The Gist
- So close yet so far. 95% of B2B SaaS companies have customer success teams but annual churn rates are still unacceptable.
- Modern B2B CS is evolving. From support to onboarding to adoption and optimization, is your CS function keeping pace with the possibilities?
- From support role to revenue driver. Focusing on the areas that make CS strategic can take it from a cost to a profit center and improve ROI for both — customers and the business.
If customer experience (CX) is the cornerstone of B2B business strategy, then the customer success (CS) team is increasingly the custodian of the post-purchase CX. The team's job is to help the customer meet their goals and expectations from the product and convert that into retention, revenue and growth. That explains why over 95% of B2B organizations have a customer success team in place today.
But there’s another angle. The global benchmark for an acceptable churn rate today in B2B software as a service (SaaS) is around 5%. While 70% of organizations meet that benchmark, about 30% still have an unacceptably high churn rate.
What’s worse? In this post, customer success thought leader Lincoln Murphy explains how even a 5% monthly churn can result in a 46% annual churn rate — also entirely unacceptable!
Done right, however, even a 5% increase in customer retention rates can increase profits by 25% to 95% depending on the industry, while also bringing down the operational costs of serving customers.
This means just having a customer success team in place is no guarantee of it being a strategic driver of growth. The question then is, while CS teams ensure optimal product usage and ROI for customers, how can companies ensure the optimal usage of — and ROI from — their CS teams?
A Quick (Re)Intro to Modern B2B Customer Success Teams
The customer success team’s job is to help customers achieve whatever goals or value they had in mind with the product or solution. Their goal is customer retention and optimal customer lifetime value (CLV). While this applies to all companies, CS is especially relevant for companies with:
- More technical or unfamiliar products that need additional hand-holding for multiple stakeholders to drive adoption and optimal feature usage.
- Product-led growth (PLG) strategies, where converting trials into paying and staying customers is crucial to the viability of the business model.
- Subscription-based strategies where retention and expansion are key.
- Matrix organizations with complex stakeholder personas and buying collectives, where the relationship needs to be built and strengthened at different levels through the customer journey for retention and expansion outcomes.
- Very dynamic, evolving or competitive industries, where customer feedback is crucial to stay ahead of the product development curve and competitor innovations.
- High-value products and solutions that need to show faster time-to-value and ensure seamless integration across often legacy stacks and processes. For instance, as annual contract value (ACV) grows from $25,000 to $1 million, companies start to invest more in their CS ops teams.
Related Article: How Do You Measure Customer Success? Very Carefully
Unlocking the Strategic Value of Customer Success Teams
CS was originally about ensuring the successful onboarding of a customer and reactive support. It then evolved to user adoption, and now, is about optimization — making sure the customer can use the product as effectively as possible with minimal time-to-value. With this, the focus has shifted to the potential revenue deliverables of this function — retention, renewals, expansion and growth.
Given the right support, and treated as a strategic business team, customer success can make a crucial impact in two areas:
- Customer and revenue: manifested in terms of retention and CLV that leads to higher revenues and lower operating costs.
- Product and value: manifested in terms of customer and product usage insights that help create better value propositions, product features and competitive advantage.
This evolution of CS is a natural phenomenon for high-growth companies. For example, at DemandFarm, a B2B enterprise SaaS company that digitizes key account management practices, CS has evolved from onboarding, ad-hoc pre-sales demos and need-based training to a strategic function.
“In its current avatar, CS has evolved from merely a support function to being a key contributor to revenue generation," said co-founder and CEO Abhijit Gangoli. "Specialized roles address the complexity of the deployment, adoption and retention cycles. Its scope has expanded to solutioning, project management, change management, relationship management and account expansion. Being closest to customers, the CS team also represents the voice of the customer (VOC) and plays a significant role in the product strategy."
Related Article: Building the Best Customer Success Team
6 Ways to Elevate the Strategic Value of Modern B2B Customer Success Teams
1. Create Workflows That Bring the VoC to the Business
Crucial customer feedback about the product experience (PX) helps ensure investments in innovation and product development are customer-centric. In addition to informing, educating and guiding users in their unique context, customer success departments need structured processes for gathering feedback and insight. Their ringside view of PX and feature usage preferences can inform product engineering teams about possible improvements, innovations and redundancies.
2. Effectively Gather Zero-Party Data as a Business Asset
Customer success teams are well-positioned to collect usage and preference-related zero-party data during the customer’s post-purchase journey. Not only can these insights help sales and marketing efforts, but they can also help build success stories, case studies and testimonials as business assets. Streamlining zero-party data gathering as a structured activity will help ensure this does not interfere with or intrude into the product and customer experience but helps improve both.
