Executive Summary

Vendors today realize that they need to systematically create programs that allow for interaction between them and their customers. Most will need to address how to service the largest portion of their customer base in a technically friendly way while reducing the need for human capital–intensive ways of building relationships. This large portion of customers are usually lower-value customers in terms of annual spend commitment, but they are important for overall growth. This is not to say that you will eliminate the need for personal relationships with your customers; it just dictates a need to develop different programs that fit each segment of your customer base accordingly. This has to be done without losing the strong connection between customer and vendor that ultimately breeds loyalty, and changes what is known as a customer–vendor relationship into a mutual partnership.

Depending on your product and service, you will need to decide how to create a customer experience that develops a connection with your company. Once outlined, that customer experience needs to be captured, driven, and continually refined by your customer success team and practices. However, customer experience must be a top company priority; it can't be delivered by individual relationships with your customers or even by a single department. The customer experience that builds the strongest relationship between you and your customer needs to start during the initial sales cycle (which could be interacting with your website or an actual human), and then moves to onboarding, product quality, support, and solution adoption, while having a strong focus on communication between the two entities and your community of customers.

While all this reads like common business practice, most organizations do not have a cohesive plan (key word being cohesive) to deliver the optimal customer experience. By having a customer experience blueprint that maps across the entire organization, and a customer success organization that drives the process, a company will now have data points to drive change and help develop stronger relationship across all customers. The data-driven decisions can allow companies to institute change that includes website design and flow, more intuitive product design, and new customer success programs customized to particular sizes of customer organizations, while allowing you to redirect expensive one-to-one human interaction to your highest-value customers.

Businesses scale only when customers scale. For most companies, that means a long tail of low-value customers. In aggregate, they are often extremely valuable, but each of them individually is typically not big enough or strategic enough to merit anything approaching white-glove treatment. These are the customers who make up the bottom of your segmentation pyramid under the heading low touch or tech touch. You have to figure out how to deliver love and value to these customers without much one-to-one interaction. This will bring out both the best and the worst in your product and your company as you learn whether customers will be loyal because of the value they get from your product, not the relationship they have with an individual.

With the advent of the SaaS delivery model, department heads are now empowered more than ever to drive business value through a wide variety of solutions. With lowered dependency on IT involvement to deliver and maintain business applications, the door has been opened for companies of all sizes to evaluate and invest in solutions to improve their department's productivity and effectiveness. This evolution provides a win for both the customer and the vendor, but it does create a need for a different approach to managing customer relationships.

Previously, vendors serviced customers through one-to-one relationships, either maintained by the original salesperson or managed by a separate group of account managers. This model works well if your customers spend a large amount of money with you, and your company can support the high cost structure accompanying this model. But with solution vendors now growing at a rapid clip by selling to smaller companies first and then working their way up the revenue chain, tackling bigger and bigger clients, the old customer relationship model doesn't work until the vendor has reached a certain maturity point and is starting to sell large, annual, recurring revenue deals. A few of the SaaS vendors that started with this selling model include well-known players, such as DocuSign, Cornerstone OnDemand, Marketo, Salesforce.com, SuccessFactors/SAP, and Xactly, while relative newcomers, such as Gainsight, Mixpanel, and Zenefits, have recently hit the scene. The proven players have established themselves as leaders in their space by having superior products and focusing on customer success initiatives as a high priority. Their early success resulted from the tremendous growth of their top-line revenues; however, for sustained long-term growth, all companies must focus on new business as well as customer retention. By applying some of the following principles and processes, you can advance and improve your customer success initiatives, focusing on building stronger relationships between your company and your customers:

• Segment your customers by a particular metric that works for your business.
• Define a customer coverage model based on your segmentation.
• Create customer interaction categories based on your coverage model.
• Establish a cadence for interacting with customers.
• Help connect your customers by building a strong and loyal community.
• Create a customer feedback loop.

