Understanding the Differences Between Technical Support and Customer Success

As we look to embrace Customer Success it is imperative that we have a shared understanding about what Customer Success is and is not. All too often we find examples of Customer Success initiatives that involve little more than changing the name of the Support department or adding a few new roles to focus on success-related activities.

Every step towards a Customer Success-oriented approach is positive, but if we truly want to pursue Customer Success, we need to understand what it is and why it is different from traditional Technical Support models.

The Journey to Customer Success

The term Customer Success seems to permeate the technology industry with nearly every company engaged in some type of success initiative.  The focus and awareness of Customer Success is timely and refreshing.  I don’t mean to imply that technology companies have not been focused on making customers successful in the past, but this emphasis on Customer Success creates a new level of awareness and commitment to truly impacting customers’ ability to derive benefits from technology.  Customer Success has profound implications for the ways that companies engage, serve, and retain customers.

Customer Success – Functions vs. Philosophy

It is important to distinguish between customer success-focused activities (functions) and Customer Success as operating model (philosophy).  Support and many customer-facing departments have been engaged in success-focused practices long before we started labeling them as Customer Success.  Today, perhaps we label too many things as Customer Success.

By instituting Customer Success functions (onboarding, driving adoption, customer health indexing, success management, etc.)  within Support, we do not necessarily achieve a customer success-focused way of conducting business. True Customer Success requires transformation and cooperation across many departments and introduces new ways to define and measure business performance.

The Customer Success – Spectrum

We need to recognize that there are variations of Customer Success. Customer Success has specific functions, roles, and ways of conducting business.  If you embrace one or even a few customer-success focused activities, or have roles with Customer Success in the title, it does not mean that you have fully embraced Customer Success. I have defined three distinct stages in the “success – spectrum.”  See the descriptions and comparisons below to determine where you are in your journey to Customer Success.

Technical Support

Traditional Technical Support functions focused on issue resolution and answering how-to questions primarily in response to customer questions.

Success Enable Support

Introduction of success-focused roles such as Customer Success Managers and adoption of success practices such as onboarding, health assessments, journey mapping and success planning. Introduction of proactive customer engagement.

Customer Success

Cross-functional cooperation or organizational alignment primarily focused on customer engagement and proactive service delivery. Primary business objective is to retain and grow relationship value.

Technical Support – A Cornerstone of the Customer Relationship

Technical Support is a practice that seems to be as old as the technology industry itself.  For many companies the Support department is the primary interface with customers after the initial sale.  The mission of Support is to be there for the customer when they needed help, but not necessarily to engage customers proactively to assure that they can use and apply their applications.  Once again, this is not to suggest that companies or Support organizations are not committed to helping customers succeed – some of the most committed and customer-centric people in the technology industry can be found within Support.  The fact is that traditional Support organizations typically do not have a mandate nor the resources to fully drive Customer Success outcomes.

Success Enabled Support – A Hybrid Approach

Somewhere between a traditional Technical Support organization and a full-fledge Customer Success initiative is a hybrid model that introduces success-focused practices and resources into Support. Success Enabled Support include success-focused roles such as customer success managers, onboarding and adoption specialists, and retention, renewal and upsell experts. Practices include formal onboarding, efforts to drive adoption and plans to define and drive successful outcomes (success plans and journey maps).

These success-focused resources and activities are a quantum leap towards Customer Success. Yet, they are often contained within siloed organizational structures or lack full organizational commitment and governance to truly drive an enterprise-wide coordination to maximize retention and relationship growth.

Customer Success – A Business Model

Customer Success is a strategy to maximize customer retention and create opportunities for revenue expansion within the customer base. It is not simply an organizational structure, function, process, team, or job description – Customer Success is a customer engagement and retention philosophy. It should be seen as a way of doing business that transcends all aspects of a company from the way it develops products to the way it sustains and expands customer relationships.

Customer Success is predicated on the understanding that a significant portion of revenue and growth comes from existing customer relationships and that for technology vendors to grow relationship value their customers must be able to apply and succeed with the products they have purchased.

Customer Success is a critical methodology for companies that depend on recurring revenues from license, maintenance, and other service subscriptions.  Customer Success is not however just for companies that sell products as-a-Service.  Companies that sell perpetual software licenses, equipment and devices can benefit from Customer Success to drive product adoption and to assure maintenance contract renewals.

Technical Support vs. Customer Success – Key Differences

The following table highlights some of the key distinctions between traditional Technical Support, Success Enabled Support, and all-in Customer Success business models.

 

Technical Support

Success Enabled Support

Customer Success

Primary Objective

Resolve product-related issues, answer “how-to” questions.

Help customers adopt and succeed with products.

Cross-functional approach to engaging, retaining, and expanding customer relationship value by helping customers to use and succeed with products.

