Let’s use you as an example: Your business needs effective sales and marketing to be successful. But in today’s competitive market, customers have endless options, so sales and marketing alone aren’t enough to maintain continuous growth. So, what are the most successful businesses today doing to succeed? You guessed it: customer success!

Customer success is the effort a business takes to help its customers succeed with its product or service. This means ensuring that customers are using a product or service to achieve a desired outcome, whether it’s a business goal or a personal milestone. Customer success teams take a proactive approach to help customers use their product more effectively so they can achieve their top goals, including:

• Reducing Churn Rate: By understanding customer needs and addressing potential issues before they become major problems, customer success teams can significantly reduce the likelihood of customers leaving or downgrading.
• Increasing Sales and Revenue: Through upselling and cross-selling, customer success teams can encourage existing customers to purchase more or higher-value products, thereby increasing sales and revenue.
• Increasing Customer Loyalty and Retention: By consistently providing value and excellent service, customer success teams can foster stronger relationships with customers, increasing their loyalty and likelihood to continue using the product or service.
• Improving Product Adoption: Customer success teams can provide training and resources to help customers understand and use a product's features, thereby improving product adoption rates.
• Boosting Customer Satisfaction: Through proactive support and engagement, customer success teams can enhance the overall customer experience, leading to higher satisfaction rates.
• Increasing Customer Lifetime Value: By maximizing customer satisfaction and loyalty, customer success teams can increase a company's total net profit from any given customer — their lifetime value.
• Gaining Customer Referrals: Satisfied customers are more likely to refer others, and customer success teams play an important role in creating these satisfied customers. This can lead to new business, thereby increasing overall growth.
• Enhancing Brand Reputation: Happy, successful customers can become advocates for your brand, sharing their positive experiences with others and enhancing your brand's reputation.

For SaaS and many other subscription-based businesses, customer retention is vital for growing their monthly recurring revenue. After all, increasing customer retention by only 5% boosts profits from 25% to 95%! Customer success increases the chances that customers will stick around when they are successful with a product.

Why Is Customer Success Important?

The importance of customer success simply cannot be overstated in business. The harsh reality is that the cost of acquiring a new customer can be anywhere from five to 25 times more than the cost of retaining an existing one. In a fiercely competitive SaaS market, where the risk of customer churn is constant, providing a great customer experience is more important than ever.

When customers find success in using a product, they're much less inclined to try out any alternative options. This holds particularly true when they're satisfied with the product and receive top-notch service throughout the entire customer journey. This satisfaction and success with a product create a sense of loyalty, making them less likely to switch providers.

The rise of SaaS and subscription-based business models have been among the biggest driving factors for the amplified focus on customer success — gone are the days when companies sold one-time deals to customers.

The current trend leans heavily towards businesses selling monthly subscriptions. This shift has resulted in an environment where customers must perceive continuous value from a product to justify its monthly renewal.

When a customer sees value and success in using a product, they're more likely to renew their subscription, thereby increasing the company's recurring revenue and the customer’s lifetime value. On the other hand, if a company fails to meet expectations, the results can be devastating. Research suggests that for every 26 unhappy customers, only one will reach out to customer support to voice their complaints.

This is where the role of customer success becomes especially important. By taking a customer-centric approach, maintaining a constant dialogue with customers, asking for their feedback, and ensuring they’re deriving value from the product, businesses can take the initiative to significantly reduce customer churn.

Customer Success Versus Customer Service

While often used interchangeably, it's important to understand that customer success and customer service are two separate terms. Even though they seem fairly similar, they serve distinct functions within an organization.

There are several differences between the two, but it’s easiest to think of them this way:

• Customer success is proactive
• Customer support is reactive

Customer service and support teams play an essential role in any company. These customer experience teams are the first line of defense when dealing with customer issues and complaints. When a customer encounters a problem or has a question, they reach out to the customer support team.

The team then reacts to the inbound communication, providing solutions, answering questions, or troubleshooting issues in real-time. By default, customer service and support are reactive because they respond to issues after they've occurred and work to repair any potential damage to the customer relationship.

On the other hand, the customer success team takes a more proactive approach. Their role isn't just about tackling issues as they arise but rather preventing those issues from happening in the first place. They work tirelessly to understand the customer's goals and needs and optimize the product or service to provide a positive customer experience. The idea is to anticipate potential problems and work preemptively to eliminate them before they impact the customer.

