When talking about SaaS businesses in 2020, there is a fine line that separates top-performing companies and the struggling ones. This ‘fine line’ is created by the gap between customer acquisition and customer retention. While customer acquisition is the key driver for dynamic revenue growth, customer retention is often the critical factor. When the convergence of low customer retention rates and higher churn, creates a deadlock in business growth, ‘client success manager’ comes in.
What is Client Success?
The mainstream definition of the term ‘customer success’ indicates that it is a business methodology of ensuring that the customers achieve their desired outcomes while using your product or service. When talking with respect to B2B businesses, the term is often rephrased as client success.
For instance, in business, if you are a seller and the client is your buyer, the initial purchase is a mere origin of the value exchange. When mutual value exchange occurs over time, it emphasizes client success. Client success is a relationship focused on the benefit of the client or customer, and aligns with their goals, in order to foster mutual benefit. It coordinates vendor goals with those of the client and paves the way for two-way profits. In layman’s language, client success is assuring the client gets what he needs, in order to retain them as a part of your business, as well as ensure a permanent revenue source.
In an interview, renowned SaaS growth hacker and customer success expert, Lincoln Murphy clarified this concept with an example, “For example, if somebody is paying you $10 a month for your product, that’s great. You want them to pay $10 a month for as long as possible. But wouldn’t it be even better if they paid you $10, then $12, then $15, then $20 a month? That’s what we are working towards customer success.”
What is a Client Success Manager?
According to the LinkedIn 2020 Emerging Jobs Report, 72% of the customer success managers are working in the Software & IT industry. This clearly depicts the dependence of SaaS businesses on client success as a parameter for their revenue growth. The importance of considering client success as a vital factor for revenue growth is substantial as it can be the only boundary between failure or hyper-growth for a business.
With a 34% growth rate in 2019, customer success specialist is one of the top emerging jobs in 2020. In the present times, when SaaS industries are dominated by digital and technology-focused roles, it is interesting to find relationship management focused job. What is so significant in the job role?
A client success manager aligns with the clients and supports them through the sales process. He functions as a bridge between the vendor or company and the client and provides the client with value propositions. This not only propels the profits of the client but also builds their trust with the company. In the long run, client success managers help the clients achieve their goals, thereby strengthening their relationship with the business. This, in turn, reduces the customer acquisition cost for the business.
In a nutshell, the client success manager handles the clients’ success for your company and tracks the churn metrics to reduce the business headwinds. Investment in the client relationship holds great revenue potential and it is necessary to make sure that it goes well. According to Deloitte 2019 Enterprise Customer Success Study and Outlook, approximately 70 percent of the respondents have had CS teams in operation for more than two years, while 45 percent reported
having a CS team that is more than four years old. Also, 50 percent of born-in-the-cloud (BITC) companies believe CS is a strategic priority.
The survey also concluded that 75 percent of the CS functions track the rise in renewal rates and have demonstrated a double-digit increase, 67 percent of them have seen a similar rise in the annual recurring revenue (ARR). Undoubtedly, client success is a good choice.
What Does a Client Success Manager do?
As discussed, a client success manager is the building block of a customer support team. But that is not all. The horizon of client success managers extends beyond just customer support. When the focus of companies ran towards client success functions, many of them crafted an additional role in their organizational structure.
- A client success manager works on the prospects one-on-one. They act as the torchbearer for your business. They play a major role in convincing the client that your business is the key to their profits. Being an advocate for your company, they help build the brand reputation for your business. Having essential communication skills to nurture the brand’s image amongst the client’s options makes it a witty task. Thus, client success managers should have the knowledge of balancing their words in the exact amount and placing them in front of the client.
- With a continuous focus on life-cycle selling, businesses need not lose track of the ‘land and refresh’ mindset. Onboarding new potential clients is one of the biggest responsibilities of the client success manager. It is always necessary to focus on the new client base so as to propel client acquisition thoroughly. Being excellent communicators, client success managers need to make the clients focus on what they need from the deal and how can they benefit, in the long run.
- We mentioned a gap between customer acquisition and customer retention processes earlier. The client success manager confronts this gap. It is their job to bring in loyal clients rather than one-time users for the company. They should stand as a trusted advisor for clients and help them identify growth opportunities. Knowledge enablementis one of the prime functions of a client success manager. Enabling the client with knowledge makes them believe in the company’s value propositions. Moreover, they need to follow up on the ones who do not respond in order to curb the churn rates.
