Opinion

Productizing Customer Success in the Cloud

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A pivotal principle that sets Software-as-a-Service (SaaS) apart from the on-premises, legacy applications of the past is the shift of the vendors’ priorities so they better align with their customers. Rather than placing the burden of deploying and managing the software on the customer, SaaS vendors have to ensure customer satisfaction, minimize churn and maximize the lifetime value of their customers. 

Achieving this objective requires the right combination of staff skills, business processes and support systems. Although every successful SaaS company has been committed to the idea of customer success, capturing the right data to gain a holistic view of the customer to better serve their needs has been a significant challenge. 

Salesforce.com was the first SaaS company to associate itself with the customer success idea and incorporate “success” into its branding. After promoting itself as a “cloud” and “social” company, Salesforce.com changed its corporate message this year to reposition itself as the “customer company” and challenged its customers to do the same with their customers. 

The objective of Salesforce.com’s new branding campaign is to position its customer relationship management (CRM) system as the centerpiece for achieving customer success. However, an increasing number of companies — especially SaaS and other service-oriented companies — are discovering a CRM system falls short of meeting their information and coordination needs when it comes to fully serving their customers. 

In most companies, CRM systems just capture sales data. Billing systems only capture financial transactions. Helpdesk systems capture customer requests. And ERP systems capture product delivery and logistical information. In other words, there isn’t a single system that captures all the interactions a company has with its customers. More importantly, there hasn’t been a specific system that alerts a company when it is at risk of losing a customer and notifies the company when there is an opportunity to sell more products or services to a customer, i.e., alerting the company about upsell and cross-sell opportunities. 

This gap can be very costly when you consider the multiplier effect of customer churn and missed sales opportunities in a subscription-based business. 

It is not only a system problem but also an organizational, cultural and training problem. Many SaaS companies are uncertain about who within their organizations should be specifically responsible for customer success, the skills required to fulfill this role and the incentives necessary to properly motivate them. And they need the right software solution to monitor and manage this function. 

This problem is being attacked by a new set of SaaS vendors offering “customer success management” (CSM) solutions. The companies vying for position in the CSM market have had to educate corporate decision makers about the value-add of their offerings in relation to the CRM, helpdesk and marketing automation systems already in place. 

This market segment has been taking shape over the past year and really crystalized at last week’s Pulse 2013 conference hosted by Gainsight, one of the key players in this emerging market. The event brought together over 250 customer success professionals hungry to learn about industry best practices and trade perspectives with their peers. Many also were gathering information about the value of CSM solutions and how they can tie together their existing systems to give them greater insight into their customers’ status so they can improve satisfaction, reduce abandonment and capitalize on new sales opportunities. 

The conference helped to define a market need, validate a new SaaS alternative and create a new professional community focused on customer success. 

[Disclosure: Gainsight paid me to host a panel session at the Pulse 2013 conference.] 

Jeff Kaplan is the managing director of THINKstrategies, founder of the Cloud Computing Showplace and host of the Cloud Innovators Summit conference series, including the Cloud Channel Summit, November 4 at the Computer History Museum in Mountain View, CA. He can be reached at jkaplan@thinkstrategies.com

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