2015 Customer Success Industry Trends Report

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1 2015 Customer Success Industry Trends Report

2 Table of Contents 3 EXECUTIVE SUMMARY 4 MEET THE SURVEY RESPONDENTS 6 WHO DOES YOUR HEAD OF CUSTOMER SUCCESS REPORT TO? 8 HOW WOULD YOU CHARACTERIZE THE MATURITY LEVEL OF YOUR CUSTOMER SUCCESS ORGANIZATION? 10 WHAT ARE YOUR PRIMARY CUSTOMER SUCCESS OBJECTIVES? 12 WHAT KEY PERFORMANCE INDICATORS / METRICS ARE REPORTED TO THE C-SUITE AND / OR BOARD OF DIRECTORS ON A REGULAR BASIS? 14 WHAT IS YOUR APPROXIMATE RATIO OF ANNUAL RECURRING REVENUE (ARR) TO CUSTOMER SUCCESS MANAGERS? 16 APPROXIMATELY HOW MANY CUSTOMER SUCCESS PROFESSIONALS DO YOU PLAN TO HIRE WITHIN THE NEXT 12 MONTHS? 17 WHAT ARE THE BIGGEST BARRIERS YOU EXPERIENCE THAT MAKE IT HARDER TO FULFILL THE PROMISE OF YOUR CUSTOMER SUCCESS ORGANIZATION? 18 DO YOU PLAN ON MAKING ANY SIGNIFICANT CHANGES TO YOUR CUSTOMER SUCCESS ORGANIZATION OVER THE NEXT 6 TO 12 MONTHS? 19 ARE CUSTOMER SUCCESS MANAGERS IN YOUR ORGANIZATION CHARGED WITH PROACTIVE OUTREACH TO CUSTOMERS? 20 ARE MEMBERS OF YOUR CUSTOMER SUCCESS TEAM ELIGIBLE TO RECEIVE COMMISSION OR OTHER FORMS OF VARIABLE COMPENSATION? 2

3 Executive Summary The aggregates responses from 125 Customer Success professionals servicing customers across a wide range of industries. The survey included a combination of close-ended and open-ended questions designed to assess the structure of the Customer Success organization and identify common challenges experienced in this still relatively new field. As the following report shows, the Customer Success organization is growing rapidly and already has a seat at the table, often reporting to someone at the C-level. This justifiably gives the department significant exposure and empowers Customer Success leaders to influence positive change. Across all industries surveyed, the department is most commonly accountable for reducing churn, increasing product adoption, and enhancing the customer experience. This has led many survey respondents to establish listening posts at various stages of the customer journey with programs such as Net Promoter Score or Customer Satisfaction Surveys and using third parties to ensure the data is objective and reliable. While there is a growing appreciation for the Customer Success organization, survey respondents agree there are still hurdles to overcome. In particular, they cite the struggle to scale (due primarily to finding qualified candidates and budget), buy-in across the entire company, and determining the appropriate compensation plans as common pain points. Despite these obstacles, Customer Success professionals remain focused on delivering customer value and creating long-term relationships as illustrated in this respondent s verbatim feedback: Baseline, we are stewards of our customers investment. We ensure we protect every renewal and identify opportunities for cross-sell and up-sell. We also look for opportunities to capitalize on their great experience through cultivating references, video, and case studies. Beyond this, we are the trusted advisors to our customers, being their internal advocates within our organization and identifying opportunities to connect customers with other customers to learn from each other and share ideas with our company leadership as well. We would like to extend our gratitude for all those who responded to our inaugural Customer Success Industry Trends Report. This is clearly a very exciting and quickly evolving role and we sincerely hope you find the following summary research both valuable and actionable. Learn how Satrix Solutions can help your company build a worldclass Voice-of-Customer program. 3

4 Meet the Survey Respondents RESPONDENTS BY TITLE RESPONDENTS BY NUMBER OF EMPLOYEES Director, Customer Success 33% VP, Customer Success 24% Account Manager Customer Success 22% C-Level 10% Other 6% % % % % % Manager/Supervisor 5% n=125 4

