As the CEO of your company, there may come a situation where you need to implement customer success. You have two options- in-house customer success or outsourcing customer success. With customer success being a new function and companies not prepared for it, outsourcing might seem like a wise decision. But will it help in the long run? Let’s explore that in detail.
What is customer success
Customer success isn’t that complicated. In simple words, SaaS customer success expert Lincoln Murphy says,
Customer success is simply ensuring that your customers achieve their Desired Outcome through their interactions with your company. That’s it.
Companies are becoming more customer-centric, that is they are concentrating more on long-term locked-in contracts and are always ready to upgrade their services in order to meet their customer needs.
The competition is growing in the SaaS industry and customers now have many choices. This means businesses have to find new ways to improve retention and reduce churn. After all, when another product is never more than a click away, any competitive advantage becomes essential.
It’s here that customer success comes in.
Due to high records in the cost of customer acquisition, brands have become much more invested in developing strong customer relationships.
Customer success is mainly focused on customer relationships. It focuses on customer needs and what the customers want to achieve. If there’s something that will act as an obstacle for the customer, the business must do what it can to not only remove this obstacle but notice it before the customer does.
Suggested Read: ROI of implementing Customer Success
Why you should have customer success
SaaS companies have a much deeper insight into how and when their products are being used. This gives it easier for them to choose a proactive customer success strategy. Many of the most successful companies treat customer success as important.
Streamlined user onboarding
Retention begins at onboarding. With CSMs assigned to each new customer, you can ensure that they’re comfortable and happy throughout the journey. Likewise, a customer success manager can be instrumental in retaining a customer who is currently on a free trial by guiding them through the process, answering questions, and providing key support at an early stage.
Suggested Reading: Designing a Customer Onboarding Framework for B2B SaaS
Customer Success will help customers realize more value in your products and services which will lead to increased renewal rates and longer customer tenures. Renewal decisions are based on perceived value. By focusing on customer success you will, both of which increase a customer’s lifetime value and help you drive growth and profitability.
Studies show 70%–90% of a customer’s lifetime value is generated via renewals, cross-sells, and up-sells. With the help of Customer success, you’ll understand your customer goals better. It will also help you identify and convert valuable up-sell and cross-sell opportunities. By this, you’ll create a deep association between your customers’ success and your product.
Customer success increases customer predictability by giving you insight into developing issues. Without a customer success perspective, you are just looking at an outcome. With a customer success focus, you can uncover drivers of that outcome, which will help you with recurring revenue predictability and capacity planning.
A good customer success strategy helps you to have customers who readily recommend and refer to your service also providing testimonials. This goodwill and third-party validation helps you accelerate acquisition velocity, grow market share, lower overall CAC, and sometimes helps you open the door for new market development.
Enabling a feedback-driven development cycle
Collecting feedback is an important part of the process. Feedbacks give you an idea about how your service is performing and what are improvements you need to do. Because the relationship is one-on-one, CSMs are often privy to crucial feedback which — when used appropriately — can result in valuable changes to the product.
Additional Read: Net promoter Score and its relevancy
Difference between customer success and customer support.
Reactive vs. Proactive
Customer support is generally “reactive” in approach, this includes helping a customer once they need something or when they reach out to you with a problem or question. In contrast, customer success is “proactive”. It focuses on helping to identify and facilitate customers reaching their goals. Customer success doesn’t wait for the customers to come to you but instead reach out to them to solve their problems.
Transactional vs Relationship Oriented
Customer support interactions are generally transactional in nature. This begins with the customer reaching out to you. On the other hand, customer success doesn’t have an “endpoint”. It’s an ongoing, evolving, and consistent focus, continually working to build upon existing relationships to further the bond between the customer and the company.
What happens if you outsource customer success
Outsourcing customer success has its own pros and cons. Very often, many customer-facing business functions get outsourced. Outsourced customer support is extremely common, technical teams are often used on a contract basis, and even sales gets accomplished by outside teams.
But should you outsource your customer success operations? Well, it depends on various factors like – If you’ve outsourced other customer-facing parts of your business, you might be tempted to answer “yes” right away.
The decision, however, is much more complicated than you might realize. Let us look at the advantages and disadvantages of outsourcing customer success.
The reasons for not outsourcing CS function
Customer Success Professionals Need To Be Decision-Makers
Because they’re on the front lines of your company and addressing the needs of your customers, your customer success team needs to be able to make high-level decisions and act on them quickly.
Customer Success Requires Extensive Knowledge
Outsourced sales teams can develop a solid base of knowledge about your products and services. But their knowledge is very focused: it’s on features and benefits. It might include your position in the market among your competitors.
Reasons you should outsource
It’s not a long-term solution
When you partner with a third-party customer success organization, it 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.
No need to teach things from the scratch
When you outsource your customer success, you do not need to teach the team from scratch. The CS team is already packed with professionals. Without external assistance, you are responsible for engineering all the CS best practices from square one. From customer segmentation, all the way to how to monetize CS, the responsibility for formulating every step is resting on your shoulders.
What happens if you have inhouse customer success department
Your employees have complete knowledge about your company culture, your goals, the lay of the land and every little detail about your product. These employees have grown with you. They are clear with the vision and mission of your company. They have already been serving your customers for years and they understand your customers. Keeping CS in-house means all of this company knowledge is already in place.
If the customer success is in-house, you have complete control. You know and own every employee and their details. You have power on the goals, strategies, budget and almost everything.But also, If your customers are not satisfied with your CS team, the responsibility unavoidably falls on you alone.
There can be a case where you and your outsourced partner stop working together. This is where you’d need to figure out what remains yours and what you cannot access anymore. But if you build an in-house CS organization, you need not worry about these scenarios.You also never have to worry about the logistics of getting your information back under your own control. It’s all yours, and it’s always been yours.
Tight labor market for CSMs
According to LinkedIn, the role for CSM is one of the fastest-growing jobs. But it can be difficult to find a good CSM. They are in high demand, so if you are looking to hire a team of experienced CSMs, it might take a while to build your team and you have to put in a lot of effort. Also, you cannot afford to mismanage your CSMs, because this could directly end up with you losing them to your competition.
If you’re building your own in-house CS organization, you’ll need to provide your current employees with proper training. Your employees can be from different departments and each one of them has their way of doing things. Also gathering existing staff can weaken the other departments.
Spreading your CSMs too thin
You have to segment your customers and accordingly assign CSMs to them. If this is mismanaged, your CS plan can fail because your CSMs could end up working too many accounts, leaving the rest of your customers unsatisfied. This will lead to losing valuable customers and wasting your CSMs’ time. Studies show that “when customer experience falls short, 58% of customers don’t hesitate to move on to your competition.”
It’s very important to go visit at least your top customers frequently, get their feedback, and engage with them, it is the least that can be done for ensuring customer success.
Your own employees and team will know your product, the issues, and its future better. It’s much better to staff these functions in-house. But, it’s better to outsource than to “non-source”.