By Kristine Stewart, Vice President, Client Success, Channel Impact
Customer success has become one of THE most in-demand careers in our industry. A June analysis found that 62,000 LinkedIn members have the title of customer success manager (CSM) and that roughly 20,000 CSM job openings now exist worldwide. I recently sat down with Phil Nanus, vice president of the customer success practice at TSIA, to get his expert take on how this phenomenon impacts today’s partners.
What is customer success and why are we hearing so much about it?
Phil: For decades, technology providers sold hardware assets or software licenses up front, so most of their revenue came from that initial purchase. In that model, business centered around the first transaction and it was the customer’s responsibility to achieve return on investment. With the advent of the cloud and the meteoric rise of the subscription economy, there have been two significant shifts. The first is that the barrier to entry for technology OEMs has lowered considerably. The second is that power has shifted to the customer and risk now lies squarely with the vendor. These factors have set the stage for the phenomenon that is customer success. To adapt, organizations must now focus on retaining and growing customer relationships.
What is the difference between customer success and customer experience and how do they align?
Phil: Customer experience (CX) focuses on the interactions between companies and their customers and it optimizes how those interactions take place. Customer success focuses on ensuring that the customer extracts value from the technology and services that they’ve already purchased: its very essence is the intersection between the promise of technology and the customer’s business outcome. There are points where the two intersect — for example, there is a practice called customer journey mapping. This is a capability that guides companies to understand the various customer touch points (human and digital, high touch and low touch) and visualize the engagement process over time. More advanced customer success organizations take this to the next level by documenting a plan or playbook that aligns the right resources (people, process, data and technology) at the right point in the customer’s journey to facilitate value realization and customer success. We find that the companies that start with customer journey mapping and then take steps to operationalize it have lower churn rates in comparison to those that do not.
What does customer success mean for channel partners?
Phil: Vendors have been training partners to focus on customer acquisition and all their economics have been anchored by that singular, transactional event. Subscription models have changed the game and the new focus is building relationships and ensuring that customers succeed. As traditional sales and marketing motions transform to address all phases of the customer lifecycle (land, adopt, renew and expand), rest assured that partners remain very important.
When I speak to CFOs, it’s very clear that they don’t want to hire hundreds of CSMs and they don’t want to replicate their sales organization. For partners willing to adapt, this represents a huge opportunity to serve that role and empower tech companies to scale their customer success organizations.
What should technology providers be doing now to assist their partners in adopting customer success practices?
Phil: It is critical that providers train and support partners in customer success. To do this, they need a clearly defined partner strategy that details how they plan to develop and invest in their partner community. Vendors should also share their own customer success IP with their partners – things like customer usage and telemetry data, customer success platforms and related technologies, and customer success plans and playbooks. And lastly, OEMs must consider their partners an extension of their own customer success organization and give them the resources they need to thrive. This is a win-win proposition because, from what I’ve seen, the vendors that have rolled out customer success programs for their partners are seeing higher revenue growth rates.
It was a thrill for me to interview an industry luminary like Phil about a topic that is a major focus of our business at Channel Impact. As many of our clients transition to the subscription world, we have been asked to redefine their channel strategy and programs to align with a customer success go-to-market model. We’d be happy to have a discussion with you about your interests or requirements in this area.
Lastly, if you want to better understand the latest trends and best practices in customer success, you won’t want to miss TSIA’s TSW event, Oct. 15 – 17 in Las Vegas. As part of the overall focus on making the LAER model more efficient, Phil will be on stage discussing customer success in verticals and the role partners play in supporting their vendors in these niche markets. And on Oct. 17 I’ll be teaming up with Steve Frost, VP of TSIA’s Expand Selling practice, for a tabletop discussion titled “Choosing the Right Channel Partners: One Size Does Not Fit All.” Lastly, Channel Impact will be exhibiting at TSW as a consulting alliance partner. Please email me to set up a discussion or stop by and see me in our booth.