Customer Success of Things (CSoT) – A Darwinian Evolution Approach

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To continue the CSoT (Customer Success of Things) blog series and as we onboard 2017 with new resolutions to transform our habits, let’s keep indarwin mind our digital transformation context and take a Darwinian look at the role of customer success to facilitate this exciting evolution.

It is not the strongest of the species that survives, nor the most intelligent, but the ones most responsive to change (Darwin)

Chameleon
Chameleon – “Adaptus Rex”

Having always been inspired by this Darwin quote, those who have crossed my path will have already met my mascot chameleon which I affectionately call “Adaptus Rex”. He’s tame and as a prehistoric descendant, he learned to survive environmental change! His capacity to modify colours has followed me through all life environments and challenges, adapting to the next state of evolution.

The famous Darwin concept of “survival of the fittest” (1) and its selection process is accelerated today in response to unprecedented environmental changes such as global warming in our natural world while in business, the digital transformation is taking us by storm.

Whilst history has always shown us the progressive driving force of technology in transformation, digitalisation is creating an immediate impact and disruption. Each digital change brings a promise of progress or new experiences and which are accompanied by considerable learning curves and adaptation, irrespective of our generation: baby boomers, Xers (like myself) and millennials. It’s simple. We either adapt, transform and evolve or we don’t with the risk of being left behind or even becoming extinct! In the words of Brian Solis (2):

Each business is a victim of digital Darwinism, the evolution of consumer behaviour when society and technology move faster than the ability to exploit it. Digital Darwinism does not discriminate. Every business is threatened.

In nature, the famous evolutionary story took place in my native northern England during the last major technological transformation: the industrial revolution. To ensure camouflage as a consequence of the sooty manufacturing towns, peppered moths (3), originally white, became predominantly black via a reproduction process. mothsA recent example in response to current climatic change is the shift of snail shell colour from dark to light. Snails have developed lighter coloured shells (4) which have a lower body temperature to keep cooler in response to global warming. This phenomenon is noticeable here in France where snails are still a culinary delicacy!

In business today, we’re lucky enough to be facing another incredible transformation, this time in human form. The digital revolution and the related technological innovations are forcing us human beings to challenge our behaviour, routines, processes and even our business models.

Whilst we may not suddenly develop coloured shells and wings to adapt, this brings me to the vital importance of the role of customer success as a lever to facilitate our collective metamorphosis. In today’s professional environment we are constantly trying to keep pace with the impact of digitalised innovations: cloud, big data, IoT, predictive analytics, machine learning, Artifical Intelligence, 3D printing and mobility to name but a few.

Customer success emerged and evolved in the Silicon Valley as a logical response to the introduction of the cloud subscription economy. Cloud exposed painful gaps in how existing companies were interacting with their customers. These pain points were filled with the role of customer success to encourage customer engagement with solutions, continued added value, client longevity and advocacy.

As the SaaS model continues to grow with companies moving away from purchasing software upfront preferring to purchase on a subscription basis, customer success promises a bright future ahead. Other non-SaaS recurring revenue companies have also been seduced by its strategic importance and are investing in customer success.

With the continuous flow of new digital technologies to our business environments, it seems that my favourite Darwin quote has never rung so true. comfort-zone-24Out of all the animal kingdom, though we humans are definitely not the strongest, we are perhaps the most intelligent (open to debate…) but when it comes to responding to change, we are generally slow or resistant. Staying in a known comfort zone is so much more tempting than stepping out into unknown and potentially risky territory.

Success is on the other side of your comfort zone (Orrin Woodward)

So this is where customer success plays its role by partnering clients, helping them step out of comfort zones and adapt to new and unknown situations where gains are promised. The aim is to either obtain better results than before or create new positive experiences which could never have been imagined without innovative technology. The real challenge of this adaptation process is not about the technology itself. It’s rather about how the technology, digitalisation and its promise fit harmoniously into the future organisation, processes and methodologies defined for achieving desired outcomes.

Like the peppered moths of my native England, we humans face the challenge of adapting in our digital fast paced environment. We need to “camouflage” the new technology and associated behaviour, blending it into our daily habitat so that it becomes the accepted “norm”, at least until the next one presents itself.

It is perhaps because human beings are the most intelligent of creatures on earth (so we believe) that our response to change is more complex than our animal neighbours.

internet-strategy

We perhaps approach each new business context with too much thought, emotion, fear and memory rather than acting on our instinct, like my friends Adaptus Rex, the peppered moth and the shell changing snail.

