Why Customer Success Programs Fail (and How to Avoid It) - Glide Consulting
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Why Customer Success Programs Fail (and How to Avoid It)

 

One of the challenges of building a customer success team in a SaaS organization is that the entire discipline is new. Even if you look at organizations that have invested the heaviest in customer success, you’ll see people who have only been working in that capacity for a few years.

In most cases, customer success managers are pulled from elsewhere within the organization. This means they come with preconceived notions about how CS should run. For instance, ex-salesmen want to grow accounts and ex-support staff want to respond to problems as they arrive.

However, customer success isn’t driven by the people who run it. It’s driven by the needs of the customer. A customer success team will never be successful if it’s not organized at the highest level.

Lack of a top-down approach to a CS team’s organization will create an environment that opens the program up to failure. Here are some reasons a program may fail and how you can avoid it happening in your organization.

Free download: Customer Success Program Health Checklist

Your customer success team lacks a purpose

Image: Max PixelEvery team in your company needs a purpose, but especially customer success. Your product developers know they’ll be iterating on your product over time. Your marketing team knows they need to bring in leads. But customer success can be a lot of things for an organization, so your first step is to figure out what CS means to your company.

Look at it like this: If the C-suite thinks that a customer success manager’s job is to improve user adoption, but doesn’t inform the CSM, the CSM may focus on retention instead. Retention is great, but if retention activities don’t fit in the C-suite’s plans, the overall business strategy could be disrupted.

A scalable, repeatable process is part of a great customer success program; however, you’ll never be able to create an effective process if you don’t have a purpose for which it serves. You’ll end up in a situation where CSMs are running around putting out fires instead of working toward a defined goal.

Often, setting a purpose is as easy as agreeing upon the metrics that will be used to evaluate the customer success managers. You may judge them on renewal rate, time-to-onboard, NPS scores, etc. Once your team knows what they need to do, they’ll figure out how to do it.

The company doesn’t buy-in

Customer success is a growing field. It used to be wrapped into account management, customer support and sales, but for the most part, it didn’t exist 10 years ago. The SaaS market has grown tremendously over the last few years and most companies see the value in a customer success team. However, there are some organizations who don’t completely buy it.

Customer success is an integrated discipline that affects your other teams (everyone from marketing to sales to product development) in different ways. If each of those teams don’t understand and believe in the customer success team’s purpose, your organization will present a confusing customer experience and never see the CS team’s full value.

A smart solution to this is to make your first customer success manager one of your early hires. Use your first CSM to define what customer success means to your company and to build out your other teams. Hire people who prioritize retention and want to help the customer achieve maximum value.

The leader isn’t right for the job

 

There are a lot of ways to organize a customer success team. The team’s purpose and process can vary widely. You can’t just hire a leader that’s right for customer success. You need a leader that’s right for your version of customer success.

“Customer success manager is a broad job and the leadership need varies dramatically based upon stage, scope, and the nature of your solution,” says Nick Mehta, CEO of Gainsight.

First, make sure any customer success team member is built to serve. You need someone who finds personal satisfaction in giving and serving others. They need strive to solve problems proactively. If, like many organizations, you intend to pull customer success managers out of your sales team, you may be disappointed with the overall results.

Second, define the purpose of your customer success team. Will they be focusing on retention? Upsells and cross-sells? Will they be helping the marketing and sales departments to identify better customers?
Once you know what you expect out of a CSM, you’ll be able to hire the right people. For instance, if your CSMs need to spend a lot of time face-to-face with customers, don’t hire someone who prefers to spend time alone in their office scrutinizing data.

Of course, hiring people with the right strengths isn’t easy. Some organizations use practical exercises during the interview process to determine if a candidate CSM’s skills jive with the organization’s needs.

The program is driven by cost, not value

A successful customer success program will drive down your support costs. After all, customers who can achieve success with the product on their own do not need much help. This cost-cutting is an effect of a well-run customer success program. It should not be the goal of your team.

The point of a customer success team is to provide value to your customers. That doesn’t fit neatly into a cost-benefit chart. Some initiatives will be expensive; but, the costs of those initiatives can be mitigated by turning them into repeatable, process-based solutions that can be applied to other customers. With each use, those initiatives become cheaper.

There’s no plan for customer success team growth

Image: Startup Stock Photos / Flickr

Being prepared to grow is a critical component of a successful customer success program. Operating at scale isn’t as simple as other teams. Customers can sign at any time, so you need a plan in place. (If your sales cycle is long, you have some leeway here because you can see what’s coming down the pipe. Low-touch SaaS organizations can become encumbered by new customers any time marketing has a good week.)

Other groups in an organization have clear growth models. Engineering, for example, is often funded equal to a percentage of revenue. Customer support teams are grown based on some objective metric, like the average number of weekly support tickets. We can use the same principle for customer success.

It’s standard in the industry for each CSM to oversee about $2 million in revenue. If $2 million comes from a small group of customers, you’ll probably want more personal service, including training, support, consulting, etc. If $2 million comes from a lot of low-touch customers, your CSM will focus on automation-based processes.

You’ll also want to consider the complexity of the product. Complex products require more CSMs, so you might want to reduce your threshold to $1.75 million or $1.5 million per CSM. These products also require more CSM training, so hire sooner.

It’s often useful to limit the number of accounts, even if the CSMs haven’t reached their dollar threshold. Too many accounts will cause your CSM to struggle with staying organized. Consider adding to your customer success team whenever the company introduces a new core feature or enters a new vertical.

Set the criteria that makes sense for your business, but set it before you need it. You don’t want to find yourself justifying unplanned hiring expenses to your CFO when you have an inbox full of customer problems.

Use this free checklist to ensure your customer success program is healthy.

Final thought: Failure as learning

Treat your customer success operations like the marketing teams and product teams treat their work. The ability to honestly evaluate the success or failure of a program and then iterate to make it better is the hallmark of a strong business. That is especially true for SaaS organizations.

If you have clearly defined the purpose of your SaaS team, assessing its effectiveness should be simple. If you aren’t happy with the results, identify the problem and improve. Don’t give up. Your customers will thank you!

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