Customer success

What is customer success?

Customer success is the team and practice that makes sure customers get the value they bought, so they renew and buy more. Gartner describes it as a method for ensuring customers reach their desired outcomes. The function grew up in subscription software in the mid-2000s. In services it usually sits with account managers who own the agreement after the sale.

Why it matters to a revenue leader

Forrester data shows that existing customers, through renewal and expansion, account for 61% of B2B revenue. For a commercial services company the share is often higher, because service agreements renew every year and repair work flows from them. When nobody owns the customer after the sale, renewals slip and the new-business team has to refill the hole. Treat customer success as part of the number, with its own targets for renewals and expansion, reviewed alongside new business.

How a customer success organization is set up

Most teams organize by customer segment, by stage of the customer lifecycle, or by how they engage, and many blend all three. By segment: dedicated managers for the largest accounts, a mix of people and digital programs in the middle, and mostly digital coverage for the long tail. By lifecycle stage: onboarding and implementation, then adoption, then renewal and expansion.

The common roles are a leader of customer success (sometimes a chief customer officer), customer success managers who own the relationship after the sale, renewals or account managers who own the contract, customer success operations for processes, tools and data, and support. In commercial services the account manager who owns the service agreement usually covers several of these roles at once.

Goals and how they are measured

The goals tie to revenue the company already has. The usual measures are net revenue retention, gross revenue retention, time to value, renewal forecast accuracy and how well the customer health score predicts what actually renews. Measure outcomes rather than activity: a count of check-in calls says little about whether a customer will renew.

Outcomes: the customer's and the company's

Gartner defines customer success around the customer reaching their desired outcomes. That is the first test: did the customer get what they bought, in their own terms, such as fewer equipment failures, a passed inspection or a lower energy bill? The company's outcomes follow from it: renewal, expansion and referrals. A team that reports only the company's outcomes finds out about the customer's too late, at renewal.

A fire protection company has 600 inspection agreements worth $4.2 million a year. Sellers hand off each new agreement and move on. A review shows 70 agreements did not renew last year, worth $490,000, and in most of them no one had spoken to the customer since signing. The CRO gives every agreement a named owner and starts reviewing renewals and add-on work in the same meeting as new business.