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Shreesha Ramdas is SVP and GM of Strikedeck at Medallia, a Customer Experience Management Company.
Hinterhaus Productions 2016
It is hard to argue against the fact that the business world today is substantially different than it was 18 months ago. Whether the parameters of this new, Covid-19-rewritten world are here to stay or there is some new state for businesses that’s yet to emerge — or even if the business world fully returns to pre-pandemic conditions — I believe being ready to stay abreast of greater uncertainty and a deeper level (and faster rate) of change will be a critical competency for companies.
For me, one thing is certain: Organizations that survive — and those that thrive — in a challenging new world will be focused on the needs of the customer first. During the last 12 to 18 months, I saw organizations with more mature and developed customer success practices realize faster and deeper time to insight. This visibility and knowledge includes understanding change at the customer level and recognizing potential strategic pivots that might help reorient the business. Customer success can help protect existing recurring revenue, retain customers and uncover new opportunities in times of upheaval.
Rather than peering into a magic ball for improbable predictions, I have identified six important changes that I believe reflect our new reality.
1. Customer success will have a clear path to the C-suite. For many companies, customer success has evolved considerably from being an adjunct to some department, such as customer service or sales, to its own function with dedicated goals and resources. Some companies already understand the strategic potential of using customer success to more deeply inform all parts of the business, uncover new opportunities and avoid potential pitfalls, and proactively ensure the success of each customer. Companies should create a clear link to — and even reporting mechanism for — the C-suite. Some have already created a c-level function for customer success. Now, after all the upheaval, this trend will likely continue at a faster pace.
2. There could be a substantial increase in the size and scope of customer success. Naturally, with the elevated role of customer success and its value during turbulent and difficult times, customer success will likely not only have a direct line to the C-suite but will also feature larger teams with bigger budgets and resources. For many companies, customer success could have a larger team than sales. In particular, as selling and sales models change, customer success should take on a more substantial role in revenue by protecting against churn, increasing the revenue of each account and promoting reference selling to win new customers. As the team’s role expands, it is important to find customer success professionals who can take on new capabilities or induct other functional professionals into customer success teams. In some cases, this will be a natural extension for the most adept employees. For others, companies will need to establish training and more prescriptive procedures. For instance, employees may need more skills or training to take on more upselling and revenue expansion responsibilities. Many customer success professionals already do this to varying degrees, but they often do so in concert with sales. To shift the responsibility fully, companies should better equip their customer success practitioners. In some cases, the customer success role may demand different or deeper skill sets than it did before. This might mean recruiting a new type of person for the role.
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3. NRR could become the new ARR. Net revenue retention (NRR) has become a qualifier for funding and a key criterion for review at many board meetings. Previously, annual recurring revenue (ARR) was the focal point, but I believe investors, executives and the financial community are realizing that retaining customers and continuing to provide value to them is a more strategic measure and more accurately reflects customer and company health.
Net revenue retention (NRR) is retained revenue from existing customers that takes into account expansion revenue (upgrades, cross-sells or upsells), downgraded revenue and churned revenue. Companies will need to provide these metrics (actual and projected) to their finance departments, so it will be important to establish the means to gets these figures updated on a regular basis. These are not just key c-level metrics; I believe they should be treated as core customer success metrics as well.
4. Customer success leaders will need to design customer success operations for scale. Customer success has historically been one of the few departments that lacks a plan for how to linearly scale its practice without compromising its existing value and the ability to take on new responsibilities. Headcount alone is not the answer. In my experience, there are three important considerations: being high-touch, incorporating automation and reimagining technology.
5. Community could be the Trojan horse for customer success. Initially, many customer success teams saw an online community run for and by customers as a support feature and a way to substantially lessen their loads. Now, community affects nearly all functional areas, from marketing to sales to development. Prospective customers often turn to communities to hear real customers’ stories before committing to a purchase. Sales can use a community as a facet of reference selling or can harvest prospective customers there. Marketing can use it as a forum for testing ideas, as well as boosting the brand and enthusiasm. Similarly, I believe customer success teams will become more embedded and involved in these communities to ensure customer success.
I believe open-source companies like Databricks and HashiCorp have led the way in demonstrating how to successfully leverage a user community to support growth, provide self-evident customer references and encourage the adoption of additional applications or modules. If your company does not already have an online customer community, customer success could partner with several other groups in the company, such as support, professional consulting, sales engineering and others, to form one. New best practices like those outlined on communityled.com are emerging in terms of frameworks, guidelines and best practices for leveraging this new growth tool.
6. Customer success will have a permanent seat at the executive table. Given the critical role it can play, it stands to reason that customer success will take its rightful place as an essential business function with sales, engineering, marketing and more.
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