Key Insights
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The pandemic has led to trustworthiness becoming the top priority for customers
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Forging deeper ties with customers will be incomplete without a strong focus on effective customer success strategies
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Outsourcing key customer success activities can contribute in several ways to revenue and growth
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A clear vision and meticulous planning when it comes to customer success strategies can be the key differentiator between failure and success
Amid shifting business priorities and disrupted operations brought about by the COVID-19 pandemic, one lesson stands out above all others: The critical significance of customer success in growing and protecting relationships with existing customers.
Trustworthiness is now a top priority, as highlighted by a Salesforce study.
Not only has trustworthiness become more important to customers than before the pandemic but it has also grown more difficult to earn.
Building trust among B2B customers requires a sustained focus. And as the function focused on ensuring these outcomes, customer success is now a vital requirement for business continuity and growth.
It is no surprise that customer success teams only showed an upward trajectory during the pandemic.
What Defines Customer Success?
Before discussing the benefits of customer success solutions, it’s essential to define what customer success is.
Customer success is a business methodology that ensures the desired outcomes for your customers throughout the customer life cycle.
A research by Deloitte identifies three types of value that constitute customer success:
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Performance value focuses on the use of the product itself
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Business value focuses on how using the product or solution contributes to achieving specific business outcomes
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Experience value centers on the ease of doing business and the depth of the business relationship between customer and vendor
It also bears certain key differences from customer service and customer support.
Customer support and customer service teams are activated when customers reach out with a specific problem and are geared toward resolving the problem within a single interaction.
Customer success, on the other hand, continuously seeks to innovate new ways of gaining value for customers, providing new use cases and perspectives before customers ask for them.
Why Do Companies Need Customer Success?
In today’s B2B world, getting the signature on the dotted line is only the beginning of the customer life cycle.
With customers finding it easier than ever to switch vendors when dissatisfied with a product, a methodology focused on delivering customer experience, product value, and business value offers several distinct advantages.
Below we have listed the top benefits of customer success in business.
1. Improved Retention
Given the significance of retention, it is important to note that one of the traditional and most effective aspects of customer success is retention.
In the 2020 State of Customer Success report by ClientSuccess, customer success contributed to an average net retention rate of 99% for 411 customer success professionals across 347 organizations.
Retention, unsurprisingly, is cost-effective for companies, with estimates suggesting that retaining an existing customer is 6-7 times cheaper than acquiring a new one.
2. Increased Upsells & Cross-sells
While retention protects the revenue base, growth depends on upselling and cross-selling.
Effective customer success best practices can secure this growth by increasing the likelihood of customer satisfaction.
In fact, vendors are 60-70% likely to sell to existing customers, against being only 5-20% successful in selling to new customers.
This is because satisfied customers recognize the value of a product or service and are aware of how it contributes to securing their business outcomes.
3. Improved Advocacy
Second-order revenues, that is all those sources of revenue which are indirectly influenced by a customer, can significantly contribute to revenue growth.
One common route for second-order revenue is when a champion customer changes companies and brings the product on board with the new company.
The other is word of mouth or referrals from satisfied customers to others in their professional networks.
In either case, by directly impacting customer attitudes toward the assessments of the product and vendor, customer success is significantly responsible for driving second-order revenue.
4. Operational & Product Improvements
With its finger constantly on the pulse to uncover customer pain points, customer success is a key avenue of feedback not only on a product or solution but also on how organizational operations impact customer value.
Customer success teams can create efficient feedback loops and judge the impact of new releases and updates, gathering valuable data for optimizing the product roadmap.
Customer success can also aid in optimizing operational processes across all customer-facing and other teams by identifying key bottlenecks or sources of friction that frustrate customers.
How Outsourcing Can Help You Build Effective Customer Success
At first glance, outsourcing more transactional engagements such as customer service or customer support may seem more reasonable than doing so with a long-term, relational role like customer success.
However, outsourcing key customer success activities can contribute in several ways to revenue and growth:
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Cost-savings: Companies can save on operational costs related to onboarding and training, renting and maintaining office space, management costs, and investing in the latest tools and technology stacks
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Overcoming talent shortages: Outsourcing can ease this process by doing the heavy lifting when it comes to hiring quality customer success representatives
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Access to expertise and technology: Outsourced CSMs have not only been hired for their skills but also undergo the necessary training in a variety of approaches, processes, and technologies so that they can hit the ground running for any organization
Effective management of the long tail: Outsourcing the long-tail customers can help organizations move beyond an 80-20 trap in their revenue generation
The Bottomline
In the wake of the pandemic, the writing on the wall is clear: customer success is integral for the survival of business organizations in a subscription economy.
Satisfying the expectations of existing customers, retaining their business, and increasing revenues through customer advocacy are all vital for sustainable growth.
However, building in-house customer success teams may not always be cost-effective or viable.
Instead, taking on a blended approach of outsourcing specific customer success functions can provide important efficiencies and resource boosts that allow for better engagement of customers.