5 WE HAVE CUSTOMER SUCCESS AND ACCOUNT MANAGEMENT IN THE LARGER CUSTOMER SUCCESS TEAM ACCOUNT MANAGEMENT IS RESPONSIBLE FOR SALES/RENEWALS AND CUSTOMER SUCCESS MANAGER S ARE RESPONSIBLE FOR ADOPTION, SATISFACTION, AND PRODUCT USAGE AND CLOSELY CONNECTED WITH SUPPORT. 5

6 Who does your Head of Customer Success report to? According to survey respondents, a majority of Customer Success leaders report directly into the C-Suite. This is significant in that customer experience leaders repeatedly outperform competitors and are rewarded with higher retention levels, greater share of wallet, and lower customer acquisition costs. CEO COO or similar Head of Sales / Business Development President Other CCO CMO or simiar Still evaluating 35% 17% 15% 9% 8% 7% 7% 2% 6

7 WE ARE A COMPLEX ENTERPRISE-LEVEL PRODUCT THAT REQUIRES SIGNIFICANT CUSTOMER INVESTMENT AND COMMITMENT TO GET FULL ADOPTION. AS A RESULT, MORE CUSTOMER SUCCESS RESOURCES ARE NEEDED TO PROVIDE THE LEVEL OF ATTENTION THAT CUSTOMERS NEED EARLY IN THE RELATIONSHIP. 7

8 How would you characterize the maturity level of your Customer Success organization? Most survey respondents agree the Customer Success organization is still in an early stage of development, citing a lack of resources as one of the many inhibitors of growth. To help guide their programs to a higher level of maturity, companies are attending conferences, relying on online communities, and working with consultants. Just getting started 30% Established, but we have a ways to go 51% Fairly sophisticated 11% More advanced than most 7% World-class 1% BEING A STARTUP, WE VE BEEN TASKED WITH A LOT OF DIFFERENT DUTIES, INCLUDING TECHNICAL SUPPORT. AS WE VE BEEN SCALING, DETERMINING HOW AND WHAT TO HAVE MEMBERS OF OUR ORGANIZATION SPECIALIZE IN HAS BEEN A CHALLENGE. THE CHALLENGES WE FACE IN FULLY LAUNCHING THE CUSTOMER SUCCESS ORGANIZATION HAVE TO DO WITH DISORGANIZATION IN THE SUPPORT DEPARTMENT AND THE CUSTOMER SUCCESS MANAGERS GETTING PULLED INTO SUPPORT RELATED ISSUES. DATA RELIABILITY IS A BIG CHALLENGE. WE NEED CONSISTENT AND RELIABLE DATA TO MAKE IMPROVEMENTS TO OUR OUTREACH AND INVESTIGATE CUSTOMERS EXPERIENCE WITH THE PRODUCT AND THE SUPPORT WE PROVIDE. WE ALSO NEED DATA TO ASSESS OUR IMPACT ON OVERALL CHURN RATES AND REVENUE. 8

9 WE ARE WORKING ON STANDARDIZATION, PROCESSES, AND REPORTING. THE OBJECTIVE IS TO IMPROVE OVERALL CUSTOMER ENGAGEMENT, IMPLEMENTATIONS, AND CUSTOMER SATISFACTION. WE WANT TO PROVE VALUE TO DRIVE CUSTOMER TESTIMONIALS AND UP-SELL/ CROSS-SELL OPPORTUNITIES AS WELL AS MAKE THE RENEWAL PROCESS A SMOOTH EXERCISE AND NOT A LABORIOUS TASK FIGHTING OFF VARIOUS COMPETITORS. 9

10 What are your primary Customer Success objectives? While the Customer Success organization has many objectives, survey respondents focus primarily on reducing churn, increasing product adoption, and enhancing the customer experience. Reduce churn/ improve retention 73 Increase product usage/adoption/ stickiness 62 Enhance customer satisfaction/loyalty 56 Increase up-sell/ cross-sell 41 Increase customer lifetime value 17 Inrease customer references, testimonials, case studies 17 Increase renewals 34 Gather voice of the customer 12 Improve onboarding/ implementation 23 Enhance company reputation 7 Reduce customer effort/friction 5 Increase margins/profitability 4 Reduce support tickets submitted 4 Other 2 Numbers represent the absolute count of respondents for each category. 10

