Who “Owns” What?

The short answer is a basic lack of ownership, of dedicated management attention.  When I first began researching what SaaS firms were doing about customer retention and maximizing per-customer profitability, I found the most common answer to the question of who authentically “owns” the customer relationship was: no one.  Just as in the traditional market, once the contract has been signed, Sales is off hunting new customers.  After the implementation team has done its work, the trainers have delivered their courses, if any issues are reported, Support will work to close them as quickly as possible.  In all of this, there is a built-in and terribly false assumption that the sale has been made.  But in the SaaS/Cloud model, no sale is ever final.  There is always another renewal to be earned.  Who will do the earning in your company?  How?

When no one is authentically accountable for customer retention or the management of upsells, cross-sells, or the attainment of optimum per-customer spend with your company, the stage is set for unfortunate scenes.  As the initial contract expires, customers may note that the only time they hear from the vendor is at renewal time, and the message given then may not be what that vendor wants to hear.

The Forum:  Tuesday, May 22nd 2012 — Redwood City, CA

I’ll be presenting a Forum session in Redwood City, CA on 5/22 on the realities of managing CLV and effective customer retention in the SaaS/Cloud sector.  The session is sponsored by Scout Analytics, provider of revenue intelligence solutions that enable SaaS companies to leverage behavioral analytics to maximize the lifetime value of their customer relationships.

Advance registration is required for the event.  To register, click here.

[  http://theforum052212.eventbrite.com  ]

(Thanks to SaaS billing solution vendor Zuora Inc. and their Customer Success Management team for providing the meeting space and the refreshments for the gathering.)

Agenda: 

7:00 PM – Doors open for registered attendees

7:30 – 8:15 PM – Mikael’s Presentation + Q&A

8:15 – 8:30 – Scout Analytics

Privacy Notice:  By registering for this event, you are agreeing to receive emails from Mikael Blaisdell & Associates and the event sponsors.  You may unsubscribe from such emails at any time if your preferences change.

Sponsored by customer engagement management platform vendor Totango Inc., the first event will be held on Thursday evening, April 5th in San Mateo, CA from 7-8:30 PM.  The session is free, and is open to all CSM professionals and SaaS/Cloud company CxO’s.  Advance registration is required, and space will be limited.  To register, please click here or put the following in your browser:  http://forumsf040512.eventbrite.com

The second event will be in the Boston, MA area in May, followed by another in Seattle, WA in July.  Meetings in other cities are being scheduled.

To be notified of future CSM community events, please take a moment to join the CSM mailing List of The HotLine Magazine.  Mailings to the list occur at most once per month, and you may update your preferences or unsubscribe at any time.  To join the CSM List, and/or its companion The SaaS & Support List for customer support professionals in the SaaS/Cloud sector, follow this link to sign up for a free Basic Membership in The HotLine Magazine.  If you have questions about this or other events or resources, please give me a call or post a Question here.

The Future of Customer Success Management:  A Look Ahead — SF Bay Area CSM Meetup

Mikael Blaisdell:  The HotLine Magazine
Thursday: April 5th 7-8:30

San Mateo, CA

Advance registration for this FREE event is required, and space is limited.

Use this link to register: 
 http://forumsf040512.eventbrite.com

Sponsored by: Totango Inc.

Agenda

• 

7:00 Doors open for registered attendees; 
Refreshments & Networking
•  
7:25 Welcome
• 
7:30 – 8:15 Mikael’s Presentation and Q&A
• 8:15 – 8:30  Totango Customer Engagement Tips

The Centricity of Success

The Wharton School of Business program defines “customer centricity” very precisely. To be authentically customer centric  requires that a company conceive of and manage themselves “not as a group of products, services, territories or functions, but as a portfolio of customers.” The program teaches that companies who are customer centric “know how much money they make or lose with each of their customers or customer segments, and they understand why.” Perhaps most importantly, “they understand in precise analytic terms exactly how their different customer relationships contribute to, or subtract from, the total value of the firm. Because they manage their customer portfolio on this basis, they know what to manage and where to invest in order to create sustainable profitable growth…”

We make more money better faster for your company and ours, and we can prove it!

Mikael’s Mantra for Customer Success Management

The emerging profession of customer success management in the SaaS/Cloud industry came to be primarily out of the  necessity for customer retention in the subscription business model.  A core aspect of the CSM role is ensuring that customers succeed in measurable terms from their investment in the vendor’s applications.  But the customer, though unquestionably vital, must not be the only object of the CSM team’s concern.  Their own company, the app vendor, must succeed as well, and the team has the best access to the data necessary for that goal too.