In other words, while customer service responds to immediate problems, customer success focuses on facilitating the customer's long-term success with the product or service. The customer success team seeks to enhance the customer's overall experience and satisfaction, thereby reducing churn and increasing retention.

To sum it up, customer service and success are integral to a company’s operations, but they serve different purposes. Customer service and customer support teams respond to inbound communication and requests from customers. Whereas the customer success team proactively works to eliminate customer issues or problems before they arise and result in a negative customer interaction.

How To Achieve Customer Success

Achieving customer success isn't completing a sale and leaving the customer to understand your product or service independently. Instead, the ultimate objective should be to guarantee that your customer finds value in what you offer and continues to see tangible results post-sale. The customer success team's focus should be strategically fostering a strong, mutually beneficial relationship with the customer.

Savvy companies don't leave customer success to chance. They don't just hope their customers find value in their product or service.

Instead, they meticulously plan and implement a customer success strategy with the following key objectives in mind:

• Understanding the Customer's Wants and Needs: This is the first step towards achieving customer success. It involves comprehending what the customer expects from your product or service, their specific needs, and how your offering can meet those needs.
• Identifying Each Customer's Goals: Every customer has unique goals that they aim to achieve using your product or service. Understanding these goals helps tailor your offerings to meet their specific objectives, enhancing their success chances.
• Developing Strong Relationships: Customer success is all about building and maintaining strong relationships throughout the customer lifecycle. This involves regular communication, timely support, and genuine interest in their success.
• Working With the Customer To Ensure Success: The role of a customer success team doesn't end with understanding the customer's needs and goals. They must work closely with the customer, guiding them at every step to ensure they achieve their desired success.

The customer success team serves as the primary point of contact for anything the customer needs throughout their product usage journey.

To make customer success work effectively, some essential factors need to be in place:

• Knowledge of When and How Customers Are Using the Product: This insight allows the customer success team to understand the customer's interaction with the product, identify potential issues, and proactively address them.
• A Thorough Understanding of Each Customer’s Business and Goals: This knowledge enables the team to align the product or service with the customer's business objectives, ensuring they derive maximum value from it.
• Availability of Experts To Guide Customers: Experts who can guide customers on how to best use the product to achieve their goals are an important part of a successful customer success strategy. They provide the necessary knowledge and support to help customers succeed.

By implementing these strategies and ensuring these elements are in place, your business can effectively achieve customer success, resulting in improved customer satisfaction, reduced churn, enhanced growth, and increased customer acquisition.

Identify Churn And Take Steps To Prevent It

One of the aspects of customer success is the ability to identify churn and devise strategies to prevent it. Monitoring key metrics such as customer lifetime value, usage frequency, renewal rates, and churn timing can provide valuable insights into when and why customers leave.

More often than not, the primary reason behind customer churn is the product or service not meeting their needs. Therefore, the most effective way to reduce churn is to identify customers who are at risk of churning early. This early identification allows ample time to implement customer success interventions and attempt to persuade the customer to stay.

Customer surveys can be a goldmine of important information, revealing invaluable insights into the customer's success journey. Using surveys can reveal your Customer Effort Score (CES), Customer Satisfaction Score (CSAT), Customer Health Score, and more.

These results can highlight possible pain points, uncover unmet needs, and provide feedback that can help the customer success team enhance overall customer satisfaction.

In addition to the survey, other valuable metrics to track customer success may include:

• Up-sells: This refers to encouraging customers to buy a higher-end product, an upgrade, or an add-on to make a more profitable sale.
• Down-sells: Down-selling involves offering a lower-cost alternative to a customer who is unwilling or unable to purchase a more expensive product or service.
• Cross-sells: Cross-selling is the strategy of selling different complementary products or services to existing customers, normally based on their previous purchases.
• Upgrades: An upgrade refers to the act of improving a product or service to a superior version that may involve adding new features, improving functionality, or enhancing service.
• Downgrades: A downgrade is the opposite of an upgrade and refers to a customer moving to a lower tier of a product or service, often due to cost considerations or under-utilizing the current plan's features.
• Frequency of Usage: This refers to how often a customer uses a product or service and can be measured in various ways, such as daily logins for a software platform, weekly purchases for a retail store, or monthly usage for a subscription service.

Tracking Metrics for Success

Customer support metrics are an important part of any customer success strategy. They provide data-driven insights into how effectively your support team meets customer needs and resolves issues.

