This is where we talk about flying cars, right? Doesn't every story that looks to the future have flying cars in it? In this case, perhaps those flying cars are actually Google self-flying cars. And, of course, they will be carrying customer success droids that, at a cost of a penny apiece, will come on-site with every single customer of our products and guide them through the perfect use and the highest possible ROI. Churn will be a distant memory. Every customer will be a customer for life. The next generation always has it so much easier.
Okay. Time to awaken from that dream and spend some additional time here in the real world. No doubt the future will bring dramatic changes to every part of our lives. Customer success will not be left behind. In fact, because it's still in its infancy and because of its dependency on technology, the pace of change is likely to be significantly higher than in most disciplines.
Predicting the future and what will and won't change is a dangerous business, although it's always a no-brainer to simply say “everything will change.” I know for sure that many of the elements of customer success we've discussed in this book will continue to morph and mature and many others will take their place in the spotlight at various times. If this book is not completely out of date in a couple years, I'll be surprised and disappointed. Greater things lie ahead. Here are a number of areas of change, or further change, that are likely:
As SaaS companies mature and virtually every company tries to become a recurring revenue business, it's easy to predict that the value and visibility of customer success will continue to rise. In those recurring revenue businesses, customer success is an imperative and, as such, will always have its place in the spotlight. But other businesses, driven by the power shift from the vendor to the customer, will be also required to embrace some of the philosophy and practices of customer success. Remember that customer success is a secondary wave, not the primary one. The primary wave is the move to recurring revenue business models, which places customers on the throne. At the same time, customers (businesses and consumers) continue to gain power in the market dynamic because of social media and the easy availability of all information. No vendor can hide from its failures, and its success stories will spread quickly, with or without a public relations team. It is, without question, the Age of the Customer. In fact, I'll take Tien Tzuo's phrase “the subscription economy” one step further and coin a new and broader term—the customer economy.
In the customer economy, the customer (surprise!) will have more and more power. We've seen this happen over the course of the Internet age as information becomes more easily accessible than ever. This trend has almost certainly not run its course. Tsunamis grow in height as they approach the shore, which is why they are so destructive. The subscription tsunami is still building and is a long way from the shore and its maximum height and disruptive power. We've seen the tip of the iceberg in the software world, but this tsunami will not be limited to the disruption of one market. The software industry has been massively disrupted by subscriptions and the web as a delivery vehicle. Given that, it's easy and logical to extrapolate disruption across virtually every other industry, too. One needs to look no further than the taxi business, disrupted by Uber and Lyft, and the hotel business, disrupted by Airbnb, to see this happening before our eyes. Every one of those disruptions is beneficial to the customer because they provide options. Better options. Nothing will stop that. If customers see a better way, they will have it. Cities and unions can fight Uber all they want. In the end, they can't win. The customer, en masse, will always win.
So if every business is going to get disrupted in favor of the customer, then every business is going to have to turn more focus and energy and investment on caring for their customers. That's the nature of customer success. What's been done so far is amazing, but there really are miles to go before we sleep. Those who adapt the quickest will survive and those who embrace the customer movement will take advantage of it as opposed to being stampeded by it. Those are pretty much the only two choices. You can choose to be Waldenbooks and fight Amazon and the Internet (and lose) or you can be Barnes & Noble and embrace the Internet, compete with Amazon at their own game, and survive. The customer is becoming more important, and more empowered, in every business in the world, including yours. It's time to start thinking seriously about customer success.
Rather than dreaming about flying cars and customer success droids, it will be more practical and probably more helpful to just talk about what an ideal customer experience could be today, especially with so many companies just getting started on this journey. In essence, the perfect execution of customer success today will feel very futuristic to most. Let's dig in and see what that might look like.
Fictional vendor: Wingtip Software, Inc. Wingtip is a SaaS company delivering an online training solution to SMB and midmarket customers. They've been in business for five years with solid growth that has them poised to finish 2015 with $40 million in ARR across 1,600 customers. Overall ASP is now at $25,000 but rising. It was $21,000 when the year started and will exceed $35,000 in the fourth quarter. Wingtip has stopped selling below $10,000 annual contracts but still have about 200 of those customers on the books. At the high end, they've begun pushing into Enterprise customers and have 15 whose ARR is over $150,000. At their investors' insistence, they invested early on in customer success, knowing their business depended on it. Their VP of customer success was employee number 23 (out of now 320 total employees). He has responsibility for all post-sales functions, which includes onboarding, training, customer support, professional services, and classic customer success. His total team is 110 people 21, of whom are on the classic customer success team. They break down into these functions:
Fictional customer: Financiality, Inc. Financiality is a technology and services company providing data analytics tools and consulting to banks and brokers. It purchased the Wingtip solution because it needed a tool to help the company easily create and track on-demand product training. Financiality made its purchase at the end of Wingtip's 2014 second quarter (Q2) and signed a one-year deal for $29,000 ARR plus a onetime $15,000 for the Mid-Market onboarding package.