11 OUR CUSTOMER SUCCESS TEAM WORKS POST SALES TO ENSURE THE CUSTOMER IS ONBOARDED SUCCESSFULLY AND HAVE A GROWING ADOPTION RATE. FROM THERE, CUSTOMER SUCCESS EVALUATES CUSTOMER SATISFACTION AND USAGE TO DETERMINE ANY RENEWAL RISKS AND THEN ACTS OR ESCALATES AS NEEDED. 11

12 What key performance indicators / metrics are reported to the C-Suite and / or Board of Directors on a regular basis? To successfully meet department objectives and determine the health of customer relationships, a large majority of Customer Success organizations track customer retention and churn KPIs. Equally valuable to survey respondents: Net Promoter Score (NPS). Both a customer loyalty metric and organizational discipline, NPS identifies behaviors directly linked to profit, such as defecting less, spending more, and referring the company to others. Customer churn data 63 Customer retention rate 54 Net Promoter Score 54 Additional revenue from up-sell / cross-sell 52 Number of support tickets submitted 28 Number of formal customer business reviews ( quarterly, annually, etc. ) 13 Numbers represent the absolute count of respondents for each category. Customer renewal rate 52 Overall customer satisfaction rate 33 Don t know / still evaluating 10 Customer share-of-wallet / spend-per-customer 9 First Contact Resolution 7 Product usage / adoption 5 Social media data ( followers, etc.) 5 Other 4 Customer Effort Score 3 12

13 I AM ONLY ONE PERSON MANAGING A LARGE NUMBER OF CLIENTS. UNFORTUNATELY, CUSTOMERS WHO ARE ON FIRE GET THE MOST ATTENTION. THIS LEAVES ME NEGLECTING CUSTOMERS WHO MAY BE STAGNANT IN THEIR ADOPTION OR SUCCESSFUL CUSTOMERS WHO I COULD BE SUPPORTING MORE. 13

14 What is your approximate ratio of Annual Recurring Revenue (ARR) to Customer Success Managers? Many of the respondents surveyed are employing a tiered approach based on Annual Recurring Revenue. When formulating these multi-tier Customer Success strategies, companies establish listening posts to collect feedback at various touch points to continually assess customer needs and expectations. $ 0 $ 100 K 11% $ K $ 1 M 38% $ 1.1 M $ 5 M 33% $ 5.1 M $ 10 M 15% $ 10.1 M + 4% Responses ranged from: $ 15 K $ 17.5 M Average response was: $ 2.7 M I HAVE SEVERAL TIERS OF CUSTOMER SUCCESS MANAGERS THREE WITH DIFFERENT RATIOS AND BOOKS OF BUSINESS. TIER 1 HAS 25/1 RATIO WITH ARR OF 12.1M, TIER 2 HAS 60/1 RATIO WITH ARR OF 9M, AND TIER 3 IS THE SCALABLE TEAM WITH RATIOS OF 750/1 AND ARR OF 17M. THEY ARE NOT DIRECTLY ALIGNED AND ARE PROACTIVELY MANAGING CUSTOMERS THROUGH OUTBOUND CALLING AND CAMPAIGNS. 14

15 WE WERE JUST APPROVED TO ADD MORE CUSTOMER SUCCESS MANAGERS. ONCE THEY ARE HIRED, WE WILL BE AT 130:1 AND 10M:1 BY THE END OF THE YEAR. 15

16 Approximately how many Customer Success professionals do you plan to hire within the next 12 months? The responses suggest Customer Success Teams of all sizes will double over the next 12 months. 87% 16

