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 March.  A presentation of the material will be delivered in a webinar, made possible by Citrix OnLine, on Thursday, February 23rd at 10am PST.

The Webinar

The webinar and the written Report will include the research findings to date on what SaaS/Cloud firms are doing in the areas of the Strategy, Process, People and Technology of Customer Success Management.  Attendees will also receive a complimentary copy of the white paper after publication.

Advance registration for the webinar is required, and space will be limited.  To reserve a seat, please follow the link given below:

Webinar:  The State of Customer Success Management 2012
Thursday; February 23rd 2012 10: AM PST

Registration link:

https://www3.gotomeeting.com/register/264426014

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 …

Mavens and the Knowledge Inventory

Support professionals have been focused on building and extending community support resources for many years as a means of reducing skyrocketing contact center costs.  A key aspect of this effort has been encouraging the role of “mavens,” non-employees who are very knowledgeable about how the company’s products work and who are willing, even insistent to share their expertise with other customers for free.  The contribution of a small number of mavens can easily reach strategically significant levels for a technology maker.  Not only do mavens answer technical questions about how something works, they are also often at the forefront of innovation in how to better use a product to enhance productivity and profitability.  As such, they represent a substantial value to the company.

The encouragement of mavens also carries a risk, however, for affiliation with a company or product can be positive or negative.  At the senior end of the scale, mavens tend to have their own extensive set of relationships within the customerium and beyond.  Their contributions build their own reputation and identity within the community over time, and savvy companies need to keep this fact in mind, for mavens also tend to be serious influencers.  If offended, what was once an enthusiastic supporter, promoter and influencer can easily turn into an equally dedicated and active detractor and enemy — and the resulting damage can be every bit as substantial as the former gain.

We’ve become a society which increasingly is about personal definition through membership in groups and other affiliations. In the face of that reality, it’s time to fundamentally revise how companies think about the marketplace and their own organizational structure.

Mavens are only one expression of the knowledge inventory that grows up around a technology.  Each customer company will have employees that learn how to use the application to increase their productivity and their company’s profitability.  There is no reason why that knowledge and value must be lost if/when they are laid off or move to a different employer.  Recognizing the value of such individuals, some SaaS firms have begun to maintain a registry of skilled users, and rent them to other customers when additional staff is needed on a temporary basis.

The Architecture of Enduring Relationships

The maintenance of a sustainable and profitable customerium begins with strategy, with the design and architecture of the role of the various elements and of the whole.  Does your company have a map of its community?   Are the key players and their standing along the knowledge and influence spectrums known?  The power of those roles and individuals are far too important to be left to chance.  For optimum results, there needs to be a strategy in place for the full range of conversations that take place between your company and all of the roles/players, but also for the interactions that take place amongst those people on the outside.  We’ll be discussing this in The SaaS Support Forum on LinkedIn, and I’m also available for complimentary Office Hours sessions by appointment.

[This article was originally published on January 3rd, 2009.  It has been extensively revised using insights developed from The SaaS & Support Project research.]

The Strategy of Community Support

Many companies have perceived online community support as just a way to reduce employee staffing and cut costs by deflecting calls away from the customer contact center.  Some monumental public relations disasters have been the result of such short-sightedness as online firestorms have erupted with no one assigned to monitor or deal with them.  Opening a door, especially in the online world, can have far-reaching consequences.  The first step towards success is developing a consistent strategy that covers all aspects of the online experience.

What do you want to make happen through the use of social media for support?  How does that map to your overall business strategy?  There is a wide spectrum of customer-company conversations; which ones do you want to encourage through which channels?  How about customer-to-customer conversations?  Where do they fit into your community support strategy and how will you encourage them?  How will the various channels be used together, so that a conversation might begin in a forum and end in the creation and resolution of a support case?  Or vice-versa?  Which aspects of the online experience will you use for marketing purposes, and which for support?  Most importantly, how will you measure the results and keep everything aligned with that strategy?

The Marketing of Community Support

Opening a support forum is only the beginning; you can’t stop there and expect to succeed.  From before the start, it’s vital to properly set expectations about what the resource is intended to offer, and how it will be managed.  Once opened, there is still a vital need to let people know that the resource is there, the value it has to offer to them and what’s going on in it on a regular basis.

Many forum / discussion applications allow for each user to flag particular topics so that any subsequent posts by anyone automatically generate a notification email, even permit response from that email.  Some forums permit periodic general updates to be emailed out, notifying all members of new discussions and activity.  Be sure to let individuals set their preferences for such notifications.

The Management of Community Support Resources

One of the best uses in my experience of an online discussion forum is in the creation of small working groups who can pool their knowledge and expertise to address a particular issue.  In the process, bonds may be forged between the experts to create a functional community and a resource of considerable value to those experts, to the company and to the members and participants of the forum at large.  It’s important to realize that the conversation can be as valuable as the answer that is finally developed.  To produce a good conversation often takes a skilled facilitator or leader, and this is especially true in forum work.  Every discussion forum needs a Moderator, or a team of moderators, who read everything that is posted and ensure that the discussion stays civil and on-topic as much as possible.  Be sure that you have trained those moderators to understand very clearly how their tactical decisions and activities tie into your overall strategy.

What Comes After

The biggest barrier to effective use of a support forum is the “noise” factor.  Newcomers tend to create new threads for questions that have already been answered.  Some conversational threads may go on for literally hundreds of entries before a viable solution is worked out.  If these topic threads are permitted to remain, it will become increasingly difficult to find anything worthwhile, and the forum will tend to decline in effectiveness.  At the same time, too few discussions can discourage visitors and set an impression of overall inactivity.  Here is where the role of the monitors is especially important, for they should be the ones who turn completed conversations into knowledge articles before archiving the thread and removing it from view.