Financiality falls into Wingtip's low-touch customer segment. That means that the planned experience is a combination of one-on-one touches and automated touches. Reality is not often exactly what is planned so the actual experience has been something like this so far:
I realize that was a little bit tedious, but the first 90 days of a customer's life is so important, and it's essential to understand the kind of experience you can create for your customers with the right tools and processes. Remember also that the biggest risk of churn is at the time of first renewal or early on in the customer's life cycle if there isn't a renewal event. Managing the customer experience really well from day one is critical.
Without going into all the details we did above, some of the additional activities that are likely or certain to also take place in the first year with this customer will include:
If you read through that first-year process again, you'll see that it was not perfect. The onboarding process started and ended late. There were risks that came up both for low survey score and for too many support tickets opened. But each of those was handled quickly and efficiently, which is all a customer can really expect. In addition, there were moments of delight built into the process, too. I believe that, barring anomalous circumstances, Financiality is highly likely to renew their contract for at least another year assuming Wingtip's product provides them real business value.
For many of you, the scenario I've described feels like a pipe dream, which is why I've placed it here in this chapter. It's all very doable today so, in that sense, it's not future. But I daresay that, for most companies, this scenario feels very futuristic.
Lest you still have a feeling that customer success is only for B2B SaaS companies, let me conclude with a personal story and an analysis of customer success that is not called that but has all the same characteristics.
I love Starbucks. I don't like the taste of coffee, but I love Starbucks. I know many of you don't love Starbucks and maybe even have strong negative emotions about them for whatever reason. It's my understanding that coffee experts (a.k.a. snobs) do not favor Starbucks coffee but are more likely to be found at Peet's, Philz, Caribou, Tim Hortons, or even Dunkin' Donuts. I'm not here to argue about the quality and taste of coffee. As I said, I don't even like the taste of coffee. And, by the way, caffeine does not affect me at all. However, did I mention that I love Starbucks? Let me share with you why and see whether you agree that some of these six characteristics can be categorized as customer success:
That's a starter list anyway. As many of you know, familiarity is a really good thing, especially when you travel. It's fun to try new things, but familiar things remind us of home and give us trust and comfort. This is why McDonalds is so popular even in places where it seems crazy for anyone to eat at McDonald's. For me, wherever I travel, it's easy to find a Starbucks for breakfast, an afternoon pit stop, or a convenient place to meet someone.
To me, all of those things add up to customer success. They create behavioral loyalty first, because it's almost always convenient. And then, at least for me but clearly for millions of others, too, they also create attitudinal loyalty. I have used the word love multiple times already to describe my loyalty to Starbucks. That's the key word that defines attitudinal loyalty. And, as we've discussed, at its core, customer success is all about creating attitudinal loyalty. Attitudinal loyalty is hard to come by. As we mentioned, it's first of all expensive. But it's also just plain hard. Do you know anyone who loves her gas station? Do you know anyone who loves her pharmacy? Do you know anyone who loves her Post Office? You might be saying, “Well, that's not fair because all of those are commodities offering the same products or services.” And I say, “What about coffee? Is there any food item, with the possible exception of Coke, that is more of a commodity than coffee?” How many places do you drive by every day where you could get a cup of coffee and for far less money? And yet Starbucks stores are everywhere, often with lines of people waiting to order. Is there any other brand that you can name that creates lines? No doubt the brand that comes to mind is my premier example of attitudinal loyalty—Apple. If you are Starbucks and the loyalty of your customers is compared to that of Apple customers, you will take that six days a week and twice on Sundays.
If Starbucks counted only on its customers' need or desire for coffee, would they spend the extra money to have stores with places to sit? Of course not. That's expensive. Would they spend money on thousands and thousands of green umbrellas for outdoor seating? Certainly not. That, too, is expensive. If all Starbucks stood for was serving coffee, every store would be a drive-thru. It would not have invested in customer success to drive attitudinal loyalty and be reaping the benefits of it. As I write this, Starbucks's market cap is just short of $81 billion. That's 25 percent larger than Costco's as a comparative.
Remember now, we're not talking about customer service. We're talking about customer success. Customer service would only mean ensuring the quality of your drink, that you got what you ordered, and that it was ready in a reasonable amount of time. Making room for the customers to lounge, offering free Wi-Fi, and getting to know them by name is going beyond customer service to customer success.
There's one more thing that Starbucks has done to solidify its public appeal, and its hold on me, which has extended its vision of customer success. Starbucks has created a frequent-buyer program and married it with the latest technology to create a killer combination.
