To Charge or Not to Charge

Based on my experience leading Service Organizations worldwide and for the past three years advising to various Tech companies on Service Strategy and Customer Success, the common challenge facing business leaders today is still confusion over the role and definition of Customer Success.

Questions like “What do Customer Success people do?” and “To charge or not to charge for Customer Success?” are still being asked often.

The pressure is on to make XaaS (meaning Software as a Service, Platform as a Service, etc.… subscription companies) business models more profitable. Most organizations are working on connecting Customer Success to revenue. Even if you never charged for Customer Success, it is essential to be able to prove a real, measurable increase in profitability to your clients and your organization.

 

 

What do Customer Success people do?

Love the work of Lincoln Murphy on Customer Success, and he described the mission of CS the best – “Customer Success is when customers achieve their Desired Outcome through their interactions with your company”. Looking at the customer it means you identify the opportunities for increasing their profits, their productivity and you work with them directly to attain those goals

Support Services is all about break/fix – if something breaks, you fix it.

Customer Success is all about looking at where the clients are, identifying where they want to be, developing Customer Success plans to take them there and stepping in as a right strategic advisor to the clients.

The difference between Customer Success and Sales is quite straight forward. Salespeople hunt, they want to be in front of the prospects making a new sale. As they say, fighter pilot and the salesman have a lot in common.

Customer Success people can work very effectively with Sales if you do a controller for a fighter operation. You share what the target looks like; the questions prospects might ask, the benefits they want to receive, ideal customer profile, the way to recognize those customers and to talk to them. So, the salespeople go out, and they close, and at this point, Customer Success takes over.

In some companies, Customer Success groups are getting involved much earlier in the process. I’ve seen CS working as Sales Engineers, and it is an exciting model to consider as it allows access to all the relevant information and documents on everything that happened during the sales cycle. The customer transition, on-boarding, and Success Plans development go much smoother as a result.

 

To charge or not to charge for Customer Success?

Customer Success in many companies starts as ad-hoc churn fighting group, so you’ve got a lot of history and people who think they know what is expected. It comes as a surprise when they are told we’re doing more than that. The key is to have data. Robust analytics capability is crucial; you need to have a clear view of who the clients are and where the time is going. Look to establish your basic cost structure of what your utilization of your Customer Success Managers is, in other words, what the billing rate is. You can then dig deeper into data on profitability per client, ROI per project, and develop mutually beneficial offerings. The key is selling value.

Many companies are hesitant to charge for Customer Success. It is especially prevailing in SaaS, where the plans were to make it quick and easy. We’ll flip a few buttons and get running. But don’t forget about full implementation and effective adoption of the product, to roll it out throughout the entire organization, it takes guidance, and that guidance has a lot of value. Why not break off pieces of implementation aligned with adoption life-cycle and offer specialized training at cost. Consider:

  • Up-sell: Additional seats, usage, etc.
  • Cross-Sells of Support, Training,
  • Renewal income
  • Paid On-boarding
  • Professional Services/Customization

By owning the revenue streams from sales of the above products, CS can be managed on a P&L basis. All of them require the same domain and product knowledge that already reside in Customer Success.