Target Audience

Customers that are entitled to and request Support through warranty or service contract.

Targeted segments of the customer base (e.g. top tier accounts or customers that purchase a specific product or service type).

Customers that purchase renewable products and services, and/or buy specific success plans.

Entitlement Program

Support portfolio.

Success plan or add-on.

Success plan, add-on, or included with product purchase.

Monetization

Support fees.

Add-on fees for customer success programs.

Success program fees and subsidies from product revenue, retention, and growth.

Organizational Model

Stand-alone Technical Support organization.

Distinct team of customer success-focused resources within Support department. Some coordination and cooperation with other customer facing teams.

Cooperation across functional roles (Sales, Professional Services, Education, Support) organized by matrix or reporting structure.

Primary Functions

Cases resolution.

Onboarding, drive adoption, success planning, customer health monitoring, retention.

Onboarding, drive adoption, success planning, customer health monitoring, retention, revenue expansion.

Success Metrics

Time to Resolve (TTR), First Contact Resolution (FCR), Cost per case, Net Promoter Score (NPS), Customer satisfaction.

Process execution: Rate of adoption, success plan execution, retention, renewal rates.

Customer retention, revenue growth rate (Annual Recurring Revenue (ARR) / Monthly Recurring Revenue (MRR), renewal, growth)

Service Levels

Service levels and terms defined by support contract.

Defined by success plan terms or triggering events (e.g. customer health).

Ongoing touch points throughout the relationship or triggering events (e.g. customer health).

Service Delivery

Reactive, customer initiated.

Proactive, often triggered by customer milestones or events.

Proactive, often triggered by customer milestones or events.

Retention

Emphasis on contract renewal, typically the responsibility of another group.

Emphasis on recurring revenue renewal, guided by CSM team, booking often responsibility of another group.

Emphasis on recurring revenue renewal, coordinated by cross-functional success team equally accountable for retention/renewal/growth.

Growth

Possible add-on upsell, typically the responsibility of other group.

Opportunity identification because of customer engagement. Booking often responsibility of another group.

Opportunity identification because of customer engagement. Cross-functional success team equally accountable for retention and growth.

The Journey to Customer Success

The journey to Customer Success may not require the full transformation to an entirely new way of conducting business, organizing resources, or measuring business performance.  Adopting some success-focus activities and creating success roles may be adequate for your business.  For companies that depend upon recurring revenues, customer retention and relationship growth are paramount, and a true Customer Success operating mode is an effective strategy.  Be honest about where you are in your journey and what approach to Customer Success is appropriate to your business.  Be careful not to overstate where you are in your journey if you have farther to go.

Featured: The Journey to Customer Success

The journey from Technical Support to Customer Success requires more than a name change or the addition of a team of Customer Success Managers. To fully embrace Customer Success, Support must rethink its role and adopt new ways to engage, retain and grow customer relationships. This Playbook provides a guided journey across four key milestones to help you define essential Customer Success capabilities.

This Playbook is FREE – Register or Log-in to download your copy.

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*Membership level determines your access to ServiceXRG research and other member services. Paid memberships include access to research and playbooks. Free memberships include access to some reports and discounts to others. Please visit our membership page for a list of available membership programs.

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The problem with organizational silos

Organizational silos create barriers to customer success by inhibiting the levels of coordination and cooperation necessary to retain and grow customer relationships. The hand off from one department to the next creates gaps between expectations set and how they are met. This study reveals how the isolated sales and service silos of the past can evolve to drive Customer Success.

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How Effective are Your Renewal Practices?

Service contract renewal performance is fundamental to overall corporate financial health. Existing service relationships represent a predictable recurring revenue stream and provide the foundation from which to grow revenue. Before you can grow relationship value however, you must be able to retain what you have.

Service Renewal Performance: Leaders vs. Laggards

Get an Instant Assessment

Use ServiceXRG’s Contract Renewal Assessment tool to get an immediate evaluation of your current renewal practices and performance.  The assessment takes just a few minutes and will provide you with a customized performance scorecard with recommendations for improving contract renewals.

The assessment covers the following areas:

  • Overall Renewal Health
  • Renewal Rate Performance
  • On-Time Renewals
  • Renewal Practices
  • Service Onboarding Practices
  • Success Practices
  • Value Delivery
  • Renewal Process

You will receive a customized assessment with observations and recommendations based on your input. Your report will be sent to you via e-mail upon completion of this questionnaire. Please note that your responses will be kept confidential.

Stemming Maintenance Contact Attrition

Stemming Maintenance Contact Attrition

Over time, the implication of achieving only industry-average renewal rates will result in significant customer attrition and lost revenue.  Industry-average renewal rates show that nearly one-fifth of customers are lost at renewal time.  As these losses compound over time, the effects are dramatic.

