I received an interesting reply to last week's newsletter with the following question:
"Is customer success dead?"
I believe the answer is no... and yes...
Let's explore it.
The sudden shift in economic conditions for outside capital-backed SaaS companies is now driving scrutiny across all expense categories.
The rapid rise of interest rates in 2022 and 2023 caused a dramatic slowdown in the economy's growth sector, which had previously exploded during the pandemic.
This has increased scrutiny of all teams, including customer success, which is a good thing from my perspective.
It will force customer success leaders to tie their efforts to their company's strategic business goals. And perhaps even force them to rethink how they engage with customers, favoring more cost-effective and scalable approaches.
We can trace the concept of customer success back to the earliest SaaS companies—many credit Salesforce.com as the originator.
Multi-tenant SaaS allows companies to monitor and analyze customer data, create industry benchmarks, track customer health, and prioritize customers for proactive intervention and support.
The essence of customer success is using data to iterate the product, improve customer results, and proactively drive retention.
But somewhere along the way, customer success metastasized into something else.
Something much bigger.
The customer success manager (CSM) role expanded to include parts of onboarding, professional services, support, training, account management, and even customer marketing.
This "catch-all" approach works great for early-stage startups who are seeking product market fit and grabbing market share.
But as startups, VCs, and PE firms preached the gospel of customer success, the CSM role and its generalist tendencies became the standard for both early and established companies alike.
As I’ve written previously:
“it's clear that generalist roles of any sort quickly become insufficient as a company and its customer base grows.”
My perspective hasn’t changed.
To make matters worse, CSMs often find themselves at odds with other departments due to their broad remit and overlapping responsibilities. To resolve this, leaders have learned to lean on “RACI” matrices to explain the difference between the responsibilities of CSMs, account managers, support reps, and service team members across the customer journey.
Despite these problems, I believe that killing the concept of customer success would be throwing the proverbial baby out with the bath water.
That's because SaaS companies cannot survive without delivering meaningful customer outcomes to drive long-term retention.
Even so, there is a difficult truth we need to address: For the reasons above, the CSM role doesn't appear to be the most effective OR efficient way of driving customer success.
We need a better approach in a world where cost efficiency is standard fare in the boardroom.
We need to get back to the fundamentals.
To that end, I believe we can break down customer success into five core elements. Let's call it ABC2A:
- Analyze - gather and analyze customer results
- Benchmark - compare results across groups of similar customers (cohorts)
- Communicate - communicate results and benchmarks to each customer
- Consult - provide personalized recommendations on how to improve results
- Assist - help customers implement changes that will improve their results
Analysis, benchmarking, and communication are best when centralized and automated across all customers.
Product data analysts and industry experts collaborate to identify meaningful trends and useful cross-customer comparisons. These insights are regularly processed and delivered to customer stakeholders through a recurring scorecard or progress report delivered in-app or via email to all stakeholders (even executive sponsors).
As a Chief Customer Officer responsible for customer support, I receive monthly emails like this from Zendesk. I’ve never once spoken to a Zendesk CSM, but I use these emails to discuss trends and benchmarks with my VP of Support.
With performance data in the customers' hands, we can then focus on consulting with and assisting, i.e., helping them implement changes to improve their outcomes.
Consulting and assisting might be delivered via one-on-one consultation.
But more scalable approaches for customers with lower average contract values include office hours calls, webinars, knowledge bases, or other one-to-many programs.
As participants in these programs, we teach customers how to interpret their own performance results and provide tips, tricks, and solutions for improvement.
These programs can work for large accounts, too.
Power users often consume content and resources asynchronously, even if they also have the opportunity for one-on-one consultations.
Once established, every customer is entitled to participate in these programs. The incremental cost of adding a participant is close to zero.
As part of the broader product pricing and packaging strategy, you can determine whether to offer one-on-one coaching sessions, how frequently they can be utilized, or whether they're part of separate service offerings.
In the ABC2A model CSMs become subject matter experts and consultants... Success Consultants, if you will.
They hand over account management responsibilities to commercial account managers who are incentivized on renewals and expansion (I know, a larger conversation in and of itself).
The Success Consultants' core objective is to learn from customers, establish best practices, and drive widespread adoption of those practices across the installed customer base.
Their titles, such as “Employee Recruiting Strategist” or “Supply Chain Optimization Consultant," resonate with our customers and appeal to their specific needs.
These teams are smaller but happier and more effective, and there’s less friction related to the division of labor and responsibilities internally.
I'm curious to hear your feedback. What would have to be true for ABC2A to work for your company? Hit "reply" and share your thoughts with me.
I do believe rumors of the death of customer success are exaggerated.
But the status quo approach needs to be put out of its misery.