The Evolution of Customer Success: Its Journey in SaaS So Far

Thoughts on Customer Success: The Journey So Far

We live in an on-demand, subscription-based world. Customers now have more power than ever and technologies have become increasingly integrated and immersive in our everyday lives. Simply delivering a product that customers are willing to pay for is no longer enough. You’ve got to continually prove to the customer that they’re making the right choice by doing business with you. Customers want to achieve their desired outcome and receive the appropriate experience during interactions with your company. That’s why more and more companies — including Cemplicity — have refocused efforts to strengthen existing customer relationships by investing in Customer Success.

A Quickly Evolving Paradigm

The roots of Customer Success are entrenched in the SaaS world. The concept itself arose through the culmination of three paradigm shifts: an appreciation of the experience economy, the arrival of the digital cloud-based era and the subscription model.[1]

Twenty years ago, two authors published a book whose ideas have underpinned the field we call Customer Experience (CX). Together, Pine and Gilmore shared their vision that experiences would be the new economic opportunities that await companies of the future.[2]Their work detailed a realisation that as the marketplace became more complex an excellent product or service would no longer guarantee success. Companies required a broader perspective. They needed to look at the sum of all the experiences customers had with their product or service across the entirety of their relationship with the company to remain competitive. A view which quickly began to reshape the business world.

The advent of the digital cloud-based era coincided perfectly with the increasing adoption of the Internet allowing the surveying of customers and feedback mechanisms that worked with CRM systems to become easier and easier. Early advocates of CX and customer centricity realised that while existing CRM tools could help with the collection of customer data and improve customer experience, they still lacked a key element – the voice of the customer. The development of the NPS and CES lead to the adoption of tools which were short, simple and most importantly only focused on understanding the customer’s experience.[3]

Early leaders of the SaaS industry struggled with retention. They quickly realised that traditional business models no longer worked in a cloud-based, subscription service world filled with increasingly competitive product and price offerings. Traditional on-premise software offerings meant switching to a competitor was expensive and difficult, however, cloud-based subscription services switching was neither expensive nor difficult. In an industry entirely dependent on renewable subscriptions all the power lay squarely in the hands of their customers. Companies began to invest more in managing individual customer relationships to ensure value through successful outcomes and paved the way for Customer Success efforts yet to come.[4]

Evolution Through Trial and Error

Getting Customer Success to where is today has not been without a degree of trial and error. Early initiatives focused solely on fighting and reducing churn, commonly referred to as ‘Customer Success 1.0.’[3] This form is problematic because the focus is on customer retention not successful customer outcomes. Doing the bare minimum to keep customers from leaving is hardly the recipe for success, yet many well-known players have fallen into this trap.[5] This limited view of what customer success resulted in customer pushback, a seemingly never-ending list of documented disasters , and a need to rethink what customer success really needed to be . The need for Customer Success to evolve beyond its initial iteration made the way for what McKinsey calls ‘Customer Success 2.0.’ [3] A renewed focus on growth and retention. “We’re at the beginning of a new era—call it customer success 2.0—in which many companies are focusing on growth in addition to churn.” [3] While seemingly an improvement, this still fails to put customer outcomes first. And if handled poorly, could undermine a customer’s trust in the company and be damaging to their existing relationship.

What’s Next?

Lessons learned from the earliest forays in Customer Success have shown a clear need to work alongside customers and ensure their goals not only provide moments to delight but measurable value on a consistent basis. We must become better students of customer behaviour to ensure that from the customer’s perspective, we are the only ones they’ll want to do business with. Thereby ensuring both their success and ultimately our own. The best way forward in the ever-changing experience economy.

References

[1] Pine, B. J. II, & Gilmore, J. H. (1999).  The Experience Economy.  Harvard Business School Press, BOSTON, MA.

[2] Bloomberg, J. (2018). Customer Success? Pull The Other Leg.

[3] Atkins, C., Gupta, S., Roche, P. (2018) Introducing customer success 2.0: The new growth engine. McKinsey & Company.

[4] Customer Gauge (2015). Customer Success: A Brief History.

[5] Bloomberg, J. (2018). Customer Success? Pull The Other Leg. Forbes

March 27th, 2018|Categories: Customer Success stories|

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