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Customer success service is getting much bigger to an extent that it can be chargeable. But what factors should you consider? Let’s explore them.
Customer success has always been seen as a contributor of product adoption, retention and account expansion. While the front roles are acquired by the marketing, sales and product team, customer success has acquired the perception of back-end role for generating revenues. But what if customer success services can become a value-added service that can be chargeable? Can companies adopt a fee-based model for providing this service? Let’s explore that in detail.
Customer success fulfills objectives for both sides – customer and vendor. For vendor, it provides value through customer retention, or net revenue retention, product adoption, upsells and brand advocacy. And for customers, it helps them achieve higher ROI from the product.
For vendor, customer success is a cost in return for the value it generates. And for customer, its cost is included in the monthly contract value.
So, the question that arises here are:
Answers to these questions would help you decide whether it becomes a chargeable asset or not. Let’s explore them one by one.
Below are the points you must think upon before you make this decision.
Different customers need different levels of support and engagement from your customer success team. A mature customer who is switching to your product from your competitor might already be evolved enough to use it. So, you won’t have to spend much time on them other than the initial product orientation efforts.
But an amateur customer would require a certain amount of training before they start using your product. That might be considered something more than your domain of offerings which is the product and hence, might be billed.
An organized way of billing customers for training has already been adopted by companies like Salesforce providing paid certification programs to their users. Facebook blueprint is another example where Facebook charges for training their users to use their marketing products. Their core marketing products have different package plans and don’t include the training cost.
Hence, charging for new entrant customers makes sense. But it cannot be done for all. Their different maturity levels decide if you can provide them free customer success or not.
When you are serving a large set of customers and your product is simple to use, you might not even need customer success for all. But not all customers are same. Few might be needing more support than others.
Hence, giving them an option for additional paid service by assigning a dedicated CSM would be a good idea. Customers can opt for this service on a need basis. And it will not be an overhead for the company to maintain their CSM workforce. Instead, it will only add a new source of revenue for them if managed correctly.
Another way to go about it is thinking in terms of customer journey. There are times when your customer needs essential support. Other times, it might be needed for over-the-top support only to make their job simpler and derive more value from the product.
Essential support is needed only during the initial stages like implementation and onboarding. You might need to engage an implementation consultant or an onboarding specialist for this phase which could be included in the product pricing.
But once a customer passes this phase, the value they get from your customer success would be something beyond the basic support. Hence, it can be billed.
So, it makes sense to communicate to the customer from the very beginning that they are using customer success consulting for free only for the first few months or so. Sending them a “zero invoice” (that consists of the services you provide them for free) during their free usage time would be a good idea to help them realize the benefit.
Once you decide to offer paid customer success support, there are certain steps you must follow to implement it. They are:
B2B products are usually more comprehensive and holistic catering to a vast set of customers. Different customers may be deriving different levels of value from it based on the depth of their engagement with the product. Their engagement levels depend on the complexity of their outcomes.
Hence, segmenting your customers based on their size and the complexities would be a good place to start. For the customers needing simpler solutions and having a considerably lower size, it won’t make sense to monetize your customer success as a service. But you can easily do so for enterprise customers having complex needs.
According to the customer segments created above, identify the minimum service modules needed for each of them. Lower-sized customers may require only few initial supports like training and implementation. Mid-sized companies may need something more than that. While the enterprise customers would require a “white-glow” ongoing service for lifetime.
Creating different packages for each customer segment would help you place them correctly to the right audience. Each package should have a certain set of modules.
You might be having a list of services to provide to your customers, but it is always better understood when you talk in customer’s terms.
Providing a service for onboarding could be well understood by yourself but when you translate that into the specific value you would help customers attain during time to first value phase, your communication would be much clearer.
Instead of calling it an onboarding support you can communicate to them like providing support until the customer is able to generate x amount of revenue, save x amount of time, or manage x number of tickets. This is the communication tone you must follow.
Once you have a list of services, you need to determine their cost using a right pricing model. Through cost-based pricing method, you can easily decide upon the cost you must assign to each service module. Another way of determining cost is through value-based pricing. This is calculated based on how much value is your client getting from your service and what is the price they would be willing to pay for it.
Once you have the cost for each service module, assign these individual costs to all the modules you have identified in service packages in previous steps. And there you have the total pricing for each of your service packages.
Once you are done with all the preparation, you must start with a small set of customers. Identifying these customers from each segment or may be just from the low-value segment would be a good idea. This would reduce the risk of revenue churn from your installed base.
By starting small, you would know the challenges in implementing this change. This could be either in your execution or in the form of customer responses. You would get a lot of learnings from this small set of customers which would prepare you for implementing this later in its full swing to the rest of your customers.
Due to the falsely perceived similarities between customer success and customer support (the former being a rebranding of latter) it often becomes challenging for companies to consider customer success as a paid service. But with the immense number of benefits this growing field is providing – both to the vendors and the customers – it is being considered no less than any other professional service.33
With independent firms like CSM Practice and PracticalCSM offering dedicated customer success service, it only provides more confidence to the SaaS firms to transform their customer success into a paid service and open a new source of revenue.
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.
Published 15 Feb 2021, Updated 16 Feb 2021
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