Key terms: customer success
management, customer retention, B2B, SaaS
How often have you found out
about an unhappy customer (or maybe one that has simply stopped using your
product) too late in the game, when he or she has already decided to end the
relationship? This is an expensive oversight because the cost of retaining an
existing customer is almost always lower than finding a new one. And once lost,
a customer’s revenue stream over a lifetime is gone forever.
How do you know your customers
are succeeding? In the modern business-to-business (B2B) marketplace, dozens of
metrics come into play when measuring customer success — everything from
product usage to net promoter scores to contract and billing data — and you
need early access to this intelligence to know if an account might be in
trouble.
So it’s not surprising that the
new science of customer success management (CSM) has been surging in popularity
among B2B enterprises, and especially among SaaS enterprises that depend on
recurring subscription revenue to sustain business growth. These companies
often get a majority of their revenue from existing clients (renewal and
up-sell), which means that customers who churn after an initial contract
purchase can seriously diminish a company’s long-term financial prospects.
To boost retention you need to
rigorously manage the satisfaction and success of customers, keeping all their
“health” metrics up to date, and moving proactively when any warning signs appear
on the radar. This can be a really complex task -- even more so for SaaS
companies that are growing rapidly and onboarding scores of new customers in
the cloud on a daily basis.
In a recent study
by Mainstay [http://www.slideshare.net/MainstayCompany/gainsight-roi-for-csm-wp-9],
we broke down the value proposition of CSM and quantified the revenue
improvements and cost savings reported by companies that adopted a new
generation of automated CSM software solutions. The results were impressive:
The average CSM-solution adopter reported $16 million in bottom line impact
over three years, in large part derived from lower customer churn, more
cross-selling and upselling revenue, and savings from operational efficiencies.
Is CSM a worthy investment? We
believe it is poised to become one of the key differentiators for businesses in
a B2B economy increasingly dominated by cloud-based services.
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