C-CHANGE GROWTH DRIVERS

• The Customer Success Manager (CSM) plays a critical role in ensuring cross-functional alignment around the customer. This is because customers are demanding ever slicker, more integrated experiences. Hence, the CEOs and leaders should increasingly redirect investments from sales into Customer Success to drive sustainable business growth.
• The role of the CSM is evolving from merely a post-sales function. The CSM is now responsible for ensuring a successful customer experience across the entire customer lifecycle – even before the customer has bought anything from the respective organisation, and especially during the onboarding and implementation phases. The CSM role is also valid in both B2B and B2C environments.
• CSMs should be incentivised and compensated first on successful customer outcomes, and second on securing customer renewals. They should not be given sales incentive targets as this drives the wrong behaviours.

Customer Success, like all aspects of the C-change growth engine, serves to drive sustainable business growth. According to Wikipedia (see Figure 6.1):

‘Customer Success is the function at a company responsible for managing the relationship between a vendor and its customers. The goal of Customer Success is to make the customer as successful as possible, which, in turn, improves customer lifetime value (CLTV) for the company’.

Gainsight, arguably the leading voice on the subject of Customer Success, describes it in three ways: a philosophy, a department, and – most importantly – a discipline (i.e. CSM, VP, Customer Success, etc.). Customer Success is an evolving discipline and increasingly intersects with other elements of the C-change growth engine, just as other C-change growth drivers increasingly intersect with each other. Ultimately, all of the C-change growth drivers must blend together in support of sustainable, customer-led business growth.

THE PHILOSOPHY

The shoots of the Customer Success philosophy, as it is recognised today, first appeared around 2004 at salesforce.com, when the company discovered that its churn rate was 8% per month. But the movement really started to take hold from 2009 with the formation of Gainsight, a Silicon Valley–headquartered software-as-a-service (SaaS) company known for its Customer Success platform. In 2016, the seminal book Customer Success was launched. Written by Gainsight's CEO Nick Mehta, COO Dan Steinman (who wrote the foreword to The Customer Catalyst) and Lincoln Murphy, the book really marked the moment when both Gainsight's market position and today's Customer Success phenomenon was truly cemented. Gainsight is a privately listed company but boasts over 500 employees with customers across the globe. It is widely regarded as one of the leading technology companies in Bay Area. Gainsight runs three industry conferences a year – one in Bay Area, one in Europe and another in the Asia Pacific region. These events, known as ‘Pulse’, a phenomenon in their own right, are now attended by thousands of CSMs and the associated ecosystem of partners, executives, analysts and other industry commentators.

The Customer Success philosophy came about because of the explosion in the number of SaaS-based businesses. Their customers buy either on a subscription or consumption basis; so, if they are not happy, they will either not renew or will no longer use the company's products or services. In other words, switching is easier than it used to be. While the idea of satisfying, retaining and growing customers is nothing new, the move to the ‘everything as a service’ model has emphasised the need to become customer-obsessed. In many ways, Customer Success has much in common with other customer-centric philosophies such as Customer Experience, Customer Advocacy and Customer Engagement.

That said, Customer Success does place particular emphasis on the post-sales customer experience – the bit after the customer chooses to buy (i.e. the second part of the customer journey that we discussed in the customer experience chapter). Also, it has been recognised for focusing the minds of Customer Success teams and executives on driving the business outcomes for the customer. This has effectively injected some more science and quantification into the mix, much of which has been enabled by Customer Success platforms such as Gainsight and Totango.

While Customer Success started in the SaaS world, it has moved increasingly into non-SaaS businesses (in both B2B and B2C). It has begun to address some of the topics and practical project considerations that customer experience practitioners have been grappling with for decades. Indeed, Gainsight defines Customer Success as a combination of both Customer experience and Customer Outcomes, that is, CS = CX + CO. Also, Customer Success is expanding its reach by considering issues such as product-led customer experience. The theory here is that, by building a self-service, frictionless product experience (similar to that described in the Digital chapter), there is less need to recruit and deploy CSMs, especially for the more mundane tasks. It is part of the reason why Gainsight has recently acquired Aptrinsic to help their customers drive better digital (product) experiences. Aptrinsic helps companies to automate and streamline and development of software products. This, in theory, should make life easier for the customer (especially if he/she does not have to talk every week to the CSM for each vendor solution he/she is using!)