17 What are the biggest barriers you experience that make it harder to fulfill the promise of your Customer Success organization? These quotes represent the most common themes identified across respondent feedback. THE BIGGEST BARRIER IS EXTRACTING USAGE DATA FROM OUR PLATFORM TO PROACTIVELY HELP OUR CUSTOMERS SUCCEED. SALES HAVE ALSO LED TO MULTIPLE (SOMETIMES COMPETING) PATHS TO SUCCESS, WHICH DAMPERS OUR ABILITY TO SCALE. AS WE REBUILD OUR CUSTOMER SUCCESS ORGANIZATION ORIENTED TO THE NEW PRODUCT, WE CAN TAKE THESE LESSONS LEARNED AND IMPLEMENT THEM INTO OUR NEW SOLUTIONS STRUCTURE. A LACK OF AWARENESS INTERNALLY OF WHAT CUSTOMER SUCCESS IS AGAINST OTHER DEPARTMENTS. A SILO MENTALITY. DATA IS THEREFORE NOT INTEGRATED SO THAT WE HAVE ONE VIEW OF THE CUSTOMER. AS A NEW TEAM, THE BIGGEST BARRIER WAS HIRING THE RIGHT PEOPLE WITH THE RIGHT ATTITUDE AND SKILLSET. THIS TOOK LONGER THAN I ANTICIPATED BUT IT WAS MORE IMPORTANT TO ME TO HAVE THE RIGHT TEAM MEMBERS THAN PUTTING A TEAM TOGETHER QUICKLY. SCALING WHETHER IT S MONTHLY ACCOUNT SNAPSHOTS REPORTS FOR CUSTOMERS, HANDLING THE IN-PERSON MEETINGS FOR ACCOUNT REVIEWS, OR ANSWERING A FLURRY OF QUESTIONS FROM CUSTOMERS. 17

18 Do you plan on making any significant changes to your Customer Success organization over the next 6 to 12 months? These quotes represent the most common themes identified across respondent feedback. WE WOULD LIKE TO START CELEBRATING THE SUCCESSES OF OUR CLIENTS, HUMANIZING OUR TEMPLATES, ENGAGING OUR DEVELOPMENT STAFF WITH CUSTOMER FEEDBACK AND HAVE BETTER METRICS FOR BENCHMARKING OUR SERVICES. EXPANDING OUR OUTREACH TO LOWER TIER CUSTOMERS THROUGH AUTOMATED ACCOUNT MANAGEMENT. BRING CUSTOMER SUCCESS TO ALL DEPARTMENTS PROMOTING THE TEAM AND THEIR ACTIVITIES. PART OF MY JOB IS TO CHANGE THE CULTURE. WE HAVE ALREADY STARTED TALKING ABOUT CHANGING THE DISCUSSION FROM SAVING A CUSTOMER TO FOCUSING ON HOW TO HELP THEM SUCCEED IN ALL AREAS (NOT JUST WITH OUR PRODUCTS). WE PLAN TO IMMEDIATELY SEGMENT OUR CLIENT BASE. FURTHERMORE, OUR GOALS INCLUDE CUSTOMER SATISFACTION SURVEYS AND CUSTOMER HEALTH SCORING. 18

