog describes a framework for thinking through the different elements of a CS strategy.

True customer success is not an add-on or an appendix to a company strategy.  Rather, it is shaped by and, as importantly shapes the fundamentals of the business.   The decisions needed to develop a meaningful CS strategy require the leadership team to formalise things that many companies have, at best, not fully agreed and, at worst, have not addressed. 

CS strategy requires decisions in three main areas;

  • The company’s strategic framework sets out what problems the company solves for its chosen customers and how it delivers its products and services in a profitable, scalable way.  CS has to help shape this.
  • This sets the context for the CS delivery model, the core of customer success.  This the process through which the company delivers measurable value (ROI) to the customer in a repeatable, scalable and profitable way.  
  • The final element is the CS organisation: how CS, in its broader sense is staffed to deliver.  Depending on the decisions around the company’s strategic framework and the CS commercial model, this may well include skills and staffing in customer success, product, sales and marketing.
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I am in the process of building an expanded version of the framework into the CS Vision & Strategy module of the FREE online CS Leadership Program. Watch for further announcements!

Building a customer success plan

Delivering a return on a customer’s investment in your product is key to retention in B2B SaaS. That’s why a robust success plan built on a deep understanding of your chosen customer is the most important item in the customer success toolkit. You can’t claim to be remotely interested in CS without one.

The topic is covered in depth in our FREE Customer Success Leadership online learning program. The module “Building a success process to deliver customer ROI” covers this in detail and sets out a comprehensive approach to guide you through the thinking. If you don’t want the full monty (and you should at some time) the here is a simple version using our Customer Success Canvas.

Let us know how you get on with it in the comments, below.

10 metrics that show your ICP is working

An ideal customer profile (ICP) is a detailed description of target, or good fit customers for a given use case.  Put simply, a good fit customer is one that can achieve value from your product and can be acquired and serviced cost effectively.  Note the first element of my definition: achieving value underpins many of the benefits of an effective ICP.  Defining good and bad fit customers is also essential to getting marketing, sales, customer success and product teams working together effectively.  

But once you have built an ICP, how do you know if it is working?  Here are ten measures that will inform you.  Whilst not the only cause, if several are going the wrong way, your ICP may need revisiting.

  • Cost of acquisition (CAC): An effective ICP will lower the cost of acquiring new customers.  Available dollars can be focused on more targeted campaigns that should convert at higher rates.  A good ICP reduces disputes and friction across the different teams, allowing them to focus better on the job of winning customers and delivering their expected ROI.
  • Deal cycle time: An ideal customer relates better to your value proposition and therefore tales less convincing.  Remember the adage; a good opportunity closes quickly; a bad one dies slowly!  The same number of sales reps can therefore close more business.
  • Logo churn:  Ability to achieve value is an important component of an ICP.  A good fit customer is therefore less likely to churn as they are more likely to achieve value.  Assuming of course that you have an effective customer success process
  • Net revenue retention (NRR): Bad fit customers are less likely to achieve value from using your product and therefore unlikely to buy more.
  • Cost to service:  Good fit customers recognise the issues/opportunity they face and are motivated to address them.  As a result they typically respond better to the advice and guidance needed to achieve their goals.  A defined customer also reduces the need for custom content, increasing further CS productivity.
  • Word of mouth sales (WOM$):  Customers that achieve value are far more likely to recommend you to others.  That also contributes to a lower CAC as referrals are typically the lowest cost and highest converting lead source.
  • Lifetime customer value (LTV):  The LTV calculation includes churn as one of its components so good fit customers are highly likely to improve LTV.
  • Feature adoption:  Customers with similar needs are more likely to want similar capabilities in the product.  New features are therefore likely to have higher adoption rates.  This can also lead to simpler products and lower development costs per customer.
  • Average customer ROI achieved:  Given that achieving value is a key component of an ICP, it is obvious that good fit customers are more likely to achieve ROI, raising the average ROI per customer.  Don’t track it? You must: it is the biggest driver of retention for most B2B SaaS companies.  
  • Sat/NPS:Customers that achieve value are more likely to return higher satisfaction scores because they are more likely to achieve the value they bought the software for.  It is also easier to design and deliver an experience for customers with similar characteristics, improving your chances of delivering a great experience.

