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Charging for Customer Success

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Customer Success is one of the most influential tools in your toolbox and a staple of successful organizations -- but should you charge for it?

Learn the answer and more on Join Nick Mehta, CEO of Gainsight, and Omid Razavi, SaaS Customer Success & Services Advisor, as they discuss:

- If and when you should charge for customer success
- How to create a customer success pricing plan
- How to tier your customer success services

Setting up a successful customer success strategy starts with knowing your customer, tailoring your product to suit their needs and offering it at a price where value is truly understood. Can't attend live? Register anyway and you'll receive a copy of the recording afterward.

Published in: Technology

Charging for Customer Success

  1. 1. ©2015 Gainsight. All Rights Reserved. Should you Charge for Customer Success? Omid Razavi SHOULD YOU CHARGE FOR CUSTOMER SUCCESS?
  2. 2. ©2015 Gainsight. All Rights Reserved. Should you Charge for Customer Success? Omid Razavi Omid Razavi, Ph.D. SaaS Customer Success & Services Advisor Nick Mehta Chief Executive Officer Gainsight SHOULD YOU CHARGE FOR CUSTOMER SUCCESS?
  3. 3. ©2015 Gainsight. All Rights Reserved. Should you Charge for Customer Success? Omid Razavi SHOULD YOU CHARGE FOR CUSTOMER SUCCESS? YES!
  4. 4. ©2015 Gainsight. All Rights Reserved. ©orazavi Customer Success Monetization Approach 1. Offer a baseline success plan to all customers at no charge. 2. Offer one or more premium success plans to all or targeted customers. 3. Allow customer to choose their plan based on the value (and price). 4. Develop and market the success plans and your services portfolio. Included In Subscription Recurring Services ($) Project Services ($) Premium Success Plan(s) Baseline Success Plan Services Portfolio Packaged Services Success Services Value-Added Services …
  5. 5. ©2015 Gainsight. All Rights Reserved. Should you Charge for Customer Success? Omid Razavi “Customer Success is when your customers achieve their desired outcomes through their interactions with your company.” – Lincoln Murphy
  6. 6. ©2015 Gainsight. All Rights Reserved. Should you Charge for Customer Success? Omid Razavi “Customer success is customers achieving their business outcomes through their experiences in their journey with you.” Customer Success =0 ∞ ⎰ (Customer Experience + Business Outcome) dt
  7. 7. ©2015 Gainsight. All Rights Reserved. Should you Charge for Customer Success? Omid Razavi 75% of all interactions are with Services Source: Gartner, Agenda Overview for Customer Strategy and Experience Management All Others Services Interactions Are More Important than Ever!
  8. 8. ©2015 Gainsight. All Rights Reserved. ©orazavi Archetypal Customer Journey Map Buy Implement Churn Value Growth Renew Value Discovery LEARN Customers discover your company and your offerings Value Definition TRY Customers evaluate those products and services Value Delivery BUY & DEPLOY Customers buy (hopefully) and implement them Value Realization USE Customers realize the benefits and the outcome Value Validation GROW Customer decides to renew, grow or to leave Value Advocacy R-DaysEngage
  9. 9. ©2015 Gainsight. All Rights Reserved. ©orazavi Customer Value Along the Journey MapCustomerValue Time Services (Primary) Services (Shared) Sales & Marketing Win! Go Live! Try/ Pre-board Buy Onboard Deploy Use Renew/ Grow/ Refer Learn Success Plan Attributes CSM Coverage Fee Premium 2 Personalized/ High Touch 1 to 1 $$ Premium 1 Personalized & Automated 1 to N $ Baseline Automated/ Tech Touch Self-Service or Pooled None Renew! Premium 1 Premium 2 Baseline
  10. 10. ©2015 Gainsight. All Rights Reserved. ©orazavi Traditional Services Disciplines Consulting/ Professional Services Timeor ProjectBased Recurringor SubscriptionBased Support Services Training/ Education Services Managed Services  Sold as projects with deliverables and timelines  Sold as a support plan with SLAs and entitlements
  11. 11. ©2015 Gainsight. All Rights Reserved. ©orazavi Timeor ProjectBased Recurringor SubscriptionBased What About Customer Success Services Free or for Fee? Customer Success Management A services portfolio to help customers Adoption Services Business Outcome Realization Expansion/ Renewal Management Accelerate their adoption & productivity Realize business value from your solution Maximize their investment in you.
  12. 12. ©2015 Gainsight. All Rights Reserved. ©orazavi Customer Value Perception & Propensity to Pay Low Propensity High Propensity Propensity to Pay BusinessValue Low Value High Value Adoption Services Business Outcome Realization Mission Critical Services Basic Support Services Customer Success Support Services
  13. 13. ©2015 Gainsight. All Rights Reserved. Should you Charge for Customer Success? Omid Razavi “Yesterday, we were mostly about support. Today, we are about adoption and renewal. Tomorrow, we will be mostly about delivering business outcomes.” - A VP of Customer Success
