About CSM Best Practices

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Success Management first appeared in the field of online sales (although there is another version that CSM was the basis of marketing at the National Pepsi-Cola Company (in the 1920s)), namely CRM systems. I suggest sticking to the official version.

Since the beginning of the industry, all enterprise software companies have had a similar organizational structure for after-sales service of customer relationships. All have performed some form of implementation teams for study groups, support groups, and account management roles. Each department was assigned a mission and deliverables, but none of the performance metrics for these teams took into account customer perceptions of value delivery.

Which software company created the very first named Customer Success group?

In 1996, CRM-company "Vantive" realized that, on an industry-wide scale, corporate CRM systems have, unfortunately, a high failure rate. While the main part of the supplier's profit from the sale of perpetual licenses was received when the contract was signed. Failed implementations not only jeopardized future sales, but also resulted in strategically significant losses in expected support and maintenance fees. For this company, whose goal was expressed to have 100% of their clients ready to make recommendations at any time. The sales departments regularly offered the entire list of services to qualified prospects, luring them into the company. However, the real driving force was the development of relationships and the growth of the average check after the sale. The traditional organizational structure was not enough, a new approach was needed.

John Luongo, CEO of Vantive, experienced a very innovative use of the app by a client and wanted to bring that innovation back to Vantive. He hired Marie Alexander, who created a new approach, to come and run the "Vantive" service team.
In 1996-1997, Marie created a new department called Customer Success and began introducing the team to potential clients before signing a contract. "It's the Customer Success team that makes sure you're successful with Vantive. And they're compensated based on your success."

Other major SaaS players also liked this experience: "Siebel" (2004 introduction), "Salesforce" (2005. True, they called their department much more interestingly "Customers for Life" (Customers For Life)).

In general, as we can see, the specialty is quite new, but very exciting in the online and offline sales market.

2

I would characterize it with the formula

CS=CE*CO

Where:

CS - Customer Success (Success of the company from working with the client)
CE - Customer Experience (User experience that the business and the customer went through together)
CO - Customer Outcomes (The results that the client has achieved, is he ready for word of mouth (the highest measure of customer confidence))

3

There are two types of metrics in CSM practices: qualitative and quantitative.

Qualitative metrics - metrics based on surveys, focus groups, one-on-one interviews.

These include: NPS is a consumer loyalty index that you need to track to understand how customers feel about your company and identify shortcomings in its work. CSAT is a customer satisfaction index. It is also effective to measure CSI and CES.

Ultimately, for business, these metrics are expressed in money.

Cause-and-effect relationship: a satisfied client, as you know, pays more and more often, therefore, Account Manager will be able to upsell the client, and the client will recommend the company as a reliable partner (+ new client (Customer Rate is an important metric for some types of business).

If the level of loyalty is higher, we will keep the client in a crisis situation (he will simply understand that there is a problem and wait for its solution), so Churn (the main quantitative metric) will not change for the worse.

Also, qualitative metrics indirectly affect the company's income level, through LTV - this is the company's profit received from one client for the entire time of cooperation with him. LTV answers the question of how much money a client brings to you.

Based on the Qualitative Metrics, it is recommended to build a “Client Health Map”.

4

Why you need a Client Health Assessment:

Client Health Assessment is the process of assessing clients based on the likelihood of an outcome that you consider important.

The longevity of your company is tied to the success of your customers, which in turn depends on your ability to solve their problems. The development of a system for assessing the condition of clients significantly increases this capacity.

In short, it gives you access to the insights you need to serve your customers the best way possible.

Quantitative metrics - metrics obtained by statistical or calculated indicators. In fact, they are the final metrics for showing the effectiveness of the department and what impact (contribution) it has on the company's total income.

I would single out three to four metrics here:

MRR, Churn, GRR (Gross Retention Rate), ARPPU (or its derivatives).

And depending on the business, for example, SaaS and telecom uses them: Customer Retention Rate (CRR), where:

CS - Customer Success (Success of the company from working with the client)
CE - Customer Experience (User experience that the business and the customer went through together)
CO - Customer Outcomes (The results that the client has achieved, is he ready for word of mouth (the highest measure of customer confidence))