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Seven Steps to Customer Success at Scale
Thomas E. Lah
Executive Director
TSIA
The Discussion
• The current state of the XaaS business model
• The Four Cost Buckets of XaaS
• Seven steps to Customer Su...
Current State of XaaS
Revenue Growth
4
Average:
Q4 2013 - Q4 2014
7%
11%
11%
16%
17%
18%
21%
22%
24%
25%
26%
29%
34%
35%
42%
52%
56%
61%
74%
87%...
Revenue Multiplier (market cap/revenue)
5
Average:Q4 2014 7.0
1.7
2.2
2.5
2.5
2.6
2.9
3.2
4.9
5.9
6.6
6.7
6.8
7.3
7.9
9.4
...
Wedge Model
6
“SaaS profitability just takes longer”
7
Cost to Acquire Revenue
• salesforce is spending almost $2 dollars on Sales and Marketing for
every $1 in incremental reve...
salesforce: Profitability
How big does a XaaS business have to be
before it becomes profitable?
9
Cloud 20 Business Model
10
Q4 2013 - Q4 2014
66.7%
36.8%
15.6% 16.7%
-1.7%
67.0%
36.1%
15.3% 17.2%
-0.8%
-10.0%
0.0%
10.0%...
Cloud 20 Business Model:
Comparison to Service 50
11
66.7%
36.8%
15.6% 16.7%
-1.7%
67.0%
36.1%
15.3% 17.2%
-0.8%
52.2%
22....
Oracle and Profitability
• March 12, 1986: Oracle goes public with a
revenue of $55 million.
• August 1987: Oracle founds ...
Thomas and Tien
13
https://www.youtube.com/watch?v=c3zVp59HQ-0
XaaS Talk Track
• We are investing in growth (Sales and Marketing), that is what
investors value today.
• When we need to ...
Four Cost Buckets of XaaS
XaaS Cost Buckets
1. COGs: Cost to serve the customer
– Hosting, Datacenter
– Basic Bundled Support Services
2. CAC: Custo...
High Margin, High Profit,
XaaS Business Model
17
Modified version of:
The Missing SaaS Metric: Customer Retention Costs, T...
Current XaaS Ratios
-10.00%
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
Target XaaS TSIA Cloud 20 salesforce
COGS CAC+...
Common XaaS Experience
• COGs do go down as the XaaS business scales
– So economies of scale do apply
• However CAC + CRC ...
Seven Steps for Customer
Success at Scale
Parameters of Customer Success
• What do you want us to do?
• How will we measure success?
• What will help us scale?
• Ho...
1. Charter
• What do you want us to do?
• How will we measure success?
• What will help us scale?
• How will we be funded?...
2014 TSIA Customer Success Benchmark
(76 Companies)
23
Software
49%
SaaS
29%
Hardware
13%
Services
9%
Company Types
Softwa...
Charter Question
• What percentage of time does your Customer Success
organization spend on each of the following activiti...
Three Profiles of Customer Success
0%
10%
20%
30%
40%
50%
60%
70%
80%
Adopters Retainers Expanders
What % of CSM time is a...
Audience Poll
• Predominate charter of your Customer Success
organization?
A. Adoption
B. Retention
C. Expansion
D. Other
...
Participant Profiles
40%
37%
10%
13%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Adopters Retainers Expanders None of These
Prof...
Audience Poll
• Do you think the charter of the Customer
Success organization is impacting how
Customer Success is funded ...
2. Financial Model
• What do you want us to do?
• How will we measure success?
• What will help us scale?
• How will we be...
Building the Customer Success
Funding Framework
1. What is the target financial model your company is
attempting to achiev...
Example #1: Adoption Only
31
Five Questions 2 3 4 5
Support Adoption
Own
Renewal
Expansion
Y Y Y Y
Subscription Revenue 10...
Example #2: All up and in…
32
Five Questions 2 3 4 5
Support Adoption
Own
Renewal
Expansion
Y Y Y Y
Subscription Revenue 1...
Funding Customer Success
at $500M in company revenues
$-
$20,000,000
$40,000,000
$60,000,000
$80,000,000
$100,000,000
$120...
Cost Effective CAC
Cost Effective Cross Sell and Renewal!
34
Impact of Customer
Success on growth
and profitability!
Data ...
