For a long time, companies believed that to sell more, all they had to do was 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 indicate that acquiring a new customer is 5 to 25 times more expensive than retaining an existing one. The cost per customer acquisition, or CAC, is high in most companies, and this impacts the need to direct efforts towards maintaining the largest possible number of active customers.
So why do we spend most of our time and our best resources trying to attract and sell to a new customer, when you can, with the same effort and investment, retain your existing customers and create personalized offers?
Working with a customer-centric approach is the first step in answering this question. Let's understand more about this term?
What is customer success?
Customer success is a function that helps consumers get the most value from a product or service, while working collaboratively with sales, marketing, and product teams to achieve that 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 client management or support, but the truth is that neither of these attributes accurately describes the job. Customer success encompasses aspects such as market consulting, proactive actions, and making customer success 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 is not the same as the success of your customer service. This is a common mistake made by those who work in customer service and are transitioning to the area of customer success.
The fact that a client attends all meetings, learns to use your product perfectly, and understands your processes is not an indicator of customer success. These indicators say a lot about customer engagement, which is indeed an important pillar for achieving success, but it's only the tip of the iceberg when we talk about this term.
The successful customer begins to take shape during the sales qualification process, continuing into the post-sale phase, 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 department, but one that takes care of the entire customer lifecycle, and especially how the customer will achieve success using their solution.
Knowing about this professional's role, you're probably already thinking about some advantages of having someone like that in your company, right?
The importance of customer success in companies.
In addition to ensuring that the client achieves their goals, the customer success manager is also responsible for delivering a positive customer experience. This is because a key aspect of this work is close client relationships, leading to ongoing performance monitoring. Let's talk about the advantages of having a customer success?
#1 Organic Marketing
When a customer is satisfied with the result, their next step will be to defend and positively promote your company without any investment. It works like a mental trigger of reciprocity.
If you're giving your client something truly valuable, providing insights, the client will certainly want to reciprocate in some way.
#2 Anticipate/Identify opportunities
As mentioned earlier, a customer success professional is someone who has the freedom to take the facts seriously, and it is their right to be proactive and knowledgeable in multiple areas to identify opportunities for a client to change a process, as well as anticipate future errors that may arise.
#3 Retention
Since this professional's mission is customer success, it is their responsibility to keep customers satisfied and up-to-date, reducing churn rate, and also to be attentive to the company's success indicators.
#4 Revenue Expansion
If your client has the potential to succeed with your solution and achieves the desired result, they won't leave. We're talking about retention, which is the main contribution of having customer success in the company, reducing churn – which can be a nightmare for any organization.
A customer who doesn't leave your company is the first step not only to retaining them, but also to extending their contract and presenting them with more possibilities. This allows us to talk about the much-desired upselling and cross-selling.
Upselling is the process of increasing a customer's existing plan or switching to a more "premium" version of the same product or service.
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 its professionals and consolidates a culture focused on customer success, accompanying them every step of the way, your company will not only build loyalty but also gain promoter customerswho will sing your praises, generating more referrals.
Furthermore, communication is fundamental when it comes to ensuring the success of your clients.
It's one thing to offer a one-hour conversation session, and quite another to continuously check in, address specific pain points, and focus on areas for improvement. By doing this, you not only help the client, but you begin to build a relationship with them.
In this way, you can effectively ensure that you are reducing churn rates and continuously helping your clients succeed.
That's why companies are increasingly investing in delivering good service and good products, in order to guarantee a good experience for their customers and achieve the goals they had when acquiring their product or service.
ROI of customer success
Traditionally, sales and marketing teams were considered the main drivers of company growth, but that has changed somewhat.
If you still think that growing your company is simply a matter of hiring more salespeople, you might be mistaken. Especially if you're in the SaaS market.
The biggest barrier to this next level of growth will likely not be the size of your sales and marketing team, but rather how good your company is at reducing customer churnand, 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 most mature, you can see that out of the 6 revenue indicators, 5 of them are handled by customer success. That's a lot!
Today, customer success professionals are responsible for the majority of a company's success indicators.
Furthermore, they play a key role in companies, proactively identifying customer needs at specific times.
"The most cost-effective way to run a business today is to ensure that your customers are happy and successful – which leads to customer success.".
Lincoln Murphy
What does success mean to my client?
First and foremost, keep in mind that you need to consistently deliver success to your clients, not to yourself.
Ensuring your client achieves results regarding 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 client isn't about them making excellent use of the application, logging in multiple times a day, and utilizing the most important features of your product. It's not about them finding the interface great and user-friendly, nor even about them thinking 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 his.
For example, if you sell a task management tool, and the client didn't see a positive impact on their team's productivity in the first few months, it cost a lot to implement, and it didn't solve their team's pain point, you're probably dealing with a future ex-client.
"Ah, but the client didn't use my product correctly," "the client didn't complete the implementation," "he didn't change the processes that needed to be changed 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 talk about customer success, we immediately think of that proactive professional who follows our interactions and, at the same time, is already planning improvements, right?
