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 reve
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.
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.”
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 executive 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 directors 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 CSM 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.
As discussed, a CSM is the building block of a customer support team. But that is not all. The horizon of CSMs 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. Below are few areas from the client success manager’s job description.
A CSM 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, CSMs 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 enablement is one of the prime functions of a senior 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 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 economy 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, an enterprise 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.
Upselling and upgrading are ways to increase portfolio growth. A client success manager needs to increase the lifetime value of the customer. That is the main goal. This will become easier when they look into upselling and cross selling efforts regularly. A good client success strategy involves data and keeping the customer in the center.
Client success managers need to conduct regular client health checks. Even the oldest customers may think of leaving. So periodic client health checks are the best way to maintain the customer balance. This will help client success managers be prepared for any situations where customers are unhappy with the product. having a customer success platform to do a health check is recommended to improve efficiency.
Client success managers also need to ensure that customers become advocates. Making sure clients become advocates is important and that could be reviews, NPS survey, case studies, and referrals. Financial growth is the underlying current for companies, and this is what client success managers need to do.
Client success managers need to support clients with product knowledge. They need to improve customer experience with product knowledge. Client success managers need to ensure product adoption and handle customer programs with relation to products. They should be a guide for all product-related queries.
Client success managers need to handle customer complaints and requests. There is a need for clients to effectively communication for growth. They need to communicate clearly across teams to offer insights to clients and handle their complaints. From the point of first interaction to onboarding and onwards, client success managers need to ensure all complaints and issues are addressed.
The salaries for a client success manager are mostly well placed as per the country. The salary for a client success manager in the USA varies between $ 53,200- $ 1,08,000. The median salary for a client success manager in the US is $70,000 per year. In India, the salary of a client success manager is different. It ranges anywhere between 3,12,000 INR to 15,80,000 INR. The median salary for a client success manager in India is 7,20,000 INR per year. Client manager salaries in UK range from £22,600 – £59,700. The base salary for client success managers in the UK is £35,000/yr. Client manager salaries in Australia range between A$57,700 – A$1,33,000. The base salary is A$87,500/yr. In Canada, the salary for a client success manager ranges between CA$47,000 – CA$1,10,000. The median salary is CA$65,000/yr for a client success manager in Canada.
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:
|Account Manager||Client Success Manager|
|Manage client sales accounts for product or service discussions.||Responsible for long-term relationships with clients.|
|Work with a smaller number of accounts.||Work with a larger number of customers.|
|Need to foster targeted relationships and grow sales quotas.||Need to retain customers and ensure a great client experience.|
|Ensure clients understand company products and services.||Work in onboarding and training clients to use products.|
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.
|Client Success Manager||Customer Service Manager|
|Responsible for developing customer relationships.||Responsible for all customer issues.|
|Keep clients engaged and ensure their success.||Needs to collect feedback from customers.|
|Analyse metrics and KPIs of client success.||Answer customer queries and resolve their immediate concerns.|
|Understand why clients cancel or upgrade accounts.||Cancel or upgrade accounts.|
|Client Success Manager||Customer Experience Manager|
|Responsible for improving customer satisfaction.||Responsible for improving customer experience.|
|Aims at building long-term relationships with clients.||Needs to ensure that customer feedback regarding the experience is acted upon.|
|Client success managers’ goal is to use metrics and KPIs for client success.||Responsible for using insights to augment customer experience.|
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 both get training 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 comes in only after the client’s purchase, owing to the client success manager’s work.
Client success managers use some metrics and KPIs to make informed decisions by focusing on these metrics, client success managers can ensure that customers are retained.
Customer lifetime value is calculated by multiplying average revenue earned with the total number of customers. If customers get the value from the product, the lifetime value will increase. The CLTV metric is also great to understand how to increase the satisfaction of customers.
Churn rate is a common metric tracked by most companies to understand the percentage of customers who leave for a certain period. A customer with a high ticket value leaving the business may be harmful to the overall company. This churning is what client success managers need to arrest.
MRR is a number that needs to increase often. An increasing MRR is a sign of good customer satisfaction rate. Keeping these metrics in mind will help understand the big picture in a better manner.
Expansion revenue is another metric that client success managers need to look into. It measures the new money that comes into the firm from existing customers. It is a direct reflection of upselling and profits to generate revenue from existing customers.
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. 35
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.
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