Customer Success | 7 MIN READ

Should You Outsource Your Customer Success? All You Need to Know

Customer success outsourcing is different from traditional outsourcing practices. There are many nuances to it. Let’s explore them in detail!

Shoeb Ahmed
Shoeb Ahmed
Feb 10, 2021

Customer-Success-Outsourcing

Customer Success Outsourcing

The basic idea that gives rise to outsourcing is when businesses deem a function less important and can be executed elsewhere rather than in-house. There are various reasons behind that. With customer success being a new function and companies not prepared for it, outsourcing it might seem like a wise decision. But will it help in the long run? Let’s explore that in detail.

It was not until 1980s when outsourcing became a new norm in software industry. IT giants like IBM already had the vast infrastructure capable enough to serve a wide range of customers. Companies neither wanted to invest in building infrastructure nor did they have the specialized workforce to operate and lead the IT division. Hence, outsourcing their need with a long-term contract worked well for both parties.

But, does that mean you should always outsource functions beyond your core operations? There are multiple factors involved in making that decision. Let’s have a quick look at those first.

When should you outsource?

Below are the reasons that make companies decide to outsource their business unit.

To focus on core-business

Multiple responsibilities come up when setting up a new business unit. You need to hire, train and retain talent along with setting up the process to lead it. It often becomes time-consuming and expensive when you need to start from scratch. This limits your time and band-width on your core business area. To give undivided focus on your core-competency, outsourcing becomes an obvious choice.

For fast growth

All the business units, although important, do not contribute equally to the overall business growth. A flagship unit might be adding more to the business than others. This is especially true in product-led growth companies where product management is the protagonist.

When companies have to spend time to grow all business units equally, it often slows them down. For a speedy growth, they often choose to fuel their flagship unit aggressively. And when the company starts scaling, the other units have to catch-up with the same speed for sustainable growth.

To achieve business excellence

Product companies often lack expertise in leading the ancillary units like customer support, finance and back-office. Hence, hiring a third-party vendor like flatworld solutions whose day-in, day-out job lies in those areas with highest level of efficiency and proficiency becomes a good choice. They adapt to the growing pace of their customer giving them utmost scope for growth.

Should you outsource your customer success?

The plain answer is, No.

The above stated reasons to outsource may seem valid. But when it comes to customer success, you cannot simply follow the same principles and outsource it. Reasons being:

No control over staff

The underlying goal of any customer success unit is to increase the lifetime value of your customers. This happens only when you have a long and fruitful relationship with your clients. Relationships develop between individuals. Hence, to retain your customers for long, you need to retain the individual who is developing that relationship on your behalf.

When you outsource customer success to a third-party, you would not have control on their staff. One day a CSM might be serving your client, another day someone else would replace them due to internal disruptions. Even though such situations can be tackled through CSM to CSM handoff process, ideally it should not arise at all.

Having no control on your staff could shake the foundation of your customer success goals.

Cross-functional collaboration gets difficult

Unlike others, customer success is not a siloed department. In customer success firms, the nature of this job demands extensive collaboration with other teams on various fronts. You need to interact with the product team to discuss or recommend features based on customer’s voice. Marketing team also takes input from customer success from time to time to craft more customized campaigns. Likewise, sales team has their own dependency on customer success.

When you have a customer success team of your own, you have complete control over their deployment for maximum impact at an organizational level. That’s why you need a Chief Customer Officer who can keep a holistic view of customer success’ contribution to the overall business.

A third-party customer success vendor would obviously lack that level of vision for your organization. Hence, they would not be able to collaborate across different domains. Their confined vision only to the customers becomes a deterring factor for customer success to operate at its highest potential.

It’s not a long-term solution

Partnering with a third-party customer success vendor initially might seem like a quick solution for early-stage startups. They may want to focus more on product enhancements and customer acquisitions. And instead of spending time on building your own customer success team, outsourcing it to an experienced company might seem correct.

But think long-term. When you want to keep your customers for 10 years, you need to also keep the same personnel serving them for that long. This would create a long-term dependency on them. You need to always work around with setting up terms with the customer success providers to handle timely changes in their agreements and contracts. That again consumes your time and band-width and is quite a hassle. One day or another, you have to build a customer success team of your own. So, why not from day one?

Also, customer retention is not a back-stage strategy for a growing business. Instead, it is at the forefront because customer success is a growth function. You need to rely heavily on recurring revenues for the sustainable growth of your SaaS business.

“When you have to choose between the two, you may outsource acquisition, but never retention. Acquisition is a one-time process while retention is a life-long process.”

If not outsourcing then what?

Being clear on not outsourcing your customer success, you must develop your own in-house team. Things would no doubt be difficult initially, but you have to face and overcome this challenge one day or another if you think long-term.

To get started, you must hire the right candidate. Most common mistake startups make is by hiring a manager when they need a VP or an Exec. Hiring a senior CS professional and letting them drive this change would be the right place to start.

And instead of outsourcing your entire function, you must collaborate with a third-party customer success consulting firm who would help you establish this function right from scratch. They design your whole customer success program, train your employees, help you choose the right customer success tools and do everything needed to get you going and drive results.

Final Thoughts

The basic thought of outsourcing customer success arises from a common misconception people have of this field. It is usually viewed as a rebranding of customer support which is the most commonly outsourced function in organizations.

But having an in-depth understanding of customer success contribution to your company’s growth would tell you otherwise.

It permeates throughout your entire organization and works at different levels for the overall transformation of your business. It is as much a philosophy or a value as a business unit. And to build the right culture in your SaaS business that propels growth, it becomes an integral part of your organization.

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Originally Published February 10th, 2021, Updated February 17th, 2021

Shoeb Ahmed

Shoeb Ahmed

Shoeb lives and breathes Customer Success and SaaS. He has a passion to research on the latest innovations happening in SaaS and Customer Success. Shoeb hails from a Software Architecture background where he worked for many years with Indian Tech Giants like Wipro and ITC building software solutions for their MNC clients in the UK and Denmark. You can connect with him on LinkedIn here.

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