As Bill Gates said, “Your most unhappy customers are your greatest source of learning”. Customer success managers are one of the most popular jobs in marketing with growth hackers in 2021. As businesses realize the importance of customer success, they are turning to customer success managers to help them steer marketing in the right direction. The fact is that customers run the show these days. Gone are the days when every industry had few competitors.
According to Forrester's research, 72% of businesses say that improving customer success is their top priority. Today, customers expect you to guide them to success. Since customer experience will overtake both product and price as a key differentiator, the importance of customer success cannot be stressed enough. If you are interested in becoming a customer success manager or have joined the industry and are looking for a guide, you have come to the right place.
A company is like a ship, and a customer success manager is its navigator, whereas the passengers are its customers. Although the daily responsibilities of the role may differ from company to company, the purpose remains the same, and that is to navigate customers to success.
Unlike customer-facing roles that simply focus on short-term needs, a CSM deals with the long-term needs of customers. The professional must possess intimate knowledge of the customer journey and know how to navigate them through each sales phase until the post-purchase phase. Therefore, the CSM develops long-term relationships with customers that are built on trust rather than just dealing with immediate issues that they might be facing.
A serious mistake that most people make is thinking that a customer success manager, customer support manager, and account manager are the same thing. However, it could not be further from the truth. This guide aims to clear the confusion. Let's take a look at the differences between CSM and the other two roles.
The main difference between a customer success manager and customer support is that a customer success manager does not just provide support when customers require assistance.
A CSM is not a reactive role like customer support that only guides customers with day-to-day activities. Instead, it requires a proactive approach to address the long-term needs of customers.
A customer success manager and an account manager are two completely different roles. An account manager simply focuses on the assigned customer accounts, whereas a CSM is more geared towards up-selling and expansion. The account manager only identifies the needs of the assigned client accounts and pitches the right products for them. However, a CSM has a lot more ground to cover.
A CSM strives to keep customers happy and finds ways to cheer them up. It is their responsibility to try their best to keep customers happy and reduce churn. This can be easily broken down into a few key activities.
Onboarding is an extremely important task that a CSM undertakes. As they have a close relationship with customers, they can help find the best way to provide value to them. Although CSMs do not take the entire burden of customer onboarding, they are responsible for ensuring that customers understand the value of the product and how it fits their needs.
Once the customers have been onboarded, CSMs must keep a close relationship with them such as by monitoring Quarterly Business Reviews (QBRs) and nurturing SMBs accounts. Their goal is to encourage them to renew their subscriptions and encourage them to become a sponsor. It is not enough for a CSM to onboard customers.
Even if customers have been happy for a long time, it does not mean that things will remain that way in the future. Thus CSMs have to proactively, find ways to prevent at-risk customers from churn. During the follow-up phase, CSMs act as the link between customers and the company. CSMs have access to vital customer feedback which, they can transfer to the product team or the marketing teams for increasing customer lifespan.
You must take additional steps to encourage renewal. First, you should standardize your renewal process. Identify each key step during your renewal process and create detailed and organized procedures for each.
As for the onboarding, you should create a process with a checklist. You can also implement some automated notifications like automated renewal reminders or billing.
During this phase, you have an opportunity to talk with your customers and to understand what your customers think about your value proposition and your product. Do not lose this opportunity, you may gather relevant feedback for all your teams: sales, marketing, product, etc.
Once you gather all this information, you should keep them and create a Renewal Success Program with all the information of the customers that renewed and a Churn Program with all the information of the ones that churned.
Spending time to understand and analyze this info may be the key to creating the best renewal plan. It will list all the steps taken by the CSM and the customer leading up to the renewal contract.
An old test that journalists use for measuring the power of their writing is: by getting a person to read their story and retell it to peers to get the point across. It was used to determine the importance of the message or what is valuable from the information. The same theory is applicable for good customer success. You must make sure that your engagements drive value. The knowledge allows you to settle the high touch and low touch debate. Here is how the job can be distinguished.
High-touch customer success managers focus on maintaining long-term relationships with key accounts. They provide regular, one-on-one assistance to accounts. High-touch customer success involves serving customers as their personal guide. One must be very close to customers to ensure success. The CSM will be a highly visual part of customer experience and go beyond initial onboarding. Thus, greater resources would be required from the professional. Digital engagement will be at the heart of communications as it would facilitate personalized high-touch digital engagements.