Audience Poll
• How does your company predominately fund Customer
Success?
A. COGs carved out of Subscription
B. Sales and...
3. Critical Practices
• What do you want us to do?
• How will we measure success?
• What will help us scale?
• How will we...
Key Phases in Customer Lifecycle
Management
37
Land Adopt Expand Renew
The Customer Life Cycle
Traditional strengths of te...
TSIA
Customer Life Cycle Practice Map
1.0 Organizational
Strategy and
Financial
Performance
1.1 Strategy and
Goals
1.2 Bus...
Customer Success Practices: Adoption
1.0 Organizational
Strategy and
Financial
Performance
1.1 Strategy and
Goals
1.2 Busi...
40
Practices that Drive Adoption
Percentage of Customer Success organizations that can
monitor consumption remotely: 57%
P...
Prerequisites for Practice Success
• Process Quality:
– Design drives efficiency and effectiveness
– Leverages proven indu...
Process Quality Attributes
Does it Exist Documentation Tools and Data
Has the process been defined and
documented in any w...
4. Success Metrics
• What do you want us to do?
• How will we measure success?
• What will help us scale?
• How will we be...
Metric Definition Insight
% Subscription revenue spent
on Customer Success
Total annual dollars spent on Customer Success ...
Median Customers per Customer
Success Rep
25 25
16
0
5
10
15
20
25
30
Adopters Retainers Expanders
45Source: TSIA 2014 Cus...
Renewal Rates
82%
93%
83%
76%
78%
80%
82%
84%
86%
88%
90%
92%
94%
Adopters Retainers Expanders
What is the revenue renewal...
Churn Rates
21%
18%
8%
0%
5%
10%
15%
20%
25%
Adopters Retainers Expanders
What is your annual customer churn rate?
47Sourc...
5. Skills of Customer Success
• What do you want us to do?
• How will we measure success?
• What will help us scale?
• How...
Where CSMs Come From
40%
32%
3%
41%
31%
27%
9%
17%
30%
1% 1% 0%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Adopters Retainers E...
Expand SellingLand Selling
Customer Engagement Models
50
Adoption Renewal
Customer Success Sales Sales1 Sales
2
3
4 Sales/...
The Talent Supply Chain
©201
3
Attributes of best in class Skills Assessment
Does it Exist Level of Documentation Tools Best Practice Attributes
Process ...
6. Offers of Customer Success
• What do you want us to do?
• How will we measure success?
• What will help us scale?
• How...
Lah’s Law
• Feature functionality always commoditizes in XaaS
marketplaces.
54
Basic Offer: Complex Offer: Optimize Offer:...
The
Technology
Industry
Products
Hardware and
Software
Technology as
a Service
Technology
Services
Product
Services
Optimi...
Adoption Services is a New Category
56Source: TSIA Emerging Offerings Survey 2013 / 2014
• Vision & strategy
alignment
• G...
Deliverables Cloud / Hosted Maintenance &
Support
Software Cos.
Maintenance &
Support
Hardware + Software
Cos.
Managed Ser...
Deliverables Cloud / Hosted Maintenance &
Support
Software Cos.
Maintenance &
Support
Hardware + Software
Cos.
Managed Ser...
59
80%
20%
Premium Support Offerings
We offer a premium support service today
We don't offer premium, but we do plan to
Ho...
Cloud 20 Revenue from “Projects”
60
Q4 2014 Companies
Q4 2013 PS
Revenue
Q4 2014 PS
Revenue
PS Rev
Trend
% Rev
from PS
Vee...
7. Technology Stack for Customer Success
• What do you want us to do?
• How will we measure success?
• What will help us s...
Customer Success Technology Stack
62
Install Data
63
Head room for Customer
Success Platforms
Customer Success at Scale
1. Define your charter
2. Define your funding model
3. Mature the required practices
4. Benchmar...
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SEVEN STEPS TO CUSTOMER SUCCESS AT SCALE

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Customer Success Summit Keynote
Presented by: Thomas Lah, Executive Director, TSIA

Customer success has become one of the hottest capabilities technology companies find themselves investing in today. For technology-as-a-service providers, customer success potentially holds the key to retaining customers and expanding customer relationships. However, TSIA has been inundated with inquiries from member companies that are struggling to deliver customer success at scale.

