Customer Success Management

Customer success and customer success management are novel concepts that are of growing importance in business markets. The novelty of this management approach is that it does not focus on promising or selling value to a customer. Rather, customer success management aims to ensure that the promises of a customer value proposition are actually kept and that value is delivered or even enhanced when goods or services are used at the customer firm. The importance of customer success management is reflected in the growing number of customer success managers worldwide and the emergence of conferences and publications dealing with the topic. Beyond explaining the novelty and the importance of customer success and customer success management, in this chapter, the book’s outline is explained. It covers the meaning, the tasks, and the development drivers of customer success management as well as the ways in which it is organized and which outcomes it offers for customers and suppliers.

In this chapter, a goal-related perspective on CS and CSM is developed that builds the basis for this book. According to this view, customer success is when customers achieve their goals, and customer-perceived value represents the extent of a customer’s goal achievement. Based on this understanding, we distinguish between customer-perceived expected value in use, experienced value in use, and relationship value. Thus, CSM predominantly relates to experienced value in use as the extent to which customers’ goals are achieved by using a solution for a single transaction or contract period. We further develop the “CSM Wheel” that integrates the various CSM tasks and provides the structure for this book. Accordingly, CSM combines value-based selling, solution realization, value-in-use monitoring and enhancement, renewal or expansion, and customer advocacy. These activities are propelled by the CSM drivers and lead to CSM outcomes for both customers and suppliers.

CSM does not come from nowhere. Rather there are drivers on both the customer and the supplier sides that push its development and implementation. In this chapter, we identify and explain the most important drivers of the implementation of CSM from customers’ and suppliers’ perspectives. They reach from common business practices, lacking or poor customer CSM capabilities, lacking resources and offerings’ complexity over the project or relationship phase, the project type, the relevance of the business relationship, striving to secure follow-up projects to the customer value proposition itself. The importance of these CSM drivers differs, depending on whether they are seen from suppliers’ perspective or customers’ perspective. From a customer perspective, identifying relevant CSM drivers highlights opportunities to consider or actively request CSM activities by a supplier and to articulate needs for such activities. From a supplier perspective, identifying CSM drivers and their characteristics helps CS managers delineate and segment customers based on their potential and receptiveness to CSM activities.

Selling a solution to a customer firm is the prerequisite for any activity of Customer Success Management. Consequently, in order to convince customers to buy a solution, suppliers have to apply activities of Value-Based Selling (VBS) first. At its core, VBS aims at crafting and communicating a Customer Value Proposition (CVP), based on a deep understanding of a customer’s goals. This chapter explains the various steps of VBS and how a CVP helps communicate how a company will provide superior value to its customers.

Customer success can be achieved only if a solution is actually realized. Accordingly, this chapter shows how providers can help customers to do so by familiarizing them with related products and services, as well as installing and implementing them at the customer firm. This solution realization comprises thus two fields of activities: onboarding and solution adaptation. In these processes, the internal handoff from the sales team to the customer success team is the most critical stage to ensure a seamless onboarding experience of the customer.

In business markets, customer value propositions are typically characterized by value that is not exchanged in the moment of purchase but rather cocreated by the supplier and the customer throughout the customer’s usage of a solution or complex offering. As suppliers typically aim at keeping the customer churn rate low, they need to make sure that this value in use promised in the customer value proposition is actually achieved or even exceeded. Hence, suppliers have to establish measures that aim at continuous value-in-use monitoring and enhancement, i.e. a customer-related CSM process. While value-in-use monitoring includes activities of identifying the created value for the customer in form of certain key performance indicators and their reporting to the customer, value-in-use enhancement is about the reflection on opportunities for value optimization and the actual dissemination of respective activities. Through these activities, the customer-related CSM process can be fundamentally aligned with the customer’s goals and hence with the promises made during the sales process. Furthermore, suppliers need to incorporate customers into this process as an active value contributor.

Fulfilling the CVP lays the groundwork for future contract renewals. However, for repeat purchases and longer-term subscription arrangements, a CVP typically does not remain unchanged. In contrast, since customer goals likely change over time, a CVP needs to be adapted throughout a business relationship. Hence, embedding a CVP into a sales cycle can ensure that all sales endeavors are geared toward customer value. In this sense, a CVP is not renewed at a specific occasion; rather, its renewal process begins right after its sale because it should be adapted continually. The CVP thus needs to be understood as a dynamic tool to address constantly changing customer needs and emerging goals.

Moreover, the chapter presents the Case Study “Salesforce” that illustrates how the firm successfully scaled up tailored customer success management (CSM) activities.

Convincing new customers is challenging, especially when selling complex or subscription-based offerings. Here, customers often struggle to assess solutions’ quality due to solutions’ numerous and varied elements and their future-oriented nature. Therefore, prospective customers are not guaranteed that a solution promised in a CVP and the associated expectations of the VIU will actually be realized when using the solution. Beyond this backdrop, customer advocacy helps to ensure solution growth outside of the existing customer base. This includes referrals like testimonials, online reviews, or case studies. Such customers’ advocacy activities can be motivated through membership in customer advisory board (CABs) or customer referral programs.

For CSM to have the desired effect for suppliers, namely a reduced churn rate, it must be considered valuable from customers’ perspective. Research studies have shown that customers assess their suppliers’ CSM activities with regard to the quality of the suppliers’ resources, e.g. the CS managers’ competencies, and the quality of the resource integration process in which customer and supplier are involved, e.g. the communication process between both parties. The customer’s assessment of the supplier’s CSM quality then determines the customer experienced value in use—on the collective and individual levels—which is known to have an influence on the customer’s churn behavior. Besides the quality of the CSM activities, the customer-perceived extent of CSM (i.e., the supplier’s CSM effort that the customer actually perceives) can have a positive impact on the churn rate as well. This means that CSM activities should not only be of high quality and valuable to the customer, but they should also be carried out with a certain regularity and intensity. If these requirements are met, CSM activities can have a positive impact on the longevity of business relationships, reflected, for example, in a positive ROI for the supplier.

To make CSM work, i.e. to let the CSM Wheel spin, supplier firms have to implement the necessary internal CSM structures. Two aspects are crucial for this purpose. First, firms need to determine which goals to prioritize when implementing CSM. Second, they must decide how CSM will be embedded in the supplier’s organization. Within these decisions, it is also necessary to clarify how the scope and tasks of CSM are linked and interconnected with those of other customer-related management approaches—namely, VBS, CRM, KAM.

Furthermore, the chapter presents the Case Study “Camunda” showing how customer success management structures were successfully ramped up.