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3. Balance Their Role as Trusted Advisers for the Customer and Revenue Drivers for the Business
Over 50% of customer service teams are responsible for revenue goals today, and the number is rising. But as far as the customer is concerned, CS’s job is to help them derive optimal value from the purchase, not upsell them. Although this is a delicate balancing act, it does not have to cause a conflict of interest. After all, some of the most successful salespersons are considered trusted advisers by their clients. Equipping customer success leaders with clear goals for both, while removing contradictions or conflicts is necessary to help them achieve this balance.
4. Create Customer Value With a Holistic Approach
Each stage of the customer journey has a distinct customer success mandate. For example, onboarding is about relationship building and setting expectations, implementation is about successful product deployment, and usage is about training and enablement. CS has to work with multiple teams to deliver all their goals. For example, working with sales to take over onboarding, ensure renewal and help expand by funneling back leads ready for upsell and cross-sell at the right time. They also need to work with marketing to ensure the right customer insights are captured to create better messaging; with product engineering to ensure customer-centric development, and with RevOps to ensure goal setting and measurement are aligned to the business.
As a startup, Gangoli shares, the ownership between Sales and CS was blurred. With growth, however, there is more clarity on when in the customer lifecycle sales should hand over the relationship to CS. “The skills required to build and grow relationships are very different from those required to provide customer service. Even as we bring the required talent and roles into CS, for the first 12 months of customer engagement sales continue to maintain touchpoints with the customer to build confidence.”
CS teams need leadership support to align and streamline these multipronged efforts to leverage their pivotal role between the company and customers. Leadership can also help CS identify and focus on high-impact initiatives that will step-change customer satisfaction, retention, and lifetime value, and elevate the ROI from the CS function.
5. Accelerate the Digital Transformation of Customer Success
While customer success has long been viewed as a high-touch experience, automation and self-serve are increasingly key to efficiencies, scale, measurement and analytics — especially in a slowdown when every function must do more with less.
The digital transformation of customer success needs investment in the right tools and tech platforms. For example, a PLG company can have thousands of customers who are either inactive, occasional or super users. They will need to customize adoption and usage efforts across them all.
Similarly, a single enterprise customer can have thousands of users, some needing self-serve and others needing white-glove treatment. David Greenberg, chief marketing officer of AI-powered customer success solutions provider Conversica, said companies are increasingly turning to technology to deliver the personalized, engaging customer experiences that today's B2B customers demand.
Customer success leaders need the budgets and resources to build the right customer success tech stack, which should, at a minimum, include:
- A foundational customer success platform to automate communication at multiple touchpoints, monitor account health and track key performance indicators (KPIs).
- Self-serve tools for in-app guidance and support, conversational AI for live chat and e-learning systems to help customers find content and resolution quickly and effectively while also freeing up CS team resources to focus on more strategic and proactive retention and growth initiatives.
- Analytics, measurement and business intelligence tools that provide visibility into account health, product adoption, usage, retention, churn and expansion.
- Data and feedback capture tools help internal teams improve product and customer-facing processes.
- Customer support automation.
6. Keep Ahead of Emerging Trends and Customer Demands
Customer success is still evolving as a function. Keeping it strategic to the business means staying ahead of market needs. Three emerging customer success-led trends to note include:
- Communities and private social networks exclusively for customers help users get the information they need, build brand loyalty and help create more educated users who amplify peer-to-peer knowledge transfer.
- Learning platforms and certifications offered by brands help customers upskill, become more valuable to their employers and use the product optimally. For example, DemandFarm recently launched a dedicated self-serve training learning management system platform capable of delivering custom, interactive and gamified training programs to each onboarded customer.
- Conversational AI: A recent survey conducted by Conversica shows that the rigid, first-gen chatbot experience leads to four out of five buyers abandoning the chat experience if the answers don’t address their unique needs. According to Greenberg, conversational AI solutions allow for hyperpersonalized, humanlike interactions and deepen relationships across multiple channels (email, SMS, messaging, social media, voice and digital signage) without the loss of data and knowledge that can happen with humans. And, of course, far more cost effectively, too.
Conclusion: Customer Success Has Wide-Reaching Departmental Impact
Customer success done effectively can impact sales, marketing, product, training and support outcomes. By elevating its strategic value, B2B leaders can also ensure the function operates as a profit center rather than a cost center.
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