Engineering Customer Success

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.