Archives for December 2016

Contents of an Awesome Customer Success Playbook

Customer Success has been clearly defined and what goes into Customer Success Management has been fully documented.

But when it comes to certain aspects of Customer Success Management, there are still a few things that remain a bit mysterious to some.

A great example of that is the concept of the Customer Success Playbook, the sports analogy-based workflows, processes, interventions, etc. – called “plays” – to run with the customers when something happens.

I haven’t talked about Customer Success Playbooks much, and here’s why.

While there are high-level Customer Success frameworks like those I use with my clients, the way we orchestrate and operationalize a Customer Success-driven Growth strategy is different enough across companies, products, and customer segments, that trying to create a one-size-fits-all Customer Success Playbook that works for all companies is never going to – or should never – happen.

But my lack of coverage of this subject doesn’t mean Customer Success playbooks aren’t important; they absolutely are super-important. They’re so important in fact, that trying to come up with generic ones that would work for any company isn’t something I think can be or should be done! So I’ve avoided talking about it publicly.

A friend of mine asked me for some advice the other day. She knows that I’ve helped hundreds of companies around the world with their Customer Success-driven Growth strategies, but she decided to start by Googling around.

After finding unhelpful posts or forum answers on how to create generic Customer Success playbooks, she came to me.

So I typed up the following for her and since she liked it, I thought I’d share my take on how she should go about creating Customer Success playbooks for her unique situation with you, too.

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Customer Success: The Definitive Guide 2019

Customer Success: The Definitive Guide 2018Customer Success is transformative.

Whether you have a Software-as-a-Service, subscription or membership business or you sell one-off products or services and simply want to do business with your customer more than once, Customer Success should be your driving purpose.

Customer Success has its roots in the Software-as-a-Service (SaaS) world and my original definition was very much SaaS-centric.

But since then, companies that are not SaaS, or even technology companies at all, have recognized the transformative power of Customer Success and embraced it as their new operating model.

If you aren’t familiar with exactly how Customer Success is transformative, I’ll lay that out for you below in great detail in this guide.

I don’t know what will happen with Customer Success in the next couple of years, but I wouldn’t be surprised if sometime down the road we’re no longer talking about “Customer Success” as a separate function within a business, but simply as part of the way you do business.

Even today that’s how you should view it.

Why? Simply put; No Customer Success = No Your Success.

You make sure your customers are successful and they’ll make sure you’re successful.

On the flip-side, if your customers are not achieving “success” in their relationship with you, your success is at risk.

Of course, what “success” looks like for your customers is 100% unique to your customers, in the context of your product or service.

So while there’s not a one-size-fits-all definition of lower-case customer success – that’s up to you to know – as far as the concept of upper-case Customer Success is concerned, I’ve attempted to define that for you here.

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Understanding Customer Success Management Compensation Models

Understanding Customer Success Management Compensation ModelsWhat’s the best Comp Model for Customer Success Managers (CSM)? How can I create a compensation model that drives the type of behavior we need? What percentage of CSM comp should be variable, and what impact should individual vs. org-level performance have on the variable piece of compensation?

The more this comes up, the more I realize – especially when you’re first operationalizing Customer Success Management in your company, but very likely eventually – that when it comes to Customer Success, variable compensation is a red herring.

You’re going to spend a lot of time on it even when you don’t need to. You – and your CSMs – have better things to do than worry about this… like actually making your customers successful.

Let’s dig into this…

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Determining the Number of Accounts per Customer Success Manager

This is otherwise known as, “How to Determine Customer Success Practitioner Coverage Ratios.”

Initially, the question was “how many accounts should a Customer Success Manager (CSM) handle?”

But people quickly realized that answers like “37 on the low end; 200 on the high end” weren’t actually helpful.

Then, an ex-CEO-turned-VC with a strong content marketing machine, said a different thing that has, unfortunately, stuck:

“1 CSM per $2M/ARR.”

That’s not accurate, it never was, and it needs to stop being propagated.

Here’s what to do instead…

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Customer Success-driven Growth: Rapid, Exponential, and Efficient

Doing whatever you can, spending whatever you can spend, to acquire any and all customers – whether they’re a good fit long-term or not – is played out. That’s not a valid growth strategy anymore (it never really was).

Today, Investors, Boards, Executives, and Startup Founders are all looking for rapid, exponential, and efficient growth. And yes, you can actually have all three of those.

In fact, there’s no more efficient – and done correctly, rapid and exponential – growth than growth within and from your existing customer base.

And the key to unleashing the power of this growth engine is Customer Success.

I even wrote a post that illustrates just how much of an impact Customer Success-driven Growth can have not just on Revenue expansion, but literally on the value of your company!

Let’s dig into what Customer Success-driven Growth is…

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Why You Can’t Offset Churn with Upsells

If you lose $1 in revenue through churn – either because a customer cancels their subscription or decides to stay but pays you less because of discounts or downsells – you first need to replace that $1 before you can start to grow.

Now, you can acquire those churn-offsetting revenue dollars in two ways: by acquiring net new customers or by getting your existing customers to buy more or expand their relationship with you.

For the longest time, companies looked at acquiring new customers as the logical way to offset churn. But at some point, it would occur to them that this was a losing proposition for several reasons, ranging from a longer payback period for Customer Acquisition Cost (CAC) to the negative market sentiment created by so much churn.

So the logical next step in offsetting the revenue lost from churn was for vendors to look at getting their existing customers to buy more or to otherwise expand their relationship with them.

But as you’ll see, this doesn’t work, either.

Some people think that having churn – even a lot of churn – is okay as long as they’re making up for it by getting more from the customers that stay.

In fact, I’d say this is one of the biggest – yet least talked about – misconceptions around Customer Success: that you can “use” existing customers to offset whatever churn you have.

It’s time to address this directly so there are no more misconceptions…

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9 Things Customer Success is Not

The definition of Customer Success has been clearly laid out.

What goes into Customer Success Management has been fully documented.

But there’s still a chance that you have a misconception or misunderstanding about Customer Success that could keep you from fully embracing this potentially transformative concept.

So I want to make sure any preconceived notions about Customer Success aren’t standing in your way of understanding something this powerful.

So let’s go through a few things that Customer Success is not…

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Customer Success Management: An Executive Overview

Customer Success is when your customers achieve their Desired Outcome through their Interactions with your company.

The actual process of moving customers toward their ever-evolving Desired Outcome is called Customer Success Management.

It’s important to understand the difference between Customer Success and Customer Success Management; the former can be thought of as an Operating Philosophy, while the latter is your Operating Model that can increase the value of your company.

Okay, let’s dig in…

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The 8 Elements of Customer Success Management

the-8-elements-of-customer-success-managementCustomer Success is when your customers achieve their Desired Outcome through their Interactions with your Company.

To actually ensure your customers achieve their Desired Outcome – or what they need to achieve, the way they need to achieve it – and not just hope it happens, you need to actively work your customers toward that goal.

That’s where Customer Success Management comes in.

I define Customer Success Management as the process of moving customers toward their ever-evolving Desired Outcome.

And Customer Success Management is made up of the following things:

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Logical Customer Segmentation: The Key to Scaling Customer Success

logical-customer-segmentation-the-key-to-scaling-customer-successCustomers that pay more need more human interaction, right?

Customers that pay less don’t deserve as much human interaction, right?

Customers that we give more human interaction should pay more, right?

Segmenting customers based on how much they pay us is one of those traps that a lot of Customer Success organizations fall into, mostly because it seems logical and it’s what the industry has been doing for a long time.

But that doesn’t mean it’s right. Let’s explore a bit, shall we?

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