In the glorious business of the SaaS space, one underlying truth that determines the growth and scaling of the business is that it takes several months to recover the Customer Acquisition Cost (CAC) and get to the profitable zone at a unit economics level. Hence it is essential that the customers continue to subscribe and keep renewing their contracts for the company to be successful.
A very important SaaS metric that comes into play here is the Customer Lifetime Value(LTV). It indicates how much revenue a customer can create for a business over the length of the customer life cycle. With the right data and a proactive strategy, there are various approaches a company can take to maximize a customer’s LTV. There are typically two tools commonly used by SaaS businesses to manage this mission. One is Customer Relationship Management (CRM) and the other is Customer Success (CS) platforms. However, only one of them performs tasks at scale.
According to a research study, 20% of the SaaS companies, especially small to midsize companies, often depend on their CRM to administer all customer life cycle tasks which do not suffice their Customer Success function.
This blog helps to clarify the purpose of CRMs versus Customer Success tools. It will help you understand why having a dedicated Customer Success platform in your Customer Success tech stack is essential and justify the fact that CRM is not enough for the Customer Success function.
What is CRM ? What is its primary function?
Customer Relationship Management can have variations in its definition depending on a company’s goals and its relationship to its customers. However, it generally means any activity undertaken or technology used to administer a business’s interactions with its customer base. A tool far evolved from the spreadsheets helping in engaging the customers with your business coming with a unified intelligent system that makes gathering and managing the customer data way more accessible.
Mostly used for acquiring, analyzing, managing customer information, and planning strategies for marketing as well to maintain good customer relationships.
How is CRM different from a Customer Success Platform?
Customer Relationship Management (CRM) is a tool that helps businesses in nurturing relationships with potential buyers and converting them into paid customers. It provides a unified view of customer data and assists organizations in every step of the sales process. With the help of this useful sales tool, companies can manage leads, track customer progress, improve sales performance, streamline processes, and manage opportunities.
Whereas, a Customer Success tool is a software that usually comes with in-built tools to provide a holistic view of your customers and their account health. These tools provide insights into various metrics that enable your CS team to identify which customers need more assistance, or where there may be potential pain points.
In a nutshell, CRMs focus on the transaction stage of a customer relationship. Customer Success Platforms focus on the entire relationship and the delivery of continuous value. While CRMs have their benefits, traditional relationship management tools lack the necessary features to nurture long-term growth. This makes a CS Platform an invaluable tool for any SaaS company.
Unlike a CRM, a Customer Success platform covers the entire customer life cycle—not just the transaction sales pipeline. As a CRM, a robust CS platform will feature automation efficiencies and data analytics tools. But unlike a CRM, these features:
- Monitors customer health,
- Nurtures the customer relationship, and
- Ensures customers can succeed with your products.
Statistics have routinely shown that companies that focus on building a deeper relationship with their customers have better outcomes.
Can businesses use CRM for their Customer Success function?
The practical answer is “no. The distinct differences between what parts of the customer journey a CRM tool and a CS tool are meant to address clearly state that. However, this does not stop CRM developers from trying to incorporate Customer Success into their platforms.
Smaller CRM platforms may include a CS component via plug-ins and app integrations that essentially incorporate CS functionality to the core product. Other platforms with more resources may develop Customer Success tools as a more integrated feature. The Salesforce Customer Success platform is an example of this approach. At its core, Salesforce is a sales-oriented CRM; by including a host of other customer journey tools around its main product, it purports to be a full-featured Customer Success platform. In actuality, this adds more complexity and greater overhead to an already complicated and expensive platform.
Challenges that you can solve using a Customer Success Platform
Workflow management becomes easier when combined with a CS tool
The workflow of the Customer Success function is a bit different which a CRM is not for. Let’s understand how, so Since CRMs mostly help in monitoring the transactional relationship data, they mostly struggle to draw insights from product usage information and other data. This provides a challenge when working to automate processes like onboarding and renewal workflows.
Customer Success platforms provide the workflows your CS team needs to succeed – all with little to no technical know-how. In fact, these platforms support these workflows out of the box. They enable proactive engagement by helping you organize, automate and scale your processes at every part of your customer lifecycle. Automating these processes provides a key advantage for increasing efficiency. In fact, they allow your team to manage more accounts without the need to increase headcount.
Product Adoption and Touchpoint Monitoring
A Customer Success management software can derive insights such as the following:
- The product is adopted correctly or regularly,
- If the licenses utilization is proper or not,
- They have a probability of downgrading, etc.
But a CRM fails to do so as they are not designed to monitor these data. The customer interaction with the product is analyzed through the term touchpoints. Regardless of the low touch or high touch model this data is well analyzed by customer success tools. A CRM can’t offer information on touchpoints.
Much more of Customer data analysis with CS tool
CSM software look into product health, relationship health, service health, financial health, and impacting other factors. This means, there is all data you need from onboarding to advocacy. CRM can’t look into these aspects of the customer data.
The Customer success management software offers insights on customer account health which derives value such as understanding the needs of the customers and offering actionable alerts to drive retention. In this case, customer relationship management software is not enough to handle the situation.
As we well know, adopting remote or digital Customer Success is the foundation for optimizing your customer success at scale. Where we cannot rely upon the traditional method of sticking to CRMs for tackling customer success function in scale. Your tools need to match their purpose to build a truly mature, efficient, well-run organization that stands the test of time. This is why we are here, in our tech tool showdown, to find out just which one will be the champion of Customer Success.
P.S. – The main image has been taken from pexels.com