Customer success is a passionate role to partner our fellow homo sapiens acclimatise to their new surroundings and rise to the challenges of a business world driven by technological innovation. Afterall, the word “success” derives from the latin “successus”, meaning “an advance, a good result, happy outcome.”

So as we move into 2017 with the human tradition to make resolutions (myself included) to change certain behaviours for improvement, there’s no better prospect for customer success to partner these desired outcomes, helping companies transform their performances through the challenges and gains of the digitalised environment.

“Adaptus Rex” joins me to wish you all great resolutions for your digital adaptation, transformation and evolution to success in 2017.

If you’re setting up or expanding your customer success organisation in Europe, we’d be pleased to help out : Success Track Enterprise.

Other Customer Success of Things Blogs : CSoT blog stories

For further Darwinian reading:

1) Explanations on “Survival of the fittest

2) Digital Darwinism – How Disruptive Technology is Changing Business For Good

3) The story of the peppered moths

4) How A Few Species are hacking climate change

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Customer Success – It Takes Two Totango – Interview with Guy Nirpaz

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Two TotangoInterview By Sue Nabeth Moore – Customer Success Evangelist, France

Sue: Why is customer success becoming so important when it is often perceived as an activity which has always been done but was not given the label “customer success”?

Guy: Customer success is often associated with traditional activities such as account management, professional services or support but the activity of customer success is linked to the maturity of the recurring revenue model. Companies with a recurring revenue model such as SaaS depend on their ability to retain and grow. The role of customer success is becoming just as critical as that of sales. Customers prefer now to have the choice of renewing their contract or not with a company. The role of customer success is therefore to do everything to make sure that the customer just keeps coming back.

Sue: Customer success seems more mature in certain regions and sectors. What are your thoughts for the expansion of this role?

Guy: Totango was initially created in Israel in 2010 as a response to ensure life-time value to the Telco industry, a sector heavily dependant on the recurring revenue model where churn prevention is critical.

In terms of geography, the need for customer success is everywhere. 40% of Totango business for example is outside of the USA, mainly in Europe but also in Australia, India and Brazil. Totango has been collecting and sharing best practices and creating events to evangelize customer success. We have noticed that the customer success machine has started to develop just by the number of participants. Our first Totango event in the USA in 2013 attracted 100 participants, the 2nd one in 2014 attracted 400, and the 3rd one in 2015 attracted 1000 people. This is a huge success for CS actors to network, participate in the interactive seminars and workshops and learn from their peers. Over 75% told us they’d be back! We’re excited to start the Totango road show this first quarter 2016 in USA and Israel.

Sue: What do you consider to be an ideal profile for a CS Manager ?

Guy: OK well let’s start by defining what they need to do. Basically their goal is to retain and grow customers. To achieve these 2 main outcomes, we need to look at the drivers and values. The 5 main drivers are:

1) On-boarding

2) Nurturing

3) Renewal

4) Up selling/Up-grading

5) Escalation

On-boarding is critical to success. It is often complex and fluid process and organizational and project management skills are required.

Depending on the size of the company, there are different CS organizations and roles. In smaller companies, the CSM is usually responsible for all 5 drivers, at least to begin with. As a company grows, the drivers are often split into CS management roles where CSMs are specialized, e.g. for on boarding, renewals, up selling and cross-selling.

The CSM drives and articulates business value at all times. Value indicators are measured on the business outcomes expected. It’s not about the product itself but about the business gains generated. Business curiosity and a talent for solving issues is also key. Engagement is essential in order to identify gaps for achieving this value.

The real challenge is how to articulate the customer success activity and engagement in a scalable way.

Sue: What for you are the main challenges for a company wishing to start a customer success activity?

Guy: First of all the CS activity must be aligned with the main objectives of the company – to maximize renewals and up sell. This should be done in a very pragmatic way to ensure profitability and growth. If the fire-fighter model is still in operation and a company needs to spend for example 1$ to generate 1$ of renewal, then the CS role is not moving the needle forwards.

It is necessary to invest heavily in the previously mentioned 5 drivers (see above) and to keep tabs on the value that customers are gaining from the product. This is applicable for all customers.

Sue: There are more and more actors on the customer success software market, yourselves included of course. What guidelines can you give as to when a company should invest in such software?

Guy: Usually for smaller companies, the CEO begins the CS activity themself. As a general guideline, as soon as there are between 20 – 50 customers, it’s a good time to start and think about investing in CS software and for the following 2 reasons:

1) It’s great to build the activity and capitalize from best practices rather than repeat the same mistakes made before by other companies.