This free resource will help you define your ideal customer profile and build an end-to-end customer lifecycle to acquire and service them. 

The case for Product-Led Customer Success

Led by Openview Labs, product-led growth has become a recognised SaaS business model.  Much of the focus has been on the use of the product as the primary sales tool.  I want to focus on product-led customer success (PLCS) as an approach to build scalable, profitable growth through retention and expansion revenue.  

Product-Led Growth = 

Product-Led Marketing & Sales + Product-Led Customer Success

To secure the retention and expansion revenue that is key to SaaS growth, B2B suppliers must be able to convert the promises in the marketing and sales stages into measurable value, preferably a proven ROI.  Zuora CEO and Subscribed author Tien Tzuo said “We tend to meet each new challenge by creating a new stovepipe.”  That’s how most companies approach the delivery of customer success.  Rather than think about CS being built-in, we create it as an add-on.  This approach however does not deliver scalable margin, especially in businesses with low AOV.  

PLCS addresses this by building the success realisation process into the product.  A success realisation process follows five stages:

  • Discovery: Extending what has been learned in the sales process to provide context.
  • Benchmark & Goals: Determining the current and desired levels of the measures of value. 
  • Success plan: A customer specific project plan, including actions beyond the product, detailing what is needed to achieve their desired goals.
  • Advice & guidance: Context rich delivery of resources throughout the success plan to help the customer achieve their desired goals.
  • Success dashboard: Tracking & reporting of progress in the steps of the success plan and achievement of the desired goals.

To learn more about the process read our e-book “Product-led Customer Success

I believe PLCS will become the dominant model for B2B customer success for the following reasons.

It is what many customers want.  Customers have bought a product and expect that product to deliver the value that underpins their buying decision and what was probably promised in your marketing & sales.  In a blog about predictions for CS in 2019, CS software supplier Gainsight say “Customers are happier when their needs are anticipated and addressed through efficient digital means.”  Given a choice, busy customers don’t want to call a support or success agent, they just want a product that delivers what was sold to them.  

It delivers significant financial benefits for the supplier.  Shifting the balance between people and product-based costs provides massive opportunities for scalable profitable growth.  It also holds out the opportunity to shift from costs and low-value services revenue to recurring revenue: a mix preferred by investors for its scalability and predictability.  Openview’s Product-Led Growth Index suggests PLG companies attract higher valuation multiples.  We have created a PLCS financial model to help companies assess this impact on revenue, profitability and company valuation.  It is important to note that the product-led growth approach shifts the balance of costs way from sales, marketing and customer success to research & development.  Data from Openview show that some companies recognised as leaders in product-led growth spend up to 50% of revenues on R&D. 

Building the success process into the product creates opportunities for companies to understand better the relationship between value and the activities required to achieve it.  Mastering this relationship will deliver further benefits:

  • Companies will find it easier to direct product roadmaps to further improve value achievement.
  • Marketing & sales messaging will be strengthened with value-proven case studies and reference customers.  PLCS companies will be able to offer guarantees for their SaaS products.
  • Analysis of customers value achievement will refine ideal customer profiles, creating a virtuous cycle.
  • Confidence about proven value will enable companies to introduce performance-based pricing 
  • performance, where customers pay for the value delivered against that promised in the sales process.  

Products that are easy to use go hand-in-hand with PLCS.  Consumer software achieves this, even with complex products.  Where they lead, B2B will follow.  The techniques are known, it is the intent and desire that is often missing.   PLCS requires a level of ambition for software developers far in excess of what many now aspire to.  

Let make clear that product-led does not mean product-only.  I do not see the end of people as a means of delivering the advice and guidance customers need to achieve their goals with the product.  I do however predict a lower ratio as more of the success process is productised.  This will result in a shift in what CSMs do; guiding customers on the process and psychology of change rather than product use.

How good is your Success Plan?

Success plans set out how a company guides the customer to the value/ROI they purchased your software for.  They are therefore at the core of customer success: the means by which SaaS Customer Success deliver on their purpose. 

Having built and reviewed success plans for a range of companies, I have developed a maturity model to help B2B SaaS companies assess their success plans and develop actions to improve them.  The model was originally developed as part of a project for the Customer Success Network – a European online group for CS really worth joining.  

Feel free to download the Success Plan Maturity Model.