Your growth engine is working wonders. Sales reps are bringing in new logos and cross selling into the existing customer base. Everything is looking great! Bookings are increasing, but strangely enough, revenue is not growing as fast as you would have expected. A deeper look indicates that churn has steadily increased and now hovers in the mid-teens. It seems that your revenue bucket is leaking as fast as your sellers can fill it! Customers are leaving before you have actually recouped your cost of acquisition. What is a sales leader to do?
In the cloud, the sales leader cannot focus only on bringing business in the door. Recurring revenue models require the sales leader to place significant emphasis on keeping customers once they have been acquired. The finance community likes the predictability and profitability of a recurring revenue stream. The reality for sales leaders in recurring revenue models is they must continually “win” the customer’s business, or risk churn.
The Role of Customer Success
The Customer Success function is on the rise in cloud sales organizations with recurring revenue models as they grow up, grow larger and expand. While organizations may implement the role somewhat differently, the core remit of the job is the same: reduce churn risk and turn your customers into promoters of your products and services. What Sales is to “closing,” Customer Success is to “keeping”; and as the name implies, this function is tasked with ensuring the success of your customers, post-contract.
To better understand the Customer Success role, let’s look at the typical customer journey. There are several phases within the Customer Lifecycle that every single customer goes through. Within each of these phases, there are unique flashpoints where a poor experience could result in churn. The role of the Customer Success function is to know where these flashpoints are within the process, proactively identify customers that could be at risk for churn and take steps to ensure that the customer continues their subscription. Here are four of the most common flashpoints:
- On-boarding: Once the sales contract has been signed, customers go through an on-boarding phase which introduces them to the service, best practices to drive adoption and how to get support. Often times, this process will be led by the Customer Success function with support from an implementation team. It is the job of Customer Success to ensure that all customers make it through this phase, learning what they need to know and emerging with the confidence to move on to the deployment phase. Failure to truly understand how to best deploy the solution often results in either early account churn or excessive support resources required to correct a poor on-boarding experience.
- Deployment: Following the on-boarding process, customers go through their first deployment. The system is configured to their specifications, and workflows are customized to support the new solution. Implementation teams will often play a lead role in this phase, but it is up to the Customer Success function to work with the customer to define and quantify what a successful outcome looks like, addressing such questions as: What would make this deployment a resounding success? What are possible roadblocks that could arise that would take the customer off course? How can Customer Success ensure that the experience is a good one and that the customer is able to realize the benefits that they purchased?
- Adoption: Once the solution has been configured and has been launched to the target audience, Customer Success helps the customer gain traction and drive usage of the solution. Customer Success should come to the table with strategies and tactics to help drive user adoption as they seek to incorporate the solution into the Standard Operating Procedures of the business. The goal of Customer Success is to have users ask themselves, “How did I ever do this without your solution?” Regardless of how great the solution is, without strong adoption it would be hard for anybody to rationalize continuing to subscribe if it is never used.
- Growth: If there has been strong adoption of the core products, customers will often expand their usage to other business units or look at other products within the portfolio. This is where the Customer Lifecycle begins again. By expanding their usage, customer expectations continue to rise, but so does their investment in your company. The role of Customer Success is to ensure that the customer continues to see value in their relationship with you.
One topic we have purposefully omitted until now is the concept of renewals. The primary role of Customer Success is to ensure the customer realizes benefit from the relationship with your company, and thus desires to continue or expand their investment in your services. Does the customer success role handle renewals? Or should you deploy a separate role to focus solely on renewal sales? Some companies combine this function while others deploy distinct roles. In either case, companies that only deploy renewal sales reps but do not invest in customer success risk lower customer adoption, lower renewal rates, and thus higher churn.
To learn more about how the Alexander Group has helped our clients define the role of customer success to minimize customer churn and grow top-line revenue, please visit our Cloud Sales page.
Originally published by: Dale Chang