2) At a certain point, it can become very quickly unmanageable to be in control of all the 5 main levers. Customer success software helps to structure and alleviate the multiple tasks, allowing greater visibility on customer activity, risks and the company engagement.

My advise is to invest in customer success software as early as it is affordable.

Sue: So what is your elevator (or rather “lift” – sorry I’m British) pitch for Totango ?

Guy: Our key philosophy is to drive value to customers. It’s necessary to know how your company is driving value. To do that, you need to understand the way that customers are using your products. Once you’ve mastered that, you can better retain and grow your customers. We built Totango on this foundation.

I’ve never been a fan of the customer 360° view concept. This implies that you’re in the middle of a circle without really knowing in which direction to look first. I prefer to consider customer knowledge and consequent success with the following main areas:

1) Utilization

2) Adoption

3) Measurable business outcomes

4) Operational aspects

5) Feedback, e.g. NPS

Success is the result of the company’s engagement and understanding of their customer’s gained value but also of their customer’s ownership on what’s going on around your product.

It takes two Totango! Tango 2

Sue: What are the main profiles of Totango’s current customers?

Guy: There are 3 main world-wide categories:

1) Start ups and maturing SaaS companies

2) Medium to large companies

3) Verticals : telco, data providers and infrastructure

Sue: What are Totango’s ambitions for 2016?

Guy: Our first aim is to make Totango software easily accessible to all client focused actors: CSMs, VPs, CEOs…

We aim to have a new release per month and celebrated 8 new releases already in 2015.

We look forward to the Totango Customer Success Summit on March 21st and 22nd in San Francisco. Here we’ll meet and exchange with like-minded actors in a very convivial, productive and inspiring event.

Sue: If you had a crystal ball, describe what you would see for customer success in 5 years from now:

Guy: Customer success will be more mature and we will know how to do it better than today. It will evolve like the role of digital marketing has evolved over the last 7-8 years.

As customers innovate and their expectations increase, customer success will also gain in importance, becoming equally strategic and sustainable as the role of sales. Customer success will be more efficient and scaled, facilitated by faster programs and software.

For Totango, I can foresee continued amazing growth and thank all our customers for their advocacy and for finding great value from our customer success software.

Sue: Thanks Guy for the interview. I wish you continued success and look forward to seeing you at the next Totango road show, why not here in France!

Guy: Yes with great pleasure. Thank you Sue.

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Innovative Vendors Strike Back – Vendors Organize For Customer Success

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Episode 2 of my interview with Gainsight’s CCO, Dan Steinman:

Vinylemag.com
Vinylemag.com

Innovative Vendors Strike Back – Vendors organize themselves for Customer Success

Following on from Episode 1: New Hope: SaaS Wars – A New Business Model and The Growing Importance of Customer Success.

Sue: So who do you think should own the role of customer success Dan?

Dan: It’s a really interesting question. Literally I have seen customer success organizations in different entities: sales, services, product, marketing and in a separate stand-alone organization. I believe that customer success is going to ultimately become so important that it’ll be more and more a separate organization for most companies, reporting directly to the CEO. It’s one of the reasons that the role of Chief Customer Officer (CCO like myself) is in vogue. That’s the person the CEO is going to hold accountable for the entire customer life-cycle and customer retention number. Whilst you want someone high level to own your sales number you also need someone to own your retention because it’s so critical to the long term success of the company.

I think for an ideal organization the following 3 roles reporting to the CEO are key:

– CRO (Chief Revenue Officer) who owns the acquisition process via marketing and sales.

– COO (Chief Operating Officer) who owns operations and finance and maybe engineering.

– CCO (Chief Client Officer) who owns customer success, professional services and support and perhaps the renewals.

Customer success can work in any organization and so there’s no right or wrong. But I think the evolution will take us where customer success will become this stand-alone organization.

Sue: We’ve also seen the emergence of different customer success roles, often called customer success managers (CSM). What for you does it take to be a great customer success actor ?

Dan: Yes I have a pretty long list after having managed CSMs over a number of years and so I’ll give the highlights. Firstly, I think it’s obvious but if you’re going to be dealing with customers, you have to have the right personality and demeanor to do that. That’s not just about being likeable. You also have to be able and willing to take some level of punishment. That’s because this job is often dealing with customers who are not always delighted. There is an element of pain which comes with that and so you have to know how to live in that world. In addition, the 2 skill components that you have to either find or build are:

1) A high degree of product expertise. At a user level, I can help you use my product better because I really know how to use it in an optimal way.

2) The second one is equally as important or even arguably more important and that is domain expertise. If I’m selling a marketing solution like we did at Marketo, my CSMs had a thorough knowledge of marketing processes. So if you are selling accountancy software, you may want to hire accountants and teach them how to use your product.