Companies like Spotify , Netflix , and Uber have customer success professionals , but have they ever called you? I'm almost certain they haven't…
Customer success isn't always about giving feedback and acting proactively, but about ensuring the customer can complete the desired action in the shortest time possible and with minimal effort. That's what delivering success is all about!
For example, Daily Mix was developed because they realized that one of their users' biggest pain points was choosing the right music. No one contacted you, but they still delivered success.
Another example? Let's talk about Netflix. I don't know if you know this, but the weekly news emails aren't sent to everyone at the same time. Netflix understands user behavior patterns and usually sends these emails during the times when you use the platform the most.
Brilliant, isn't it? We're talking about high personalization.
How do you measure customer success?
Within the area of customer success, there are a number of indicators that should be constantly analyzed. Here we will discuss some standard metrics for any Customer Success team seeking to predict the future of their operations. Check it out:
#1 Churn Rate
In simple terms, churn is an index that represents the rate of customers who abandon or cancel products or services within a given period.
This fee is important for all sectors, but especially for those business models based on subscriptions.
It's clear that customer retention is related to a huge range of factors, but it's the customer success to know the churn rate and understand that, generally, the reason lies within the organization.
There are two types: churn and recipe churn (MRR Churn). The difference between them is simple and it's essential to understand it.
Churn represents the number of consumers who canceled a product or service in a given period, while revenue churn represents the amount of budget lost.
Another indicator you can keep an eye on is the punctuality of the client's payments. It's not the customer success to collect payments from the client, but rather to understand if the client is experiencing any financial difficulties and propose solutions for both parties.
In some cases, when a customer isn't paying on time, it could mean they no longer see as much value in the platform, and this could possibly be an indication of churn. So, be aware!
P.S.: If you'd like to delve deeper into this topic, I suggest you check out our article on churn rate.
#2 Revenue Expansion
It is the responsibility of the customer success professional to monitor revenue growth indicators, as we mentioned earlier.
This is one of the best indicators of your business's health. If customers are buying more of your products or services, you're obviously doing something right.
In this case, you should have a spreadsheet to track new customer rates , renewed contracts , downsells , upsells , and cross-sells .
Selling to existing customers is a much cheaper source of new revenue, and it can be an untapped source of growth for your business.
P.S.: If you'd like to delve deeper into this topic, I suggest checking out 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 the health of the consumer, being able to predict their actions and desires.
Through this metric, it is possible to adapt services, improve bottlenecks, and retain customers for longer, preventing the termination of service to each of them. This makes customer retention and loyalty more effective.
Customer health indicates what the consumer thinks about a product or service, that is, the value they see in the brand. Some questions can help reveal what the consumer thinks about what is 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 the customers with the company?
- How is the product/service being used?
- Did the client expand their business as a result of implementing your product/service?
- How often do you receive calls to your support team?
These are just a few examples of what can be measured and asked. Each company needs to have the right questions for its own specific situation and think in terms of 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 using 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, which are:
- 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 averageby adding all the occurrences and dividing by the number of respondents.
But if you opt for model 1 and 2, or 1 to 3, the calculation ends up being easier, since you will basically have to subtract the percentage of satisfied customers vs. dissatisfied customers.
#5 Net Promoter Score (NPS)
NPS , or Net Promoter Score, is a customer loyalty metric . Its goal is to determine a consistent and easily interpretable score that can be compared over time or across different industries.
This metric assesses how much the respondent recommends 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 want to share that experience with others, right?
The 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 their response, 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.
- Neutral (score 7-8) satisfied customers who buy with average frequency and are vulnerable to competitive offers.
- Detractors (score 0-6) are dissatisfied customers who can damage your brand and hinder growth through negative word of mouth.
#6 Customer Effort Score (CES)
Customer Effort Score is a metric used to measure the level of effort a customer had to put into resolving a specific problem 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 problem?
To calculate customer effort, a weighted average of the scores must be taken to determine a score out of 7. The higher the score, the less effort was put in.
Statistics on customer success:
- Brazilian companies lose R$ 400 billion due to poor customer service – 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 2.4 times more than detractor customers – Medallia
- Resolve a complaint in the customer's favor and they have a 70% chance of doing business with you again – Lee Resources
- It takes 12 positive experiences to offset 1 unresolved negative experience – Glance
- 80% of large companies believe they offer "superior" service, but only 8% of consumers report having received "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 successful customer professional is here to revolutionize how companies view good old-fashioned customer relationships, focusing not only on what they want, but on what matters most – the customer!
Although it originated in SaaS companies, and the vast majority of studies and articles on the subject are written based on this business model, customer success should be the focus of any company. Regardless of size and segment, investing in customer success is investing in the success of your company.
It's crucial to understand that consumers are increasingly seeking agile, personalized, simple that provide a great experience. If your company is delivering on these four pillars, I'm sure you have a successful business. Thinking about innovating in the area of customer success? Discover Harmo, the first and only platform that integrates online reputation management and multi-metric research to amplify your brand's online word-of-mouth marketing.