Define a Customer Coverage Model Based on Your Segmentation

Defining a customer coverage model is not one size fits all. Depending on the solutions you provide and the maturity level of your organization, your coverage model will evolve over time. If you are an early stage start-up, your customer success team might be asked to wear multiple hats and deliver onboarding, training, support, and renewals. As your company matures, you will naturally start to create specific departments to handle each functional area.

Once your organization is big enough to have a dedicated customer success team, you will need to decide on your coverage model. If, as a company, your business does not lend itself to building a customer success organization, you can still apply customer success principles through the tech-touch model. The first step in the process is to define how many accounts fall into the following categories of interaction: high touch, low touch, and tech touch (see guidelines under the following section, “Create Customer Interaction Categories Based on Your Coverage Model”). One approach to help understand your segmentation (if you use ARR as the benchmark) is to see where your Pareto principle kicks in, by analyzing where 80 percent of your revenue is coming from. Based on your findings, you can start making judgments about how many accounts you want managed by high-touch versus low-touch CSMs and programs. Once accounts are established by segment, you can more easily decide how many accounts each of your CSMs can manage appropriately. Depending on the complexity of your solution and the customer's willingness to spend, the range for the number of high-touch accounts managed by an individual CSM can vary from 5 to 15 accounts, whereas your low-touch CSMs might be able to manage from 20 to 50 accounts or even many more. This will vary greatly for every company, depending on a number of factors. The guideline provided for high-touch accounts, for example, is for complex solutions that service multiple departments or the whole company and that have high ARR value—say, $500,000 or more. The focus of this exercise should be on how much to invest in protecting your current revenue stream (and potential upside growth) from your most valuable customers.

Create Customer Interaction Categories Based on Your Coverage Model

The focus has shifted from a one-to-one relationship to one-to-many relationship. As a vendor servicing a broader set of customers, you need to establish multiple programs for customer engagement. These programs should provide a channel to make your customer feel connected to your company. Moreover, these programs should be educating your customers about features and functions but, more importantly, teaching best practices with the goal of increasing overall adoption. Depending on how you categorize your customers into segments, the following guidelines help determine how and when to interact with your customers.

High Touch

• Multiple in-person meetings during a quarter (depending on each customer's initiatives)
• QBR meetings
• Creation of a blueprint success plan
• One-to-one meeting(s) with your executive staff

Low Touch

• One in-person meeting per quarter (or as needed)
• Focus on at least one high-value meeting per month via online or video conferencing
• One-to-one meeting with your executive staff

Tech Touch

• Webinar-style one-to-many customers meetings on product adoption
• Monthly to quarterly newsletter
• Data-triggered e-mail campaigns
• On-demand training and guidance
• Community portal

These are some suggested guidelines, but it will take individual judgment to know where CSMs should be spending time and effort based on the health of their portfolio of customers. Each company will need to define what high-, low-, and tech-touch interactions look like. Depending on your customer mix and spend, you could very well have a high-touch interaction model that does not justify face-to-face meetings and one-to-one executive interaction—and that's okay. If you sell to the SMB market, for example, you might want to consider one executive interaction with many customers. This experience can be delivered through executive roundtable events by region. The key is to have distinct interactions by grouping that are valued by your customer base and provide the right level of attention for each category.

Establish a Cadence for Interacting with Customers

Now that you have segmented your customers by their appropriate touch category, you should weave those interactions into your larger communication/relationship strategy. Your goal should be to interact with your customers on at least a monthly basis via your macro-communication strategy (company and product newsletters, regional user groups, annual customer user conference, etc.). The macro-communication strategy should be focused on all your customers (content might vary by segment), but the medium of delivery is the same for all. When you establish your macro-communication strategy for the year, your customer success leader and your CSMs can now layer in the different “touch” interactions for their portfolio of customers.

Now that you have established a macro-communication strategy and an engagement model, you should map out your plan for the whole year. By building your macro-communication calendar, the frequency of interaction by your “touch” programs becomes much clearer to deliver by your organization and individual CSMs.