The Need to Know

Every SaaS/Cloud ISV needs a detailed map for each of its customer portfolios so that the CSM team can track individual customer progress against that map.  The production of those maps is a prime goal of the CSM team, for they are the ones who should have the data necessary for the exercise.  With it in hand, slowed progress or plateaus should generate alerts, and quick corrective action, for revenues and retention are at risk.  The precise knowledge of just how much money is at risk is the proof of the CSM’s value proposition as a team.  Yes, the customer success manager must know which specific modules and features of the application are in use by which customers, but the knowing can’t stop there.  Being able to show the value of that usage to both the customer and to their own senior management team is what will bring both retention and continued employment.  And there’s still more knowledge to be gained — the knowing of the customers’ business so that other opportunities for profitable offers of technology and services can be identified and produced.

Want to know how your CSM team is doing?  A good list of initial questions to ask can be found in the Customer Success Management Initiative research, even if you’re only at the planning stage.  The ongoing discussions of the Customer Success Management Forum on LinkedIn, where nearly a thousand other SaaS/Cloud CSM professionals have gathered,  have a lot to offer as well.  For the discussion of this particular article, click here. To discuss other resources, please join me for an Office Hours conversation.

As a fast increasing number of SaaS/Cloud companies are discovering, the sea-change in the industry is far from over.  The shift in profit realization strategies from the sale of perpetual licenses over to the subscription model has made customer retention a mandatory requirement.  The signing of the first contract is a only a milestone, not a resting place.  “Shelf-ware” or underutilized products is no longer an option.  As a result, software vendors are now realizing that in order to keep their customers, they must take a far more proactive role in ensuring the success of those customers with their technology.   But understanding that customer retention is a year-around effort, a commitment that requires a dedicated and accountable executive, is only the beginning.  There is much more to Customer Success Management than just establishing a new box in the overall corporate organization chart.

What do Customer Success Managers do?  How should the CSM team be chartered?  What access channels and technologies are needed?  Where should a company look for skilled people?  How should the individual and group performance metrics be connected to the strategic goals and objectives of the company?

What is The Customer Success Management Initiative?

Sponsored by CSM technology vendors Apptegic, Jbara Software and Totango and media sponsors Sand Hill Group and The HotLine Magazine, the purpose of The Customer Success Management Initiative is to gather data and insight on what SaaS/Cloud companies are actually doing about the new role and profession.  Through two online surveys, direct interviews with CxOs and CSMs, online conversations in the CSM Forum and review of a wide range of published material, an initial view of the current-state of Customer Success Management has been developed.  The first Report is being written, and will be published in early March.  A presentation of the material was delivered in a webinar, made possible by Citrix OnLine, held on Thursday, February 23rd.

 If you weren’t able to attend the webinar, you can access a copy of the Report when it is published later.  This article will be updated when the Report is available.

Recommended Reading

• The Dark Side of The Cloud: Churn Generators and Departure Drivers
• Customer Success Management: Position or Profession?
• The Metrics of Customer Success Management
• Does Your Company Have a Customer Success Management Group?
• Cloud Profitability and the Burden of Customer Success

Departure Drivers

The initial research survey of The SaaS & Support Project asked participants to identify and rate the common causes of churn in the Cloud.  Respondents described their perceived key factors in a variety of terms, but the general categories were:

Disconnection.  In general, disconnection occurs when the Senior Management team of the customer gets out of touch with the vendor.  While the relationship between the vendor’s operations & support  team and the customer’s IT team and users of the application can appear to be  satisfactory, there may be a very different perception of value-received going on with the real decision makers at the customer end.  Changes may have occurred in the Sr. Mgmt team, and those who originally understood why the contract was signed are no longer involved, or new strategic factors are being considered.  Unresolved customer service issues can also contribute to disconnection.

Disengagement.  When a customer does not begin to use the application, or slows in their progression up the adoption curve of the application’s feature set, loud alarm bells should go off in the vendor’s team.  The account is now At Risk, and corrective action needs to be assessed and applied as appropriate.  There can be a variety of factors that are causing the situation, including over-selling, user resistance, etc.  Disengagement can also result from vendor operational woes such as outages or breaks in availability of key features.

Downturn.  If the customers’ own business is not succeeding, their restricted income may cause them to end relationships or scale back numbers of active licenses, etc.  They may even go out of business entirely.

Competition.  New vendors are steadily entering the market, and the range of available choices for customers is constantly expanding.  The barriers to exit in the SaaS sector have been falling for some time.  Access to data, or lock-in, is much less a factor due to the presence of many data synchronization or migration firms.  A vendor who fails to offer a vital feature may also lose to a competitor who does if the customer desire for it is high enough.

