The Economic Value of Customer Success June 2014 #custome rsuccess
The Economic Value of Customer Success for Enterprise SaaS Companies
Aug 17, 2014
Guest presenter Kate Leggett, Principal Analyst from Forrester Research, shares The Economic Value of Customer Success. In this presentation she goes into the real economic and monetary impact that having a Customer Success focus brings to a Subscription business like Enterprise SaaS.
In fact, the most successful Enterprise SaaS companies know that growing revenue only through new customer acquisition is the less efficient way to scale. Rather, they understand that growing revenue within your existing customer base - through up-sells, cross-sells, and expanded use - is the most profitable way to scale.
Enterprise SaaS companies that grow revenue - and company valuation - by expanding revenue within their existing customer base also know the key to making this work is to focus on - and operationalize - Customer Success.
In fact, the most successful Enterprise SaaS companies know that growing revenue only through new customer acquisition is the less efficient way to scale. Rather, they understand that growing revenue within your existing customer base - through up-sells, cross-sells, and expanded use - is the most profitable way to scale.
Enterprise SaaS companies that grow revenue - and company valuation - by expanding revenue within their existing customer base also know the key to making this work is to focus on - and operationalize - Customer Success.
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Transcript
The Economic Value of Customer
Success
June
2014
#customersuccess
2014 Gainsight, Inc. All rights reserved.
Housekeeping
• Q&A panel on your right • Recording for colleagues who can’t make
it• Attendees will receive slides and final
Forrester report• Twitter hashtag #customersuccess
2014 Gainsight, Inc. All rights reserved.
Your Speakers
Lincoln MurphyCustomer Success Evangelist
@lincolnmurphy
Kate LeggettPrincipal Analyst
@kateleggett
2014 Gainsight, Inc. All rights reserved.
What We’ll Cover
1. The State of Customer Success2. The Economic Value of Customer Success3. AKA CSM
2014 Gainsight, Inc. All rights reserved.
The Curriculum
access.gainsight.com/csm-university
Summer Session starts June 30
Making Leaders Successful Every Day
The Economic Value Of Customer Success
Kate Leggett
Principal Analyst, Forrester Research
@kateleggett
We have entered the “age of the customer”
Source: October 10, 2013, “Competitive Strategy In The Age Of The Customer” Forrester report
1900 1960 1990 2010
Age of ManufacturingMass manufacturing makes industrial powerhouses successful
Age of DistributionGlobal connections and transportation systems make distribution key
Age of InformationConnected PCs and supply chains mean those that control information flow dominate
Age of the CustomerEmpowered buyers demand a new level of customer obsession
Beyond
• Ford• Boeing• GE• RCA
• Wal-Mart• Toyota• P&G• UPS
• Amazon• Google• Comcast• Capital One
• Macy’s• Salesforce.com• USAA• Amazon
Our world is moving to a subscription economy
Credit: www.zuora.com
Our world is moving to a subscription economy
And the business model for technology is moving to subscriptions
14%
January 2014 “TechRadar™: Software-As-A-Service, Q1 2014”
And the business model for technology is moving to subscriptions
21%
January 2014 “TechRadar™: Software-As-A-Service, Q1 2014”
And the business model for technology is moving to subscriptions
13%
January 2014 “TechRadar™: Software-As-A-Service, Q1 2014”
The subscription model has tipped for many B2B software categories
January 2014 “TechRadar™: Software-As-A-Service, Q1 2014”
The subscription model has tipped for many B2B software categories
January 2014 “TechRadar™: Software-As-A-Service, Q1 2014”
The subscription model has tipped for many B2B software categories
January 2014 “TechRadar™: Software-As-A-Service, Q1 2014”
And because of this relationships are becoming more important
Product Focused Relationship Focusedwww.zuora.com
Good relationships have business value
March 2012 “The Business Impact Of Customer Experience, 2012”
Relationships improve business metrics
April 2012 “Define the Right CRM Metrics”
Customer success managers actively manage customer relationships to reduce churn, increase existing revenue and influence new sales
CUSTOMER SUCCESS MANAGEMENT REDUCES CHURN
25
Companies follow a standard growth trajectory
26
Where are you in your growth?
27
Where are you in your growth?
28
Along the way, you tier your customers
29
As you grow, revenue from existing customers becomes a larger and larger part of your company’s economic value
30
Calculating the impact of customer churn
31
The negative impact of churn can be quantifiedre
venu
e
time
95% retention rate- Acquired 600 customers- Lost 30
80% retention rate- Acquired 600 customers- Lost 120
$2M difference
32
Churn is dependent on deal size
CUSTOMER SUCCESS MANAGEMENT INCREASES NEW REVENUE
Data-driven conversations make cross-selling and upselling easy
• Product utilization data. Can be used to have data-driven conversations on the economic benefit of the purchased solution
• Active users exceed purchased users. Indicates a customer who is utilizing their purchased products beyond the negotiated terms of their contract. Customer success managers can use this data in customer conversations to showcase the value of their purchase, as well as drive upsells and upgrades.
• Active features exceed purchased capabilities. Indicates a customer who has a greater need for product capabilities than what is purchased.
Find the white space
CUSTOMER SUCCESS MANAGEMENT INCREASES ADVOCACY
Brand advocates are more valuable than average customers
38
Happy champions will buy you again
CUSTOMER SUCCESS MANAGEMENT DRIVES TEAM PERFORMANCE
You can amplify the effects of each team member
Teams automate manual reporting and task management to deliver more value.
ENGAGEMENT STRATEGY
ENGAGEMENT PROCESSES
ENGAGERS ENGAGEMENT LEVERS
Customer success management takes coordinated effort across four dimensions
ENGAGEMENT STRATEGY
ENGAGEMENT PROCESSES
ENGAGERS ENGAGEMENT LEVERS
Customer success management takes coordinated effort across four dimensions
What data do you need?
44
Customer
Goal
Inactive users
Provisioned users
ContractTerms
Renewal
Realized economic
value
Audit records
Feedback
Advocacy
Support feedbackCustomer
feedback
Active users
Measures of success
Features
Alerts
Calls and tickets
Onboarding
What do you do with data?
Integration Validation Visualization
Analytics Exploration
Workflow
Data
Insights
Action
The Advanced Playbook
LOBData
Enterprise Insights
Outside-inAction
• Customer360• Alerts
• Surveys• Automated Email
• Health Scorecards• Playbooks• Workflow
• Embedded Apps
• External Sponsor Alerts• Automated Customer
Presentations• Mobile
• Data Science
ENGAGEMENT STRATEGY
ENGAGEMENT PROCESSES
ENGAGERS ENGAGEMENT LEVERS
Customer success management takes coordinated effort across four dimensions
2014 Gainsight, Inc. All rights reserved.
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