The first Starbucks card was offered to the general public in November 2001. In the next eight months, over 4 million Starbucks cards were activated. As a comparison, more cards than that will likely be activated on a single day in late December of this year. In any case, the Starbucks card has also become ubiquitous. It's perhaps the most popular gift item in history. It creates loyalty on the part of the owner. And it serves as the hook for many new customers who aren't yet regular visitors. Not a new idea by any means but genius in this market.
And then it took the loyalty program one step further. Starbucks put it on my smartphone. Long before PayPal Wallet, Apple Pay, or Android Pay appeared on the landscape, Starbucks had digitized its loyalty program and allowed me to put it on my phone. They then invested in scanners in every single store so I can pay with my phone. Today, fully 20 percent of all Starbucks purchases are paid for with a mobile device. And, if that wasn't enough, Starbucks then did one more thing that some might consider insidious. It started rewarding me for every purchase. Bonus stars they call them. Every 12 purchases, and on my birthday, I get a free drink. That doesn't sound like much but it locks you in. Just like when you get a certain number of miles on United. It becomes harder and harder to book a flight on another airline. If I'm going to sit and have a cup of coffee, I might as well do it at a place that feels like home and that rewards me for shopping there. And now the promotions roll in every week—buy one of these, get three stars. Buy two for friends, get six bonus stars. And on it goes. And it works. Frequent-buyer programs always work. They wouldn't exist if they didn't, right? That's taking a consumer retail experience and extending it so that it's subscription-like. And sometime soon, I'm sure I'll be able to buy a monthly Starbucks subscription that offers me unlimited access to my habit.
Digitizing the loyalty program is just the start, too. The app also allows me to automatically reload my card when it drops below a certain balance, which removes the conscious expenditure, something every business in the world would like to do with their customers. In some ways, it's even better than a subscription—all the benefits but there's nothing unlimited about it. Every drink and every food item is paid for. Today, I can also order ahead from my app so my drink is ready when I get there, and Starbucks delivery is not far behind.
Of course, the real magic of a loyalty program is that we as consumers think we're benefiting (which we are) when the real benefits are going to the vendor. And I'm not talking about financial benefits here. I'm talking about information. We don't have to look very far to find companies that probably know more about us than we'd like them to. Facebook, Amazon, and Google and whichever company's browser I use, come quickly to mind. Think about the value of the information Starbucks has about me and millions of others. I'm certain that Starbucks could tell you the temperature outside of every store in the country based on the ratio of hot to cold drinks it serves. Starbucks could also measure the intensity of a storm in the area based on the drop in business on that day.
Taken to the extreme, this kind of information is dangerous and perhaps even illegal. I've often wondered whether United knows that I'll pay $69 for a window seat and therefore tells me that the only standard-fare seats left on the flight I'm booking are center seats, even when it's not true. I'm not sayin'; I'm just sayin'. Starbucks can most certainly predict my behavior when it sends me a promotion that requires that I buy my favorite drink. That's not hard. But it probably also knows how far out of my comfort zone I am willing to go to earn a bonus star. Would I buy something I've never tried? Or something I've only had three times? With its volume, Starbucks can experiment daily. If it wants to know, it will know.
But we're back to attitudinal loyalty. The loyalty that Starbucks has created with me has convinced me to share information that I would otherwise not share. It has also convinced me to let Starbucks market all of its promotions to me (or spam if you prefer). It has even convinced me to basically withdraw money directly from my bank account every time I buy a drink. If the art of customer success is to create attitudinal loyalty, then Starbucks has reaped the extraordinary benefits of creating that kind of loyalty with millions of customers like me.
I acknowledged up front that not everyone loves Starbucks. But I wanted to share Starbucks' story of customer success because I think it's easier to understand than some B2B vendor selling software that you'll never use. However, that B2B vendor's customer success challenge is very much the same as Starbucks' or United Airlines'—investing in people, technology, and processes that create a customer experience that delivers attitudinal loyalty. Once a company has done that, it has paved a golden trail to overall success because attitudinal loyalty lasts. It does not go away with one bad experience. Remember that the word involved is love. It almost always takes a series of mistakes to change love to like or don't mind or hate. Attitudinal loyalty is money in your bank account that you can draw on as needed, knowing that you won't drain it unless you withdraw frequently. And companies that have invested in customer success and take it seriously are unlikely to ever drain their loyalty accounts dry.
Customer success, amid the customer economy, is not a cool idea or a nice thing to do. It's a necessity. Your customers expect it, or, if they don't, they soon will. And there's a growing set of expertise and technology available to help you take the first steps or to help you develop industry-leading processes for delivering the best possible customer experience. It's not rocket science, and it's not even a new idea. It's just an idea whose time has most certainly come.
Committing to customer success is hard and executing on it is expensive. But it's a necessity in many businesses already and soon will be in yours. You can resist it or embrace it. Your choice. I suggest you embrace it, and it's my sincere hope that some of the insights and practical suggestions in this book will help you along the way. I wish you the best of luck in your journey.