Sue: Yes that is really important for your credibility with your customers and their trust in you.

Dan: Yes, they love talking to people who have actually done the job which you are trying to do and who can truly empathize. There’s so much power in words when you know exactly how they feel.

Sue: So a typical great CSM needs to be a Jack of all trades.

Dan: Yes and there are a lot of skills in managing customers and product expertise as well as supporting and consulting team skills. It’s all about bringing all these together in one place with people who are very passionate about their customers. It’s not that I want to see CSMs going to hospital but I kind of expect them to feel ill if their customers aren’t really doing well. For the great CSMs, it’s a very personal thing. It hurts in your stomach when your customers aren’t happy. Great people in every job are like that. A great sales person for example anguishes over their deals. Great CSMs are just the same.

Sue: I empathize with that. It’s all about how you interact and the real concern and passion you feel for what’s happening with your customer’s success. It’s not just another routine job.

Dan: That’s right. It becomes a craft. It goes beyond a job and almost becomes a hobby. I think about it and work on it in my apartment in my spare time. I’m always determined to be better at it even if no-one else notices except me!

Sue: Indeed it gives you a great sense of satisfaction knowing that you’ve created added value.

Coming soon… Episode 3:

Return of “The Wall Street”- Evangelism of Customer Success Value and Return on Investment.

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The Customer Success Movement Is Taking The Business World By Storm

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Star Wars Androids
Oscar.go.com – Star Wars Droids – 2016 Oscars

Interview with Gainsight’s CCO, Dan Steinman. February 2016

By Sue Nabeth Moore, Customer Success Enthusiast, Paris 

In the momentum around customer success, I’m pleased to share my recent interview with Dan Steinman, CCO (and Skywalker) from Gainsight. In keeping with the theme of the Oscars last weekend, this inspiring interview is split into a “SaaS Wars Trilogy” which you’re invited to follow over the next week. It also casts an avant-première at Gainsight’s new book – Customer Success – How Innovative Companies Are Reducing Churn And Increasing Revenue, to be officially published on 7th March. 

Trilogy Episodes: 

1) New Hope: SaaS Wars – A New Business Model and The Growing Importance of Customer Success

2) Innovative Vendors Strike Back – Vendors Organize Themselves for Customer Success

3) Return of “The Wall Street”– Evangelism of Customer Success Value and Return on Investment 

Episode 1 – New Hope: SaaS Wars

A New Business Model and The Growing Importance of Customer Success.

Sue: Thanks for accepting this interview Dan. Firstly, how do you define the role of customer success ?

Dan: I’d like to present my pictorial. Imagine that there’s a gap between what your product has the ability to do and how your customers are actually using it. Every company should have that gap. That’s because it shows that you’re innovating on your product. Customers can never keep up if you’re innovating at a good pace.

Customer success is there to narrow that gap, by bringing the bottom line closer to the top line. By getting your customers to use more of your product, this brings a direct correlation to loyalty, value and all those other wonderful things we want to happen: renewal, up sell, cross sell and advocacy…

Sue: I like the gap pictorial Dan. I know there’s a lot of momentum around customer success right now and Gainsight has even coined the so-called “Customer Success Movement”. Yourself, Nick Mehta, (CEO of Gainsight) and Lincoln Murphy have just written a book on the subject. Can you give us a little avant-première insight please? Is it going to be the “bible” of the customer success movement?

Gainsight Book on Customer SuccessDan: Well I would probably use the word bible pretty carefully:) Let’s say it’s the first book of the new customer success movement. The terminology of “customer success” has been used before. But in the new world order where subscriptions are king and customer success is a necessity in a subscription company, this is the kind of first book. It won’t be the last. I know of least three other people who are writing a customer success book. I’m proud that we got there first and that we’re taking on a leadership role.

The book covers different aspects. Firstly, the history of customer success and how we got here. It explains what the subscription tsunami is all about and how that turned into the customer success movement. The middle of the book deals with a lot of practical advise on how we do it, what we like to call the ten laws of customer success. At the end, we cast a look at what the next five or ten years will look like. From a tongue in cheek point of view, we think we’ll be seeing customer success droids flying around in Google self-flying cars ensuring that every customer has a customer success droid helping them do their thing. The total cost of doing customer success at the highest possible level will be around a nickel a year! So I don’t think that’s realistic but at least that is the direction that we’re trying to go in. By necessity, customer success will become more and more valuable in the subscription world that we live in.

