Customer Success – Why Services Should Lead

Customer Success – Why Services Should Lead

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Customer Success – Why Services Should Lead

Products get built, products get sold and then Service steps in to take it from there.  At least that how it used to work.

Now – as an industry – we are aware that it’s a good idea to help customers use the products they buy, and it’s even better if we can make certain that customers are successful.

So now that the industry is buzzing with talk of customer success, what does it mean for Services?

Who better than Services to understand the challenges customers face in using products and the gratitude that can be earned by helping them.  It is time for Services to take a leadership role in driving the principles of customer success across the company.

Service organizations are in a unique position to drive customer success initiatives.  It is not enough however to stop at the edge of the Service silo.  For customer success to be fully effective other customer facing departments need to embrace success-oriented principles.

What should customer success look like at your company?

  • Sell quality products that have the features and performance customers need.
  • Onboard customers to help them use and apply your products.
  • Teach customers to be proficient and support them when they need help.
  • Demonstrate that your products are indispensable and accelerate customer outcomes.

When customers use your products effectively, they do not churn and are prime targets for renewal and expansion opportunities.

The principles of customers success are well documented, and many companies have already launched initiatives.  Yet, more than half of companies surveyed by ServiceXRG indicate that customer success is an activity within a single department, most often within Services. Customer success must be a company-wide effort. Sales, Marketing, and Product Development all play critical roles.

The Leadership Role for Services

Services organizations have been in the business of customer success for decades and many are actively engaged in success initiatives today. Services can take the lead and make the case for customer success company-wide.

Look to renewal rates, ARR/MRR growth, NPS and satisfaction as indicators about that current impact of customer success.  If you don’t have the data now, begin collecting it.

Highlight the activities that yield positive customer outcomes (onboarding, success planning, account management, etc.) and those the create customer angst (poor product quality, sales and service policies, poor hand-offs between departments, etc.).

If you would like to discuss how you can develop a compelling justification for implementing or expanding customer success at your company give me a call.

The Meaning of Net Recurring Revenue

Measuring Net Recurring Revenue provides a clear indication about the extent to which recurring revenue is growing or declining.  The more important insights from this metric come by examining the reasons for growth or contraction of Recurring Revenue.  Consider the following when examining Net Recurring Revenue:

  • What is the trend in Net Recurring Revenue – growth or contraction?
  • What is the rate of rate of change in growth / contraction?
  • What are the primary reasons for loss of recurring revenue – loss of customers or contraction or exiting of relationships?
  • What are the primary factors that contribute to revenue gains – new relationships or expansion of existing relationships?

The type and magnitude of changes to Net Recurring Revenue Rate can provide important insights into the reasons for changes to the value of customer relationships.  Use these insights to develop strategies to stem customer churn and reduction of contract value. Build upon practices and circumstances that lead to new customer engagement and growth of existing relationships.

Net Recurring Revenue

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Five Characteristics of Highly Effective Service Organizations

Five Characteristics of Highly Effective Service Organizations

The characteristics of service organizations that appreciably drive service effectiveness and desired outcomes may surprise you.  The most effective service organizations are not necessarily defined by their state-of-the-art systems, or adoption of the latest organizational designs (although they certainly support functional and business goals). The most effective Service Organizations embrace five core principles that, to my mind, transcend technology or org-theory trends.  See what you think:

Five high-effectiveness characteristics of service organizations

1.       A well-defined service strategy

Highly effective service organizations are guided by a coherent strategy that aligns service initiatives to overall corporate goals and objectives.  The service strategy describes how service operations contribute to the attainment of specific corporate objectives. And it’s responsive and resilient in the face of changing customer profiles, trends, and demands.

2.       Appropriate success metrics

Highly effective service organizations have the means to measure the contribution of service initiatives to specific corporate goals and objectives. Success metrics provide not only visibility into progress against goals, but also insights into areas to strengthen within the service organization. (And when the service organization exceeds its goals, success metrics give service leadership leverage come budget time.)

3.       Performance insights and analytics

Highly effective service organizations have the means to monitor the current level of performance for established success metrics with data and analytical insights. These insights can both stretch organization-wide and provide pinpoint focus at the associate level to inform performance management.

4.       Ability to execute

Highly effective service organizations have the tools and resources required to execute service strategies. Leadership readily leverages performance data and analytics to justifying necessary funding levels that will address system and resource limitations.

