State of June 2019 Customer Success 2019 - Regalix · Customer churn rate Net Promoter Score (NPS)...

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State of CustomerSuccess2019

June 2019

Trends, Technologies and the Future

2

Introduction

According to a recent study on customer success, “organizations with a dedicated customer success team have at least a 10% boost in retention than those without.” It’s no surprise, then, that an increasing number of businesses are investing in customer success. While customer success has its roots in the SaaS world, it is widely adopted across industries today.

Early last year, we conducted the study, ‘State of Customer Success 2018’. This is a follow up to that study, primarily aimed at understanding how customer success has evolved since then and whether some of the issues that were challenging marketers at the time have been adequately addressed now.

Read on to know what we found.

3State of Customer Success 2019 - Trends, Technologies and the Future

Industry breakup

Revenue breakup

Level breakup

Employee breakup

Customer breakup

Computer Software

Information Technology and Services

Marketing and Advertising

Internet

Telecommunications

Hospital and Health Care

Others

72%

8%

3%

3%

1%

1%

12%

> $1B

$500M - $1B

$250M - $500M

$100M - $250M

$50M - $100M

< $50M

> 10,000

5,001-10,000

1,001-5,000

501-1,000

201-500

< 200

C-Suite

Vice Presidents

Directors

Managers

3%

3%

1%

11%

11%

71%

2%

1%

11%

19%

8%

60%

14%

35%

8%

20%

23%

2%

8%

14%

76%

> 50

50-500

501-1,000

1,001-5,000

< 5,000

Profile of respondents

4

Key insights from the study

• 78% of organizations have clearly defined customer success strategies.

• Reducing churn (84%), increasing product usage (59%) and boosting upsells and cross-sells (51%) are the top three business objectives for customer success programs.

• Email (96%) and phone (57%) are the two main channels that organizations use to engage with their customer base.

• Live demonstrations (79%) and training documents (69%) are the top content assets that organizations use to onboard their customers in customer success programs.

• Managing customer expectations (52%) and getting actionable insights from customer data (44%) are the two biggest challenges in customer success programs.

• Product adoption (69%) and better ROI (65%) are the main benefits of customer success programs.


Most of the organizations surveyed do have defined customer strategies. 78% of the organizations surveyed say they have clearly defined customer strategies. This is an increase over last year’s figure of 72% (State of Customer Success 2018) (Figure 1).

Does your company have a clearly defined customer success strategy?

Figure 1

78%Yes

22%No

6

3-5 years is the most common customer lifetime period among organizations.50% of the surveyed organizations say that the average lifetime period of their customers is 3-5 years. Only 20% have customer lifetimes of over 5 years (Figure 2).

What is the average customer lifetime period in your organization?

Figure 2

Less than a year

1-2 years

3-5 years

5+ years

3%

27%

50%

20%


How much of your revenue is generated through product renewals/service retention?

A significant portion of revenue for organizations comes from renewals and service retention.77% of organizations have over 40% of their revenues being generated from renewals and service retention. Of these, 36% generate over 60% of their revenues through renewals. This is a clear indication as to why customer success is a necessary strategy for businesses: it promises to deliver higher retention (Figure 3).

Figure 3

10-20%

21-40%

41-60%

61-80%

80%+

4%

19%

41%

21%

15%

8

Reducing churn is the number one objective of customer success programs.More than 80% of the organizations surveyed say reducing churn is one among the top three business objectives of their customer success programs. Increasing product usage (59%) and boosting upsells and cross-sells (51%) are the other two. Renewals (50%) come in at a close fourth (Figure 4).

Now here’s what’s interesting: while reducing churn topped the list of objectives last year too, it was chosen by only 66% of the respondents, as against 84% this year - a reflection, perhaps, of the increasing challenges in combating churn that businesses have been faced with in recent times.

Likewise, boosting upsells and cross-sells stood at only 38% last year as compared to 51% this year. This confirms our earlier observation that while reducing churn and increasing product usage are commendable initiatives by themselves, marketers can benefit further by digging deeper into such programs; upselling and cross-selling of products and building referrals are some of the more immediate benefits that marketers can hope to gain.

Reduce churn

Increase product usage

Upsell and cross-sell

Increase renewals

Increase average revenue from each customer

Gain referrals

Channel success

Other

84%

59%

51%

50%

28%

21%

11%

6%

What are the top 3 business objectives of your customer success program?

Figure 4


Deeper product adoption and better ROI are the key benefits that customers gain from a customer success program.69% of organizations believe that deeper product adoption is the top benefit that customers gain from their customer success program. Better ROI (65%) comes next (Figure 5).

What are the top 2 benefits your customers enjoy as a result of your customer success program?

