The coming platform storm

CRM/Customer Success/Customer-Led Growth: place your bets

We may have seen the first baby steps in rethinking CS software with the announcement this week of the merger of Catalyst and Totango. Both are currently perceived and promote themselves as suppliers of CS platforms but I think this move has a bigger aim. The press release announcing the merger said; “By unifying the capabilities of a CRM and those of a customer success platform, we can bridge the gap to create a unified customer-centric solution—an enterprise customer growth platform.” Note, he intentionally differentiates his vision from, and perhaps takes a small swipe at, both CRM and CS platforms. And in an extra dig, Kevin Chiu, Catalyst co-founder and COO said “A CRM offers a fragmented approach to growth over a customer’s lifetime, discouraging cross-departmental collaboration.” That’s quite a hornet’s nest to kick!

To those who watch carefully, this direction is not a surprise. Last year, Kevin said ““Real Customer Success (CLG) takes a unified GTM (go-to-market) approach across sales, customer success, marketing, and product while leveraging data, insights, and customer outcomes to drive better business results for their customers.” It was clear to me that Catalyst had its eyes on a prize bigger than the CS platform market space.

Customer-led growth describes an approach that focuses on measurable results for key customer roles across the entire customer lifecycle. A value proposition setting out what results a product enables for whom is the basis of what marketing communicates, what sales sell, what services enable and, most importantly, what the product delivers. CLG is truly cross-functional. As such, it requires a different mindset; one which places far greater emphasis on an, un-siloed go-to-market (GTM) approach. An approach that delivers a coherent, joined-up experience for customers served by a seamless process internally. An element of this joined-up approach is the technology employed.

I think the vision behind the Catalyst and Totango merger is very much on the right lines, but their move is not without its challenges. Notwithstanding the hard work of integrating companies and their technologies there are real hurdles to overcome.

I think the first is the vision. The messaging put out about the merger is slightly off beam and, if true CLG is their real intent, misses a real opportunity. On commenting on what customers need, the press release says; “They need an enterprise customer growth platform—a comprehensive solution designed to manage customer relationships by driving recurring success across the post-sale revenue journey. “ (My emphasis).

Real CLG is not a post-sale revenue journey. It is about building an entire GTM capability around measurable results to key customer roles. It encompasses pre-sale, first sale and post-sale and subsequent sales.

To restrict CLG to post initial sale is to perpetuate the pre and post sales silos and thinking that inflict damage on so many SaaS businesses. It is not the stated “comprehensive solution” mentioned. It is also a missed opportunity. As described, it excludes marketing, sales and product’s role in communicating and selling customer value for new customer acquisition. Yes, in a successful SaaS business sales to existing customers will become the biggest source of revenue and demands attention and investment but new customer acquisition still has an important role to play in revenue growth. Alignment of messaging, process, tools and data in both initial sales and everything thereafter is key to delivering customer-led growth.

CLG needs technology capability that coherently enables the entire customer journey. I think there are three possible paths to achieving this.

The most likely competition to the Catalyst/Totango play will come from incumbents. Existing CRM heavyweights like Hubspot and Salesforce are well placed to deliver a true CLG platform, having a strong presence in the marketing and sales domains. I have long believed that both will move into the value enablement and post-first sale space more aggressively. I still expect to see a Hubspot “Success Hub” and a Salesforce “Success Cloud”. This could come from in-house build or acquisition. Salesforce particularly has a track record of acquiring to fill product gaps. The recent Gartner Magic Quadrant for CS platforms positions Salesforce alongside the leader Gainsight, so it already has a big foot in this camp. And let’s not forget, the CS domain really owes it presence to Salesforce, which led when it created it’s Customers for Life team in 2004 to address a significant churn problem.

Both Hubspot and Salesforce have the resources to enter the CLG market. They have the customer base and the credibility to become major players. Both have a strong presence in the SaaS and subscription markets, although Salesforce particularly may view the space as too small to be of interest.

I also see a number of startups entering the space with products designed specifically for CLG. The early adopters of CLG tend to be smaller, tech companies who could be attracted to build their capabilities on a platform designed specifically to address the whole customer lifecycle. I think these new entrants will bring products different from existing players. They will be intentionally designed around a single, joined up lifecycle and not the traditional marketing, sales and service silos. Product will be included to cater for the growing need product-led approaches. We have the seeds of this approach with the merging of marketing, sales and CS ops teams into revenue ops. These new entrants will be AI native

Definitely more left field is the data play. A major problem facing many SaaS companies is fractured data and the inability to construct a single, coherent view of the customer. This is problem exacerbated by and complex, disconnected tech stacks. Customer Data Platforms are an obvious starting point, but they will need to break out of their perceived position as a tool for marketers. A true company-wide CDP with specialist products sitting atop has real promise.

The major data players are also well positioned. One of the biggest data players, Snowflake, has much to say about the approach most companies take to CS! I think their view of CS as a company-wide capability is as close to my understanding of CLG as I understand it. Again, the initial limited market size might restrict their interest.

Whatever path(s) opens up, and there will be others I’m not bright enough to see, CLG needs a different tech stack. But that’s not the only problem. In a webinar late last year, Jason Lemkin and Nick Mehta talked about the future of customer success. In the discussion, Jason said “Nick, we need to reinvent CS software.” My comment at the time was before we reinvent CS software, we need to reinvent CS.

That’s my purpose!