For a long time, companies believed that to sell more, they simply had to hire more salespeople and keep them motivated. Well, that worked for a while, but today, customer success is the biggest emerging growth opportunity in business.
Studies show that it's 5 to 25 times more expensive to acquire a new customer than to retain an existing one. Customer acquisition cost, or CAC , is high for most companies, and this impacts the need to focus efforts on retaining as many active customers as possible.
So why do we spend most of our time and our best resources trying to attract and sell to a new customer, if you can with the same effort and investment keep your customers and create personalized offers ?
Working with a customer focus is the first step to answering this question. Let's learn more about this term.
What is customer success?
Customer success is a function that helps customers get the most value from a product or service, while working collaboratively with sales, marketing, and product to achieve this goal.
The term customer success was originally applied to SaaS (Software as a Service) companies, but since then, non-SaaS companies, or even technology companies, have recognized the transformative power of customer success and embraced it as their new operating model.
Many people associate customer success with customer management or support, but the truth is that neither of these attributes accurately describes their work. Customer success encompasses roles such as market consulting and proactive actions, and customer success becomes their responsibility.
If before the focus was on making the customer happy, pampering them, working on customization, personalization, and basically doing everything the customer wanted to keep them, it is necessary to consider the success of this customer as a loyalty mechanism.
Customer success is much more than satisfaction
Customer success isn't the same as customer service success . This is a common mistake among those working in customer service who are transitioning to customer success .
Just because a customer attends every meeting, learns how to use your product perfectly, and understands your processes isn't an indicator of customer success. These metrics speak volumes about customer engagement , which is indeed an important pillar for success, but they're just the tip of the iceberg when it comes to this term.
A successful customer begins to be formed during the sales qualification process, reaching the post-sale stage, and believe me, it's a cycle that never ends.
That's why it's crucial for companies to have a customer-centric culture , not just as a sector, but one that takes care of the entire customer cycle, and most importantly, how they will achieve success using their solution.
Knowing about this professional's role, you must already be thinking about some advantages of having a person like this in your company, right?
The importance of customer success in companies
In addition to ensuring that customers achieve their goals, the customer success manager is also responsible for providing a good customer experience . This is because the premise of this role is close proximity to the customer, resulting in results monitoring. Let's talk about the advantages of having a customer success .
#1 Organic Marketing
When the customer is satisfied with the result, their next step will be to advocate and promote your company positively without any investment. This acts as a mental trigger for reciprocity.
If you are giving your customer something truly valuable, bringing insights , the customer will definitely want to reciprocate in some way.
#2 Anticipate/Identify opportunities
customer success professional is a person who has the freedom to take the facts, and it is their right to be proactive and have knowledge in multiple areas to be able to identify opportunities for a client to change a process, and also anticipate future errors that may arise.
#3 Retention
Since this professional's mission is customer success, it is their responsibility to keep them satisfied and updated, reducing the churn rate , in addition to being aware of the company's success indicators.
#4 Revenue Expansion
If your customer has the potential to succeed with your solution and achieves the desired outcome, they won't leave. We're talking about retention, which is the main contribution of having a customer success strategy in your company, reducing churn—which can be a nightmare for any organization.
A customer who sticks with your company is the first step toward not only retaining them, but also extending their contract term and offering them more opportunities. We can then talk about the dreamed-of upsell and cross-sell .
Upselling is the increase in plan for what the customer already has or the change to the same product or service, but in a more “premium” version.
Cross-selling is when a customer buys something complementary that you offer, in addition to what they already have.
If your company invests in training professionals and consolidates a culture focused on customer success , following their every step, your company will not only build customer loyalty but also gain promoter customers , who will praise your company, earning more referrals.
Additionally, communication is key when it comes to ensuring your clients' success.
It's one thing to offer a one-hour conversation, but it's another to continually check in, address specific pain points, and focus on areas for improvement. By doing this, you not only help the client but also begin to build a relationship with them.
This way, you can effectively ensure that you are reducing churn rates, and continually helping your customers succeed.
That's why companies are increasingly investing in delivering good service and good products, to ensure a good experience for their customers and achieve the objectives they had when purchasing their product or service.
Customer Success ROI
Traditionally, sales and marketing teams were considered the main drivers of company growth, but that has changed somewhat.