To prevent unnecessary duplication of topics, the forum software should prompt the member through the creation process to look at other threads that may be relevant to the issue.  Unfortunately, even this method may not catch all of the duplicates, so there needs to be effective pruning and moving functionality so that the duplicates can be merged into one as appropriate.

Choosing a Vendor/Application

Start your review by looking at the websites of your competitors.  What features are in play?  Why?  What’s their strategy?  What are the strengths and weaknesses you see in their offerings?  Next, visit the websites of some of the leading vendors of technologies used for online community support & discussion, companies such as GetSatisfaction, Jive Software and Lithium.

The standard features and functionality of a typical online discussion group are essentially commodities at this point in the industry’s development.  There are several very good open-source packages available for free downloading and use that will enable you to establish a basic foundation.  Going the free software route, however, leaves the entire burden of getting value from the exercise on you.  If you’re an online social media expert in your own right, this may be enough.  For most companies, however, much more is needed.  In my opinion, the first point on the vendor/application evaluation and selection checklist is: does the prospective vendor have a Customer Success team that will fully engage with you from the initial design phase all the way through to continuing maintenance and management of your new online resourced?  If not, look elsewhere.

Follow-through

Strategy. Marketing, Managing; none are one-time events in the life of a successful community support resource.  All are ongoing efforts, necessary to keep a consistent program producing quality results.  The beginning, and most crucial element is that of strategy.  Defining a strategy for your community / social media program is not something to take lightly.  If you don’t have professional-grade expertise already on your staff, then look outside for assistance.

If you have questions about this article, please submit a comment or join us for a complimentary Office Hours session.

Recommended Reading

• Technology Selection
• The Impact of Support 2.0
• Support 2.0 – Let The User Beware
• SaaS & Customer Success: The (new) Definition of Customer Support
• The Cost of Asking The Wrong Questions
• Services For Software Companies

Towards a Definition of Customer Success Management

The Customer Success management (CSM) role is a developing one in the SaaS/Cloud sector.  In a few companies, the title has been used for or within the Implementation team, with staff members acting as technical account managers to see that all goes well with the project.

In other companies, however, the CSM role is much more senior — it’s the actual owner of the ongoing customer relationship.  In such cases, it’s more than an Account Manager role, for it also includes insuring that the customer is getting real economic value from their investment — and that they know it.  The CSM maps out the customer relationship, and is responsible for moving the customer along and up the profitability chain for both parties.

Does your company have a Customer Success Management team?  If so, what responsibilities/authorities do they have?  What performance metrics are in use? What were the driving factors that brought the group into being?   What do you look for in recruiting CSM staff?

The Mission of the Customer Success Group

In a previous article about the need to change the role of Support to being about much more than just Break/Fix, I suggested that the new mission for the group in the SaaS/Cloud era should be:

“We directly contribute to making more sustainable profitability faster/better for your company and ours, and we can prove it! “

That’s not  a bad starting place for developing a mission statement for the Customer Success Management team, but it needs to go even further.  If you have a CSM team, I’d like to talk directly to you about it — off the record, or on.  Please use the message form on the contact page, or send me an email directly.  If you’d like to be kept informed about progress on this subject, please join the mailing list and also consider becoming a basic/subscribing member of The HotLine Magazine.  There is no cost for a Basic Membership.

Recommended Reading for Customer Success Management

• Cloud Profitability & The Burden of Customer Success
• SaaS & Customer Success, the (new) Definition of Customer Support

• SaaS Support Structure
• Tracking SaaS customers
• saas customer support
• support model for a SaaS product
• customer advocacy and support saas

A complete answer to the question must address several vital issues.  What is the purpose (Strategy) of the support, and what services are to be offered? How will you measure the performance and the results?   Through what access channels (Process) will the service requests will be received and delivered?  What organizational structure and staffing (People) will be required?  What Technology will be needed to receive, record and resolve the incoming requests?  The visitors will often be hoping to find out what other SaaS/Cloud vendors are doing about Support.  The HotLine Magazine is the best source of information about all of these aspects, as we have focused on this area since early 2007.

For information about what SaaS vendors are doing about Support, the first Report of The SaaS & Support Project is an excellent resource.  Information about the Report may be found here; for access, you must be logged in as a Research Member.  To join, please click here.

Here are some links to articles previously published by The HotLine Magazine that address various aspects of the SaaS Support model.

The Strategy of SaaS Support

• Aligning for Effectiveness
• SaaS/Cloud & Support: The Strategic Key
• Aligning with the SaaS/Cloud Profits-Realization Strategy
• SaaS, Support, and Owning the Customer Relationship
• SaaS/Cloud & Support: The End of Break/Fix
• SaaS/Cloud & Support: Reinventing the Role
• Real Economic Value vs. Break/Fix Support

The Process of SaaS Support

• The Knowledge Inventory Operation

The People of SaaS Support

• SaaS/Cloud & Support: The Right People
• Customer Centricity & The Ownership of the Relationship

The Technology of SaaS Support

• SaaS & The Contact Center Technology Market
• The Technology of Customer Centricity
• The Customer Contact Center Technology Suite

Additional information may be developed through participation in the discussions of The SaaS Support Forum.

The SaaS Support Forum

The SaaS Support Forum is a discussion area on LinkedIn where interested professionals may ask questions and share ideas.  For more information about the Forum, please click here.  Note that you must be a LinkedIn member in order to access the forum and to participate in the ongoing conversations there.