Wednesday, April 27, 2016

Defining Customer Success

Since I've started this new blog, people have noticed that I've picked up a real focus on customer success.  Some have even implied that it's the only subject I'll be writing about.  Seems those folks don't know me very well...I'll be writing about a wide variety of topics relating to enterprise software.  It's just that I've been deeply involved lately in SaaS Customer Success matters and I've learned a ton.  That's what bloggers do: we learn about something that is new and exciting and useful, then we share that learning with others by writing about it.  That's what I'm doing here.

On to the second thread of feedback I've been hearing:  define this SaaS Customer Success thing.  We've all heard about it, we know it's important, but we struggle to clearly define it.  OK, let's tackle it right now.

I actually go with two different definitions.  Because your definition of customer success in the SaaS world depends on your perspective:  are you a SaaS customer or a SaaS provider?

In providing a definition from the customer perspective, I'm spinning off a definition provided by SaaS Customer Success guru Lincoln Murphy:  customer success is the achievement of your desired outcome(s) through interactions with your SaaS provider.

  • Achievement of your desired outcome(s) - did you get what you expected to get? Are things better than when you started your SaaS journey?
  • Interactions with your SaaS provider covers all the interaction touch points:  market and sales, onboarding, nurturing...did it all work together to make things better as quickly and inexpensively as possible?  
So, you may ask, what is Floyd thinking with this latter portion of the definition?  I'm thinking that when we talk about Software-as-a-Service, we place a huge emphasis on the service - if it was just about the software, we'd call it Software-as-a-Software...and that doesn't make any sense at all, now does it?

From a provider perspective, the definition is a bit more quantitative than the qualitative definition customers use.  It's all about maximizing customer lifetime value:  CLV=APA/Customer Churn Rate

  • CLV = Customer Lifetime Value
  • ARPA = Average Revenue Per Account (Monthly)
  • Customer Churn Rate = The Monthly Percentage of Customers Cancelling or Failing to Renew
Think about this formula for a minute and you'll realize the huge influence of the "interactions" portion of the customer definition on CLV.  So both customers while emphasize the importance of service interactions, SaaS providers are incentivized to optimize those interactions.

So now that I'm up to my eyeballs in the work of a Center of Excellence for Customer Success, what's my personal bottom line?  It's in creating more value more quickly for both the customer and the provider.  That's a tough nut to crack.  We'll talk about it in a subsequent post.

Needless to say, your feedback is always welcome.  Get intimate with the comments.

No comments:

Post a Comment