Sue : That sounds like a wonderful futuristic world for customer success. I mentioned the bible and you talk about the ten laws of customer success:) So when will the book be published ?

Dan: Well I didn’t correlate that before and there are definitely no stone tablets provided with the book:) The book is completed. It’s on the printing press right now and available in Amazon. The official publication is March 7th so before the world runs out of paper, you can hurry up and get your copy now:)

Sue :Well I’ll definitely order my copy on Amazon and would love you to personally sign it for me*.

With all the current buzz, how do you position the role of customer success compared to more traditional roles, e.g. sales, account management, professional services, support, marketing … ?

Dan: Yes, a little history I think helps answer this question. The history has to do with the shift in the changing business model from the enterprise to the subscription economy. Let’s just use those high level terms. One of the main things that the subscription economy drives is the focus on customers.

In the enterprise economy, we used to be able to sell to a customer once and not really worry about revenue afterwards. In those days, 90% of all of the money was collected at the time of the first deal. Now that has flipped completely. Today less than 10% of all the money we’re going to collect from you is collected at the time of the first deal. The other 90% comes after that in the form of renewal, contracts and up sells. So if 90% of all the business I can potentially generate is after the first deal, we need a team of people who are going to help manage those customers to make sure they wish to renew those contracts.

It’s a little bit like taking subscription to the very basic level of magazine subscriptions. If I sell you an annual magazine subscription, I better do something which delivers value to you so that you renew your subscription. I can’t just ship you a piece of empty paper! I have to give you content, pictures and whatever exciting things you want in that magazine. The same thing is true now in the software world with a subscription recurring revenue. Customer success is not about delivering just another product but about delivering a value, an outcome and ultimately success. If I do that for you, you are likely to renew your contract. If I have more products to sell, you are likely to at least look at those and potentially buy them too.

Sue: We’re really witnessing a power shift where power is now in the hands of the client.

Dan: That’s absolutely right. There is a significant power shift from vendor to customer that has driven this customer success movement. Since you spoke about power shifts, there is another second shift inside of companies going from sales to post sales, basically from acquisition to retention.

In a SaaS company what usually happens after about four to five years of existence is that more dollars are coming from the installed base rather than coming from new acquisition sales. I like to use Salesforce as the analogy because they’re the most mature SaaS company. Next year Salesforce will be around a $10 billion company. Out of that, somewhere in the region of $8 billion will come from the installed base and not from new sales. That’s a significant power shift. So, if you’re the CFO at Salesforce, who are you talking to most about next year’s forecast, the one who has the $2B number or the one who has the $8B number?

Coming soon… Episode 2: Innovative Vendors Strike Back

*I have since ordered my copy of the book on Amazon for my Kindle….It’s a recommended read!

 

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2016 : The Year to Boost Your Customer Success Strategy

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With the arrival of the 3.0 marketing era where each client becomes ambassador to the greatest possible number of people, every company must ensure that their customers reach the outcome expected from their investment (i). Indeed, a satisfied customer is the best possible ambassador of your product or service (ii).

From this need, new business strategies have developped: Customer Experience and Customer Success depending on context.

The Customer Success framework was created by SaaS software companies in the US – the first of them being Salesforce.com. With the advent of cloud, the software industry has changed in depth:

  • In the business model, from selling a box to a subscription-based relationship
  • In design, from a watefall approach to agile development
  • In the implementation, from a heavy installation to a light set up
  • In usage, from an owner front end to a more intuitive web interface
  • In product updates, now available on CD or immediately through the interface
  • etc.

Customer Success is dedicated to partnering customers within this new framework to facilitate the achievement of expected outcomes. As an emerging role, this mission of underlining added value includes the implementation, use and deployment and can be extended to the design and marketing and sales.

To take the example of Salesforce.com, which stood out by creating the logo “no software” and was the first to set the goal of customer success at the heart of its business objective. Today, their signature is “The Customer Success Platform” with a stated goal of nothing less than a “Customer for Life” ! Indeed, it is a whole approach and organisation which complements the solution with features and tools dedicated to this objective and assigned partners working in a very active community. Almost every editor has been inspired by and followed their model: clients for life.

Ultimately, whatever the outcome expected by their customers – e.g. for marketing to optimise its website or its omni-channel interaction or for sales to optimise their sales process, etc. each editor must announce and keep their promise. This will result in customers becoming naturally inclined to act as ambassadors for their product or service  🙂

Happy New Year !

To go further :

(i) 3 Technology Trends That Are Transforming The Customer Experience

(ii) The Ultimate Moment of Truth and The Art of Digital Engagement

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