In this closing keynote, TSIA executive director Thomas Lah will leverage recent benchmark data and industry observations to outline a seven-step approach to establishing and scaling a customer success capability. From the charter to the financial model to enabling technology, Thomas will provide practical frameworks customer success organizations can leverage as they grow.

Published in: Technology
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SEVEN STEPS TO CUSTOMER SUCCESS AT SCALE

  1. 1. Seven Steps to Customer Success at Scale Thomas E. Lah Executive Director TSIA
  2. 2. The Discussion • The current state of the XaaS business model • The Four Cost Buckets of XaaS • Seven steps to Customer Success at Scale 2
  3. 3. Current State of XaaS
  4. 4. Revenue Growth 4 Average: Q4 2013 - Q4 2014 7% 11% 11% 16% 17% 18% 21% 22% 24% 25% 26% 29% 34% 35% 42% 52% 56% 61% 74% 87% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% RealPage IntraLinks LivePerson Medidata Ultimate Software Athena Health NetSuite Cornerstone Ondemand Demandware Workday 33% Average annual revenues> $500M
  5. 5. Revenue Multiplier (market cap/revenue) 5 Average:Q4 2014 7.0 1.7 2.2 2.5 2.5 2.6 2.9 3.2 4.9 5.9 6.6 6.7 6.8 7.3 7.9 9.4 11.5 11.6 11.9 12.0 20.7 0.0 5.0 10.0 15.0 20.0 25.0 IntraLinks Dealer Track Constant Contact LivePerson Google Cornerstone Ondemand SalesForce Concur Technologies Demandware ServiceNow
  6. 6. Wedge Model 6
  7. 7. “SaaS profitability just takes longer” 7
  8. 8. Cost to Acquire Revenue • salesforce is spending almost $2 dollars on Sales and Marketing for every $1 in incremental revenue. 8
  9. 9. salesforce: Profitability How big does a XaaS business have to be before it becomes profitable? 9
  10. 10. Cloud 20 Business Model 10 Q4 2013 - Q4 2014 66.7% 36.8% 15.6% 16.7% -1.7% 67.0% 36.1% 15.3% 17.2% -0.8% -10.0% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% Gross Margin S&M G&A R&D OI Q4 2013 Q4 2014
  11. 11. Cloud 20 Business Model: Comparison to Service 50 11 66.7% 36.8% 15.6% 16.7% -1.7% 67.0% 36.1% 15.3% 17.2% -0.8% 52.2% 22.5% 9.2% 12.6% 15.5% -10.0% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% Gross Margin S&M G&A R&D OI Q4 2013 Q4 2014 Service 50 Q4 2014
  12. 12. Oracle and Profitability • March 12, 1986: Oracle goes public with a revenue of $55 million. • August 1987: Oracle founds its Applications division • 1989: Revenues reach $584 million. • 1990: In the third quarter, Oracle reports its first ever loss 12
  13. 13. Thomas and Tien 13 https://www.youtube.com/watch?v=c3zVp59HQ-0
  14. 14. XaaS Talk Track • We are investing in growth (Sales and Marketing), that is what investors value today. • When we need to be profitable, we will reduce our high Sales and Marketing expenses, making the business model profitable. • Also, GAAP accounting does not truly reflect the health of an annuity business. – Have expense now (selling and adding customer) but revenue flows over time so expense and revenues are not matched in a given year. – We have line of sight to deferred revenues 14
  15. 15. Four Cost Buckets of XaaS
  16. 16. XaaS Cost Buckets 1. COGs: Cost to serve the customer – Hosting, Datacenter – Basic Bundled Support Services 2. CAC: Customer Acquisition Costs – Land Sales: Sales and Marketing for acquiring new customers 3. CEC: Customer Expansion Costs – Expand Sales: Cross-selling, Upselling to existing customers 4. CRC: Customer Retention Costs – Sales and marketing expenses for renewing existing customers – Customer Success – Non-billed PS, ES, Account Management 16
  17. 17. High Margin, High Profit, XaaS Business Model 17 Modified version of: The Missing SaaS Metric: Customer Retention Costs, Totango Subscription Revenue 100% COGS 25% Datacenter, Etc. 15% Support 10% GROSS MARGIN 75% Sales and Marketing 30% CAC (65% of S&M) 19.5% CEC (15% of S&M) 4.5% CRC (20% of S&M) 6.0% R&D 15% G&A 10% OI 20% TARGET
  18. 18. Current XaaS Ratios -10.00% 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% Target XaaS TSIA Cloud 20 salesforce COGS CAC+CRC+CEC OI 18 Short term problem (goes away with scale) Long term problem (NOT going away with scale)
