How to know if you should appoint a customer success manager

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Customer success managers have become commonplace within software companies. But is there a place for them in other industries too?

Customer success managers (CSMs) are becoming an increasingly popular role to appoint in today’s organisations, proving to be one of the fastest growing positions in business.

But that’s not to say that all organisations need such a role, and they are predominantly found in specific industries at present.

Nonetheless, there are suggestions that we will start to see customer success managers branching out into a wider range of sectors very soon. And those that embrace the role first could steal a competitive advantage over rivals if they replicate the success they have delivered to date.

So what organisations are currently benefiting from CSMs, and what businesses should be investigating if they could also stand to gain from their appointment?

Where did customer success managers evolve from?

Although the birth of customer success predates the establishment of the role at Salesforce, there’s no doubt that the cloud giant’s evangelisation of the discipline has been pivotal to its proliferation, and particularly in its industry.

“At the moment, customer success managers are predominantly found in the software and technology sectors,” explains James Scott, general partner at Success Hacker, a consultancy and trainer for organisations seeking to accelerate their growth through customer success. “It started at Salesforce and you will now find it in any software-as-a-service business.”

Kat Fisher, head of customer success at Disciple, adds: “Any SaaS or tech business should have a customer success function within their organisation; particularly B2B businesses where the platform has a wide range of features and functions.

“It’s also particularly important when the buyer of the product and the user are different people. For instance, in our case, in the sales cycle we may sell to a CMO, record company or politician but the user of the product is often a community manager who may not report to the buyer. It’s therefore important to work with them directly to help them reap the benefits of the product that the buyer has invested in.”

More often than not, CSMs are effective within the B2B space, agrees Steve Tan, director of customer success, EMEA/APAC, at Urban Airship.

“The sector has become even more competitive due to the boom in service providers and so the reliance on CSMs increases. Renewal and upgrade revenue is foundational for SaaS companies. If customer churn is high it negates the attractive predictability of SaaS business models, which is why the role of the CSM is so crucial.

“To keep customer churn levels low, SaaS company CSMs must pay close attention to product usage. When usage levels are low, or if they’re receiving product feedback, the CSM can work closely with the product team to help resolve the issue.

“Because the CSM role relies so heavily on connecting so closely with the customer, the role is often more effective in the B2B space, as customer needs vary dramatically, and they aren’t always as willing to communicate with brands.”

When usage levels are low, or if they’re receiving product feedback, the CSM can work closely with the product team to help resolve the issue.

Are customer success managers only found in B2B?

Customer success managers continue to branch out from their industries of origin. This has meant it is increasingly a role found in different corners of the software industry. “We’re starting to see it being implemented in older companies that have an on-premise model,” notes Scott.

But it is also now being found in sectors beyond B2B.

Partly this is because of the rise in subscription-based business models, something that is being adopted by a growing number of industries.  

"Many brands, from apparel through to health, are already adopting subscription-based services, but the automotive market will see the most dramatic change in 2019 in order to reflect shifts in consumerism," explains Paul Fennemore, c-suite level digital transformation and customer experience consultant at Sitecore.

"With car subscription, customers will no longer be restricted to traditional car buying and leasing methods. Essentially, consumers will pay a monthly fee to a manufacturer for access to several vehicle models in a lineup. This fee would also cover the cost for insurance, maintenance and road assistance of the car."

Because of the rise in subscription-based business models, CSMs are being adopted by a growing number of industries

Volvo Cars is one carmaker that has already embraced this model, having announced its focus on subscription-based services with its Care by Volvo programme - and its CEO recently predicted that half of the company’s revenue by 2025 will come from consumer subscription services.

It is easy to see why CSMs could become an important component for these brands in much the same way they have become integral to software vendors, ensuring that customers are making the most of their subscription and maximising their utiltilsation of the different services and components that the car and the overall package can provide. 

But the rise in CSMs in B2C is also a result of the growing focus on customer experience, notes Scott. 

“Experience is something that is a much more established industry, and of course experience is important, but you can’t just deliver the experience piece well and not get the outcomes right,” he explains.

“I use the Uber vs taxi example. An Uber or a taxi will both get you from A to B, but the experience of an Uber is often considered better, so people may choose the Uber. However, if you get in the Uber and it gives you a great experience, but it takes you to the wrong place then your outcome is wrong – and then you’re not going to want to use it again.”

Therefore, Scott believes that any business model that has recurring revenue from a customer and relatively low barriers to entry and exit has a need for customer success.

He uses gym clubs as an example – an industry that has recurring revenue from members, but which requires members to actually make progress and achieve the outcomes they set when they joined the gym, in order to ensure that they will not cancel their membership.

Utilities is another industry where customer success is increasingly a focus, with a growing effort from energy companies to help customers understand how they can be more economic with their energy consumption – even though they are effectively encouraging consumers to spend less money with them.

Any business model that has recurring revenue from a customer and relatively low barriers to entry and exit has a need for customer success

“At some point the companies know customers are going to do a cost versus value equation, and if they are seen as a partner that is helping the customer to extract as much value as possible then the customer is going to be far more likely to stay with them than go to a competitor,” adds Scott.

“So it is definitely something that has a place outside of tech, and there are some companies that are forward-thinking enough to do it - although it is still relatively uncommon outside of tech.”

What industries don't appoint customer success managers?

So what about those industries that aren’t such a good fit?

“A customer success manager is focused on understanding detailed business needs and building long-term customer relationships, with the goal of ensuring more successful outcomes for their customers and the organisation that they work for. B2C/retail (or more transactional businesses) may find that a more traditional customer service team is more appropriate, as they won’t necessarily need to understand the customer or product in as much depth,” suggests Rebecca Roberts, customer success manager at MarketInvoice.

“Customer success won’t work in retail,” agrees Fisher.

Yet, even then, there are examples of retail firms that are starting to embrace CSMs.

As Nick Honey, senior customer success manager at Optimizely, notes: “All sectors, to a certain degree, could benefit from some form of CSM to ensure repeat business but this will largely rely on the businesses specific strategy and key goals. An indication of this, for me, can be seen in the retail space, where we are seeing subscription models in companies such as Sky and Just Eat.

A CSM will help the customer identify key customer segments and deliver personalised content, messaging and services.”

Honey concludes: “Ultimately, the need for a CSM depends on what the business is trying to achieve, and the importance placed on ensuring a continuous relationship with the consumer.”

 

About Neil Davey

ND

Neil Davey is the managing editor of MyCustomer. An experienced business journalist and editor, Neil has worked on a variety of newspapers, magazines and websites over the past 15 years, including Internet Works, CXO magazine and Business Management. He joined Sift Media in 2007.

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28th Jan 2019 10:07

Feels like a rebrand if you ask me.
Far better to have a 'co-creation manager'. Someone who looks from the point of view of multiple stakeholders to define where value can be found for the business through building relationships. ie., this could be customer, supplier, employee or other related. It could be about cost reduction or growth. The point is it is about engaging relationships to surface opportunity for the firm. The purpose of a business is to make money and that is what the aim of co-creation is: but make money via relationship.
How you do that involves a set of co-creation techniques (we will be talking about at our conference on March 19th). IMHO

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04th Feb 2019 10:42

It is true that implementing CSMs won’t work for every business - but at a time when products and services are moving to subscription models it is vital that brands ensure that consumers are getting the best out of their investment, whether that is a music streaming service or SaaS software.

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