Customer Service is Dead Long Live Customer Success!

Customer success has become a buzzword in high tech over the past few years, with the phrase increasingly cropping up in sales presentations, on business cards and org charts. But what does customer success really mean? Is this just customer service with a fancy name?

Done right, customer success is more than just an aspirational job title or a new spin on the customer service function. It’s really an evolution of customer service, requiring new skill sets and mindsets to staff the customer success organizations that are cropping up in tech companies.

The customer success model aligns the interests of the service provider with the interests of the customer in a quantifiable way. It denotes an organization that’s much moreproactively involved than customer service, which has historically functioned more as an ad-hoc troubleshooting service driven by upsell opportunities.

A SaaS-driven evolution

This evolution is being driven by the maturation of cloud computing and Software as a Service.

In the heyday of on-premise software the customer service organization typically consisted of sales people, account managers, and tech support. The sales people would bring in new business while account managers worked on quotas and commissions, and focused on upselling. Tech support would be there to solve problems.

In the early days, SaaS companies followed this same model. But it didn’t work as well. As Cloud and SaaS models became more established, people started to realize a few things. With SaaS, it's quite a bit easier to move from one system to another, so providers have to be ever mindful of winning subscription renewals. There’s a lot of stickiness with an on-premise solution that you’ve already sunk millions into that isn’t there with SaaS.

SaaS companies also innovate faster. It’s common for a SaaS provider to do two to four updates a year, making new or improved functionality available on a more or less continuous basis. So, there’s a greater challenge around making sure customers know what’s available, how to use it and how to leverage it to drive business value than there was with on-premise solutions.

SaaS companies realized that with the traditional tech customer service model, customers that had implemented in a certain way often didn’t realize there was continually more that they could do and improve. Or, being accustomed to the more static on-premise software paradigm, when their business changed they simply assumed that the software couldn’t do what they needed it to do anymore and looked elsewhere.

The upsell opportunity for vendors also changed. There’s still potential for SaaS vendors to sell new modules or added seats, but product upgrades are essentially free.  All the new releases are pushed to the platform and available to everyone. Customers don’t have to upgrade or re-implement to get new features and functionality.

Greater vendor engagement 

All of this taken together pointed to a need for greater engagement on the part of vendors than was provided by the old troubleshoot-and-upsell model. To ensure continued renewals, SaaS companies have to make sure the software stays relevant to the business. Hence the evolution from customer service to Customer Success.

The pace of change in business is so fast that software that doesn’t keep up can create  real challenges. If your business remains static, you can probably implement some software and run fine with that implementation for a long time. But few businesses are like that now, and the days when account managers can count on having a lot of their accounts run on autopilot until it’s time to upgrade are over.

SaaS companies have developed the customer success role to really manage the relationship from a business standpoint, to make sure customers are getting continuing value out of their software and minimize subscription attrition rates.

Customer success teams strive to build much deeper relationships with customers than Account Representatives. The best of them marry an understanding of the client’s business environment with their knowledge of their own technology. As they're working with clients, they can observe, diagnose and articulate value. They can match their software’s functions with their clients needs, even as those needs are developing.

Perhaps most importantly, instead of having account reps on a quota, Customer Success teams are incented on pre-defined, clearly measurable business outcomes they help the customer achieve with the technology.

This is a significant change from business as usual in the software industry, and one that has been driven by cloud companies themselves to support the SaaS business model. It represents a new mindset on the part of software providers and one that is more partnership oriented and in my opinion better for both parties. The irony is that customers are not always poised to take advantage of this higher level of vendor engagement.

How can customers best position themselves to reap the benefits of the shift from customer service to Customer Success? That’s a topic my colleague Kevin Turner will talk about in a future post.