5.       Means to assess customer impact

Highly effective service organizations employ active customer feedback mechanisms to continually assess the effect of service initiatives on CX. This direct customer knowledge empowers the service organization to take an active “seat at the table” when corporate strategy and direction are defined, assessed, and refined.

Apply the 5 core characteristics of effective service organizations to become a strategic partner for the success of your company.

  • Make certain that the role of your service organization is clearly defined and well-aligned with overall corporate initiatives.
  • Monitor the indicators and service levels that reveal the extent to which service activities contribute to the attainment of corporate objectives. 
  • Leverage customer feedback as a basis to influence corporate goals. 
  • Identify opportunities to meet market needs and to mitigate issues that may diminish competitiveness and profitability.

Would you like to discuss how well you have embraced these Five Characteristics of Highly Effective Service Organizations?  Would you like examples of effective service strategies and metrics? Contact ServiceXRG. Use the chat button at bottom right, send an e-mail, or click on my calendar to schedule a specific time.

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Top Findings from the Customer Success Practices and Metrics Study

Top Findings from the Customer Success Practices and Metrics Study

Top Findings from the Customer Success Practices and Metrics Study

The State of Customer Success

Customer Success has become a widely used and universally accepted term to describe a variety of customer-focused activities. The term has many meanings: A department; a team; a role, a business strategy.

The fundamentals of Customer Success are not new, the general concept has been around for some time, but current practices suggest that something more profound is happening across the industry. There is broad recognition that helping customers adopt and apply products successfully will help retain and build customer relationship value.

Companies based entirely on “as-a-service” models have known for some time that landing new customers is just the beginning of the relationship. Companies that have evolved from the world of perpetual licensing have been slower to recognize that the imperative to retain and expand existing relationships applies to them too.

Customer success is not a one-sized-fits-all methodology and there is no right or wrong way to apply the principles of customer success provided that the outcome from success initiatives result in the ability to sustain and grow customer relationships.

Customer Success Structure

Top Findings

  • Customer Success is a series of interrelated activities performed throughout the customer relationship lifecycle.
  • Effective customer success initiatives include activities from onboarding to expansion with an emphasis on assuring customers successful use of products.
  • Nearly half of responding companies focus on just one or two customer success activities.
  • Customer Success reports to the CEO or Chief Customer Officer a quarter of the time (22.6%).
  • Typically, Customer Success is organized within an existing department, and most often within Service or Support (57.0%), sometimes Sales (16.1%) and least likely within Marketing (4.3%).
  • The primary customer success Key Performance Indicators (KPI) are strategic with an emphasis on the health and value of customer relationships.
  • The top customer success KPIs include customer sentiment as measured by customer satisfaction or NPS; recurring revenue, and retention (churn).
  • Companies report “positive” or “significant positive” results from their customer success initiatives with the greatest positive impact focused on recurring revenue rates and product adoption.
  • Customer success is reported to have the least impact on customer churn (retention) and margin.
  • 60 percent of the time the group responsible for establishing a new relationship is not responsible for the ongoing account relationship.
  • A formal hand-off from the sales channel to the team that “owns” the post-sales relationship occurs two-thirds of the time.
  • Less than half (41.5%) of companies provide formal onboarding services. Those that do are most likely to assure that customers can access and use the product or service they have purchased.
  • The initial customer welcome as part of the onboarding process, remains a personal activity using a combination of personal e-mails, phone calls and on-site visits.
  • Many (42.4%) companies use an automated welcome e-mail, but fewer than 5 percent rely on a fully automated welcome.
  • When account resources are included with product purchase they are often provided to fulfill vendor-focused objectives.
  • The responsibilities for customer retention and recurring revenue are seldom shared across multiple post-sales teams and are most often the burden of a single department.
  • Nearly half of companies surveyed indicate that they do not actively track formal Customer Success metrics.
  • The most common metric used to evaluate Customer Success team performance is customer sentiment expressed as satisfaction and/or NPS.
  • Less than half of companies have tools to enable core success activities. The majority of companies that indicate use of specific success systems built their own solution often based on their existing CRM infrastructure.

Download the full report for complete data and analysis.

Featured: Customer Success Practices and Metrics

Customer Success has become a widely used and universally accepted term to describe a variety of customer-focused activities. The term has many meanings: A department; a team; a role, a business strategy. Unfortunately, the broad use of the term has obscured the diverse and complex activities that underlie a potentially transformational initiative. This study examines the approach companies use to organize, deliver and measure their Customer Success initiatives.

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**A copy of the current findings (as of 12-4-18) will be sent upon the completion of the study.

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