THE DEPARTMENT

Increasingly, the Customer Success function is eclipsing other business functions such as customer support and customer services. In some cases (e.g. Slack), customer support and services have been merged into a single Customer Success department. This is just one example of how businesses of the future will be structured around the customer journey and not around their own internal siloes.

In March 2019, Customer Success leader Scott Gilbert published a blog defining the key functions and business components of Customer Success. He listed them out as follows:

• Professional/implementation services
• Knowledge management
• Customer/technical support
• Renewals
• Customer Success operations

Note carefully that all the functions described here relate to the entire post-sales engagement with customers, and therefore reflect just part of the overall experience. However, this broad, all-inclusive view of Customer Success is an accurate description of how the function is developing today.

THE DISCIPLINE: CSM AS THE CUSTOMER'S ULTIMATE CHAMPION

While the Customer Success philosophy and department purports to only look at the post-sale customer experience, we at The Customer Catalyst believe that there should be a single ‘scrum master’ role. This individual should be responsible for orchestrating the cross-functional interaction with a single customer (or a small subset of clients) along the entire customer journey. This applies to both new areas of growth with existing customers and new clients (or prospects) alike. This indicates both pre-sales and post-sales responsibility. In the case of B2B, there are primarily two areas where this could sit: (1) sales, and more specifically, account management, and (2) Customer Success management. There are pros and cons to both approaches. To make matters slightly more complicated, the CSM role might even sit in sales!

However, on balance, just as the executive team needs a cross-functional, externally focused leader, which is the chief customer officer (CCO), individual customers need a single orchestrator (or scrum master) who is characterised as both cross-functional and customer-first. We have seen models where both sales and CSMs have joint overall ‘orchestration’ responsibility – but, generally, this causes friction.

The entire raison d'être of the CSM, as orchestrator of the customer journey and experience, is to ensure that the customers' desired outcomes are achieved. The CSM should not be measured by internal performance metrics such as sales pipeline or marketing funnel. They are the equivalent of the scrum master in the agile software development teams. Sales will be the natural outcome of good behaviours and leadership exhibited by the CSM. As mentioned in the Growth chapter, it is the end of sales (as we know it).

In today's Customer Economy, the CSM, as the ultimate orchestrator of cross-functional interactions, has primary responsibility for the overall customer relationship, and is supported by other functions. Even in the B2C world, CSMs could play this role by looking after groups of customer segments or personas, rather than it being solely the responsibility of sales or marketing. The CSM is a facilitator of cross-functional interactions along the entire customer lifecycle. Given the key role of the CSM, the demand for CSMs is growing and is, as mentioned in the previous chapter, far outweighing the availability of CSMs. Perhaps even a good, new home for sales?

AN OUTSIDE-IN PERSPECTIVE TO CUSTOMER SUCCESS IS ESSENTIAL

Whether it is mapping the customer journey, developing growth metrics or telling the customer's story, it is essential to always walk in the shoes of the customer. The same applies to Customer Success. All too often, CSMs will define customer outcomes that are internal performance metrics. For example, CSMs may look at the number of open support cases, churn rates or opportunities for cross and upsell. While it is key to measure these things (especially when it comes to measuring growth), the CSM also has to drive the customer's own outcomes. The CSM is the ultimate customer champion and should be encouraging cross-functional team members to align their goals to those of the customer!

ESTABLISHING A CSM MATURITY ASSESSMENT

Recently, the Technology Services Industry Association (TSIA), a leading industry think tank, has launched a Customer Success maturity assessment named the ‘LAER efficiency model’ (see Figure 6.2) – this stands for Land, Adopt, Expand, Renew. It helps companies to understand how far along the Customer Success journey they have travelled, in terms of their key performance indicators (KPIs), critical practices, compensation models, organisational structure and culture. This model looks in depth at Customer Success maturity and highlights some of the linkages between the other disciplines included in the C-change growth engine. At Gainsight's European Pulse conference in late 2018, most of the 1000+ attendees classed themselves in the ‘Experimenting’ category – meaning there is still a lot of work to be done!

We have examined the elements of this model in the Culture, Technology and Health chapters of this book. It is also worth emphasising the parts of this model that are critical in the overall impact of the Customer Success programme, as follows.

ONBOARDING IS THE SINGLE BIGGEST SUCCESS FACTOR IN CUSTOMER SUCCESS

According to Lincoln Murphy, Customer Success leader and co-author of the book Customer Success, ‘the seeds of churn are planted early’. In other words, if the CSM sets the right expectations and then ensures the customer derives value quickly post-purchase, the customer will be far less likely to defect. The CSM needs to be on the ball throughout the customer journey to ensure the customer experience is as smooth and painless as possible and to help the customer achieve time to value as quickly as possible. This creates a much tighter relationship, based on trust – and customers know that the CSM has their back!