19 Are Customer Success Managers in your organization charged with proactive outreach to customers? These quotes represent the most common themes identified across respondent feedback. YES, DEPENDING ON THE TIER OF THE CUSTOMER. HIGHER TIER CUSTOMERS GET MORE REGULAR PROACTIVE OUTREACH, WHILE THE LOWER TIERS MAY NOT GET AS MUCH. HOWEVER, WE ARE DEVELOPING MECHANISMS AND AVENUES TO PROVIDE LOWER TIER CUSTOMERS WITH THE SAME INFORMATION HIGHER TIER CUSTOMERS GET THROUGH WEBINARS, NEWSLETTERS, ETC. YES. OUR CUSTOMER SUCCESS TEAM REACHES OUT WITH TOUCH POINT CALLS AND QUARTERLY BUSINESS REVIEWS (QBRS)/ROADMAP DISCUSSIONS. TYPICALLY THEY CONTACT EACH OF THEIR CUSTOMERS ON A QUARTERLY BASIS, BUT THE ONES WITH MORE REACTIONARY ISSUES (OPEN SUPPORT INCIDENTS) ARE CONTACTED WEEKLY OR MONTHLY. YES, WE ARE VERY SENSITIVE TO HOW OUR CUSTOMERS REACT TO OUR PRODUCT. IF WE SENSE ISSUES, WE PROACTIVELY TRY TO GET IN FRONT OF THEM TO MAKE SURE WE CONTINUE WITH SYSTEM ADOPTION AND USAGE RATES. WE DO NOT TRACK FREQUENCY OF OUTREACH. YES. WE STRIVE FOR SUBSTANTIVE, PROACTIVE OUTREACH. THE FREQUENCY VARIES FROM CLIENT TO CLIENT BUT, ON AVERAGE, IT IS APPROXIMATELY BI-MONTHLY PROACTIVE OUTREACH. THE GOALS OF THESE CALLS ARE: ENGAGEMENT WITH PLATFORM, STRATEGIC INITIATIVES, AND RESOLVING ISSUES. 19

20 Are members of your Customer Success Team eligible to receive commission or other forms of variable compensation? These quotes represent the most common themes identified across respondent feedback. THEY RECEIVE A QUARTERLY BONUS FOR CROSS-SELL/ UP-SELL OPPORTUNITIES WITHIN THEIR CUSTOMERS. IF THE TEAM HITS THEIR GOAL, THEY ALL RECEIVE COMPENSATION. THIS ENCOURAGES COLLABORATION, GROWTH DISCUSSIONS WITH CUSTOMERS, AND DOES NOT PUNISH ONE PERSON WHEN A LARGE COMPANY DECIDES NOT TO RENEW. NO VARIABLE COMPENSATION FOR THE CUSTOMER SUCCESS MANAGERS, BUT THEY ARE ELIGIBLE FOR A BONUS BASED ON INDIVIDUAL AND COMPANY PERFORMANCE. ACCOUNT MANAGERS RESPONSIBLE FOR UP-SELL AND RENEWALS ARE ELIGIBLE FOR SALES COMMISSION. YES, WE HAVE A QUARTERLY VARIABLE BONUS PLUS COMMISSIONS ON RENEWALS AND UP-SELLS. CUSTOMER SUCCESS IS NOT RESPONSIBLE FOR CLOSING OR SELLING TO CUSTOMERS. HOWEVER, WE ARE RESPONSIBLE FOR DEMONSTRATING VALUE SO THAT WE CAN RETAIN AND GROW OUR BUSINESS WITH THESE CUSTOMERS. THEREFORE, WE PARTNER WITH THE SALES ORGANIZATION AND SHARE IN THE REWARDS. YES, THEY RECEIVE COMMISSIONS ON EACH RENEWAL THAT THEY CLOSE. THEY GET PAID ON UP-SELLS OF ADDITIONAL PRODUCTS AND SERVICES, THEY GET A QUARTERLY RETENTION BONUS AND THEY ALSO GET PAID A % OF ALL CLOSED DEALS THAT STARTED WITH A LEAD THAT THEY PASSED TO THE NEW BUSINESS SALES TEAM FOR A LAND EXPAND DEAL OF A CLIENT THAT THEY WORK WITH. 20

21 17470 N. Pacesetter Way Scottsdale, Arizona SatrixSolutions Satrix Solutions is a customer success champion, helping companies derive maximum value from their most important assets customers, employees, and reputation. Benefitting from a range of feedback programs and a consultative approach, companies that partner with us realize Net Promoter Scores twice the B2B average and experience increased retention, referrals, and sales win rates. The objective insights and recommendations delivered empower business leaders to outperform the competition and achieve higher valuations in the public and private markets. For more information, please visit: or call SatrixSolutions LLC. All rights reserved. Net Promoter, Net Promoter Score and NPS are registered trademarks of Bain & Company, Inc., Satmetrix Systems, Inc., and Fred Reichheld.

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