Customer Success is Your Passport to the Subscription Economy

March 08 2016 0comment

Customer Success has gained incredible traction in the world of Software as a Service (SaaS). The shift to a subscription pricing model has demonstrated the importance of a clear strategy for Customer Success. But Customer Success is not simply an offshoot of Sales or Support that Silicon Valley has cooked up for the rest of us. Customer Success represents a fundamentally different way of looking at business, all business.

For every product you sell, there is a corresponding service you can provide which can transform your income stream from one-time sales into recurring revenue. We’re not just manufacturing widgets that perform one simple action over and over. We are providing a service that dramatically improves our customers’ lives. And if you can’t say that about your business, perhaps you’re not in the right business.

Once we adopt this mindset, the value of Customer Success becomes immediately apparent. But there’s a catch: The core elements of Customer Success – empathy, a strategic mindset, and a bias for being proactive – lose their importance in the following situations:

  • The average monthly fee in your subscription offering is very low
  • The service you are offering is extremely simple

Let’s face it: if you’re charging someone $10 per month for the privilege of using your service, you can’t afford to match them with a dedicated Customer Success Manager. The second scenario is closely related to the first: If you’ve created something so basic that virtually all of your customers can figure it out at a glance, why match them with someone whose sole mission is to help them achieve their business goals? In either case you’re adding complication where none exists, a sure recipe for disaster.

No, the key to exponential, hockey-stick growth is to find that balance between too simple and too complex. You want your customers to be able to grasp the value of your solution right from the start, while at the same time providing them with new opportunities to expand their business on a continuous basis.

Customer Success lies at the intersection of these two priorities. At the moment your customer realizes that your service can be immensely valuable, while also providing creative ways to scale, that’s the moment when Customer Success can really shine. And this moment can come about in any industry. The only reason Customer Success began with Software as a Service (SaaS) is that all the products are virtual, so it’s easy to reframe them as services. Customer Success began with SaaS, but its potential is practically unlimited. Here are a few examples of what Customer Success might look like in other industries that – on the surface – appears to have nothing to do with SaaS:

Food

Let’s put ourselves in the shoes of a large Foodservice distributor, like Aramark or Sysco. The objectives of their clients include providing a consistent supply of high quality food at a reasonable price to the consumer, food that’s safe and presented in an attractive manner. Right now their clients are billed for each order they place, but what would it look like if they paid a monthly or weekly subscription instead? Suddenly it would become much more important for Aramark and Sysco understand not only their clients’ objectives, but their deeper goals. Safe, cost-effective food is only the bare minimum when it comes to running a successful restaurant or dining facility. Their clients might care much more about the source of their food, its nutrition, or even how their patrons might attempt to share recipes and reproduce them at home. Introducing a subscription pricing plan which included a strong emphasis on Customer Success would cover their clients’ objectives while creating significant opportunities to help them achieve their long-term goals.

HVAC

Let’s break this term down to its most basic elements: Heating, Ventilation, and Air Conditioning. Already you can begin to see how this ‘product’ is associated with a very strong ‘service’ element. The HVAC industry is still operating the way the software industry functioned 20 years ago, with a very large upfront fee (which pays, for example, for a campus-wide Air Conditioning installation in the former and an ERP solution in the latter). Historically, this one-time purchase would be followed by much smaller monthly maintenance payments. Just like in our Food example above, this model handily covers clients’ objectives but not their goals. Enter Customer Success! If we shift our focus from the product (Rooftop HVAC unit) to the service (providing precise climate-control of 1000 of our clients’ employees so that they can be more effective at work), then immediately we can begin to identify with what our client is trying to achieve. This is the essence of Customer Success.

Nonprofits

What is the service that donors receive in exchange for their weekly, monthly, or annual contribution? Here the framework for Customer Success already exists, but let’s go deeper. For individual supporters, an automated email marketing campaign might be sufficient to demonstrate how an NPO is helping channel their donation towards the greater good, but for a large corporate donor the stakes are much higher. How can NPOs demonstrate to their corporate donors that their contributions are delivering a significant ROI? How can NPOs create additional opportunities for giving within their largest corporate accounts? How can NPOs identify their champions within those accounts… and nurture them for testimonials and referrals? These questions are the bread and butter of Customer Success.

The point here is to get you to think about how to apply the values of Customer Success in your industry and business. Customer Success does not belong to SaaS any more than Sales, Support, Product, or Operations. With the right focus on your customers’ long-term business goals, you can help your entire industry thrive. That’s the potential of Customer Success.

Summary

How does your industry treat Customer Success? Do you work in Food, HVAC, Nonprofits, or perhaps some other industry where your company is shifting its focus from meeting clients’ objectives by helping them achieve their goals? If you believe focusing on Customer Success would help your company (and if you’re reading this there’s a good chance that it would), please let me know in the comments.

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Written By:

Andrew Rhodes

Andrew draws upon years of strategic business consulting experience and is extremely passionate about Customer Success. Andrew is redefining the goal of Customer Success – it is not a matter of stopping churn, but of creating the business conditions in which churn becomes impossible.