IT IS NOT ALL A BED OF ROSES: HOW TO SOLVE THE TYPICAL CHALLENGES CSMS FACE

Table 6.1 looks at just some of the major challenges that Customer Success teams face today, and how they can handle or overcome them. As we launch The Customer Catalyst, we are keen to hear as many stories from the trenches about the challenges faced, and how they can be handled.

HOW DO YOU MONETISE THE CSM?

As the CSM role becomes more in-demand across many industries, business leaders are increasing financial investment in these roles. Microsoft, for example, recently went on a major recruitment drive to hire over 2000 CSMs around the world – a decision that was led by the chief financial officer, who was convinced of the need to protect, maintain and grow subscription revenues. Given the high cost of employing and deploying CSMs, executives are increasingly looking at ways to monetise their investment. One possibility is to charge back the CSM to the customer or charge back Customer Success as a service to customers – a bit like a value-added insurance policy, this applies equally to B2B and B2C. By way of an interesting example, security alarm system companies (e.g. Pyronix), mentioned in the digital chapter, offer both installation and annual Customer Success plans (via a network of approved installers) to ensure the ongoing maintenance of systems (even if it is something as simple as changing batteries in the PIRs!). What this company lacks in digital experience, it compensates for in Customer Success. Over time, these Customer Success plans will no doubt become more sophisticated. Imagine a business model where alarm system manufacturers do not charge you for installation. You simply pay on a consumption basis for the ongoing safety and protection of your home, and you can switch to a new supplier at any moment. Maybe that would prompt a company like this to up its game in terms of digital experience.

Another factor to consider around monetisation is more internally focused. The CSM community has long debated the need for variable compensation models, that is, where CSMs receive additional salary and bonus for successful client outcomes, renewal protection or customer sales growth. At The Customer Catalyst, we believe that variable compensation models can work – but only if they are aligned to what is important to the customer and, at the very most, whether a renewal was secured. The CSM should not be rewarded for account growth or new customer sales, in monetary terms at least, because this may drive completely wrong behaviours. Customers cotton on to compensation models very quickly – they can smell a target-drive salesperson a mile off. It would be a travesty to introduce that type of behaviour into the CSM world. Also, sometimes, a CSM, with the customer's business outcomes in mind, might actually recommend a customer exiting the relationship if it is in the client's best interest. Consider amazon.com for a second; the company makes it just as easy to walk away as it does to buy! In other words, compensating a CSM on renewals might be the right thing to do – but the company is truly customer-centric; it will not push for either a short-term sale or even a renewal if it is simply the wrong thing to do (financially, ethically or tactically).

THE ROLE (AND LACK) OF CUSTOMER SUCCESS LEADERSHIP

As covered in the Culture chapter, we believe that every company should appoint a CCO. The CCO should report directly to the CEO and have ultimate responsibility and executive empowerment to drive the cross-functional transformation needed to achieve customer-led growth.

It is also important to appoint someone in charge of Customer Success, who (we would recommend) reports to the CCO. For smaller organisations, the role might be a hybrid of the two. This individual needs to be able to make the bridge between managing the team (or teams) of CSMs and executive leadership. The CSM team should be one of the best sources of customer intelligence and voice, which should be systematically and continuously articulated back to the executive  team. This ensures that the right business decisions – for the ultimate benefit of the client – are made. Unfortunately, just as there is a global CSM skills shortage, there is also a lack of Customer Success leaders. We believe that the Customer Economy will ultimately force businesses, academia and vocational education or industry organisations to redress this supply and demand imbalance.

ALLOCATE SOFTWARE: A WORLD-CLASS CUSTOMER SUCCESS PROGRAMME IMPROVING PATIENTS' LIVES

‘Over the coming months, we will continue to grow the business while remaining focused on building innovative solutions and delivering an excellent customer experience. We always look forward to meeting and listening to our customers and partners to ensure we continue to evolve to meet their changing needs’.

– Nick Wilson, CEO, Allocate UK

Allocate Software is a leading international provider of workforce and resource planning software and services, supporting the operational and administrative needs of healthcare, defence and maritime sectors. Allocate Software is headquartered in the United Kingdom, with 538 employees, including over 190 in research, development and product management functions. It provides services and support to its international customer base through regional offices in the United Kingdom, Sweden, Germany and Australia.

