Predictions for Customer Success in 2014

Nick Mehta LiveOffice Web 291x300 Predictions for Customer Success in 2014It’s safe to say that 2013 was the year of Customer Success, especially in the SaaS industry. But where do we go from here? What does Customer Success look like in 2014?

Luckily, I’m friends with someone who’s job it is to know – or at least attempt to predict – what’s going to happen in this space in the near future, so I asked him to tell us what he thinks.

His name is Nick Mehta and he’s CEO of Gainsight – one of the Customer Success companies that came to prevalence in 2013 – and he’s going to share with us some predictions for the Customer Success movement in 2014.

In case you’re wondering, I did a small paid consulting engagement with Gainsight in early 2013, but haven’t been paid by them for anything since, and certainly didn’t get paid for this post.

Nick is a friend who’s opinion and industry knowledge I value, so I’m excited for him to share his predictions for 2014 with us.

I’ll turn it over to Nick now…

Prediction 1: Customer Success Organizations Become Must-Have

Very few CEOs could imagine running a business without a dedicated team responsible for Sales. In a similar way, leaders will realize that they need to have an owner for Customer Success who maximizes revenue from existing customers.

They will do this not only because “Customer Success” sounds good but also because it significantly impacts growth. In our recent survey of 100+ leading subscription businesses, having a dedicated Customer Success team was correlated with a 24 percent reduction in churn rate, which yields a dramatic increase in growth.

Bottom Line: If you don’t have a dedicated Customer Success organization in 2014, you might as well be rocking a Palm Pilot Blackberry in a holster, because you’re retro!

Prediction 2: Customer Success Enters The Board Room

For many savvy companies, Customer Success is already a hot topic at the Board level. Sophisticated Boards know that Customer Success can be a highly leveraged driver of revenue growth and shareholder value, with a recent study showing that a 2 point increase in net retention results in a 20 percent increase in equity value.

Yet many Boards still don’t know the questions to ask around Customer Success and many Customer Success execs have never had to present, in a meaningful way, to the Board before. Further confusing matters, metrics like retention and churn have so many different meanings, making it hard for companies to measure the impact of Customer Success.

Bottom Line: In 2014, Boards will make a Customer Success a regular topic of discussion and will define a rigorous scorecard for measuring it. Churn will no longer be the Elephant in the Board Room.

Prediction 3: Putting the Success Back Into Customer Success

Much of the early innings of Customer Success has been about avoiding customer failure. Companies used Customer Success teams to find at-risk customers, identify clients who aren’t adopting and overall, minimize churn. Customer Success teams were the firefighters or disaster clean-up crew, depending on how you looked at it.

But this is just one part of the opportunity for Customer Success. In 2014, companies will layer on top of Churn Mitigation the concept of Success Maximization.

Success Maximization involves learning what is common amongst a company’s best customers and reinforcing those behaviors to all customers. Customer Success teams will study the patterns that link together customers that are adopting and buying more and that are becoming champions of the product or service.

Maybe a company’s best customers are taking training or maybe they are using one of its high value features. Maybe they are from certain industries or were acquired through specific marketing channels.

Companies will also study the bottom line metrics that matter to their customers. Whether they login or not is moderately interesting, but nobody buys a product to “log in” (except, I guess, when they buy LogMeIn). Customers buy a product or service to accomplish a goal (create opportunities, drive sales, improve customer sat) and vendors will become savvy about measuring “success metrics,” not just “activity metrics.”

Bottom Line: In 2014, Customer Success teams will move from preventing failure to reinforcing success. And the job will get a little bit more fun in the process.

Prediction 4: Customer Success Gets Reinforcements

For many companies, Customer Success teams are fighting a battle on many fronts with no help.

Customer Success Managers often handle onboarding, training, support, adoption, up-sells, renewals and references – as well as sometimes making coffee for their customers.

In 2014, companies will assign cross-functional resources to help the Customer Success team maximize revenue from existing customers.

Just as Marketing team members help Sales drive leads, Marketing will assign resources to help Customer Success create campaigns to drive engagement and minimize churn.

Similarly, Product teams will recognize the wealth of customer insight that Customer Success teams have and will assign Product Managers to work with the feedback from Customer Success.

Bottom Line: In 2014, Customer Success will become a cross-functional effort.

Prediction 5: Success Moves Beyond SaaS

While Customer Success as a concept was born in SaaS companies like Salesforce.com, it will grow up in the B2B world more broadly.

With subscription pricing models and a wealth of customer data, SaaS companies were the natural early adopters for Customer Success. But as other businesses – from traditional hardware and software companies to information service providers to healthcare vendors – see the massive gains from leveraging data to drive customer retention, Customer Success will spread like wildfire.

Even today, we are seeing Customer Success teams pop up in industries as diverse as medical device manufacturing, advertising and bond ratings. Any industry that gets paid by its customers over time will realize the benefit of having a team focused on maximizing customer lifetime value.

Bottom Line: Nearly every B2B industry will take concepts and terminology from the Customer Success movement.

Bonus Prediction: If You Work In Customer Success, You’re Getting A Raise

Nick Mehta is CEO of Gainsight, loves old-school Hip Hop, and you should definitely follow him on Twitter.

Afterword by Lincoln

Lincoln here again…

I agree with everything Nick says here – especially the part about having a dedicated CS team reducing churn. But as far as big predictions go, I like the 5th one… that Customer Success will move beyond SaaS.

I think SaaS is actually the proving ground for lots of strategies, tactics, technologies, and techniques that eventually make their way to other online businesses… and then to offline businesses as well, so this is very interesting indeed.

Of course, this could be a positioning statement for Gainsight (“look, we’re not just for SaaS companies”) – and there’s nothing wrong with that – but I really think Nick is onto something here.

But what do you think? Do you agree with Nick… let me know in the comments.

And of course, if you need help implementing a Customer Success strategy, then…

Let’s Improve your SaaS Customer Success

For immediate consultation and advice on SaaS Customer Success, schedule at least a 15-minute meeting with me via Clarity. If you feel a more involved engagement is required for me to help you, email me with the specifics of your situation (as much detail as you’re comfortable giving) and we’ll setup a meeting to work through the particulars.

- Lincoln

Comments

  1. Becoming addicted to your blog.

    I don’t even have a Saas biz, but I apply what you talk about to me agency biz.

  2. Lincoln & Nick,
    nice article ! coming to your point#5. Customer Success is not new and always existed in the traditional B2B tech business. It is also called Customer References Program. it is a marketing function and the focus there was more on promotion of the successful customer. whereas in a SaaS/subscription revenue model the focus is more on making the customer a success, for the obvious reasons. and it is more of an sales/account management function.

    One thing i wanted to add to your 5 predictions is that Customer Success can be a very valuable source for Content Marketing. testimonials from happy customers provides the credibility and has the ability to deliver the marketing message. read this for more details … http://customertestimonials.wordpress.com/2013/12/30/content-marketing-and-customer-success

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