Key metrics to track include:

• The Number of Customer Support Requests: This could be through various channels such as calls, emails, social media, in-app messaging, SMS, or website contact forms. Tracking the volume and source of these requests can provide valuable insights into where customers commonly experience issues and prefer to seek help.

• First-contact Resolution Rate: This measures the percentage of issues resolved in the first interaction. Customers generally prefer their problems to be resolved quickly and efficiently, ideally in a single contact. A high first-contact resolution rate indicates effective and efficient customer support.

• Average Time To Resolve a Customer Support Request: In the era of advanced technology, customers, particularly Millennials, expect quick resolutions to their problems. The longer customers have to wait for help, the more their satisfaction levels dip. Therefore, a shorter resolution time typically translates to happier, more successful customers.

Conducting Exit Interviews

Exit interviews with customers who have downgraded or churned can provide deeper insights into their motivations, often revealing more than internal brainstorming sessions.

Besides unmet needs or expectations, common reasons for customer churn typically include:

• The customer no longer needs the product
• Customers find lower-cost alternatives that meet their needs
• Customers switch to a competitor
• Poor customer service experiences

By studying the usage patterns of previous customers who have churned or downgraded, companies can identify red flags indicating a customer is at risk of churn. This allows them to intervene proactively and potentially prevent the churn from happening before it’s too late.

Customer Success Management

Customer success management oversees the customer success team. That group helps develop and maintain effective strategies to proactively help customers achieve success to gain a large following of loyal clientele and reduce churn.

The role of customer success management is pivotal to an organization's success as it directly influences customer retention rates and the frequency of cross-sells and upsells.

It's an inherently customer-centric role focused on customer advocacy to ensure they receive maximum value from a product or service.

Key Responsibilities Of A Customer Success Manager: 

A Customer Success Manager (CSM) wears many hats, each important for ensuring the customer's journey toward success.

Their responsibilities typically include:

• Ensuring Customer Support: A CSM ensures customers are receiving the necessary assistance to extract the maximum value from the product or service, thereby enhancing client retention.
• Analyzing and Implementing Feedback: They assess customer feedback to identify areas that most need improvement and then implement changes to encourage total customer success.
• Developing Customer Success Strategy: A CSM supports crafting the organization's customer success strategy to keep customers engaged and satisfied.
• Encouraging Customer Feedback: They proactively solicit customer feedback through direct questioning or surveys to better understand customer needs and expectations.
• Training Customer Success Representatives: A CSM is responsible for hiring, onboarding, training, and motivating customer success representatives on best practices for client engagement, retention, and product or service utilization.
• Assisting in Product Development: They work closely with the product team and contribute to the development of future products that will increase revenues and enhance customers' success.
• Segmenting the Customer Base: CSMs segment the customer base by factors such as subscription type, product adoption, and business size. This segmentation allows the customer service team to tailor their approach to help customers succeed better.
• Analyzing Retention Rates: They assess retention rates to gauge the effectiveness of the customer success strategy.

Form A Successful Customer Success Strategy 

While B2B and SaaS companies with subscription-based plans should certainly have a customer success strategy in place, the truth is every company needs one. In any business environment where there's a risk of frequent customer churn, having a well-defined customer success strategy can be the difference between the organization's success or failure.

However, customer success strategy isn't a one-size-fits-all solution. Each company will have its unique approach based on its specific needs and customer base. Some organizations may have a separate department dedicated solely to customer success, while others may integrate the discipline across all areas and departments.

The goal, however, remains the same — to ensure customers derive maximum value from the product or service, thereby boosting customer satisfaction and loyalty.

The Final Word

Customer success is critical to scale a business. If a customer gets value out of a product because it meets their needs, they’re more likely to renew. On the other hand, if the product doesn’t satisfy a customer and their needs are not met, or they receive poor service, there’s a high chance the customer will churn in this extremely competitive market. Having a dedicated team that solely focuses on customer success and implements effective strategies will increase customer retention and revenue.

Are you in need of a customer success team to keep your customers and take your business to the next level? Then contact Awesome CX to get started today!

Sources:

The Value of Keeping the Right Customers | Harvard Business Review

50 Important Customer Experience Stats for Business Leaders | Huffpost.com

40 Amazing Customer Loyalty Statistics In 2021 | SmallBizGenius.net