What is Customer Success at a software company?

A CSM’s #1 goal is customer renewals.

Overview of what Customer Success Managers do

CSMs make sure your company keeps its existing customer base. Said another way, making sure that customers are going to renew their subscription to your software (re-sign the ordering document and purchase order at the end of their subscription term.)

The key problem that CSM teams solve for software providers is lack of engagement with existing customers. The growth of customer success as a job came out of recurring revenue (SaaS) model.

When your customers renew, it means they keep paying your company (the software provider) money.

Customer Success Managers (CSMs) do this by helping customers get value from the product that your company provides.

This is much more than just providing great customer service:

CSMs have to make sure the product works for customers, and that the customer is using all of the modules and features that they have purchased.
If a customer isn’t using certain modules, the customer is unlikely to renew that portion of their contract once their subscription is up. This results in churn (lost revenue) for the software provider.
If a customer is having issues and challenges with the system, it’s the CSMs job to raise hell internally and get someone involve to help fix the customer problems.

Difference between Sales vs. Customer Success

In the grand-scheme of the SaaS business model, the CSM team is a critical part of the sales team, focused on managing relationships with existing customers and making sure that existing customers renew.

Think of the Customer Acquisition team (traditionally known as sales reps) as “Hunters”, and the Account Management team (including Customer Success) as “Farmers”.

“Farming” vs. “Hunting”

Customer Acquisition: Net-new Sales Reps search for new customers that do not currently have any relationship with the software provider, aka Hunting.
- Sales teams are the “hunters”. Sales teams should find new customers and close deals with new customers. Once a sales rep closes a deal, the customer transitions to post-sale processes like “Account Management” and “Customer Success.
Account Management: renewing and expanding existing customers, aka Farming.
- Account Managers and Customer Success team are the “farmers”. Ensuring customers get business value from the product, and keeping close contact with Account Managers to find expansion opportunities.
- Customer Success Managers are broadly part of Account Management, and typically are more product focused instead of deal-focused.
- Customer Success teams typically don’t have as much of a sales quota as Account Managers do, although there can often be some overlap.
- Every company is different, and the line between Customer Success and Account Management can vary based on the company.

Question: Why does the CSM and the Sales Rep have to have different roles? Would it be possible for a sales rep to handle the job of a CSM for their accounts as well?
Answer: At small software companies / startups, sales reps often own customer success and account management. As a company grows and gets more customers, the account management process gets more complex. This is where CSMs come in.

Everyone in organization should have customer success at the top of their mind.

For customers that are high-touch, CSMs are always on the go. At a large software provider with many customers, there are too many accounts that a Sales rep or Account Manager needs to switch between. Customer Success comes in to bridge this gap.

The rise of Customer Success teams: On-Premise to Cloud

In order to understand why Customer Success is such a critical role at software companies today, we need to understand history of the software industry and then the rise of the SaaS subscription model.

Historically, software was sold as one-time packaged purchases, to be installed at a company on site within their in-house servers. This type of software is known as “On-Premise” software.

With on-premise software, the customer is responsible for maintaining their server and database and customizing the software. As you can imaging, maintaining on-premise software can be extremely difficult.

As technology advanced, the “Cloud Software” model was born, in which a software company would manage the servers and database, and provision access to the software via subscription licenses, which a customer could access from a web browser.

With Cloud software, customers no longer had to embark on complicated and resource-intensive server and database management.

The trade-off, however, was that customers would pay a recurring subscription fee to the software vendor in order to maintain access to their system and data. This type of on-going subscription model is known as SaaS (software as a service).

Subscription terms are typically billed monthly or yearly, based on the number of users accessing the software, and feature offerings that the customer is uses.

SaaS isn’t a type of software, it is simply a licensing model, defining how the software is sold and provisioned to customers.

Succeeding as a Customer Success Manager

If you want to be a good CSM, here is some general advice, which is really applicable to any career:

Be someone that is easy to work with
People need to like working with you.
Make your boss’s job easier
Make your team’s jobs easier
Make your customers’ jobs easier
Technical knowledge won’t hold you back in your career.
- It’s good to know as much as you can, but getting the answer to a technical question is often easiest by talking to someone that is a technical expert.
- However, a lot of times your company will encourage you to get some sort of certification. Definitely go for this if they do.
Follow “never outshine the master”, a principle from Robert Greene’s 48 Laws of Power book.
- In many cases, the lead sales rep will want to own the customer relationship. Work closely with your internal sales and account management teams, gain their trust, and offer to provide value as a CSM wherever you can. If the sales team trusts you and views you as a partner, you will be much more successful as a CSM.

Internal tools for Customer Success Management

Commonly known as “Customer Lifecycle Management” tools, CLM tools function similar to CRM, allowing Customer Success Managers to track the health of existing customers.

These solutions manage the customer journey from pre-sales throughout entire customer lifecycle.

Estimates of account health can be based on various factors like value assessment, customer intimacy, competitor threats, feature adoption, support relationship, renewal process, etc. Analytics is also a big part of solving customer success issues at a large scale, and CLM tools can help with this by featuring dashboards etc.

Examples:

A customer that is live on your system and has a positive relationship with the account team and is generally happy with the system will be tagged as “Green”.
A customer that is considering cancelling their system or switching to a different system would be tagged as “Red”, requiring extra care and going the extra mile to help bring them back to a more positive experience with the software they are using.