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In this current economic climate, with looming recessions, a cost of living crisis and continued post-pandemic recovery, companies now more than ever need to be focusing on building long-term growth. That’s because it’s never been harder to get new customers; in fact, your probability of selling to an existing customer is 60–70%. Yet, your chance of selling to a new prospect is only 5-20%. Listen, watch or read as Elaine Brindamoor, COO at SOCO Sales Training, joins Tom Abbott, CEO at SOCO Sales Training to discuss customer success, why it’s essential for reducing customer acquisition costs (CAC), and how to succeed with our best practices.
What is “Customer Success”?
Customer Success is all about helping your customers succeed. Often achieved by anticipating some of their challenges, preparing for questions they might have or some challenges they may be facing and looking at things from a proactive point of view.
Customer success is not backward looking. It’s not past oriented. It’s future focused and it’s looking ahead.Tom Abbott – CEO, SOCO Sales Training
Why is Customer Success Important?
Customer Sucess is really about trying to retain these customers and keep them happy because if we anticipate problems and think ahead about what they might need to grow their businesses, they will likely stay with you longer, generating more revenue for your company.
- Keep Customers: 9 Essential Customer Retention Metrics & Formulas
- What It Takes To Be A Great Customer Success Manager: A Guide
- Top 12 Customer Retention Strategies To Avoid Churn & Improve Profits
Customer Service Vs Customer Success: What’s the Difference?
Customer Success is about being proactive, working in partnership with customers to help them get more value out of their purchase and share their feedback with you.
Whereas, Customer Service is about being reactive in dealing with customers’ problems. For example, if you’ve got an issue with software like your CRM, you pick up the phone, send them an email or live chat with a virtual assistant and ask the customer service desk to help you out.
Typical Customer Success Team Structure
If you’re wondering what having a designated customer success team, or at least a function (some people that are responsible for customer success, customer retention, customer expansion or revenue expansion), would look like, look no further:
The first thing that you want to have is someone responsible for onboarding.
Onboarding is when your sales team has closed a deal and now you have a new customer and you need someone to actually orient them with their purchase. For example:
- Getting acquainted with the system or the software
- Setting them up with an account or username, password (login details)
A crucial component of Customer Success is ensuring your customer is winning -with your product. The best way to do this is to provide easy-to-understand training via videos, webinars or live demonstrations.
Ultimately, if your customers aren’t using your product and the adoption rates are low, renewal time comes around; they’ll probably cancel because they don’t know how to use it, so they can afford to lose it.
Like the reactionary Customer Support function, tech support is a necessary component of an ideal Customer Success team. There will always be situations where a website is down; a customer can’t log in, they’ve lost their login credentials, there’s a glitch, or they lost some data. Keeping customers up, running and happy is key to their satisfaction with your product or service.
How to Measure the Success of Your Customer Success Program
6 Customer Success KPIs
1) Churn Rate
The Customer Churn Rate measures how many customers you’ve lost over time.
A good rule of thumb is that if your annual churn rate is greater than 5 to 7%, it’s time to evaluate how you’re making customers happy and get to the root cause of the problem.
Start by reevaluating how your product or service fails to meet customer expectations and needs.
Churn Rate = Number of Customers Lost in Current Month/Number of Customers in the Previous MonthChurn Rate Formula
2) Monthly Recurring Revenue (MRR) Churn
If you’re in the subscription model market, SaaS, for example, where you have monthly recurring revenue, it’s crucial to check the status of your monthly recurring revenue.
If it’s going down, you could attribute this to customer churn, but it could also be as we head uncertain economic times with the possibility of recessions. You may notice a decrease in revenue, not due to customer churn, but to downgrades.
Monthly Recurring Revenue Churn = Lost Revenue due to Customer Churn and Downgrades in Current Month / Total Revenue in Previous MonthMRR Formula
3) Revenue Expansion
Expansion Revenue is about asking yourself, “how do we increase the average revenue per customer?”