  19. 19. Common XaaS Experience • COGs do go down as the XaaS business scales – So economies of scale do apply • However CAC + CRC + CEC not declining enough to create a profitable XaaS business model. • TSIA POV: Customer Success is critical to the long term profitability of the XaaS business model. 19
  20. 20. Seven Steps for Customer Success at Scale
  21. 21. Parameters of Customer Success • What do you want us to do? • How will we measure success? • What will help us scale? • How will we be funded? 21 Charter Financial Model Practices Metrics Skills Offers Technology
  22. 22. 1. Charter • What do you want us to do? • How will we measure success? • What will help us scale? • How will we be funded? 22 Charter Financial Model Practices Metrics Skills Offers Technology
  23. 23. 2014 TSIA Customer Success Benchmark (76 Companies) 23 Software 49% SaaS 29% Hardware 13% Services 9% Company Types Software SaaS Hardware Services
  24. 24. Charter Question • What percentage of time does your Customer Success organization spend on each of the following activities? – Adoption: Assure that customers are adopting and leveraging our technology solution – Retention (Renewal): Assure that customers will renew their financial relationship with our company. – Expansion: Increase the amount of money specific customers spends with our company 24 Source: TSIA 2014 Customer Success Benchmark
  25. 25. Three Profiles of Customer Success 0% 10% 20% 30% 40% 50% 60% 70% 80% Adopters Retainers Expanders What % of CSM time is allocated to the following activities? Adoption Retention Expansion Other 25Source: TSIA 2014 Customer Success Benchmark
  26. 26. Audience Poll • Predominate charter of your Customer Success organization? A. Adoption B. Retention C. Expansion D. Other 26
  27. 27. Participant Profiles 40% 37% 10% 13% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% Adopters Retainers Expanders None of These Profiles % of respondents in each profile 27 Source: TSIA 2014 Customer Success Benchmark
  28. 28. Audience Poll • Do you think the charter of the Customer Success organization is impacting how Customer Success is funded at your company? A. YES B. NO C. Don’t Know 28
  29. 29. 2. Financial Model • What do you want us to do? • How will we measure success? • What will help us scale? • How will we be funded? 29 Charter Financial Model Practices Metrics Skills Offers Technology
  30. 30. Building the Customer Success Funding Framework 1. What is the target financial model your company is attempting to achieve? 2. Will Customer Success have responsibilities for traditional support activities? 3. Will Customer Success be responsible for adoption? 4. Will Customer Success be responsible for renewing the customer subscription? 5. Will Customer Success be responsible for cross-selling and upselling existing customers? 30
  31. 31. Example #1: Adoption Only 31 Five Questions 2 3 4 5 Support Adoption Own Renewal Expansion Y Y Y Y Subscription Revenue 100% COGS 25% Datacenter, Etc. 15% Support 10% GROSS MARGIN 75% Sales and Marketing 30% CAC (65% of S&M) 19.5% CEC (15% of S&M) 4.5% CRC (20% of S&M) 6.0% 3% R&D 15% G&A 10% OI 20% 3% Total % of Revenue Allocated to Customer Success 1 YOUR TARGET FINANCIAL MODEL
  32. 32. Example #2: All up and in… 32 Five Questions 2 3 4 5 Support Adoption Own Renewal Expansion Y Y Y Y Subscription Revenue 100% COGS 25% Datacenter, Etc. 15% Support 10% 10% GROSS MARGIN 75% Sales and Marketing 30% CAC (65% of S&M) 19.5% CEC (15% of S&M) 4.5% 4.5% CRC (20% of S&M) 6.0% 3% 3% R&D 15% G&A 10% OI 20% 20.5% Total % of Revenue Allocated to Customer Success 1 YOUR TARGET FINANCIAL MODEL
  33. 33. Funding Customer Success at $500M in company revenues $- $20,000,000 $40,000,000 $60,000,000 $80,000,000 $100,000,000 $120,000,000 Adopt Adopt + Retain Adopt + Expand Adopt + Retain + Expand Support + Adopt + Retain + Expand Customer Success Funding Customer Success Funding 33 3% of revenue 6% of revenue 10% of revenue 20% of revenue 7% of revenue