In the healthcare sector, Allocate is enabling the delivery of safe and effective care at optimal cost. In simple terms, Allocate helps public and private health organisations allocate the right healthcare professionals to the right place at the right time. The company has customers in 11 countries, and its software is used by over 800,000 healthcare professionals, across 800 organisations.

Its Optima, Software-as-a-Service (SaaS), platform optimises the complex staffing requirements of large healthcare organisations. Alongside automating sophisticated scheduling and ensuring accurate pay for staff that have complex pay rules, it is unique in providing additional benefits to improve the safety of staffing, given changing patient needs, the management of contingent workforce and the engagement of staff through a dedicated app. Optima is used to plan the working lives of half million staff across all workforce groups including doctors, nurses, therapists, care staff, operational staff and administrators.

Verity Dods, Head of Customer Success for Allocate UK (Figure 6.3), remarks: ‘At the end of the day, this is about improving the lives of individuals around the world with better healthcare provision’. Dods, a trained nurse, now runs a team of over 10 CSMs. That said, the software provided by Allocate is used either directly or indirectly by a variety of customer personas – including roster administrators, matrons, project leads, bank leads, procurement, CEOs, directors of nursing, finance directors, HR directors, medical directors, consultants, junior doctors, nurses, leaders and delivery teams.

Given the importance of client retention, satisfaction and the interconnectedness and value of referrals and advocacy in the healthcare sector, Allocate's quest to maintain high retention and low churn led to the formation of the Customer Success team 3 years ago. Allocate then developed a Customer Health score (the ERMI – Electronic Rostering Maturity Index) for its customers to baseline and benchmark their performance against a set of consistent metrics. It then launched a Customer Success programme inside the organisation and formed a series of cross-functional customer-focused teams.

Verity has overseen a number of key actions to help develop a truly world-class Customer Success programme. First of all, it was important to assign CSMs to the right volume and types of customers and to segment these customers fairly and appropriately. Second, it was about arming the Customer Success team with the right tools and data to do their job. CSM teams were then missioned to closely engage with the entire account team and wider business, including account managers, professional services and marketing. The CSMs have to be always on the front foot with customers – staying connected to the effective use of software and benefits realisation, as well as understanding and communicating where additional modules in the portfolio might help meet customers' emerging needs

Focused customer experience activities are co-ordinated by the CSM and form part of the Account Success Plan. Optima customers receive a comprehensive programme which includes system training, out-of-hours upgrades, support and, of course, the services of the CSM.

Allocate's mission states that ‘We care about helping people deliver the best healthcare’, and it is obvious that this purpose is a significant motivating factor for CSMs who can clearly see the impact their work has on the workforce delivering care. Additionally, CSMs are rewarded for improving Customer Health scores. This also makes good business sense as satisfied customers typically seek out new modules. CSMs also have shared responsibility with other functions to drive product and other feature usage.

The CSM is present as part of the cross-functional team at each stage of the entire customer lifecycle, from onboarding to expansion and advocacy. Figure 6.4 provides a simple yet powerful overview of this journey and the key goals of the CSM. Words such as ‘nurture’, ‘trust’, ‘grow’, ‘inspire’ and ‘partnership’ provide a clear view of the company's vision for happy customers. The use of organic/natural symbols (such as water, seeds, sun and trees) represents the importance of sustainable growth and authentic customer commitment.

Customer Success has evolved to work more strategically alongside cross-functional teams to develop a wider customer experience programme – everything from great customer support and help to move customers from on-premise software to the cloud, to a proactive approach to managing customer relationships (see Figure 6.5).

Recently, Allocate launched an app for clinicians which allows them to view their roster, request annual leave, swap shifts and book additional shifts to boost their income. Many organisations choose to launch the roll-out of the app alongside the introduction of this latter feature. In these organisations, the use of booking has been shown to bring a positive increase in staff engagement along with a decrease in shifts requiring agency staff to be booked, a well-publicised challenge for all NHS organisations.

In this example, the CSM flagged that the organisation was yet to use this functionality and shared the benefits that other organisations had achieved through its use. This was discussed by the Project Board, which agreed that it was something they wanted to utilise. The CSM took the rostering team through some preparatory steps in order to assure managers that safety would be maintained when staff were allowed to book directly into duty slots. This led to discussions with nurse leaders to review the skills and rules that are built into the system to ensure safety. These preparations then moved onto steps to ensure a smooth and rapid uptake of the app after launch.