If you still think that all it takes to grow your company is hiring more salespeople, you might be mistaken. Especially if you're in the SaaS market.
The biggest barrier to this next level of growth probably won't be the size of your sales and marketing team, but rather how good your company is at reducing customer churn , and most importantly, building a successful and truly engaged customer base for your product/service.
Taking the SaaS market as an example, where the customer success function is more mature, you can see that of the six revenue indicators, five of them are handled by customer success. That's a lot!
customer success professionals are responsible for most of a company's success indicators.
Furthermore, they play a key role in companies, being able to proactively identify customer needs at specific times.
“The most cost-effective way to run a business today is to ensure your customers are happy and successful – which leads to customer success.
Lincoln Murphy
What is success for my client?
First of all, keep in mind that you need to constantly deliver success to your customers , not to yourself.
Making your client experience the result of the problem or opportunity they saw when hiring you will be the only way they will continue using your service.
If you sell software, success for your customer isn't about them making great use of the application, logging in multiple times a day, and utilizing your product's most important features. It's not about them finding the interface great and user-friendly, nor is it about them believing you have the best product on the market.
For him, success is achieving the goals he had when he started looking for a solution like yours.
For example, if you sell a task management tool, and the client didn't see a positive impact on team productivity in the first few months, it was very costly to implement, and it didn't solve your team's pain points, you're probably facing a future ex-client.
“Ah, but the client didn't use my product properly”, “the client didn't do the full implementation”, “he didn't change the processes he needed to within the company”, “his analyst was slacking off”.
If you thought of any of the excuses above, great, you're starting to find the solution.
Beyond Customer Success
When we're talking about customer success, we immediately think of that proactive professional who monitors our interactions and, at the same time, is already planning improvements, right?
Companies like Spotify , Netflix , and Uber customer success professionals , but have they ever called you? I'm pretty sure they haven't...
Customer success isn't always about providing feedback and acting proactively, but ensuring the customer can take action in the shortest possible time and with minimal effort . That's delivering success!
For example, Daily Mixes were developed because they realized that one of their users' biggest pain points was choosing the right music. No one contacted them, yet they still delivered success .
Another example? Let's talk about Netflix. I don't know if you're aware, but the weekly news emails aren't sent to everyone at the same time. Netflix understands user behavior patterns and typically sends these emails during peak times.
Brilliant, isn't it? We're talking about high customization.
How to measure customer success?
Within the customer success department, there are a number of indicators that must be constantly analyzed. Here, we'll cover some standard metrics for any CS team looking to forecast their operations. Check them out:
#1 Churn Rate
In a simple definition, churn is an index that represents the rate of customers who abandon or cancel products or services in certain periods.
This rate is important for all industries, but especially for subscription-based business models.
It's clear that customer retention is related to a wide range of factors, but it's the customer success to understand the churn rate and understand that the reason is usually within the organization.
There are two types: churn and revenue churn (MRR Churn). The difference between them is simple and essential to understand.
Churn , while revenue churn represents how much budget is lost.
Another indicator you can keep an eye on is the punctuality of customer payments. Customer success for billing customers, but rather for understanding whether they're experiencing financial difficulties and proposing solutions for both parties.
In some cases, when a customer isn't paying on time, it may mean they're no longer seeing as much value in the platform, and it could possibly be an indication of churn. So, stay alert!
Ps: If you want to delve deeper into this subject, I suggest accessing our article on churn rate .
#2 Revenue Expansion
customer success professional's responsibility to monitor revenue expansion indicators, as mentioned previously.
This is one of the best indicators of your business's health. If customers are buying more of your products or services, you're clearly doing something right.
In this case, you should have a spreadsheet to track rates for new customers , renewed contracts , downsells , upsells and cross-sells .
Selling to existing customers is a much cheaper source of new revenue and can be an untapped source of growth for your business.
Ps: If you want to delve deeper into this topic, I suggest accessing Drift's article on customer success metrics .
#3 Customer Health Score (CHS)
The Customer Health Score (CHS) is an indicator of future customer behavior. Its function is to measure consumer health, being able to predict their actions and desires.