Figure 5

Product adoption

Customers get a better ROI

Easier onboarding

Customers save time

Customers are monetarily benefited (through referral promotions, loyalty programs)

Other

69%

65%

42%

19%

3%

4%

10

Renewals, customer churn rate and Net Promoter Score (NPS) are the key metrics used to measure the performance of customer success programs.Renewals (69%) and customer churn rate (55%) continue to top the list of metrics that organizations use to measure the performance of their customer success programs, in keeping with last year’s findings (Figure 6). An interesting inclusion in the top three list this year is the Net Promoter Score (NPS). NPS is a good indicator of the loyalty of a customer toward a business; it has a strong correlation with customer satisfaction and revenue growth.


Renewals

Customer churn rate

Net Promoter Score (NPS)

Customer health score

Customer satisfaction level (CSAT)

Revenue generated

Adoption rate

Engagement metrics

Lifetime value

Quantum of upsell & cross-sell

ROI

Customer referral rate

Other

69%

55%

39%

31%

23%

18%

18%

14%

11%

9%

6%

5%

4%

What are the 3 key metrics used to measure the performance of customer success in your organization?

Figure 6

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Regular account updates with clients (QBRs, EBRs, etc.)

Tutorials and demos to help use the product

Collect feedback about the product

NPS surveys

Customer satisfaction surveys

Automated emails based on product usage

Workshops

Other

88%

75%

50%

30%

20%

18%

14%

10%

What are the top 3 activities you run as part of your customer success program?

Regular account updates and tutorials & demos are the top two activities run by organizations as part of their customer success programs.Regular updates with clients (88%), followed by tutorials & demos to help use the product (75%), tops the list of activities that marketers run as part of their customer success programs. Collect feedback about the product (50%) comes in at a distant third (Figure 7).

Compared to last year, customer satisfaction surveys and NPS surveys have received less responses (44% vs. 20% and 38% vs. 30%, respectively). This does not augur well as collecting regular feedback is an important activity for any customer program to be successful.

Figure 7


Salesforce is the most popular tool used by organizations to manage their customer success programs.42% of organizations surveyed mention Salesforce as the tool they use for managing their customer success programs. Gainsight (22%) stands second.

While 22% of respondents in 2018 said they did not use any tool, only 6% say so this year, suggesting, perhaps, that more organizations are now investing in tools to manage their customer success programs (Figure 8).

Salesforce

Gainsight

In-house platform

We don’t use one at this moment

Totango

Other

42%

22%

7%

6%

4%

19%

What platform or tool do you use for managing your customer success programs?

Figure 8

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Email and phone are the most widely used engagement channels.Email (96%) is by far the preferred channel through which organizations engage their existing customers. Phone (57%) and webinar & online events (30%) are a distant second and third.

Interestingly, the dominance of the phone as a channel, which was at a response level of 80% last year, seems to have waned. Social media (5%) is not seen as a meaningful channel for engaging with existing customers (Figure 9).

Email

Phone

Webinars & online events

Offline events (workshops, seminars, etc.

Website

Social media

Other

96%

57%

30%

10%

8%

5%

5%

Which of the following channels do you use to engage with your existing customer base?

Figure 9


Managing customer expectations and getting actionable insights from customer data are the key challenges in customer success programs.When asked what they found to be the most challenging aspect of ensuring the success of their customer success programs, 52% of respondents cited managing customer expectations. Next on their list was getting actionable insights from customer data (44%), followed by measuring customer satisfaction (31%) (Figure 10).

On the subject of managing expectations, the importance of collecting regular feedback from customers cannot be overemphasized. We believe that this aspect of customer success programs is not getting the level of attention that it warrants.

Managing customer expectations

Getting actionable insights from customer data

Measuring customer satisfaction

Retaining customers

Onboarding customers

Upselling/cross-selling of products and services

Getting referrals

Other

52%

44%

31%

23%

19%

19%

12%

4%

What do you find most challenging in ensuring positive results from your customer success program?

Figure 10

16

Live demonstrations and training documents are the top content assets that organizations use to onboard their customers in customer success programs.Live demonstrations (79%) and training documents (69%) top the list of content assets that organizations use for onboarding their customers. Onboarding playbooks (61%) comes next (Figure 11).

Live demonstrations

Training docs

Onboarding playbooks

Explainer videos

Recorded demos

Feature guides

Case studies

Simulations

Other

79%

69%

61%

43%

40%

34%

26%

7%

5%

Which content assets do you use for onboarding your customers in a customer success program?

Figure 11


While the percentage of organizations that track Customer Lifetime Value (CLV) remains low, the trend seems to be changing.Only 31% of the organizations in our survey say that they track the CLVs of all their customers. This is similar to our finding last year. However, only 35% of the respondents this year (as against 57% last year) say they don’t track CLVs at all. The remaining 34% of respondents (as against 11% last year) track the CLVs of their customers partially, suggesting that they do it only for a few significant clients. This is a trend that we only see going up in the near future (Figure 12).

Do you track the Customer Lifetime Value (CLV) of all your customers?

