I couldn’t help but smile and explain to him how his mind was about to change.
During the past several weeks, I've had the opportunity to work with my colleague Sean Geehan and the smart folks at Strikedeck to better understand the nuts and bolts of B2B marketing’s new priority, Customer Success. Before this time, the Finance snob inside of me assumed “Customer Success” was just another slick label marketing had put on the tried and true function of customer service or the practice of simply following the immortal words of James Cash Penny, “The well-satisfied customer will bring the repeat sale that counts.”
I don’t know who gets credit for the name “Customer Success,” but my cohorts in Finance should scoff no longer. Despite its glib name, disciplined Customer Success is serious business (over $50 million committed by the US venture community on solution providers), and it can make or break players in the Cloud Subscription XaaS Economy. According to the Customer Success Association, “Across the SaaS B2B sector, the choice is becoming clear. You either actively manage your customer relationships as strategic portfolio assets, or you effectively cede control over them and your company’s future to chance and/or the competition.”
Whoa. Those kind of words place Customer Success at the crux of SaaS company strategy, so much so that the CS Association advises, “The ultimate strategic goal of the Customer Success role is sustainable corporate profitability and growth. The method is to make your customers as profitable and productive as possible.” With such an important strategic imperative, Marketing, who has to date been driving most Customer Success initiatives in XaaS companies, is now placed in an even more significant position. I wonder if these marketers realize their elevated status (most think they are still low men and women on the corporate totem pole), or that to take advantage of it, they get to think again about a group to whom they can't help but feel a gravitational pull: Users.
"The fate of your B2B company rests in the hands of a few people," our team has said for years about the connection between executive decision makers and B2B strategy. While this is still extremely true, in the SaaS model, users are taking back some of the attention because the adoption and use of their seat licenses have become a significant factor in determining the economic value borne by the purchase of SaaS technologies. And, more importantly, it has become the onus of sellers and their technology to make sure users adopt and use it. As such, a subscription based business is probably the closest a B2B organization has been to needing to consider users and their happiness strategically in quite some time. Furthermore, the importance of keeping user cheeks happily in license seats requires Marketing and Customer Success to plan, coordinate, monitor, and possibly even design most of the major functions of service delivery.
As one example, let’s look at one of the primary drivers of adoption and use: training. In the not-so old days as a user, it was his responsibility to learn and adapt to whatever technology the decision makers several levels above his pay grade chose to purchase and install (I am reminded of a major software conversion required at a major US bank because the CEOs at the two companies golfed together). To learn the new system, users might get to attend a class or benefit from hands-on training, but many times it came in the form of a set of very large binders through which time had to be found to dig and find answers. Online training later offered a more efficient Q&A search tool, but again, the content was fairly static (and boring) and nowhere near our modern day definition of “interactive.” All in all, learning the new system on which a user performed his job was really his responsibility, if he wanted to perform well. The technology wasn’t going anywhere, or at least until when GAAP said it could.
Today, learning the system is no longer altogether the user’s responsibility. Users expect the technology either to be intuitive enough so that even a caveman could use it, or to teach them with on-demand “Live Chat” training and quick answers to their questions in forums and chat rooms. In fact, when I talk to millennials about their jobs, they expect to be taught how and when they want to learn. If they don’t feel competent quickly enough - or they just don’t like the technology - they just won’t adopt and proceed to influence a move to an alternative. It’s “There's another app for that” mentality. There is always another app or similar technology that can do the job just as well, but maybe it has better chat rooms with more clever emojis. When their employers see adoption is low, they can scrap the technology by unsubscribing and moving their data elsewhere. Gone are the capital expenditures that had to be amortized and force users to use or lose.
The Technology Marketing and Sales research and services company ITMSA recently held its annual Marketing Leadership Forum which included a panel discussion of leaders from Amdocs, Cisco, and Oracle on customer experience and customer success and the role marketing must take in both functions. In his summary of the session, ITMSA President CEO Dave Munn notes the perspective of Steve Pinedo, vice president, Oracle Global Cloud Customer Success, “the shift to the cloud is driving dramatic changes in customer expectations for technology based solutions, with new demands for immediate and frictionless support and value at every stage of the relationship. From a marketing perspective, this puts customer success front and center, and makes reducing customer churn the number one KPI.”
Customer Churn. This is where the finance nerd inside me really takes notice. As Sean wrote in his recent post "Customer Success: Applying Science to the Art of Customer Engagement," churn (the rate at which customers leave) is the metric which could finally give marketing and customer engagement a measurement by which these efforts have a benchmark, and benchmarks mean funding and more importantly, credibility and stature with The ELT.
Armed with churn rates, Marketing may now have the words Finance has longed to hear. Whenever Sean and I speak to a group of CFOs or financial leaders, we remind them of their right to demand ROI on the investments they make in marketing. Unfortunately, their marketing peers have struggled to find an irrefutable number by which they can say, “Our programs elevated our position to Leader in Gartner’s Magic Quadrant,” or even, “Our efforts contributed to raising our market cap.” The churn rate statistic erases this previous shortcoming as the metric becomes more heavily weighted in technology evaluations and company valuations. Marketing leaders can now say, “Our Customer Success Program, with its new onboarding engagement plan, has lowered our churn rate and brought us a new round of venture funding.” With this type of measurable contribution to the organization’s growth, how can a CEO or CFO not take notice?
Marketing has an excuse no longer to shy away from numbers and figures, and they should embrace this opportunity to take ownership of measuring, monitoring, reporting, and hopefully bragging about their contribution to low churn. This might be an overstatement, or even blasphemy, but marketing finally has a reason to embrace at least one statistic. And they get to talk about user decision making behavior again. Win-Win!
I end here by sharing a graphic I found on the Customer Success Association website because I think it effectively ties together the relationship between Customer Success, retention, and profitable growth. It's a picture to rally around and unify all the corporate languages.