With so much to handle when you’re running an agency or working as a consultant, Customer Success is probably not top of mind when you’re working day to day in your business. Customer Success is still a fairly new concept and best practices are being revised and introduced all of the time. On top of that, the customer success team handle varying tasks depending on the product you sell and the customers you serve, so customer success can mean different things to different businesses. Speak to two customer success teams and you’ll see how their roles differ and where their focus is.
In this article, we will look at how, by introducing a customer success team into your business, you can increase your client retention rates and even grow your monthly recurring revenue. We’ll look at the general goals of a customer success team and how they affect your bottom line.
What is a customer success team?
A customer success team, or an account management team, is a group of people dedicated to providing ongoing support, sometimes product training, and assistance to customers who have signed up to use your product or service. By having a dedicated team to handle these account-level issues, you are able to increase your retention rates, decrease churn rates, and increase your monthly recurring revenue. The team will work with each customer to provide advice and best practices, handle escalations, and provide feedback to the rest of the organization about what your customers are looking for and how they’re using your product or service. They may also handle things like failed payments, cancellations, upgrades and downgrades and work proactively to identify opportunities to grow existing accounts. Most customer success managers (CSMs) will have their own set of clients they manage, but more commonly in Saas businesses, CSMs work together to support the entire customer base.
What are the general goals of a customer success team and how can they contribute to increased MRR?
- Provide guidance to your customers – A customer success team provides training and support to your customers to make sure they are getting the most out of your product. By providing this guidance, your account managers are increasing the average value of each customer and helping customers get the most out of your product or service.
- Decrease your customer support costs – A customer success team also acts as a support team, taking care of general questions, sometimes bug fixes for your product, and other issues that come up during the life of a customer. By taking these issues off the rest of your organization’s plate (in a care plan business, your support team), you are able to focus your team on their core competencies and not have them spend their time on account issues for existing customers.
- Increase your average customer lifetime value – By providing guidance, helping customers get the most out of your product, and decreasing your support costs, you can increase the average lifetime value of your customers. This has a direct impact on your monthly recurring revenue, as MRR is calculated by averaging your customer acquisition costs over a year and dividing them by 12.
- Decrease churn rates – Decreasing churn rate is one of the best ways to increase retention and grow your business. A customer success team has dedicated resources to tracking down churn, finding out why customers are leaving, and making recommendations for how to stop it. A good customer success team will know top reasons for churn and be working on strategies to tackle this.
- Increase your MRR from existing accounts – Customer success teams will recognise how to grow existing customer accounts, leading to expansion MRR. From a study across different industries, it’s said that the probability of selling to an existing customer is 60-70%. The probability of selling to a new customer is just 5-20%. 80% of your future profits will come from just 20% of your existing customers.
- Built a solid brand image – Customer success will work with customers long term and build up positive relationships. They’re the face of the company, through the good and the bad!
When should you hire your first customer success manager?
You should try to hire your first customer success manager as soon as possible! Although, some argue it’s when your MRR reaches $10,000 per month. The more customers you have, and the more revenue you are bringing in each month, the more challenging it will be to manage and track customer success metrics.
A general sign that you need to hire at least one CSM is that your existing teams are spending time doing tasks that aren’t their main role. For example, are your marketing people handling account questions for existing customers? Are your support team handling upgrades for your customers? Are failed payments causing people to churn but you don’t have the time to tackle this challenge? If any of these are familiar, it could be time to hire your first CSM.
How does a customer success team help you retain more customers?
By hiring a dedicated customer success manager, you are making a commitment to your customers. They will know that you have a person dedicated to helping them get the most out of the product you have provided. This dedication indicates a deeper level of commitment to your customers than a single support person who has to handle all the tickets coming in. A customer success team can also help you track and measure how successful your products are and what factors drive customers to churn. Having dedicated resources looking into this allows you to make strategic decisions about how to improve your product and makes sure you are not sacrificing functionality for simplicity.
Hiring your first CSM is also a great marketing opportunity. You can indicate in your marketing material that you have a dedicated CSM who actively works with customers to make sure they’re getting the most out of your product – this can really set you aside from your competition!
A customer success team is a great way to increase your retention rates, decrease your churn rates, and increase your monthly recurring revenue. To do this, you must hire a dedicated customer success manager early on. While this team will cost you money in the short term, they will help you make more than enough money to cover their salaries. For small agencies and consultants, this is one of the best ways to scale your business.