Using this metric, you can adapt customer service, address bottlenecks, and retain customers longer, avoiding the end of the service provided to each of them . This makes customer retention and loyalty more effective.
Customer health reflects the consumer's perception of a product or service—the value they see in the brand. Some questions indicate what consumers think about what's being offered:
- Is the customer satisfied with the purchase of the product or service?
- Would the customer do business with your company again?
- How satisfied are customers with the company?
- How is the product/service being used?
- Did the client expand their business after implementing your product/service?
- How often are calls to your support team received?
These are just a few examples of what can be measured and asked. Each company needs to have appropriate questions for its own scenario and consider each of its customers.
#4 Customer Satisfaction Score (CSAT)
The Customer Satisfaction Score is a metric that directly measures customer satisfaction levels in specific interactions, and is measured through a numerical scale that asks:
“How would you rate your experience with our company?”
There are several ways to calculate CSAT because there are different ways to measure this score.
Therefore, customer satisfaction scores can be measured in five ways, namely:
- 1 and 2 (Yes and No)
- 1 to 3 (Dissatisfied/Neutral/Satisfied)
- 1 to 5 (Likert scale)
- 1 to 7 (Likert Scale)
- 1 to 10 (Likert Scale)
If you choose to calculate CSAT on numerical scales such as 1 to 5, 1 to 7, or 1 to 10, you will need to calculate the weighted average by adding up all occurrences and dividing by the number of respondents.
But if you opt for the 1 and 2, or 1 to 3 model, the calculation ends up being easier, as you will basically have to subtract the percentage of satisfied vs. dissatisfied customers.
#5 Net Promoter Score (NPS)
NPS , or Net Promoter Score, is a customer loyalty . Its goal is to determine a consistent, easily interpretable score that can be compared over time or across industries.
The metric measures how likely respondents are to recommend a particular company, product, or service to friends, family, or colleagues. The idea is simple: if you enjoy using a product or doing business with a particular company, you'll want to share that experience with others, right?
Net Promoter Score question is simple. On a scale of 0 to 10, you ask customers:
“How likely are you to recommend our company to your friends or family?”
Depending on your answer, customers will be divided into three categories, based on their Net Promoter Score:
- Promoters (score 9-10) are loyal enthusiasts who will continue to buy and recommend your products to others, fueling the growth of your business.
- Neutrals (score 7-8) are satisfied customers who purchase with average frequency and are vulnerable to competitive offers.
- Detractors (score 0-6) are dissatisfied customers who can damage your brand and impede growth through negative word of mouth.
#6 Customer Effort Score (CES)
The Customer Effort Score is a metric used to measure the level of effort a customer put into resolving a specific issue with your company.
The Customer Effort Score question is on a scale of 1 to 7, which asks:
“Did the company make it easy to resolve my issue?”
To calculate customer effort , you need to take the weighted average of the scores to determine a score out of 7. The higher the score, the less effort was put in.
Customer success statistics:
- Due to poor service, Brazilian companies lose R$400 billion – Exame
- On average, loyal customers are worth up to 10 times more than their first purchase – Institute of Customer Service
- Promoter customers spend on average 2.4x more than detractor customers – Medallia
- Resolve a complaint in a customer's favor and they have a 70% chance of doing business with you again – Lee Resources
- It takes 12 positive experiences to make up for 1 unresolved negative experience – Glance
- 80% of large companies believe they offer “superior” service, but only 8% of consumers report receiving “superior” service from these companies – Bain & Co.
- The average global value of a lost customer is $243 – Kissmetrics
- 80% of consumers say they are more likely to do business with a company if it offers personalized experiences – Edelman
Conclusion
The Customer Success Professional is here to revolutionize the way companies view good old-fashioned customer relationships , focusing not just on what they want, but on what matters most – the customer!
Although it emerged in SaaS companies, and the vast majority of studies and articles on the topic are based on this business model, customer success should be the focus of any company. Regardless of size and industry, investing in customer success is investing in your company's success.
It's crucial to understand that consumers are increasingly seeking agile , personalized , and simple that provide a great experience . If your company is delivering on these four pillars, I'm sure you have a successful company. Thinking about innovating in customer success? Discover Harmo , the first and only platform that integrates online reputation management and multi-metric research to increase your brand's online word-of-mouth.