  34. 34. Cost Effective CAC Cost Effective Cross Sell and Renewal! 34 Impact of Customer Success on growth and profitability! Data from Pacific Crest 2014 Survey
  35. 35. Audience Poll • How does your company predominately fund Customer Success? A. COGs carved out of Subscription B. Sales and Marketing • CAC, CRC, CEC C. Other (G&A, R&D) D. Don’t Know 35
  36. 36. 3. Critical Practices • What do you want us to do? • How will we measure success? • What will help us scale? • How will we be funded? 36 Charter Financial Model Practices Metrics Skills Offers Technology
  37. 37. Key Phases in Customer Lifecycle Management 37 Land Adopt Expand Renew The Customer Life Cycle Traditional strengths of technology providers
  38. 38. TSIA Customer Life Cycle Practice Map 1.0 Organizational Strategy and Financial Performance 1.1 Strategy and Goals 1.2 Business Performance Management 2.0 Opportunity Management 2.1 Account Segmentation 2.2 Opportunity Management: Renew 2.3 Opportunity Management: Expand 3.0 Customer Success Delivery 3.1 Customer Onboarding 3.2 Value and Visioning 3.3 Enablement 3.4 Adoption Monitoring 3.5 Opportunity Identification 4.0 Success Operations 4.1 Resource Management 4.2 Talent Management 4.3 Customer Analytics 4.4 Contract Analytics 4.5 Infrastructure 5.0 Success Engineering 5.1 Success Engineering Function 5.2 Product Portfolio Alignment 5.3 Solution Development 5.4 Intellectual Asset Management 5.5 Value Engineering 5.6 Product Integration 6.0 Success Marketing 6.1 Success Marketing Function 6.2 Strategic Pricing 6.3 Services Rollout 6.4 Customer Experience 38
  39. 39. Customer Success Practices: Adoption 1.0 Organizational Strategy and Financial Performance 1.1 Strategy and Goals 1.2 Business Performance Management 2.0 Opportunity Management 2.1 Account Segmentation 2.2 Opportunity Management: Renew 2.3 Opportunity Management: Expand 3.0 Customer Success Delivery 3.1 Customer Onboarding 3.2 Value and Visioning 3.3 Enablement 3.4 Adoption Monitoring 3.5 Opportunity Identification 4.0 Success Operations 4.1 Resource Management 4.2 Talent Management 4.3 Customer Analytics 4.4 Contract Analytics 4.5 Infrastructure 5.0 Success Engineering 5.1 Success Engineering Function 5.2 Product Portfolio Alignment 5.3 Solution Development 5.4 Intellectual Asset Management 5.5 Value Engineering 5.6 Product Integration 6.0 Success Marketing 6.1 Success Marketing Function 6.2 Strategic Pricing 6.3 Services Rollout 6.4 Customer Experience 39
  40. 40. 40 Practices that Drive Adoption Percentage of Customer Success organizations that can monitor consumption remotely: 57% Percentage of Customer Success organizations that have a dedicated analytics team: 60% Percentage of Customer Success organizations that have data models to predict renewal: 50% Percentage of Customer Success organizations that have formal adoption framework: 43% Source: TSIA 2014 Customer Success Baseline Benchmark
  41. 41. Prerequisites for Practice Success • Process Quality: – Design drives efficiency and effectiveness – Leverages proven industry best practices – Well documented – Reinforced by tools and technology • Process Adoption: – Process is consistently adopted throughout the global organization – Feedback loop for adopters to provide innovations and improvements – Clear governance models 41
  42. 42. Process Quality Attributes Does it Exist Documentation Tools and Data Has the process been defined and documented in any way - or - Is it an ad hoc, reactively defined process? Phases and Steps Roles & Responsibilities Inputs / Outputs Swim Lanes / Process Flows Target Metrics Data Definitions Forms / Templates Workflow Automation Tools Software Applications Data Capture / Repositories Reporting Tools Alerts / Dashboards 42 Best Practice50% - 85%25%0% Process Qualit y Process Attributes
  43. 43. 4. Success Metrics • What do you want us to do? • How will we measure success? • What will help us scale? • How will we be funded? 43 Charter Financial Model Practices Metrics Skills Offers Technology
