This is Why Customer Success Platforms Have it All Wrong

This is Why Customer Success Platforms Have it All Wrong

December 10, 2020 | Written by Jake Sorofman

The rise of customer success as a specialized function is undoubtedly the correct response to the challenges specific to any recurring revenue business. But are companies doing enough to head off churn and unlock expansion revenue with existing customers?

If you ask me, customer success as it’s been defined commonly and conventionally, is really a half measure. It creates the illusion of revenue resilience, while actually leaving SaaS companies dangerously exposed.

At the heart of this problem is the fact that customer success platforms create false comfort through the appearance of progress, but don’t do enough to help manifest successful customer outcomes.

This reveals four fundamental flaws in conventional customer success thinking:

1. The tyranny of “busy”

Talk to any customer success leader today and you’ll detect a heightened level of anxiety that should be no surprise when you consider the state of things right now. As new logo acquisition efforts sputter against economic headwinds, all eyes turn to retention and expansion.

In response, many customer success leaders simply ratchet up the intensity. “Activity” becomes the churn-prevention measure–emails sent, meetings scheduled, QBRs completed, etc.

Most customer success platforms are oriented around workflow triggered by health scores and scheduled activity, which can be useful for organizing a customer success manager’s day–but it can also dangerously conflate “busy” with productive and effective.

While this obsession with “busy” is reinforced by these tools, its origin is much more complicated. It comes from the fact that customer success, as a function, is often set up to fail from the start. Expectations are set long before the contract is signed, and the customer success team is, therefore, often consigned to the very uncomfortable business of renewing business on promises that they cannot keep.

It’s human nature to gravitate toward the things we can control. And, frankly, there’s something comforting about “busy” when you’re feeling vaguely out of control. The satisfying microburst of serotonin as you complete a task, and the general thrum of teams collectively getting s%it done can easily paper over the realities that customers are still not getting what they want and need.

2. Adoption and sentiment as false measures of value

Consuming licenses and using software is certainly a basic precondition for value realization, but it doesn’t mean that it has actually occurred. Similarly, customer happiness is something that you should hope for and aspire to achieve, but it can easily trick you into believing that customer loyalty is secure.

A CSM with a notable SaaS company recently told me that he and his team were frequently lulled into a false sense of confidence based on positive product adoption metrics. Recounting one harrowing experience, he told me about a time his team showed up for an onsite customer meeting almost smug in the confidence that this renewal was a foregone conclusion. Adoption and usage looked great!

That one was a high six-figure churn. They never even saw it coming.

Similarly, objectively happy customers churn all the time. It makes no sense to us when it happens–I just talked to them. And they were so happy with us–but churn occurs for lots of complicated reasons, including the fact that humans avoid difficult conversations; and the fact that positive sentiment as indicated by an NPS score, for example, is rarely predictive of actual customer behavior.

3. Health scores as a false measure of risk

Most customer success platforms are built around health scores, which attempt to reduce a complex relationship down to a single number. It’s no surprise, then, to learn that these reductive formulas are notoriously inaccurate and that most CSMs don’t trust them a bit.

Still, they drive the priority and workflow for many customer success teams.

And while CSMs may not trust these health scores, others often do. This creates a disjointed view of customer health and the very real potential for conflict and thrash as CSMs choose to ignore dashboards and workflows that are triggered by health scores in favor of their own read on the account. This also leads to difficult and exhausting (!!) conversations with executives whose knowledge of the account is often only as deep as what they can see in a dashboard.

It brings to mind one of the first principles of aviation. In limited visibility conditions, a pilot should never second guess the instruments. Intuition and instinct should never override data. So long as the data is accurate! And that is the problem with customer health scores.

4. Customer success as a role instead of a goal

Perhaps the most fundamental flaw in conventional definitions of customer success and the conventional tools that are purpose-built for the job is that they tend to create a silo precisely where you really, really don’t want one in your business.

Customer success platforms are oriented around the daily work of the CSM, but they do scarcely little to create alignment with the broader organization, most notably sales.

Workflows make CSMs busy, but not necessarily productive. Health scores keep them informed, but not necessarily wiser for it. Product usage and sentiment give them something to work with, but it’s only part of the picture. What completes the picture are outcomes, the business problem or pain that the customer hopes to solve in using the product in the first place.

A better approach is to treat customer success as a company-wide goal, not just a responsibility of the nice people who “own” the relationship after the contract is signed. A better approach is to engineer customer success from the beginning, creating a connected customer experience that starts with a catalog of outcomes that sellers can promise. Unlike the value propositions dreamt up by imaginative product marketers and validated by cooperative customers, these outcomes should be validated with real data. Once the seller has aligned with the prospect on a vision for a better future, they’re in a position to close the deal with the assurance that these aren’t empty promises but achievable outcomes that can be measured and proven at scale.

But everything I described here is easy to say and, let’s face it, a bit hard to do.

That’s why, last week, MetaCX and Valuize announced Co.Lab, a customer lifecycle innovation offering for B2B SaaS revenue leaders.

Co.Lab is a living laboratory for change, a partnership to catalyze new thinking, new directions and to shine light on the path forward for transforming the B2B customer lifecycle for what’s expected in this next era of selling and renewing business in the world of SaaS. 

Ross Fulton, founder and CEO of Valuize, explains more about Co.Lab here.

Isn’t it time to fix what we know to be broken?

Every first generation of a category gets certain things right and certain things wrong. In the case of customer success platforms, I think they got one thing right, for sure: shining light on the important role of customer success to sustain and grow a recurring revenue business.

But these platforms have missed the mark on how to make customer success happen in a systematic way. That’s not about workflow and health scores, so much as it’s about a connected revenue function that ensures promises made are promises kept … and promises proven.

First generation customer success platforms are proof that whatever technology is available at a given time becomes the limiting factor in our strategic vision. Once new and better approaches become available, it opens up a world beyond what we’ve considered possible or practical.

It’s time to think beyond half measures.

It’s time for a different approach to managing the customer lifecycle.

This article originally appeared on LinkedIn.

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