How To Turn Customer Success Into YOUR Success.
We recently blogged about the churn factor in business and how a small reduction in churn can mean huge gains in company growth and profit. New research from McKinsey shows that in addition, time spent on customer success is really turning some companies around … for the better.
According to the report, businesses with top-quartile revenues achieved their strong showing by investing more in customer-success initiatives aimed at churn reduction. As we said in the previous blog, and corroborated by the McKinsey benchmark data, existing customers account for between a 33-50 percent of total revenue growth. Costs for revenue expansion from existing customers are also a fraction of those needed to acquire new clients, customers or patients.
But this is something different. This is not merely focussing on reduced churn, but rather, making sure that your clients are successful.
So how do you ensure customer success? Some firms actually employ a new breed of manager, a Customer-Success Manager (CSM) whose job it is to change the approach to customer life-cycle management. Instead of simply monitoring churn, the CSM implements ways to reduce it, by making sure customers are successful.
In a smaller business, this role may fall to the owner or one of the partners, but many medium and large companies are investing in customer success employees as part of a larger go-to-market (GTM) initiative. We should note: CSM’s are not “customer service reps” and in most cases, are not even customer facing. CSM’s do not necessarily strategically interact with customers, that role falls to customer service.
The Customer Success Manager works with other departments as an integration of functions and the activities of Marketing, Sales, Professional Services, Training and Support into a new profession developed to meet the needs of recurring-revenue model companies. They monitor customer success by making sure that customers do not get a sense that the company is simply interested in increasing profit. CSM’s are being employed by auto dealers, law and medical practices and retail business.
The report, primarily written for the software-as-a-service (SaaS) vertical says perhaps it’s time to embed customer success as a philosophy across entire organizations.
The study proves that, by identifying opportunities to deliver more value to customers, companies derive more value in return. Although it sounds basic, few companies have mastered this mutually beneficial transaction. The shift to customer success will involve a multiyear journey during which businesses build new capabilities and revise their traditional processes, all with the goal of understanding client needs, identifying products that can help them achieve their goals, and generating more customer value. Clients will return the favor by rewarding companies with greater sales, more referrals, and increased loyalty.
And that is the real value of customer success.