The new customer success
“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.
Resulting in: more Efficient Revenue Growth, not just Retention.”
Not my words, credit goes to Kevin Chiu, co-founder of Catalyst.
It’s a statement I agree fully with. My own definition of customer-led growth is: “Everything an organisation does to profitably win, satisfy, retain and grow their chosen customers better than the competition.” [You can read more about that definition here.] This is also not a new idea. I have used that phrase in different guises since the early 90s, so its not new. Indeed it was inspired by Peter Drucker, who in the 1960s said “The purpose of a company is to win and keep a customer”. He also said “The customer rarely buys what the company thinks it is selling.”
For me. customer-led growth is about building the whole go-to-market lifecycle, including (most importantly) the product around delivering measurable results to the roles you sell to and serve. This company-wide focus on measurable results is the red thread that runs through every customer intervention. In a B2B SaaS business it is what marketing communicates; what sales sell; what services enable and, most importantly, what the product delivers.
Commenting on the impact of this change, Kevin adds “Today marks a major milestone [a further investment in his company] for all Customer Success professionals and platforms in what will soon be an outdated market. I think it is not just the platforms market that is at risk, it is the CS department as we currently conceive it.
I have had many conversations in the last 12 months with CS leaders who believe the term “customer success” and the way most companies currently approach it is bankrupt. The term and the practices associated with it are holding many companies back. They (we) argue that there is too much emphasis on the post-sale phase only, too much reticence to take a robust commercial stance and too much focus on building an empire rather than building capability irrespective of where it sits. In his book “Subscribed” Zuora CEO Tien Zuou said of CEOs approach “When in doubt, build another vertical silo.” Most B2B SaaS CEOs fall into this trap. As a result, customer success departments are now considered a must have. In his book “Amp it up”, Frank Slootman, CEO of Snowflake criticises companies that create a CS department, arguing that CS is a company-wide responsibility and creating a department (another vertical silo) merely absolves others from fulfilling their role. Look deeper into the job profiles and practices of Snowflake and you will see customer success capabilities writ large. I am not saying CS departments are redundant but I am saying you can deliver great success to customers without a CS department.
I was one of the early adopters of customer success, appointing my first CSM in 2004! I have been developing my thinking about what comes next for over fifteen years, and I’m still thinking! Here’s a summary of the main points I have learned and am applying in my work:
Focus on capabilities. Reporting structures are a minor part of organisation design. Changing reporting lines will have no effect if the work does not change. Success by purposeful design is important and a primary responsibility of any B2B SaaS CEO. Don’t assume that creating a team will make things better.
Building your own approach based on a few simple principles and frameworks trumps playbooks developed by other companies.
Think of everything from a customer perspective. Customers don’t care about your structure; taking their perspective everywhere will help build a joined-up experience.
We need to be more creative in thinking about organisations. The departmental silo approach (which dates back to the English Industrial Revolution of the 1700s) is an anathema to the cross functional nature of any go-to-market work.
The reticence of many in the customer success community to embrace revenue responsibilities is founded on a false trade-off: trusted advisor vs salesperson. The best go-to-market approaches (new customer acquisition, renewal, expansion and advocacy) are based on being a trusted advisor; placing the needs for measurable results at the core of all go-to-market activities. I’ll talk further about the trend of CCOs becoming CROs and CEOs below.
Metrics can make or break your attempts to be customer focused. Whilst we need detailed data to understand the operation of the customer lifecycle, we need a very few KPIs that measure the performance of the system as a whole to support alignment. Many organisations tear themselves apart with conflicting team or departmental metrics.
A single view of the customer was always important but with AI, is even more critical.
B2B SaaS companies are product companies. The product should therefore be the primary way of delivering measurable results to key customer roles. Products should be built around achievement paths: how each key role sets and achieves their next goal for improved job performance.
The role of the CEO is critical. If the CEO is not truly customer focused, the company won’t be. It’s why I insist on speaking to the CEO before taking on any work with an organisation.
What next?
As I said, I agree with Kevin; customer-led-growth is the future of customer success. What does this mean for CS? Here’s a few ideas.
We will see more Chief Customer Officers taking on responsibility for all revenue activity. This will accelerate. Yamini Rangan, rose from CCO to CEO at Hubspot. As CCO, she was responsible for sales, marketing and customer success. My friend Alex Farmer has recently been promoted from CCO to CRO, again with full revenue responsibilities. Success in these expanded roles will depend on how the work involved in go-to-market across the customer lifecycle is changed, not in their new title. It also means that to progress, CS leaders must embrace and master revenue-generation.
The challenge posed by departmental silos will result in more cross-functional teams where traditional disciplines are brought together to serve specific customer groups. These customer clusters and project-based structures are seen increasingly in growth teams and software development teams. As a result, customer success capabilities will become more dispersed. This is good thing. It is a sign that the company is living up to the mantra of customer success as a company-wide philosophy.
One outcome of rethinking organisations will be a change to the tools and methods used. Siloed tools and methods are one result of siloed organisations and another
True organisation design will become an increasingly important task for CEOs. This is not about lines and boxes, organisation structure but about establishing the frameworks and principles that guide and connect an outside-in organisation. As a CEO once told me, leaders cast a shadow over their organisations. Their role in driving customer-led growth is central.
Product will become the primary vehicle in enabling goal setting, reporting and achieving measurable results for key customer roles. This will lead to a rethink of how B2B SaaS products are built, with achievement paths and next best value at their core. Product-led customer success (1), an often overlooked aspect of product-led growth, will become the norm.
AI is and will continue to massively change the nature of customer-led growth. Productivity improvements will significantly reduce the headcount required to serve a given number of customers and new AI-based products will take on much of the work of what CS currently does. Hopefully this will be offset by new roles and growth in the number of software companies but I am not sure this will fully replace the job losses. Fixed customer journeys, which are almost always meaningless, will be replaced by contextually driven next best value steps, delivered in-product. The importance of a wide and rich single view of the customer will take on even greater importance.
Understanding customers in depth takes centre stage. I have often said that understanding your chosen customers better than your competitors is a source of competitive advantage. There will be no room for companies that cannot show how their products deliver measurable results in metrics that matter to each of the key roles they serve. Customer-led growth’s primary metric is a quantification of the measurable benefits each role achieves. Health scores are useless unless they identify the leading indicators of improved customer performance.
I think customer-led growth will come to dominate B2B SaaS because it takes a true customer focus to the entire customer lifecycle. It is the next wave and we are already seeing early adopters. I think their success will encourage others and the wave will become a tsunami.
(1) I first wrote this in 2016 so it needs an update but the basic concept is still sound.