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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Post-Sales Organizations are Broken

Post-Sales Organizations are Broken

Why does the journey from new customer acquisition to the renewal and expansion of the relationship involve five or more different departments?

Organizational Specialization or Isolation?

While it makes sense to have specialized teams to sell and service customers, the way these teams are organized is broken.  Organizational silos create barriers to customer success by inhibiting the levels of coordination and cooperation necessary to retain and grow customer relationships.

Do you remember the game telephone?

One person whispers a message to the next person and he/she whispers it to the next person and so on.  By the time the message is passed to the last person the message has changed from the original.  This same phenomenon occurs when multiple departments engage and serve customers.

The hand off from one department to the next creates gaps between expectations set and how they are met.

Are post-sales teams working towards the same goals?

Good communication is key, common goals and objectives are imperative. Distinct organizations may be motivated to achieve different and possibly conflicting outcomes.

If Sales is motivated to book new license revenue but not incented to think about retaining the customer relationship could this lead to potential issues?  The short answer is, yes.

The key is to align all customer interactions to the attainment of common goals – both short-term and long-term.  Each step in the customer lifecycle must contribute to a common outcome such as the retention of a customer relationship (or protection of revenue) and no individual or department should be rewarded simply for the achievement of interim milestones (e.g. closing a new deal).

New Customer Success roles are not enough

Efforts to add success mangers, onboarding teams, or renewal and expansion sales roles are stopgap measures to address some of the inefficiencies of siloed post-sales organizations. These stopgap efforts are not enough.

The Bottom Line

Post-sales coordination and cooperation is the key to customer retention and relationship revenue growth and provides opportunities to achieve greater staffing efficiencies.  If you cannot achieve the necessary level of inter-department cooperation within your current post-sales organizational structure it’s time to tear down your silos.

 

Check out Are You Organized for Customer Success – it reviews our findings about current post-sales organizational structures and offers some insights about what you can do to address these issues.

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Retention is Paramount – Make it a Strategic Priority!

Retention is Paramount – Make it a Strategic Priority!

If there is one service performance indicator to steer by it is RETENTION. You can have plenty of satisfied customers but still not grow, but you can’t grow unless you retain the customers you have.

Less NPS / More High-Touch Understanding

We have become too dependent on electronic surveys and NPS/CSat scores to tell us that our customers are okay. These are fine indicators but do not always tell us why we lose customers. Frankly many of the customers we lose may never have shared feedback through voice of the customer campaigns.

To mitigate churn, we need to dig deeper to understand why a customer stops (or never starts) using a product or why they do not perceive value from the services they pay for.

The best way to do this – pick up the phone or visit your customers and listen to their concerns! Don’t wait for customers to cancel before engaging them.

How We Keep Customers

Not every relationship can (or should) be retained, but if you listen carefully enough you will find that you can address many top churn factors.  Onboarding, adoption, success planning and account management are all powerful tools to mitigate risk factors.

Principles and practices of customer success are taking us in the right direction with an emphasis on retaining existing relationships. We need to make certain that we avoid the temptations to rely too much on tech-touch and keep personal channels of communication open with customers – especially the ones we do not hear from on a regular basis.

The Bottom Line

Retention of both relationships and revenue are critical indicators of business health.  Understand retention levels and underlying factors that influence them. Retention is paramount – make it a strategic priority!

 

Assessment: How Effective Are Your Service Renewal Practices?

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