Sue: Why is customer success becoming so important when it is often perceived as an activity which has always been done but was not given the label « customer success »?
Guy: Customer success is often associated with traditional activities such as account management, professional services or support but the activity of customer success is linked to the maturity of the recurring revenue model. Companies with a recurring revenue model such as SaaS depend on their ability to retain and grow. The role of customer success is becoming just as critical as that of sales. Customers prefer now to have the choice of renewing their contract or not with a company. The role of customer success is therefore to do everything to make sure that the customer just keeps coming back.
Sue: Customer success seems more mature in certain regions and sectors. What are your thoughts for the expansion of this role?
Guy: Totango was initially created in Israel in 2010 as a response to ensure life-time value to the Telco industry, a sector heavily dependant on the recurring revenue model where churn prevention is critical.
In terms of geography, the need for customer success is everywhere. 40% of Totango business for example is outside of the USA, mainly in Europe but also in Australia, India and Brazil. Totango has been collecting and sharing best practices and creating events to evangelize customer success. We have noticed that the customer success machine has started to develop just by the number of participants. Our first Totango event in the USA in 2013 attracted 100 participants, the 2nd one in 2014 attracted 400, and the 3rd one in 2015 attracted 1000 people. This is a huge success for CS actors to network, participate in the interactive seminars and workshops and learn from their peers. Over 75% told us they’d be back! We’re excited to start the Totango road show this first quarter 2016 in USA and Israel.
Sue: What do you consider to be an ideal profile for a CS Manager ?
Guy: OK well let’s start by defining what they need to do. Basically their goal is to retain and grow customers. To achieve these 2 main outcomes, we need to look at the drivers and values. The 5 main drivers are:
4) Up selling/Up-grading
On-boarding is critical to success. It is often complex and fluid process and organizational and project management skills are required.
Depending on the size of the company, there are different CS organizations and roles. In smaller companies, the CSM is usually responsible for all 5 drivers, at least to begin with. As a company grows, the drivers are often split into CS management roles where CSMs are specialized, e.g. for on boarding, renewals, up selling and cross-selling.
The CSM drives and articulates business value at all times. Value indicators are measured on the business outcomes expected. It’s not about the product itself but about the business gains generated. Business curiosity and a talent for solving issues is also key. Engagement is essential in order to identify gaps for achieving this value.
The real challenge is how to articulate the customer success activity and engagement in a scalable way.
Sue: What for you are the main challenges for a company wishing to start a customer success activity?
Guy: First of all the CS activity must be aligned with the main objectives of the company – to maximize renewals and up sell. This should be done in a very pragmatic way to ensure profitability and growth. If the fire-fighter model is still in operation and a company needs to spend for example 1$ to generate 1$ of renewal, then the CS role is not moving the needle forwards.
It is necessary to invest heavily in the previously mentioned 5 drivers (see above) and to keep tabs on the value that customers are gaining from the product. This is applicable for all customers.
Sue: There are more and more actors on the customer success software market, yourselves included of course. What guidelines can you give as to when a company should invest in such software?
Guy: Usually for smaller companies, the CEO begins the CS activity themself. As a general guideline, as soon as there are between 20 – 50 customers, it’s a good time to start and think about investing in CS software and for the following 2 reasons:
1) It’s great to build the activity and capitalize from best practices rather than repeat the same mistakes made before by other companies.
2) At a certain point, it can become very quickly unmanageable to be in control of all the 5 main levers. Customer success software helps to structure and alleviate the multiple tasks, allowing greater visibility on customer activity, risks and the company engagement.
My advise is to invest in customer success software as early as it is affordable.
Sue: So what is your elevator (or rather « lift » – sorry I’m British) pitch for Totango?
Guy: Our key philosophy is to drive value to customers. It’s necessary to know how your company is driving value. To do that, you need to understand the way that customers are using your products. Once you’ve mastered that, you can better retain and grow your customers. We built Totango on this foundation.
I’ve never been a fan of the customer 360° view concept. This implies that you’re in the middle of a circle without really knowing in which direction to look first. I prefer to consider customer knowledge and consequent success with the following main areas:
3) Measurable business outcomes
4) Operational aspects
5) Feedback, e.g. NPS
Success is the result of the company’s engagement and understanding of their customer’s gained value but also of their customer’s ownership on what’s going on around your product.
It takes two Totango!
Sue: What are the main profiles of Totango’s current customers?
Guy: There are 3 main world-wide categories:
1) Start ups and maturing SaaS companies
2) Medium to large companies
3) Verticals : telco, data providers and infrastructure
Sue: What are Totango’s ambitions for 2016?
Guy: Our first aim is to make Totango software easily accessible to all client focused actors: CSMs, VPs, CEOs…
We aim to have a new release per month and celebrated 8 new releases already in 2015.
We look forward to the Totango Customer Success Summit on March 21st and 22nd in San Francisco. Here we’ll meet and exchange with like-minded actors in a very convivial, productive and inspiring event.
Sue: If you had a crystal ball, describe what you would see for customer success in 5 years from now:
Guy: Customer success will be more mature and we will know how to do it better than today. It will evolve like the role of digital marketing has evolved over the last 7-8 years.
As customers innovate and their expectations increase, customer success will also gain in importance, becoming equally strategic and sustainable as the role of sales. Customer success will be more efficient and scaled, facilitated by faster programs and software.
For Totango, I can foresee continued amazing growth and thank all our customers for their advocacy and for finding great value from our customer success software.
Sue: Thanks Guy for the interview. I wish you continued success and look forward to seeing you at the next Totango road show, why not here in France!
Guy: Yes with great pleasure. Thank you Sue.