A low-touch CSM mainly focuses on a one-to-many approach and implements automation while working to anticipate clients’ needs to develop a data-driven customer success strategy. Also known as tech-touch, the strategy involves digital engagement and focuses on dealing with volume customers that offer low recurring revenue. It requires proactive encouragement to get customers to try new features.
Good analytics software will provide plenty of data that you can leverage to make informed decisions. However, you will need to learn more about key KPIs to ensure that your customers remain happy and stick around longer. The following customer success KPIs will provide you with useful information about customer experiences throughout the customer lifecycle.
One of the most important KPIs that CSMs must track is the churn rate. The chances are that you are somewhat familiar with churn rate as an estimate of the percentage of customers that leave your business every month. However, there is another type of churn that you need to know more about.
Losing or having to convert high-value customers to a lower-priced tier indicates that your higher-priced tiers fail to deliver value to customers in line with their expectations. It is known as gross dollar churn. When you determine how customers perceive the value of the product, you need to evaluate customer churn along with gross dollar churn. It will provide you with more information about which customers leave and why so that you can rectify the problem.
Another important customer success KPI that you cannot ignore is MRR. Although the two churn rates provide a detailed look into customer retention, you need to dig deeper. You need to also evaluate monthly recurring revenue. It provides you with the perfect overview of how your product is perceived. Even though different tiers complicate things, you must make sure that this number continues to grow as it indicates a good overall customer satisfaction rate. This metric helps provide a better picture of your company’s health.
The next KPI that you should also consider is the customer lifetime value (LTV). Customer lifetime values are commonly used in cost/benefit analysis. The calculation requires the price of user acquisition and is calculated by multiplying the average revenue generated per customer over time by the total number of customers. But, it has other uses as well.
If you can find ways to increase the value of your product, you will notice an increase in the customer LTV metric. It could be something as simple as making higher-priced tiers appear more attractive to your existing customers to upsell to them. You can also cross-sell to customers to increase your customer LTV.
An important customer success KPI that you should also consider is your NPS. It is based on surveys conducted by your business to find out how likely customers are at recommending your products. In addition to your customer satisfaction score, you must consider your NPS. It is one of the most direct ways through which you can gauge customer satisfaction. Since the metric is user-generated, it is highly actionable.
Make sure to include a section in the survey which requires customers to tell you what they like about your product and what they do not like so that you can determine the pain points that customers might be facing when using your product and you would be able to resolve such issues. By eliminating the reasons behind why customers would not recommend your products, you get to increase satisfaction.
Finally, you also have to consider expansion revenue as it is a key KPI that is the opposite of churn. Expansion revenue measures how much money you are generating from existing customers. In simple words, it measures just how successful you are at upselling to existing clients. Even though acquiring new customers should be on the top of your mind, you must keep in mind that it is more profitable and rather easier to generate revenue from your existing client base.
Besides, increasing this number would mean that you are decreasing churn and reducing your reliance on acquisition. It also reveals that your clients are willing to spend more money on your products, which should provide you with reasonable assurance to continue meeting their expectations.
Now that you know about what working as a customer success manager is like, you need to focus on improving your aptitude. Since it is a relatively new field, you need to put in the effort to get ahead. There are many CSMs who lack formal schooling and have been working in the service industry their entire lives. Everyone has a different background. However, they possess the following skills.
A career in customer success offers great potential. Anyone who possesses amazing communication skills enjoys working in a team and can understand a product deeply can expect a lucrative career. If you are interested in becoming a customer success manager, you will be delighted to know that it is a promising career path.
You must keep in mind that the role of CSM varies from organization to organization. However, you can expect to earn anywhere from $50,000 to $140,000 depending on your experience and skills. But, there are certain industries such as software and IT that offer a much higher salary to CSMs. Finally, CSMs can expect to find more job opportunities in large cities like Chicago, Boston, New York, Los Angeles, and San Francisco. You can also boost your earning potential by signing up for a certified CSM professional course.
Now that you know everything about CSM, you must be wondering how to find a company hiring customer success managers. You can start your job hunt by asking your current company for any relevant openings. Since they already know you and what you are capable of, they would be more likely to consider you for the job. Otherwise, you can apply for the job on job boards such as Indeed, Monster, and Linked as they are the hiring giants.