  44. 44. Metric Definition Insight % Subscription revenue spent on Customer Success Total annual dollars spent on Customer Success / Total Annual Subscription Revenues Investing enough in CS? CRC Ratio Total annual dollars spent on retaining customers / Total Annual Subscription Revenues Investing enough in CRC? CAC Ratio % of Sales and Marketing Costs spent on acquiring customers/ This year’s annual revenues – Last year’s revenue Spending too much on CAC? Adoption Rating Based on your companies adoption framework, average adoption rating for accounts being served by CSM Is CS moving the adoption needle? Revenue Renewal Rate Annual Booked Dollars Renewed DIVIDED BY Annual Order Value Available to Renew X 100 Is CS impacting renewal? Churn Rate # of Customers Not Renewed DIVIDED BY # of Customers Available to Renew X 100. Is CS impacting churn? Expansion Rate Incremental Revenue from Existing Customers DIVIDED BY Total Subscription Revenues. Is CS expanding existing accounts? Accounts per CSM Total number of accounts eligible for CSM / Total number of CSMs Over stretched or under scaled? Revenue per CSM Total annual revenues managed by CSMs / Total number of CSMS Right skills to impact revenues? 44
  45. 45. Median Customers per Customer Success Rep 25 25 16 0 5 10 15 20 25 30 Adopters Retainers Expanders 45Source: TSIA 2014 Customer Success Baseline Benchmark
  46. 46. Renewal Rates 82% 93% 83% 76% 78% 80% 82% 84% 86% 88% 90% 92% 94% Adopters Retainers Expanders What is the revenue renewal rate for your Customer Success organization? 46Source: TSIA 2014 Customer Success Baseline Benchmark
  47. 47. Churn Rates 21% 18% 8% 0% 5% 10% 15% 20% 25% Adopters Retainers Expanders What is your annual customer churn rate? 47Source: TSIA 2014 Customer Success Baseline Benchmark Thought: Not fighting high churn—focus on expanding revenues from table customer base Thought: Fighting high churn so Customer Success created to keep customer engaged.
  48. 48. 5. Skills of Customer Success • What do you want us to do? • How will we measure success? • What will help us scale? • How will we be funded? 48 Charter Financial Model Practices Metrics Skills Offers Technology
  49. 49. Where CSMs Come From 40% 32% 3% 41% 31% 27% 9% 17% 30% 1% 1% 0% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% Adopters Retainers Expanders What % of CSMs are hired from the following resource pools? Customer Support Professional Services Sales and Marketing Product Group 49Source: TSIA 2014 Customer Success Baseline Benchmark
  50. 50. Expand SellingLand Selling Customer Engagement Models 50 Adoption Renewal Customer Success Sales Sales1 Sales 2 3 4 Sales/Customer Success (shared) Renewal SpecialistSales Customer Success Renewal Specialist Customer Success SalesSalesSales Sales Sales Customer Success Sources: TSIA 2014 Customer Success Baseline Benchmark; SRG Pulse Webinar Sept 2014; SRG Executive Forum Sept 2014 Customer Engagement Models are diversifying
  51. 51. The Talent Supply Chain ©201 3
  52. 52. Attributes of best in class Skills Assessment Does it Exist Level of Documentation Tools Best Practice Attributes Process for assessing and tracking the skills of delivery staff has been documented There are specific phases for assessing, documenting, and refreshing skills data Roles and Responsibilities for completing skills assessments have been documented. Metrics associated with skills assessment are tracked (EX: % of consultants that have a current profile) There is a template to capture skills data There is a central repository for skill profiles Skill profiles are refreshed at least every six months. After a self-assess, managers and peers provide input into the skills rating. The categorization of skills is effective - not too many categories, not too few. Highest ratings cannot be awarded unless skill is demonstrated on an actual customer project. Skills are aligned with job descriptions and career ladders used by HR. 52 25% 50% - 85% 100%
  53. 53. 6. Offers of Customer Success • What do you want us to do? • How will we measure success? • What will help us scale? • How will we be funded? 53 Charter Financial Model Practices Metrics Skills Offers Technology