The Road to Zero-Churn

Understanding the threat of customer churn and its sources is only the beginning.  The real challenge is to use that knowledge to effectively prevent the loss.  A fast-growing number of SaaS/Cloud firms are taking strategic and organizational steps towards the goal of reducing or eliminating churn.  The emerging new profession of Customer Success Management is being seen in all sizes of organizations, and there are a number of firms offering technologies specifically designed to alert CSM teams to at-risk customers.

As one SaaS  professional noted recently, customer retention is a year-around commitment.  What is your company doing to meet that commitment?  For further discussion of this topic, please join us in The Customer Success Management Forum on LinkedIn.

Early Trends and Indications

Under the heading of Strategy, there are a variety of labels being applied to the role, and an even greater range in how the role itself is defined. Customer Success, Client Success, Client/Customer Engagement and/or Retention — even Customer Success Advocate.  The more interesting information, however, comes from the answers to the questions: Where does the CSM first engage with the customer? Where do they disengage? In some companies, CSM is essentially another name for the Implementation Team. In others, it’s the “fire-fighters” brought in to try to save an at-risk account. But in many companies, the CSM group is becoming the authentic owner of the ongoing customer relationship, chartered with the responsibility for customer retention and maximizing per-customer profitability.

Process: Where do the bulk of the customer-CSM interactions take place? The phone line. Some teams have regular on-site visits, others never do. Email is the second most common method.

People: Where do companies look for CSM candidates, and what kinds of salary levels are offered? Generally, CSM’s tend to be well-paid, and are recruited from a variety of sources — including some surprises. Where is the group located on the company organization chart? Some CSM groups are headed by a CxO, others report to Sales or Ops. As the new profession develops, expect to see a good deal of organizational migration along the way.

Technology: Surprisingly, most companies do not have the ability of monitoring which specific features of their applications are actually being used by their customers, a core requirement for effective customer success management. Some developers have gone back and added this capability themselves, while others have opted to buy it from 3rd party vendors. Metrics is another sensitive issue. How should a company measure the effect of its CSM group?

Keeping Up To Date

Progress reports for The Customer Success Management Initiative research will be sent out to the CSM mailing list no more than once per month. If you haven’t joined the mailing list, here’s the link to the signup page. Participation in the CSMI Forum on LinkedIn is another good source of up to date intelligence about the developments in the emerging profession.  Information about the Forum may be found here.

Links to The CSMI Surveys

Both Research surveys are still open; those who fully complete a survey will receive a complimentary copy of the Report.  All responses will be kept strictly confidential; only aggregate data will be used in the Report.

If your company has already established a CSM group or role, click here to take the Survey.

If you are planning to build a CSM group or role, the 26 questions of the survey will be of value in the planning process.  Here is the link to the second survey version.

Questions?  Post them here, or join us for a complimentary Office Hours session.

Recommended Reading

• Customer Success Management: Position or Profession?
• The Metrics of Customer Success Management
• Does Your Company Have a Customer Success Management Group?
• Cloud Profitability and the Burden of Customer Success

Could a new profession be emerging?  If so, how will it be defined?  What does a Customer Success Manager do? That last question alone has brought a significant number of people from around the world to The HotLine Magazine in the past year.  What is driving the creation of these new positions and the role?  And what results have been produced?  It’s time for a closer look.

Winning By Strategy and Design

Historically, new organizational roles in the technology industry have tended to be pushed onto companies rather than designed.  An earlier tectonic shift, the explosive proliferation of access to computers, necessarily birthed the function of “technical” or “customer” Support.  The structural result was a haphazard and resented break/fix function that has seldom worked to anyone’s satisfaction. Now the SaaS/Cloud sea change is beginning to force an organizational response to its inherent imperative of customer retention.  Will that response end up being reactive, or proactive?  Will your Customer Success Management team be designed, built and managed for its strategic purpose?  Or will the process be chaotic, reacting to the winds of customer demand and organizational politics?

The strategy of customer success management, and the design of the team, logically begins with ownership.  When and where does accountability begin?  I recently interviewed a VP of Customer Success who succinctly stated: “After go-live, we own the customer base, and are accountable for what we do with it.”  That’s a very solid foundation for metrics and measurement.  But for others, the picture is nowhere near as clean-cut.  What is going on in the SaaS/Cloud community about CSM?  And what might it mean?

The Customer Success Management Initiative

We need data, models, metrics, approaches and options to fuel the discussion of design.  The purpose of the Customer Success Management Initiative is to gather those resources.  Two initial online surveys have been developed and are now open for participation.  One is for companies who have chartered and established their CSM teams.  The other is for companies who are in the planning phase.  Both begin with the strategy of customer success management, and proceed to examine the key issues of process/workflow, people and technology.