Industry Average Renewal Performance

A steady erosion of the customer base over a five-year period is typical for companies that only achieve industry average support and maintenance contract renewal rates.  The impact of consistently the industry average contract renewal rate (82.4%) illustrates the erosion of the customer base.  This example shows that at the end of a five-year period, the percent of customers under contract erodes to 46% of the original relationships.

This example does not take in to account new contracts added or other growth activities.  It is intended to highlight the impact of achieving only industry average performance.  Increasing support and maintenance contract renewal rates by 5% to 10% can have a dramatic impact on the percent of customers retained and on net revenues.

The Impact of Industry Average Performance

Moving Beyond Industry Average Performance

Industry average performance is not good enough.  To maximize support and maintenance contract revenue you need a clear picture of your current situation or a plan to understand and mitigate attrition. ServiceXRG offers the following recommendations to assess and improve your customer retention capabilities:

  1. Establish an up-to-date and actuate measure of your current support and maintenance contract renewal performance.
  2. Benchmark your current renewal performance – are you at, below or above industry average performance?
  3. Identify the top reasons for contract non-renewal (hint: ask your customers). See also Why Your Customers Don’t Renew Service Contracts and What You Can Do About It.
  4. Develop a mitigation plan to stem contract attrition.
  5. Forecast the impact of increasing contract renewal performance by 5%, 10% or more.
  6. Use the forecasted benefits from increased contract renewal performance to make the case for funding corrective actions (new or better tools, more staff, or changes to business processes).
  7. Continue to refine processes, tools and performance indicators to maximize retention and revenue from the current customer base.

Assessment: How effective are your service contract renewal practices?

Are you leaving money on the table? Do you know why customers cancel service contracts? Use ServiceXRG’s Renewal Assessment tool reveal your Service Contract Renewal Health Score.
You will receive immediate feedback with recommendations to maximize service renewal performance, a copy of the Service Renewal Best Practices playbook and a complimentary coaching session.

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Playbook: Service Renewal Best Practices

The Service Renewal Best Practices playbook introduces the metrics, practices, and activities necessary to optimize service contract renewal performance and grow customer relationship value.

Would you like a free copy of the Service Renewal Best Practices playbook?

Use ServiceXRG’s Renewal Assessment tool and receive your copy.

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*Membership level determines your access to ServiceXRG research and other member services. Paid memberships include access to research and playbooks. Free memberships include access to some reports and discounts to others. Please visit our membership page for a list of available membership programs.

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?

Check out ServiceXRG’s Renewal Assessment tool to reveal your Service Renewal Health Score.  You will get immediate feedback with recommendations to maximize service renewal performance.

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Service Revenue Generation Metrics

The ability to accurately track the effectiveness of Service Revenue Generation activities is essential to maximizing revenue from new and existing customers. There are three primary opportunities to capture service revenue including the sale of new contracts at the time of the initial product sale (Attach); renewal of existing service contracts (Renew); and as reinstatements (Win Back) of contracts that have been previously cancelled by customers. This article presents a consistent set of metrics and definitions to help companies measure the overall of service sales and renewal policies, programs and personnel.

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How Effective are Your Renewal Practices?

Use ServiceXRG’s Contract Renewal Assessment tool to get an immediate evaluation of your current renewal practices and performance. The assessment takes just a few minutes and will provide you with a customized performance scorecard with recommendations for improving contract renewals.

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Stemming Maintenance Contact Attrition

When achieving industry-average renewal performance the percent of customers under contract erodes to 46% of the original relationships at the end of a five-year period. Here are suggestions for moving beyond industry average performance.

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Why Your Customers Don’t Renew Service Contracts and What You Can Do About It

Why Your Customers Don’t Renew

Renewal Begins Day 1

From the day you sell a service contract you need to begin working on the retention of that customer relationship.  The worst thing you can do is wait until 90 days prior to the service contract expiration to send a renewal notice.  Each of the reasons for nonrenewal can be mitigated – or at least minimized – through well defined renewal practices that begin on day 1 of the service relationship.

Keep the customers you have and find ways to prevent customers from canceling services in the first place.  Retention is paramount – make it a strategic priority!

Reasons for Non-Renewal

What You Can Do About It

Addressing Perceived Lack of Value

The most common reason for service contract cancelation is that customers do not perceive that the benefits outweigh the cost of continuing the service. Or, they do not feel that the risk is too great to cancel – this is a common perception by customers that use mature products.

Active / Cancelled

For customers that actively use your product, but have canceled services, there is still hope for a win back.  Re-engage active product users and attempt to convince them of the benefits of your service.

Electronic mail and automated campaigns will not be enough.  Call them and listen to their concerns.