  54. 54. Lah’s Law • Feature functionality always commoditizes in XaaS marketplaces. 54 Basic Offer: Complex Offer: Optimize Offer: Outcome Offer: LEVEL 1 SUPPLIER LEVEL 2 SUPPLIER LEVEL 3 SUPPLIER LEVEL 4 SUPPLIER Supplier Operating Model Product Focused Outcome Focused Feature functionality by volume Feature functionality by volume Feature functionality by volume Process by volume Process by volume Outcome by volume
  55. 55. The Technology Industry Products Hardware and Software Technology as a Service Technology Services Product Services Optimize Services Operational Services* Adoption Services Information Services Outcome as a Service 55
  56. 56. Adoption Services is a New Category 56Source: TSIA Emerging Offerings Survey 2013 / 2014 • Vision & strategy alignment • Governance / Decision making authority • Adoption/usage monitoring • Adoption scoring • Adoption benchmarking vs. peers • Bu/siness KPI monitoring • Business KPI scoring • Business KPI benchmarking vs. peers • Industry-specific business metric dashboards • Performance monitoring • Capacity analysis • Account reviews • Feature deployment & utilization assistance • Industry-specific feature utilization training • Assessment/audit of current state/goals/gaps • Best practice playbooks • Success story webinars • Web-based workshops • Super user programs • User group meetings • Performance optimization based on best practice insight • Business or workflow process improvement • Best practice consulting / advise • Co-develop new capabilities with customers to deliver innovation to the market ADOPTION PLANNING CONSUMPTION MONITORING CONSUMPTION OPTIMIZATION PROCESS CONSULTING
  57. 57. Deliverables Cloud / Hosted Maintenance & Support Software Cos. Maintenance & Support Hardware + Software Cos. Managed Services Vision & Strategy Alignment Account Reviews Feature Deployment & Utilization Assistance Web-based Workshops Adoption Services – Common for Cloud & Software common emerging 57Source: TSIA Emerging Offerings Survey 2013 / 2014
  58. 58. Deliverables Cloud / Hosted Maintenance & Support Software Cos. Maintenance & Support Hardware + Software Cos. Managed Services Adoption / Usage Monitoring Assessment/Audit of Current State/Goals/Gaps Performance Optimization Based on Best Practice Insight Business or Workflow Process Improvement Best Practice Consulting / Advise Co-Develop New Capabilities with Customers to Deliver Innovation to the Market Adoption Services – Common in Managed Service Offerings common emerging 58Source: TSIA Emerging Offerings Survey 2013 / 2014
  59. 59. 59 80% 20% Premium Support Offerings We offer a premium support service today We don't offer premium, but we do plan to How Common are Fee-based Premium Support Services for Cloud /Hosted Platforms? 33% 50% 17% Platinum Support Offerings We offer a platinum support service today We don't offer platinum, but we do plan to We don't offer platinum, and we don't plan to Source: TSIA Emerging Offerings Survey 2013 / 2014
  60. 60. Cloud 20 Revenue from “Projects” 60 Q4 2014 Companies Q4 2013 PS Revenue Q4 2014 PS Revenue PS Rev Trend % Rev from PS Veeva Systems $16.0 $22.4 40% 27% Workday $26.4 $43.1 63% 23% NetSuite $21.1 $27.8 32% 19% Medidata $13.0 $14.4 11% 17% ServiceNow $18.3 $28.3 55% 16% Ultimate Software $17.7 $20.0 13% 16% Demandware $1.9 $3.9 106% 10% LivePerson $3.4 $5.1 52% 10% Jive Software $3.9 $4.4 14% 10% SalesForce $71.6 $95.1 33% 7% Athena Health $10.2 $10.7 5% 6% RealPage $3.1 $3.0 -4% 3% IntraLinks 0% RackSpace 0%
  61. 61. 7. Technology Stack for Customer Success • What do you want us to do? • How will we measure success? • What will help us scale? • How will we be funded? 61 Charter Financial Model Practices Metrics Skills Offers Technology
  62. 62. Customer Success Technology Stack 62
  63. 63. Install Data 63 Head room for Customer Success Platforms
  64. 64. Customer Success at Scale 1. Define your charter 2. Define your funding model 3. Mature the required practices 4. Benchmark your success metrics 5. Define, evaluate, and track the skills required 6. Establish offers that target “business value” 7. Invest in the technology stack 64

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