A Revolution in Customer Success is Starting
Growth at all costs has become building sustainable practices for tech companies. Customer success can no longer choose to be solely focused on adoption, customer satisfaction and customer relationships. As a profession, we need to become more accountable for business outcomes and drive the overall profitability and growth of the companies we work at.
To change, we need to understand where we went wrong.
We need to talk about the decline (or death) of customer success
Nick Mehta said in a LinkedIn post at the end of 2023, that people who said,” Customer Success is dead,” are clickbait content creators. This theme has remained persistent with Dave Kellogg, Jason Lemkin to Andreessen Horowitz taking a position on the future (or not) of customer success.
Creating a burning platform for change is not clickbait. It’s urgent! Maintaining the status quo is no longer acceptable. We need to create a future that’s a more sustainable pathway for everyone, from individuals to companies and our customers.
In October 2023, I presented a session at Notion Capital’s CXO Day on the topic, “Is Customer Success Dead?” The following three arguments were discussed in the session:
The Challenge of Organisational Design
The Toll of Inefficiency
The Ubiquity of SaaS in the Enterprise
Reason 1: The Challenge of Organisational Design
Build an operating model. Organisational design is not about dealing out resources.
Organisational design is the way the organisation executes collectively around achieving its goals in the market. It’s a framework that enables adaptable work practices, rapid decision-making and high-performing teams to be established, with the result being successful business outcomes. Structure is the outcome of design, not the starting point.
Research by Bain & Co found that 80% of Execs don’t believe their organisations are designed in a way that allows them to perform. Poor performance manifests in the form of growing people costs, an increase in low-value internal meetings and customer satisfaction. This research underlies a common problem in many B2B tech companies.
No other function has had so little agreement of ownership as a reporting function as Customer Success. Customer Success leaders may report across any of the following functional lines at the C-level, from the CEO, to Sales, Product, or Chief Operating Officer. Within a tenure at a company, it may be more than one of these. It’s certainly been one of the ongoing topics covered at conferences; if not a session it will come up in questions.
Reporting lines regularly shift, not just as a reporting function, but the responsibilities entrusted to those customer success leaders are not consistent. It has not been established what Customer Success should own in terms of post-sales teams. Post-sales is made up of everything from Implementation, Support, and Renewals, to Professional Services and Account Management. No two Customer Success leaders have the same team responsibilities.
Poorly defined organisational design often creates silos, a poor understanding of individual and team roles and responsibilities. The result is fractured services delivered by the teams to customers. A lack of clear organisational design hinders efforts to deliver exceptional customer experiences.
Given these challenges, a crucial question emerges could we better design our organisations and enrich other roles to manage the key milestones for our customers?
Reason 2: The Toll of Inefficiency
Not only is a cost to the company, but has a negative impact on customers.
Many pages could be written on the common inefficiencies in tech companies across the customer engagement lifecycle. The few discussed here will have consequences not just on managing costs for companies, maintaining a stable revenue stream and on customer outcomes.
Silos can lead to the damaging consequences for companies. Many customer success teams create self-serving processes. These are not always aligned with the scheduling of effort, prioritisation or goals of other teams. Feature requests are a common example of a process gone wrong, where the expectation management with customers can be out of step with sales, product and engineering teams.
Unclear or poorly defined roles and responsibilities can lead to duplication or non-attendance of effort. As part of the operating model design, customer success should be working with Sales as well as all post-sales functions to determine critical touch points, owners and importantly mutually agreed compensation across the core success criteria for customers. Commonly, we see Professional Services and customer success competing for the customer, when customer success should be an engine for future services sales.
Without an operating model, decision-making takes longer to make and is often tackled in a problem-to-solution manner, for example, if we are losing customers – let’s hire customer success, we need to improve perceptions of profitability – reduce headcount and we could win a big new customer – customise our product. Each builds more cost and waste into the business without a blueprint you are working towards.
This misalignment between the goals of other teams in the organisation creates tension and erodes trust in the customer success function. When trust is diminished, there is often a reduction in the quality, regularity and openness of communication across teams. This breakdown creates more negative consequences for not just the company (retention, innovation), but also with customers (growth, retention, reputation).
Can we get to a point where more customers do not equate to more customer success managers?
Reason 3: The Ubiquity of SaaS in the Enterprise
Do we still need to stand out to customers and instead make their lives easier?
If we go back to 2011/2012, many companies were just starting to explore cloud-based technologies. The model of having a human face alongside new technology adoption was new, exciting and welcomed by our customers. Ten years later, SaaS technology has become prolific and many enterprise customers now have between 130 and 230 applications – both managed and unmanaged.
Part of the shift in the early 2010s was to move to solution selling to business leaders, moving away from IT-only sales. With so many applications, our customers want to centrally manage them through consistent processes and budget management, the legacy is multi-threaded renewals. For this to happen, a business owner will engage on the budget, IT will manage the application, and procurement will sign off the spend.
Replicating the multi-threaded sale within the renewal, as the vendor, we may have an Account Executive, an Account Manager, a CSM and sometimes a Renewal Manager. These people navigating a renewal is a cost for our customers and us. And how welcome are we?
To remediate long and complex sales cycles, product-led growth is the goal of many companies.
Even then at renewal, we may end up with disputed true-ups, volume discounts demanded and competitor threats through pricing challenges.
With PLG we reduce the cost to onboard our customers - how can we use digital and AI to help us help our customers towards more transparent and fair renewals?
This content was presented on 23 October 2023 at Notion Capital’s CXO Day. Thank you for bound.co and Notion for the opportunity. Our blogs are written by us. We use generative AI to promote ideas and thought-challenge, not to write our content.