You will learn a lot about why customers canceled in the first place (price, lack of use, product issues, etc.).  Consider making modifications to the service to make it more appealing (better entitlements and/or lower price).

Active / At Risk

Within your active customer base chances are good that you have customers that would like to cancel but are not willing to accept the risks associated with lack of service or out of date software.

There is still time to protect these relationships. Work with customers potentially at risk to help them use and realize the value of service. Consider the following:

  • Interact with customers throughout the relationship and don’t just wait for them to call you. Interaction can occur through a support case, a proactive call to the customer, an informative e-mail newsletter, and publication of useful self-help resources (blog, wiki, knowledge base).
  • Report progress relative to success plans, support plans, and journey maps.
  • Make sure that customers are taking advantage of the services offered through the service relationship.
  • Meet service-level commitments and make sure that customers are aware of your performance.
  • Conduct periodic health checks and account reviews (e.g. Quarterly Business Reviews or more frequent) with both technical and business unit stakeholders.
  • Leverage each customer interaction as an opportunity to reinforce the value and necessity of the service relationship.
  • Establish a service usage “statement” that highlights the type and frequency of services used. Provide customers with evidence about the benefits they receive.

What to Do About Customers that No Longer User Your Product

The second most common reason for service cancelations occurs when customers stop using your products or have difficulty using it in the first place.

Once this occurs – for whatever reason – there is little to do to win the customer back.

Onboard, Adopt, Success

The best strategies to minimize cancelations due to lack of use is to develop good onboarding, adoption, and success practices to make sure customers can use and apply your products effectively. Consider the following:

  • Develop customers’ product skills by offering easy to access and affordable (preferably free) training programs.
  • Help customers define and achieve success through success planning.
  • Define journey maps, provide coaching and guidance to help customers attain specific outcomes.
  • Do not wait for customers to call with problems, engage customers proactively through automated and personal methods.
  • Offer or extend proof of concept, architecture, and design guidance.
  • Define and monitor customer adoption (extent and frequency of use) and success (impact of use) metrics.
  • Assign success managers or teams to monitor and drive customer adoption and success rates.
  • Monitor product performance and service use.
  • Conduct periodic health checks and account reviews.
  • Offer a portfolio of value-added outcome services.

Optimize Renewal Practices

The actions you take to secure the service renewal are fundamental to success.  Great programs and great relationships can be undermined by simple breakdowns in renewal procedures.  The costliest process breakdowns include not asking for the renewal or asking the wrong person.  Consider the following:

  • Maintain a relationship with the person(s) responsible for renewing the service contract.
  • Target multiple points of contact for renewal notification.
  • If the primary person leaves find out who will assume responsibility for the relationship.
  • Set clear expectations with the customers about budgeting for contract renewals including any uplifts or add-on fees.
  • Notify customers at least two months prior to renewal expiration.
  • Analyze the reasons customers do not renew.

Service Renewal Benchmarks

Assessment: How effective are your service contract renewal practices?

Are you leaving money on the table? Do you know why customers cancel service contracts? Use ServiceXRG’s Renewal Assessment tool reveal your Service Contract Renewal Health Score.
You will receive immediate feedback with recommendations to maximize service renewal performance, a copy of the Service Renewal Best Practices playbook and a complimentary coaching session.

Begin Assessment

Playbook: Service Renewal Best Practices

The Service Renewal Best Practices playbook introduces the metrics, practices, and activities necessary to optimize service contract renewal performance and grow customer relationship value.

Would you like a free copy of the Service Renewal Best Practices playbook?

Use ServiceXRG’s Renewal Assessment tool and receive your copy.

Login to Access the Full Report

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*Membership level determines your access to ServiceXRG research and other member services. Paid memberships include access to research and playbooks. Free memberships include access to some reports and discounts to others. Please visit our membership page for a list of available membership programs.

Related Articles

Service Revenue Generation Metrics

The ability to accurately track the effectiveness of Service Revenue Generation activities is essential to maximizing revenue from new and existing customers. There are three primary opportunities to capture service revenue including the sale of new contracts at the time of the initial product sale (Attach); renewal of existing service contracts (Renew); and as reinstatements (Win Back) of contracts that have been previously cancelled by customers. This article presents a consistent set of metrics and definitions to help companies measure the overall of service sales and renewal policies, programs and personnel.

read more

How Effective are Your Renewal Practices?

Use ServiceXRG’s Contract Renewal Assessment tool to get an immediate evaluation of your current renewal practices and performance. The assessment takes just a few minutes and will provide you with a customized performance scorecard with recommendations for improving contract renewals.

read more

Stemming Maintenance Contact Attrition

When achieving industry-average renewal performance the percent of customers under contract erodes to 46% of the original relationships at the end of a five-year period. Here are suggestions for moving beyond industry average performance.

read more

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