The CSM ensured the customer was able to access the tools that Allocate provide to support the launch of such an app to clinical staff, and also ensured that the customer team members were trained to support staff in downloading the app and registering for the service. The CSM also advised the customer that a Champion model was a successful means of rolling out the app's usage more widely. On the launch day, the CSM was on site with the customer to support with any questions that arose. Daily reports were generated that showed the uptake of the registrations, which then developed to show the change in behaviour of staff increasingly engaging with activity through the app – booking their leave – which saves their senior clinical managers time by checking some initial rules to ensure that not too many staff are off at the same time, as well as the chief aim, the increasing number of staff who were booking additional duties through the app. This took away a lot of regular activity from the customers bank bookings team, which meant they were able to focus on some of the historically hard-to-fill shifts that would generally have gone out to the more expensive agencies earlier.

The organisation was very happy with the process followed, with all the recommendations of best practice and lessons learnt from other organisations, as well as the impact that the project had at so many levels. The CSM was very much seen as a member of the project team by the organisation, and the impact of the project was acknowledged as a success by the Trust's CEO.

The team has moved on to a new project now, but the CSM and the customer continue to review the metrics as part of the regular reviews to ensure that activity does not slip, now that the focus is elsewhere.

KEY LESSONS LEARNED

Dods humbly points out how vital it is to properly educate or communicate to customers regarding the purpose and role of Customer Success. It has taken some time to move its clients on from viewing Customer Success as a purely reactive escalation point (e.g. raising support tickets and development issues) versus a proactive advisor. It now has an explainer document that is supplied during onboarding, which outlines the service and gives examples of actions that CSMs have undertaken with other organisations, and how the customer can get the best out of their CSM.

LOOKING TO THE FUTURE

The Allocate Customer Success Team has always set out to be proactive, noting areas of opportunity for better use of the software and drawing this to the clients' attention. It actively listens to customer feedback on how to take the strong foundation created to date and develop the Customer Success experience further.

In summary, the Allocate Customer Success Programme has demonstrated incredible creativity, innovation and a commitment by both the Customer Success teams and other functions to drive retention and growth. NPS scores have demonstrably increased over the last 2 years, and improvements have been made to the user communities and customer data intelligence. Dods concludes, ‘The thing I am most proud of is my team. They're completely dedicated to supporting customers in a meaningful manner. They have turned reactive product-feature discussions into strategic-outcome conversations. And they have brilliantly championed Customer Success across the whole company, and indeed with our customers for the benefit of the patient populations they serve'.

SLACK: CUSTOMER SUCCESS AT SLACK, THE UNICORN'S UNICORN

‘Slack is the unicorn's unicorn'

– Nick Mehta, CEO, Gainsight

Slack was founded in 2014 and provides a workplace community and collaboration platform. Now, with over 6 million active users and a private valuation of US$7 billion, it is characterised by an exceptional brand, a great product, and has been incredibly successful in raising funding for its company.

A year after funding, it recognised the need to build a Customer Success team. Prior to the Customer Success organisation, account managers were employed originally to maintain client relationships; however, they were not best-suited to growing adoption inside the account. The main driver for this was the sheer number of users added organically from within organisations. The non-technical users of the system especially needed help to realise the system's true value.

As Slack transitioned from a consumer-based company into the enterprise, it was critical to build a Customer Success team. This team would help customers drive adoption inside their organisations, especially as large organisations were going wall-to-wall with Slack, with the platform being used across all functions within organisations. In addition, as customers were maturing their usage with Slack, it was critical that they build integrations and workflows with core applications and use cases.

According to Christina Kosmowski, Global VP of Customer Success at Slack (Figure 6.6), ‘Companies have long struggled to break down siloes. But changing culture is very hard. The role of the Customer Success organisation is to drive cross-functional collaboration in order to present a single view of the vendor to the client’.

Kosmowski and her team first set out to map the customer journey and then to understand the cross-functional touchpoints across that journey. The CSMs provided the high-touch experience to help their customers along the journey. In addition to the CSM coverage, Slack has launched a Champion network. ‘It's all about establishing a human connection inside and across customer communities', remarks Kosmowski. Slack organises meetups across cities all over the world.

The Customer Success team is incredibly strategic to its organisation. For a start, it owns both the net revenue retention (NRR) and annual recurring revenue (ARR) numbers. Given that this is perhaps the single biggest measure of company growth and success (especially in the SaaS world), this is a very telling fact. In effect, the Customer Success team has been instrumental in driving the growth of the company.