Help Connect Your Customers by Building a Strong, Loyal Community

After establishing your customer success coverage model, macro-communication strategy, and cadence of interaction, you have now completed a great portion of your company's plan to stay connected with your customers. The plan should allow for an interactive relationship between your two entities. However, in today's world of highly connected customers (think social media—LinkedIn, Twitter, Facebook, etc.), you need to provide forums for customers to interact with one another. This is going to happen with or without you, so you are better off making it easy for your customers to meet, to collaborate, and to share their experiences. This can be done via electronic means such as a customer portal, or through high-touch gatherings such as regional user groups, meet-ups, or conferences sponsored by your company or an ecosystem of partners. By embracing a customer community and proactively planning a strategy for your customer community, you provide a platform for your users to engage, exchange knowledge, and ultimately build relationships that you helped foster. Most companies believe in a customer community. This is not a new concept, but proactively planning what you want your customers to experience within the community can be a game changer. Your customers are hands down your best marketing and lead source vehicle. You can espouse how great your company and products are until the cows come home, but when your customers do the talking on your behalf, they become your company success agents and can convert more users faster by talking about their success. These company success agents help other customers become stronger while delivering your company's value proposition to current and future customers. This role becomes as valuable as (if not more valuable than) your CSMs. It's a Catch-22, though: you need a company that invests in customer success initiatives and/or CSMs to create this new category of company success agents.

Develop a Customer Feedback Loop

To build and foster strong customer relationships and loyalty, you need to create a feedback loop. This strategy can be delivered through surveys, an electronic suggestion box, customer focus groups, one-to-one meetings, or a customer advisory board. You can employ one or all of these mechanisms, but the bottom line is that your customers need ways to voice their opinions on your product strategy, quality, customer support, enablement programs, company vision—or just to provide general feedback.

This feedback is critical to your company's future success and should help drive your current and future initiatives. Companies that listen to their customers get more great product ideas that assist with adoption and allow for stronger loyalty. You need to provide multiple communication channels focused on different goals. These goals should span feedback on specific product and service delivery to your company strategy and future initiatives. At the end of the day, your customers are the ones fueling your growth and generating your revenues—it seems fair to provide them with a seat at the table—and the most successful SaaS companies provide them an opportunity to sit at the head of the table more often than not.

By now, you probably realize that communication is the key element in building an effective relationship with your customers. To strengthen your customer relationships and to build loyalty in this new era of recurring revenue businesses, follow three basic principles with your communication efforts: (1) communicate often, (2) set clear expectations, and (3) be as transparent as possible. As a vendor, you have now taken on the responsibility of providing a quality product that delivers business value. At the same time, you've taken on the responsibility for deliverables that an internal IT team used to handle, including application availability and uptime, performance monitoring, and delivering easy-to-use products with relevant and timely new features and bug fixes.

For most vendors, the days of selling only multi-million-dollar deals and throwing bodies at the relationship part of account management are long gone. In today's world, we can't afford that level of touch with most of our customers. But this is actually a good thing: all vendors, from SaaS to subscription-based to pay-as-you-go to even B2C, now have the ability (if they choose) to reach all types of customers, from small to large. However, the economics of these deals differ greatly and therein lies your challenge. The way you build your customer success strategy has to mirror the value received from the customer and vice versa. These initiatives will still include some account management for your high-value customers, but your other customer success programs need to address the majority of your customer base and deliver value while being cost-effective.

Solid customer relationships and loyalty are the bloodline of any successful customer success–centric organization. The correlation between strong renewal rates and exceptional customer satisfaction scores depends on your customer's experience. This relationship is no longer owned by an individual but rather by the broader organization. Your whole company now needs to contribute to building the relationship between you and your customers. The relationship is now defined by the products you design, build, market, deliver, and service. By rethinking how you build a relationship with your customers based on the preceding variables, you now have the ability to plan and collaborate with the appropriate parts of the organization to help contribute content and value for all your customer success initiatives.