The Three Ways Companies Value Customer Success Programs
In the three years since publishing our first report on the customer success discipline’s relationship to customer experience management, I’ve had many conversations with Forrester clients about bringing customer success management into a business. While the topics of these discussions have ranged from nuts-and-bolts organizational questions (e.g., where should the program report?) to wonky operational debates (e.g., how many clients should a single success manager manage?), the subtext of every interaction was the same: “How do we create a customer success function whose value is plainly understood by the business?”
Defining a customer success program’s value in general terms is difficult because no two companies value customer success in the same way. For example, one organization may see a customer success program as a means to keep its biggest spenders engaged, while another organization may feel a customer success program augments its customer support capabilities across its entire customer base. In our latest report on customer success, “Design Your Customer Success Program To Drive Value For Your Business,” we tackle this problem by looking at how customer success programs are funded.
How a company chooses to pay for specific initiatives can give you insight into the value it places on that function. Our research into customer success programs shows that businesses look at their value in three ways:
- A mission-critical function essential to the growth of the business. Here, companies treat customer success as a cost of doing business because the assistance that the customer success groups provide to clients ensures retention and expansion of those accounts.
- A key component of the product or service, ensuring proper use. Companies that take this approach consider their customer success programs as a cost of goods sold because these customer success teams are essential to the proper delivery of the customer experience. This ensures that customers adopt the product, which leads to retention and expansion of those accounts.
- A value-added service that any client can pay to access. These organizations believe that, while customer success services are important to helping customers achieve their goals, the expense of delivering these services should be borne by those customers. There are two reasons for this: Some companies see customer success as an additional revenue stream, with service or product profit margins; other companies believe customer success programs should be self-funding, plowing the profits back into the development of the service.
While this breakdown seems straightforward, companies can value customer success for one or all of these reasons. How is that possible? Well, it all comes back to how business leaders look at things like customer segmentation, product complexity, and skills availability — topics that we discuss in our new report. I will also be tackling this topic in a webinar on March 5, so if this topic is of interest to you, I hope you’ll join me then.