What is Customer Success?
This is the first in a three-part series from Raise HECK about Customer Success.
What is Customer Success?
Customer Success is a business model originally developed by cloud software companies in order to retain their customers. It focuses on maximizing successful outcomes for customers of the software. Customers who are succeeding are likely to keep using – and paying for – the software. It’s truly a win-win model – the customer achieves their goals, and the company retains the business.
Why Is Customer Success Good Business?
Cloud software functions by a subscription model, meaning that companies and nonprofits who buy the software don’t have to install and maintain a server of their own, nor be responsible for upgrades and support. It’s less overhead for the customer, which is appealing. It also means that cloud software is easier to replace. Organizations are less likely to abandon the investment of a multi-million dollar server purchase than a lower-cost subscription.
To prevent contract cancellations and non-renewals, a Customer Success department works with the organization to make sure the customer is using the software to its full potential, and achieving their desired outcomes. If it ain’t broke, don’t fix it. Most organizations will stick with something that is working well and bringing in the desired results. For the business, this minimizes customer churn – a key metric tracked by software companies.
Churn – Good for Butter, Bad for Business
Churn is when a company loses customers. For a subscription service, like cloud software, churn is measured when customers cancel their subscriptions. Churn is the knife that cuts both ways. It’s bad for the company, because they lose revenue, and then need to go replace the revenue by selling software to new customers.
Churn can also be bad for the customers, because if they cancel an existing contract, then they’ll need to replace the software. Changing software will require the staff to learn and adopt a new system. If the change isn’t managed well, it will disrupt business operations and almost certainly result in lost productivity.
Is the Software Bad? Or Are We Not Using It Correctly?
Certainly, there are times when it’s a good business decision for a customer to cancel their software subscription. Maybe the system they’re using doesn’t fulfill their business needs, and there’s something else out there that’s a better fit. But it’s also often true that sometimes the software is fine, and the problem is that users aren’t using it to its full potential. And in some cases, they might not be using it at all (hello to everyone out there managing their projects and events in a spreadsheet instead of in the CRM!).
That’s a large part of what a Customer Success program exists to mitigate – to make sure the customer knows how to use the software, is aware of and is using all of the features, and is getting the outcomes they want. A Customer Success program puts the success of the customer first, because the customer’s success leads to retention of the business for the company.
In our next post, we talk about why nonprofit organizations should take the Customer Success model and apply it to their own programs.