Instilling a Culture of Growth-Oriented Customer Success

By: Chris Semain Cloud Computing, Cloud Sales, Digital Transformation, Revenue Growth Strategy, Technology Sales

Alexander Group’s (AGI) XaaS Sales Strategy Market Study blog series continues with another critical leadership priority for XaaS model optimization: instilling a culture of growth-oriented customer success.

Customer Success has gone mainstream. According to AGI research, the percent of companies utilizing the Customer Success function increased from 60 percent to 92 percent for pure-plays and from 11 percent to 75 percent for hybrids between 2016 and 2018. What’s driving this rapid shift? The answer lies in the collective perception that—despite uncertainties—an enhanced CSM role is critical to sustained bookings and revenue growth.

While utilization is now common across the technology landscape, the design, deployment and execution of the Customer Success function varies substantially from company to company. AGI reported on this variance previously, and our recent experience working with technology organizations suggests little has changed. Usage and adoption remains at the core of Customer Success. However, significant debates continue regarding the function’s role in land, expand and renew sales motions as well as appropriate forms of remuneration to guide and motivate Customer Success personnel. Questions are plentiful, yet one thing is clear: instilling a culture of growth-oriented Customer Success is a principle that should guide all organizations with recurring revenue models going forward.

AGI recently interviewed and surveyed more than 60 leading technology firms as part of our 2018 XaaS Market Study. We uncovered mission-critical actions companies must take to yield strong returns from increased investment in Customer Success. The clearest step is moving from minimalist to enhanced practices across the ILAER spectrum.

Enhanced Practices:

Identify: While CSMs generally spend the least amount of their time in the Identify phase, their deep comprehension of product use cases and business outcomes can drive more “top-of-funnel” opportunities. Leading companies employ Customer Success to share best usage/adoption practices and document notable use cases in self-service content (e.g., blogs, articles, etc.) and interactive forums for prospective buyers. Furthermore, CSMs share key use case insights and anecdotes with lead generation reps (SDRs) to enable them to better qualify prospects.

Land: CSMs do not own the Land phase as the traditional sales representative is still the primary resource for securing new accounts. However, more companies are inserting CSMs within targeted stages of the sales process to set the right expectations from a solution feature perspective and more importantly, lay the foundation for seamless activation. A positive activation experience has major downstream impact on retention rates, so companies are motivated to provide transparency to its prospects on how the activation process will work before, not after, the sales process is completed.

Adopt: Telemetry data is huge. Virtually every company is focused on how to collect product usage information. Leading companies educate CSMs on how to interpret usage information that will 1) allow them to augment or upsell on customers’ feature usage, 2) capture ways to improve customer experience and utility, and/or 3) identify at-risk renewals early in the process.

It is also imperative that CSMs establish a set of adoption milestones that are mutually agreed to by their customers. Milestone examples include: completing all training courses, conducting the first QBR and achieving 100 percent seat activation. Achievement of customer-specific milestones is critical to building a solid relationship in Year 1. And then the cycle starts again. A new set of milestones must be developed, some of which will differ from the original set as customer needs will vary from year to year as its product needs and vendor experience evolve.

Expand: The best CSMs don’t simply sniff out an upsell or cross-sell opportunity and “throw it over the fence” to the sales team. High-caliber players will proactively engage in business value discussions with users and decision-makers. They stay contemporary on industry trends and customer news, and subsequently make connections on how their products and services impact customers’ business performance.

Renew: Many AGI clients are at the beginning stages of deploying early warning systems to stave off dollar and customer churn. Leading organizations instruct CSMs to monitor these systems regularly. They proactively work with their customers to navigate roadblocks that prevent customers from realizing expected value. Leading companies are also developing and executing a much longer renewal playbook; we saw a lot of “30-day renewal plans” a couple years ago, but now we hear “90- and 180-day renewal plans” with increasing frequency. Playbooks are also becoming more sophisticated where Customer Success organizations leverage a diverse set of plays ranging from complex (e.g., tiger teams focused on big, at-risk renewals) to straight forward (e.g., auto-renewals). The key is driving each customer into the right play. CSMs accomplish this by leveraging early warning systems and initiating the renewal process much earlier in the customer cycle.

The message of 2019 is clear: move beyond minimalist Customer Success practices. Take the steps today that will ultimately lead your company to having a culture of growth-oriented customer success.

Curious to see if your firm is keeping pace with leading-edge organizations? Schedule a readout of AGI’s XaaS Sales Strategy Market Study with a tech practice leader today.

Read the overview and other parts of this blog series:
Overview
Part 1
Part 2
Part 4
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Chris Semain

Chris Semain is a principal in the San Francisco office and co-leader of the firm’s Technology practice. He works with clients in multiple industries with a particular emphasis on software, hardware and professional services. Chris has completed extensive project work related to sales organization evaluation, market segmentation, sales force sizing and deployment, incentive compensation design and sales investment optimization. Chris also leads the firm’s Private Equity practice by advising managing partners, operating executives and portfolio company leaders on sales effectiveness challenges.


Chris holds his B.S. from the University of Southern California and MBA from the University of Texas at Austin. Chris is also a Certified Sales Compensation Professional.


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