- While increasing the client lifetime, it is essential to empathize and engage with them. In order to assure the client of their profit goals, the client success managers can use the company’s premium services or products as an engaging opportunity. Client success platforms are used to notify the clients about the best opportunities. They can convince them as to how such services would be beneficial and would leverage the client’s accumulation. Due to their empathetic relationship, clients are likely to agree to their suggestions. They not only inform the client about the product or service but also tell them ways in which these can help them make strides in business.
- Being a relationship builder does not reduce the technology burden on client success managers. They need to be comfortable with the company’s products and should be able to handle technology well enough. Today, most businesses are transitioning to subscription-based models and clients expect quality experiences. Hence, the knowledge of the client success manager plays a vital role. Though, this might need some prior training. But they should know how to convert the analytics insights driven from data into on-field client success management.
- Building client relationships requires a lot of patience and passive effort. Client success management is not an easy job and things may turn out to be sour sometimes. Though its the manager’s skill that retains the clients irrespective of their first impression. Despite being a company’s advocate, a client success manager should organize and analyze the client’s information in such a way that the client cannot afford to turn the deal down. They should have real-time visibility into the client’s status in order to propose the right deals to them.
Client Success Managers vs Others
The role of a client success manager is a new one. In the mid-2000s, not only SaaS but other tech giants have realized the importance of client success managers. But, as evident from the variety of job titles, they have somehow strived to place the client success manager title amongst their existing organizational architecture. However, client success management is still believed to be ‘old package with new wrapper’. There are still misconceptions about the roles of customer success managers and the title is often misinterpreted for jobs like:
One of the topics for heated debates is that a client success manager is nothing but an account manager. The goal of both these jobs is to retain customers and generate revenue. But, in reality, even though they have similar functions, renaming the account managers may not make them effective as client success managers.
- Account managers have a deep-rooted presence in all kinds of organizations and businesses. They have been a part of the renewing, upselling and cross-selling processes for a long time. Client success managers are comparatively new. They originated from SaaS industries but are now gathering base in most businesses. Thus, their backgrounds are different.
- The goal of an account manager is solely to get renewals, cross-sells, and upsells. But this is just one of the functions of a client success manager. In addition to this, they have to help the clients succeed in their business motives. Moreover, the metrics used for mapping the progress in both areas are also different. While client success uses success metrics like ROI or Net Promoter Scores, account management is more sales-oriented.
- Account management activities are generally taken up by the end of the customer lifecycle. The functionalities of an account manager are not useful until the client is ascertained to be a permanent one. Opposite to that, client success management has a strong presence throughout the customer lifecycle.
- There are differences in the resources and training of the account managers and client success managers as well. Account managers receive training for the product or service they prefer to work on. Their resources are focused on sales. In contrary to that, a client success manager is involved in a variety of activities throughout the client lifecycle. They undergo various training, from implementation and onboarding to development and revival.
- Customer service managers are reactive to client/customer inquiries. The fix problems for clients and keep them satisfied. On the other hand, apart from proactively proposing the company deals and convincing clients into the business, client success managers have to respond to client requests and issues.
- The job of a customer service manager is issue-specific. They eliminate the systematic process loopholes and elevate the customer experience. They are quick at resolving the issues and ensure customer satisfaction. On the other hand, the client success manager looks forward to the goals of the client primarily. For them, client goal achievement is the target.
- Also, customer services are short term cost-centric plans whereas client success is a long term revenue generation-based initiative that includes up-selling, cross-selling, etc. Client success is a cross-team collaborative effort that requires inputs from various parts of the organization while customer service is an independent unit with a single function.
The roles of a client success manager and a customer experience manager are quite intertwined. They both work together to solve client problems efficiently. They are trained to monitor client deals and usage patterns and keep a track of possible client issues. But emotional marketing techniques, improvement of client service response times, using analytical data to generate personalized suggestions, and making changes to the product’s user interface in order to make it easier to use are not a part of a client success manager’s portfolio. The customer experience manager gets involved only after the client has actually made a purchase, owing to the client success manager’s work.
While the role of a client success manager is significant, it is very sensitive too. Often clients perceive client success as marketing or sales initiatives which in turn has a negative impact. Thus, conflicted job roles might cause a disruption in client success endeavors.
While technical professionals might have been stealing the spotlight for a long while now, client success managers handle an imperative aspect of the business too. A client success manager is a multi-faceted balance between your client and your business. Client success is an important growth hack for businesses in 2020. It can prove to be a powerful success engine if utilized consistently. As technology proliferates in every part of the business, a client success manager shall remain the human link between you and your clients.