  14. 14. ©2015 Gainsight. All Rights Reserved. ©orazavi • Total Value (ACV or TCV $) Customer Segmentation and Tiered Success Plans Business Sensitivity IT Maturity SLA Expectations Large Enterprise Business Critical Mature Low Stringent SMB Non- Critical Limited High Limited Price Sensitivity Support Demand Baseline Premium 1 Premium 2 Business Critical Basic Customer Oriented Segmentation Market Oriented Segmentation • Services Value ($) • Revenue ($) • Industry (Domain IP) • Product / Technology • Geography / Region
  15. 15. ©2015 Gainsight. All Rights Reserved. Should you Charge for Customer Success? Omid Razavi Customer Value is both Intellectual and Emotional
  16. 16. ©2015 Gainsight. All Rights Reserved. ©orazavi Goals for Premium Success Plans Higher Adoption Measure and Close Consumption Gap Incremental Revenue • Usage and Adoption Metric Targets • 15% acceleration to value • 50% attach rate in 2 years Pilot Business Outcome Services Improved Customer Experience Run Customer Success as a Business • Customer Business Performance Targets (Value Realization) • Self Fund Expansion at 50+% Margin • Significant NPS/C-SAT Gains
  17. 17. ©2015 Gainsight. All Rights Reserved. ©orazavi Service Design UX CX Application Design Mobile Design Customer Success Support Services Consulting Website Design CX: Customer Experience UX: User Experience Education Services Digital and Non-Digital Experience Service Design Create seamless customer experiences that drive differentiation and long-term customer value.
  18. 18. ©2015 Gainsight. All Rights Reserved. ©orazavi Service Design & Delivery Principles Service Design:  Easy to do business with and transparent in our operations.  Scalable processes to on-board, retain & grow customers.  Automation for identified repetitive, low-value activities. Service Delivery:  Expectation Setting with customers, early and clearly.  Self-Service easy for customers to help themselves.  Multiple Channels for customers to communicate, and for us to listen.  Speed to engage, resolve, learn from mistakes and improve. Customer Success Support Services Consulting Education Services Service Design + Simplicity
  19. 19. ©2015 Gainsight. All Rights Reserved. ©orazavi Package Services Upgrade Cycle Packaging 2015 Packaging 2017 Packaging 2014 Enablement Sales RevRec Finance CoE Services User Stories Prod Mgmt Customer Workshop/ Early Access CoE: Center of Excellence + Success Science Packaging 2016
  20. 20. ©2015 Gainsight. All Rights Reserved. ©orazavi The 10 Stages of the Services Packaging Process 0- PORTFOLIO 1- ASSESS 2- ALPHA 3 - PILOT 4 - BETA 5 - GA Customer Success Support Services Consulting Education Services Others “Prioritize “Develop “Test “Scale 6. PRICE 8. SELL THE VALUE 9. DELIVER THE BENEFITS 10. UPGRADE EVERY 12-18 MONTHS Milestone #1 Milestone #2 Milestone #3 Final Milestone 7. LAUNCH
  21. 21. ©2015 Gainsight. All Rights Reserved. Should you Charge for Customer Success? Omid Razavi In SaaS, where product is developed and distributed as-a-service, Services are developed and packaged as a product. Product Service
  22. 22. ©2015 Gainsight. All Rights Reserved. ©orazavi Premium Success Plan Pricing Example ACV $100K $1M $10K $20K Cost (50% Margin) Price Customer Value (200+% ROI) $40K Premium Success Plan at 20% of ACV for the 1st million and at 10% after that, with floor price of $20K. Not to scale
  23. 23. ©2015 Gainsight. All Rights Reserved. ©orazavi Customer Success Tiers Landscape with Example Tier 0 Tier 1 Tier 2 Tier 3 Included 10% 20% 30% - - - - Baseline Plans ExtensiveLimited Plan Features, Programs and Entitlements x x x x Premium 1 Price Premium 2 Premium 3 Mission Critical x x x x x x xx x x xx x Tier Ballpark Range Salesforce Success Plan Salesforce Plan Rate 3 30+% Mission Critical Up to 35% 2 15-25% Premier+ 25% 1 10-15% Premier 15% 0 0% Standard 0% (*) Computed as % of Annual Contract Value
  24. 24. ©2015 Gainsight. All Rights Reserved. ©orazavi Services Pricing Models and Approach Tier 1 10% - - 20% - - - - ExtensiveLimited Plan Features, Programs and Entitlements Price • Market-based pricing is about what customers are willing to pay • Cost-based pricing is about making your margin • Competitor-based pricing is based on observing the competition • Value-based pricing is based on value of customer business performance improvement More than one model is often applied to price service offerings. Cost+Margin Curve Value CurveCompetitors Range Market Ballpark Price/Feature Sweet Spot
  25. 25. ©2015 Gainsight. All Rights Reserved. Should you Charge for Customer Success? Omid Razavi Key Metrics to Track • Premium attach rate as % of new target accounts that opt for premium • Premium upsell rate as % of existing target accounts that upgrade to premium • Premium renewal rate of existing accounts • Incremental C-Sat/NPS scores of premium vs. baseline • Premium subscription bookings and revenue
  26. 26. ©2015 Gainsight. All Rights Reserved. Should you Charge for Customer Success? Omid Razavi Final Takeaway If your customer success goal is to drive customer growth, then … Packaged services are key to achieving sustained business growth. Packaging
  27. 27. ©2015 Gainsight. All Rights Reserved. Should you Charge for Customer Success? Omid Razavi Omid Razavi, Ph.D. SaaS Customer Success & Services Advisor Questions? orazavi@gmail.com @orazavi Nick Mehta Chief Executive Officer Gainsight nmehta@gainsight.com @nrmehta

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