Nexthink - Our 3 pillars to succeed with B2B customer success
How can organisations differentiate themselves by delighting their B2B customer? Eric Blum, Chief Customer Officer at Nexthink shares some insights.
Since the business is shifting towards everything-as-a-service and a subscription-based business model, Net retention has become a key performance indicator and stakeholders expect 120% to get a good valuation. As this is the result of subscription renewal and cross-sell, it commands to the vendors to focus on customer success, mainly defined by value realization and adoption of the solutions.
For this, vendors have created dedicated departments called Customer Success Organization (CSO). Though, some recent surveys show that this is generating some problems across the organization. For instance: Sales: “What are you doing on my accounts?”, Finance: “Do we need all those people?”, Marketing : “What are those campaigns you’re doing with customers?”
To overcome these frictions, CSO must clarify its purpose, focus its activities and intensify its communication internally. At Nexthink, a hyper-growth SaaS vendor specialized on Digital Employee Experience Management, CSO is built on 3 pillars. I recently got the opportunity to share and challenge them during some round tables and forum with B2B Service and Support executives. This article is yet another opportunity.
Live and breathe by your success scorecard
”I have not seen that many suppliers putting this kind of effort and best practices to ensure we get as much value as possible” (300.000+ employees company CTO)
“Fantastic interactions” (a recent Linkedin post from a large European bank executive)
Those quotes are typical great feedback we’re getting from customers executives. But how to be sure they are representatives of the experience of the hundreds of customers worldwide, thousands of users? Net Promoter Score (NPS) has a lot of pro’s and cons’ as the ultimate success metric. Is every feedback equal? Would a 10 mean that the Renewal is secured even when the customer must drop its overall budget by 20%?
We have defined our Global Success Score Card to better assess the customer health. It has 2 main categories: Experience and Outcomes, with no more than 5 metrics each. It has been a step change. Let’s pick a few examples. Experience embraces volume of interactions (emails, phones, meetings), Digital Community experience, On-line education consumption, Support experience, … Outcomes embraces number of our products purchased, percentage of deployment, consumption of the services, some customer business metrics reported by our products which are valid proxies for value realization.
We had to overcome 3 main challenges when setting it up:avoid over-engineering the scorecard:
- avoid over-engineering the scorecard
- don’t rely on manual data collection and favor the metrics which can be automated
- give up the typical Red-Amber-Green customer health status for a numeric score allowing many more analytics
Then comes the time to define the thresholds. One size doesn’t fit all. For instance, is there only one goal for the customer usage of the service, or should the targets vary after 1, 3, 6, 12 months? What should be their on-line learning score for these periods? As the products evolve, the market matures, the thresholds should be revised. They are critical because actions will be triggered based on them: specific knowledge articles on Community will be promoted, on-line courses, a webinar, a call from an expert…
At a large manufacturing company, we’ve targeted 500 people with free on-line education for on-boarding, we could see how quickly the education was taken, and the impact on the type of usage of the software. It became easy to be laser focused on some specific groups.
The Global Score Card is now contributing to the definition of our priorities. It is a collaborative tool for the different departments. We’re now disclosing their score to our customers so we can work together on a shared success plan.
Plan for success, get ready for action
Sales success very much depends on a robust account plan and an opportunity plan.
Taking the customer perspective: Are we clear on our requirements? What is the best technical alternative? What is the budget, and can we afford it? What is the associated risk with the program? This last question is a Customer Success question. Not addressing it during the sales cycle can only either put the deal in jeopardy or get it slipping quarter over quarter. Engaging with the customer on his success plan, at the mid-point of the sales cycle has significantly increased our win rate.
The success plan is a collaboration tool. It is structured on 5 main areas:
- business objectives
- program management,
- value realization
Developing a customer success plan is an on-going process all along the customer lifecycle. It welcomes an agile methodology approach.
The early iterations of the program with the customer will generate a wealth of data and analytics. It enables a data-driven on-going decision process to elect the most business relevant stories to develop, and confirm they’re delivering the expected value realization.
At a large pharmaceutical company, we’re growing the number of stories and use cases. We’re gathering systematically hard metric proof points of improvement. Together with the customer, we can share the accumulated value of the new operations put in place. And it talks millions. The company now leverages this: it is a part of the MBO’s given its Line of Service managers. The Success plan confirms the outcomes and identifies the agreed next set of targets.
Providing the customer management with visibility and recommendations on the 5 domains above at pace, is proven path to grow a trusted advisor relationship for a solid long-term partnership between the companies.
Now, there are 5 key moments in the customer lifecycle forcing hyper-care activities:
- on-boarding the customer on the service
- post go-live assistance
- fixing product defects or compliance enhancements
- upgrading to a new version of the service
- dealing with competitive threats (aggressive pricing or disrupting technology)
Unfortunately, it is hard to put those events on a timetable. Inspired by the concept of the project management office (PMO), the customer success office is a central instance. It publishes scheduled or exceptional Executive Success Briefs that the account manager can send to the customer Executive Sponsor and request for an Executive Business Review.
The cost of success
Each vertical industry has its benchmarks for the ratio of cost of sales to the top line revenue. In the software industry, it is not uncommon to see companies reporting cost of acquisition between 1.3 to 1.8 times the first year Annual Recurring Revenue (ARR). If the cost of acquisition outpaces the first-year revenue, business sustainability requires an on-going optimization of the cost of renewals and upsell.
A common practice is to define 3 customer segments with an associated engagement model:
- High Touch
- Right Touch
- Tech Touch
There can be some endless discussions about the parameters defining customer segmentation. It starts with the ARR, the potential for Cross-sell, but what about the distribution channels, the strategic intent on a vertical industry, the size of the local office,…. But those models also have different investment requirements and operating cost. Budget and cash can be limiting factors.
The high-touch model means a dedicated customer success manager (CSM). One CSM can handle between 3 to 5 customers. Our experience shows that the white gloves customer experience and outcomes drop significantly when the CSM cannot spend a minimum of a day per week at the customer. With a team of top performers, this model may be eventually the easiest one to operate although bearing a high cost.
The right-touch model proposes a subset of the activities of the high-touch model, automated as much as possible the process for 5 key lifecycle moments. Bringing automation comes at a price too as it requires investment in some technology, a project and some operations support people. Though the business case can be easily implemented. It is not uncommon for a right-touch CSM to care about an average of 50 customers thanks to automation.
The tech-touch model usually comes in support to a lighter version of the product, focusing on some specific use cases. As a result, customers expect more of a plug-and-play type approach, with self-support capabilities when needed. The tech-touch model commands for a B2B community approach, with an advanced platform to share knowledge, provide support and education on demand, moderate some group of interests. Integrated with the CSM Automation platform, this can be turned into some proactive engagements with large groups of individuals across multiple customers.
At Nexthink, we have developed a Digital Customer Experience platform, based on Salesforce Community Cloud, and Gainsight for the CSM Automation. Implemented in 6 months, this enables us to mature our business operating model, and governance. This is giving us some incredible insights to constantly review our High/Right/Tech touch segments in the context of our product roadmap, our channel strategy and competition.
The price for customer success shall include a fair share of technology investments, to gain more and more efficiency as the volume of customers grow. The set-up of a Customer Success Office will deliver benefits in term of governance, efficiency and risk management, similar to a PMO in the world of project management.
The shift to the engagement models described above, must be managed as a real transformation program with revision of the process, implementation of new technology, change of the job descriptions, training of the employee.
May be the ultimate success at Customer Success is when Sales and Marketing start to brag about it…
Find out more about Nexthink, here.