Strategic Customer Success

Strategic Customer Success

Recently, I participated in a rigorous program on business strategy, and it got me thinking:

How can Michael E. Porter’s classic theories on strategy be applied to Customer Success in the SaaS ecosystem?

Most of the current information that I see about Customer Success strategy isn't very ‘strategic’ by definition. Instead, it tends to be more operational in nature and focuses on customer lifecycle phases like onboarding, renewal, and advocacy.

While these are key components of a Customer Success function, they should not be confused with strategy.

What is Strategy?

Strategy is the creation of a uniquely valuable position.

Strategic positioning attempts to achieve sustainable competitive advantage by preserving what is distinctive about a company or organization.

A useful metric for understanding your Business Strategy is your Average Selling Price (ASP). In his popular blog, Joel York discusses the impact of ASP on your go-to-market sales model in the SaaS ecosystem:

The ASP places a ceiling on your customer acquisition cost, which in turn limits your SaaS sales model options. Your SaaS go-to-market models are typically No Touch (Self Service), Low Touch (Transactional), and High Touch (Enterprise).

Defining Your Customer Success Strategy

I recommend starting with your Business Model when defining your Customer Success strategy.

For lower value customers, you might create self-service tools or resources that they can use to build their internal user adoption / ROI programs.

For customers with high ASP, you might offer a more full-service, hands-on approach to help them maximize user adoption and ROI over the life of your product.

"Don't substitute operational tactics for your Customer Success strategy."

A Strategic Framework for Customer Success

Before you develop your playbook and methodology for Customer Success, it's critical to identify your strategic objectives — otherwise, you run the risk of using operational tactics as filler for your strategy.

You can start by asking the kind of questions that help identify what Michael E. Porter calls the core of uniqueness:

  • What features of your SaaS offering (product or service) are the most distinctive?
  • Which of your customers are the most satisfied with your SaaS solution? Can you develop a trend around these results and eventually a segmentation?
  • Which customers, channels, or purchase occasions are the most profitable?
  • Which of the activities in our value chain are the most distinct and effective?

Base your Customer Success strategy around the nature of your customers' issues, the value the customer adds to your SaaS business and the retention costs associated with delivering services.

Once you understand how your customers solve their problems, think about where to target your available resources to achieve the best results.

  • Uncover what success means to your customer.
  • Know how your product enables your customers to achieve that success.

Poor user adoption and the lack of perceived value are two of the biggest challenges faced by SaaS businesses, and so it's important that you focus all of your efforts on delivering the results that your customers desire.

Strategic Customer Success Model

Do you know how your customers will measure progress and what criteria they will use to make their renewal decision?

If not, you should clearly define these metrics up-front.

This exercise will allow you to come up with quantifiable Key Performance Indicators (KPIs) for your customer. By illustrating the benefits that you provide, you make it easier for them to justify their ongoing subscription. Furthermore, this will allow you to measure your customer success team’s impact on your company’s bottom line.

Over time, your Customer Success strategy can become a key advantage for your SaaS business — and one that your competitors will not easily imitate.

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About the Author

Protik Mukhopadhyay manages the west coast Customer Success team for PROS, a leading SaaS provider of Sales and Marketing Analytics. He works with strategic accounts to ensure they realize full value from their investment with PROS.

Prior to PROS, Protik managed a Customer Success team at APTTUS. He earned his Masters in Computer Science from the University of Southern California, Los Angeles.

You can connect with Protik on LinkedIn.

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