Well, you could say that the Customer Success Team have a KPI to go deeper and wider into that account. So that could be through upselling or where there could be an ancillary product or service that you could add to that sale.
Revenue Expansion = New Revenue from Upsells/Cross-sells in Current Month / Total Revenue in Previous MonthRevnue Expansion Formula
4) Customer Satisfaction Score
The Customer Satisfaction Score measures customers’ experience and satisfaction levels regarding a new feature, product or interaction.
While there’s no set formula for calculating this KPI, you can analyse and measure touchpoints in the user journey to understand the overall customer satisfaction level. Asking yourself and your team questions like:
- How are we doing?
- Are we doing a good job?
- Is the customer happy with the level of service we’re providing them?
- Are they achieving their goals?
- Are we helping them solve their problem?
A similar customer success KPI is the net promoter score, measuring the likelihood that they would promote you, refer you, and recommend you to others.
Best Practices for a Successful Customer Success Program
1. Create a Customer Success Team
Don’t just establish a customer success team on a podcast because I told you to! But create it because you see that team as a means to an end for your company.
For example, that end could be entering a new market or expanding revenue.
Once you’ve assembled a dream customer success team, you need to set some goals for maximising revenue and potential within existing accounts.
2. Educate Customers
The second thing you want to do for your customer success team to be very successful is starting educating your customers. Have this mindset, not a sales mindset, but an education mindset. To do so, ask yourself, how do we better inform our customers?
That could be as simple as an automated FAQ page (frequently asked questions) on your website or your LinkedIn company page.
Or, it could be having explainer videos and having a live assistant chat on your website.
3. Onboard Customers
Next, you must onboard and train your customers so that they can get what they need when they need it. That way, they won’t keep sending you emails asking questions, which often results in friction, lag, and wasted time.
To onboard customers successfully, you can provide easily accessible resources on your website. For example, videos, on-demand webinars, blog posts or articles.
4. Communicate with Other Teams
Typically, sales and marketing teams never meet – they don’t know what the other is doing. Yet, there are more effective ways to run an organization, especially when you add a customer success team into the mix.
Hence, communication must be paramount – so ensure you are sharing information, resources, and marketing collaterals between departments.
There are so many great pieces of content marketing and sales have created that they could be sharing with the customer success team to support customers on their journey.
No one knows more about what your customers are doing than the customer success team. They’re the ones with their ear and boots on the ground.-Tom Abbott, CEO SOCO Sales Training
(create blogs and videos)
5. Promote Customer Loyalty
The success of a Customer Success function really comes down to not just customer satisfaction but loyalty.
Are your current customers going to stick with you month after month, quarter after quarter, and year after year?
If not, how can you improve customer loyalty? It could be giving them rewards, incentives, discounts or bonus points that they can redeem for something they find interesting.
Whatever it is to keep that customer, as long as they’re profitable, remember to keep them happy.
6. Train Teams To Go Further
So, in the same way that we train salespeople to increase revenue, we can offer the same types of programs for customer success teams because they’re in a sales role.
Generally, if you are customer-facing in any capacity, regardless of your role or title, you’re part of the revenue team. So sales, marketing, and customer success, you’re all part of the revenue team responsible for generating revenue for the company, and as a result, you need to undergo some training.
That’s why a team that implements SOCO’s customer success training learn the skills needed to improve operations, nurture customer relationships, expand the business, reduce churn, increase customer loyalty and increase revenue.
Final Word: Gain the Skills to Improve Customer Retention
Many Customer Success Managers must oversee problem resolution, adoption and satisfaction. But by doing so, they lose the ”bigger picture” of the overall customer experience, risking churn that could collapse expansion opportunities.
Instead, to skyrocket loyalty and revenue, CSMs must prioritise high-level strategic goals and align them with their key stakeholders and accounts.
Customer Success (CSM) training supports managers in developing the application skills needed to effectively engage, manage and retain customers – while maximising repeat business.