There will be a webinar and a white paper published in early December to discuss the initial findings from the surveys.  All participants who fully complete the survey will receive a copy of the Report on the results.  But there’s a more immediate benefit to be gained from taking the survey.  The questions are going to challenge you, and offer an opportunity for taking a new look at your current program or your future plans for starting a CSM group.

Click here for more information about the Initiative and its sponsors.  Companies interested in sponsorship opportunities for the Initiative should contact Mikael Blaisdell directly.

Data Confidentiality

Full identification is required from all participants, both so that we can share the results with you and to assure accurate data. Strict confidentiality will be maintained at all times. Neither your identity nor your specific answers will ever be shared with anyone under any circumstances; only aggregate data will be used for reporting.

Survey Start For Currently Operating CSM Groups

If your CSM group is already established and operational, click here to be taken to the survey start page.

Survey Start For Future/Planned CSM Groups

If you’re still in the planning/design phase of a Customer Success Management Group, click here to be redirected to your survey Start page.  The questions on the two surveys cover much the same points; the differences are in the phrasing of the instructions and in some of the options for response.

The Customer Success Management Initiative Sponsors

Shapes in the Cloud

The different definitions of company and role in the traditional industry were based on receiving the bulk of the profit from a sale in an up-front burst of cash.  In the SaaS/Cloud model, profit is now realized incrementally from the subscription income stream over time.  The absence of the bulk infusion of profit means that the old role definitions and compensation schemes for employees and partners don’t work anymore.  The new subscription model also prompts a re-visioning of the product as well.  Where once the transaction was primarily about a sale of technology, the essence of the SaaS/Cloud product is a relationship.

The vital point is not who provides what service to ensure the longevity of the customer relationship, but that the services are available and effective.

Is there room for a channel in the Cloud? Yes.  The need for a range of resources to successfully sell, implement, extend and retain a customer relationship has not gone away.  That need has sharply increased from the very nature of the subscription model itself.  If a customer leaves, the flow of revenue and profit stops and what might have been a strategically significant gain can instantly turn into a substantial loss.  The signing of the initial contract is therefore only the first step in what must be a continuing effort.  It’s what happens after the relationship has begun that will ultimately determine the profitability of the sale.  When you apply that reality across the entire customer base, the meaning becomes inescapable.  Customer retention for a SaaS/Cloud firm is an imperative, for the long-term viability of the company is at stake.  The success and therefore the continuation of the customer can no longer be left to chance or the customer’s own resources.

The Redefinition of the Channel

Not every software company is going to be able or willing to build their staff to cover the full range of necessary resources to meet all of the customers’ needs.  The vital point is not who provides what service to ensure the longevity of the customer relationship, but that the services are available and effective.  Here is where the opportunity for a redefined channel begins, as a new and vibrant community of partners and resources working together.

What will the new “channel” look like?  How will the economics be structured?  Who, if anyone, will “own” the customer relationship?  How will companies build and manage their partnership communities?  It’s time for these topics to be put on the table for open discussion and experimentation.  To begin that conversation,  Jeff Kaplan of THINKstrategies and Marc Sternberg of Rising-Tide Media and the Cloud Computing Showplace created a new conference:  The Cloud Channel Summit. The first was held in Mountain View, California on Monday, November 7th 2011.  The HotLine Magazine was proud to be a media sponsor for the event.

The Cloud Channel Summit

The intent of the conference is to spark conversations and connections between companies and individuals.  There were several keynote presentations as well as panel discussions that brought a greate deal of value to the audience at that first gathering.  I was interviewed before the conference, and later moderated a panel discussion as well.  You can follow the link to see the video for the interview and  the video for my panel, as well as the rest of the presentations, may be seen under the Agenda tab on the conference website.. 

Information about the conference is available at http://cloudchannelsummit.com or by clicking here.  I’m sure that when the next one has been put on the calendar, you’ll also be able to get registration information for it at the website.

Recommended Reading

• The “Must Attend”  SaaS/Cloud Conference
• The Role of the Channel in SaaS Customer Retention

]]> http://mblaisdell.com/partnership-in-the-cloud-the-redefinition-of-the-channel/feed/ 0 http://mblaisdell.com/the-metrics-of-customer-success-management/ http://mblaisdell.com/the-metrics-of-customer-success-management/#comments Tue, 26 Jul 2011 23:36:17 +0000 Mikael Blaisdell http://mblaisdell.com/?p=2584 Before a SaaS/Cloud vendor establishes a Customer Success Management group, it’s vitally important to set the foundation for winning by clearly defining how the performance of that team is to be measured in both of its purposes.  The first purpose of the CSM group is the real benefit experienced by the customers.  The second is the value brought to the …