Taking Customer Engagement to the Next Level: ‘Customer Success’

Overheard from 5 participants attending a recent high-tech conference in Silicon Valley:

Participant #1:            “You’ve got to get onto the Customer Success bandwagon; it is what all great companies subscribe to.”

Participant #2:            “What exactly is meant by Customer Success?”

Participant #3:            “I think it is a new term that one of the valley’s high-tech companies came up with to sell more software licenses, and now is has become an industry buzzword.”

Participant #4:            “No, it’s more than just a new term. Customer Success actually a business process aimed at helping ensure companies make each customer as successful as possible, which in turn improves the customer’s lifetime value.”

Participant #5:            “Hang-on guys before you get carried away with Customer Success – isn’t that an oxymoron? Not sure I know many companies trying to achieve ‘Customer Failure’!”

It comes as no surprise that there is, and will continue to be, confusion over what is meant by Customer Success and how exactly to apply this new process to your day-to-day business. Like other paradigm shifts, it will take time for Customer Success to become mainstream. What can history teach us about thriving in paradigm shifts?

Product-Driven: Until the 1990s, most companies were ‘product driven’. They manufactured a product or provided a service and then promoted the heck out of their product/service telling customers that their product was superior to competitive products because of its outstanding features. This was the ‘build and they will come’ era. The failed Studebaker car is a good example of this ‘product-driven’ approach and validates that a product-driven approach doesn’t always work.

Customer-Driven: An important transition took place in the 1990s/2000s as best-in-class companies came to realize that product features alone cannot sustain differentiation over the long term since product features get copied by competitors over time. Rather, these best-in-class companies moved from a ‘product-driven’ to a ‘customer-driven’ approach, whereby companies began to manufacture products and provide services based on input received directly from their customers. The minivan was a good example of this new customer-driven approach.

Customer Success-Driven: In the past few years, there has been another transformation, this time from ‘customer-driven’ to ‘customer success-driven’, brought on by new business models including ‘subscription-based’ and ‘pay-as-you-go’. Under this new approach, a Customer Success Manager at a company is responsible for managing the relationship between your company and its customers. The goal of Customer Success is to make the customer as successful as possible when using your product or service, which in turn, improves customer lifetime value for your company.  The main benefits of a customer success process/discipline include reducing/managing churn, driving increased contract value from existing customers, and improving the customer experience and customer satisfaction (CSAT). Some of the many ways you can drive towards those benefits include health checks, quarterly business reviews, and proactive outreach. The Tesla car is a good example of Customer Success in action; by constantly monitoring/measuring each Tesla owner’s driving habits through software and then upgrading that software to meet the unique driving habits of each customer, Tesla has shot past most car manufacturers in term of customer satisfaction ratings.

Applying ‘Customer Success’ to your Business

Think about your own business for a moment. Whether you are in the B2C, B2B or B2B2C business, when you sell your product or service to a customer, what Customer Success metrics do you have in place to determine how much value your customer is gaining from using your product or service? How do you measure perceived value of your product or service at the end-user level? Should you measure customer satisfaction? Repeat orders? Willingness of your customer to recommend you to a friend (Net Promoter Score)? How often you receive ‘likes’ on social media sites? Or do you go one step further and measure value by promising measurable results to your customers, e.g., your customers will win more sailing regattas if they purchase your sails, your customers will hit golf balls further (or straighter!) if they purchase your golf balls, your industrial machines will have less downtime if they use your synthetic industrial lubricant, your salesforce will close more business if they apply your sale pipeline management software, etc.

The key takeaways are:

• Gone are the days when you can ‘push’ your product or service onto a customer (‘product-driven’).
• While it is critical to listen to the needs and wants of your customers and build these into your products/services, this alone will not assure the success of your product or service (‘customer-driven’).
• Now more than ever is the time to go one step further focus on your customer’s success and ask yourself, “How is my product or service adding measurable value to our customers, and what metrics do I put into place to measure this value?”.

No company is trying to achieve ‘Customer Failure’ as Participant #5 alluded to. But to survive the current paradigm shift, your company needs to focus on the value your customers receive from your offering.  Determine what metrics you should use to measure your customer’s success. Create a Customer Success process and implementation plan. Then engage with your customers and make Customer Success happen!

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Barton Goldenberg (bgoldenberg@ismguide.com) is president of ISM Inc (www.suzettes11.sg-host.com). Since 1985, ISM has established itself as the premiere strategic advisor to organizations planning or implementing ‘Engaged Customer’ strategies that leverage technologies including CRM, Social Media, eCommerce, Emerging Technologies, Data Analytics, and Identity Resolution. He is a frequent keynote speaker (www.bartongoldenberg.com) and is author of four books including his latest – The Definitive Guide to Social CRM. He is currently completing his new book titled: Engaged Customer Strategy: Your Roadmap to Success in 2030.