Although the pandemic is not exactly in the rearview mirror, we are beginning to understand the effect this has had on B2B businesses across the country – and around the world.
One of the biggest paradigm shifts is increased customer appreciation. We cannot take our customers for granted — ever. Investing in Customer Success (CS) is no longer a benefit – or even just a priority – it’s existential.
In fact, customer success is the Essential growth engine driving Net Revenue Retention (NRR) for subscription-based businesses.
Quick set of levels: what is customer success and what isn’t?
Probably the easiest way to define the difference between customer success and what many companies call customer service is that customer success is about taking care of your customers by providing proactive guidance to help them achieve business results. desired. It’s an ongoing partnership rooted in an outside-in lens focused on creating value and an exceptional experience for your customers.
Customer service (or account management) is about being reactive and solving your customers’ problems in order to keep them in “status quo mode”. As Gainsight founder Nick Mehta says, “The difference between account management and customer success is like the difference between a backyard telescope and the Hubble.”
Why NRR Matters
Investing in and operationalizing your customer success team is the best way to increase your bottom line retention. In fact, even if you keep your sales, marketing, and product efforts static, you’ll see improvements in your NRR if you invest in customer success. It’s not just your current bottom line that’s affected: NRR is also the primary metric investors look at when making decisions about where to put their money.
Here are five important recommendations that Chief Customer Officers should focus on to help retain bottom line revenue:
1. Demonstrate the ROI of customer success to increase business spend in CS and CS Ops teams.
Companies that invested 10% of their revenue in customer service had the highest NRR. So if your leadership team isn’t aware of this data, it’s time to call everyone.
Make the organization realize that CS can be a force multiplier for your business with a compelling framework and data to back it up. Show them the stats that investing in CS doesn’t just increase revenue (it’s a growth engine); it also increases the overall valuation of the company.
CS operations should be the cornerstone of this conversation. Synonymous with sales and overhaul operations, if you want to drive operational excellence and scalability within your CS organization, you strongly need to have the right CS Ops organizational structure in place to do so effectively. This is essential to mastering the three dimensions of people, process and technology.
2. If your customer success organization doesn’t have NRR yet, now is the time.
The days when customer success was only about “churn management” and customer retention are long gone. This is an extremely limited view of the true impact of your team and the power of our customers.
Nearly two-thirds (63%) of companies say their customer success organization “owns” their NRR performance. What we have all learned and appreciated is that our customers are truly the growth engine of our business. This is how we sustain our recurring revenue, how we effectively grow and grow our customer base (delivering these results), and where our customer advocates are born (fueling net new logo acquisition).
By orienting the organization around this philosophy, it naturally makes sense that NRR is a metric owned by CS but impacted by all. Being able to link your CS organization’s high value activities to leading and lagging results across all three vectors is critical.
3. Emphasize more direct revenue accountability, especially with the renewal motion.
Our research shows that 45% of companies trust their customer success team with ownership of renewals. This can manifest both in the CSMs owning the renewal transaction, but also in the renewal teams that now report increasingly to CS.
While the organizational stage and maturity of your business may dictate the different customer-facing roles and responsibilities you need, what is consistent is that your CS teams are at a minimum involved in the process of forecasting renewals. They are focused on your customers and often take a longer-term view of the probability and risk of renewal.
You can also leverage a rich customer health score to build predictive GRR forecasting models. CS teams are often at the forefront when it comes to identifying expansion. So be sure to give them credit where credit is due.
Partner with your marketing and sales teams to have a qualified customer follow-up process (CSQL) and account planning process to escalate to your sales counterparts and execute.
4. Invest in customer success through digital to scale CS efforts and drive better business results.
One of the hottest topics that comes up in my conversations with CS leaders is “how can I scale our CS efforts”. Leveraging digital-led movements can not only impact your bottom line by automating processes that don’t require human intervention, but they can also be an incredibly powerful vehicle to drive better results for your customers.
In the era of “product-driven growth,” users expect intuitive journeys and the ability to self-serve whenever possible. By better understanding our users through product analytics and leveraging technology to personalize their user experience, we deliver on the promise of an exceptional customer experience.
One of the most significant areas of opportunity identified by our research was the use of digital data tools to predict and forecast churn. Fifty percent of companies said they use commodity analytics, such as monthly and daily active user trends and their relationship to predict potential churn.
This reveals an opportunity to use more sophisticated digital tools, such as enhanced product analytics, in-app engagements, coupled with received business value assessments to improve retention, as well as drive adoption and expansion. It’s important that your customer success organization evolves from a 100% human capital structure to one that uses data and analytics to deliver value to your customers and increase NRR.
5. Align the organization around a common values framework to drive end-to-end results.
While your customer success organization should have the NRR metric, that doesn’t mean your team is solely responsible for it. It is imperative to align the organization around a common language and value framework to normatively drive customers to realize value.
This process should start with sales discovery and be captured and executed seamlessly throughout the onboarding and customer success management phases of the lifecycle. I found that establishing this fabric was the connective tissue between functions that steers the entire organization around a value-driven, customer-centric strategy.
Another powerful way to break down silos is to create a “voice of the customer” program to ensure you gather and share customer feedback with teams (like product, for example) that can drive positive long-term change. .
The key here is to make sure you have the right processes in place to take action based on feedback, such as NPS and customer effort scores. Our research shows that companies that really look into these types of programs and processes have some of the best NRR rates out there.
It’s clear that the NRR is the key metric for companies that want to succeed in a hyper-competitive modern economy. There’s no better way to ensure you’re hitting your target NRR than to make wise, strategic investments in your customer success organization.