Figure 12

31%Yes

35%No

34%Partially

18

A majority of organizations track, at least to some extent, what their customers are saying about them on social media.Social media listening has become a necessary activity today, and companies are using a range of tools to do this. 49% of organizations say they keep track of what their customers are saying about them, while 26% do so sometimes. However, 25% of organizations still don’t do any social media listening (Figure 13).

Do you track what your customers are saying about your organization or product on social media?

Figure 13

49%Yes

25%No

26%Sometimes


The practice of rewarding customers for referrals is yet to find favor with most organizations.Only 43% of surveyed organizations reward their customers for referrals. While this might seem to be a low figure, it is still an improvement over last year’s figure of 39% (Figure 14).

At a time like this, when customer advocacy and word of mouth play a significant role in influencing customer purchases, rewards and loyalty programs should be integral parts of an organization’s customer success pursuit.

Do you reward customers for referrals?

Figure 14

43%Yes

57%No

20

Analytics to predict dollar retention and customer journey mapping are the most popular areas of investment for organizations.When we asked organizations which areas they invest in to optimize their customer success programs, 35% chose analytics to predict dollar retention. This is understandable, considering that a large portion of a company’s revenue today comes from retention and renewals, as seen earlier.

After that came customer journey mapping (28%). This is certainly a positive trend, as managing customer expectations — the biggest challenge in customer success programs — begins with knowing where customers are in their respective buying journeys (Figure 15).

Analytics to predict dollar retention

Customer journey mapping

Automated workflows

Analytics to predict dollar expansion

Other

35%

28%

24%

6%

7%

In which of the following do you currently invest the most to optimize your customer success program?

Figure 15


Predictive analytics

AI & machine learning for automating processes

I don’t want to invest

Chatbots

Virtual & augmented reality for enhancing the customer experience

Other

39%

23%

20%

8%

3%

7%

Which of the following technologies do you plan to invest in for your customer success program?

Figure 16

Predictive analytics tops the list of technologies that organizations want to invest in.39% of respondents are keen to invest in predictive analytics as part of their customer success programs. AI & machine learning for automating processes (23%) is next in line. 20% of the respondents, however, say they have no wish to invest in technology (Figure 16).

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Key recommendations:

• Map the customer journey

“Customer success focuses on ensuring that your customers achieve their desired outcomes through their interactions with your company,” says Lincoln Murphy, author and customer success evangelist. To be able to help customers achieve their desired outcomes, an organization needs to know what those outcomes are. Understanding the customers and their needs, thus, becomes the cornerstone of an effective customer success program.

As our study shows, companies today face a huge challenge in managing customer expectations. This is mostly because they don’t fully appreciate what their customers are looking for. Since customer needs evolve over time, it’s important for an organization to stay connected with its customers throughout their life cycles. Understanding customer expectations at every touchpoint and delivering on those expectations can help build a long and fruitful relationship. A customer journey map would be a helpful tool in this endeavor.

• Gather constant feedback

Capturing meaningful customer feedback is essential to any customer success program. Are customers satisfied with the product? What are the challenges they face in getting more value out of it? What’s stopping them from using the product more? These and other questions need to be continuously asked so that relevant interventions can be made to address the issues. Gathering customer feedback should be an ongoing process that’s built into the customer success program. It should not be restricted to a few touchpoints, but extended to all relevant touchpoints throughout the customer journey.

Our study underlines the fact that companies are still somewhat in a monologue phase when it comes to educating customers on the benefits of their products and services; not as much emphasis is given to collecting regular feedback from them. This imbalance needs to be rectified. It’s important to have a defined process by which customer feedback can be regularly and rigorously gathered through the customer success program at each and every customer touchpoint.

• Expand the channels of engagement

To know your customers better, you need to engage with them actively. To be able to do this, organizations need to look beyond their current dependence on email and telephone. There are


many channels besides these that have great potential for engagement: webinars, online events and social media, for instance. Organizations need to actively look at expanding their channels of engagement to be where their customers are.

• Reward customer advocacy

Customer advocacy and referrals are key to building a strong customer base. Customers today increasingly turn toward social media references and peer reviews before deciding on a purchase. Given this scenario, organizations would do well to consider investing in loyalty programs that would help them actively promote customer advocacy and referrals. Brands can use chatbots, gamification and social badging to make the engagement more involved.

• Invest in technology

With technology evolving every day, it’s important that companies continually evaluate newer technologies to integrate into their customer success programs. For instance, using feature-discovery algorithms, organizations can predict which users could discontinue their services in the near future and which customers exhibit high propensities to make more purchases. By integrating these insights into their customer success efforts, businesses can take necessary action to address them.

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Research contributors

Arunh Krishnan

Shubharthi Ghosh

Survey operations

Swastika Singh

Creative services

Priyokumar Singh Naorem

About the analysts

Credits

Nimish Vohra SVP, Principal Analyst

Nimish works with CMOs and senior marketing professionals. His research focuses on customer success management, predictive analytics, mobile enablement and other emerging trends that help customers leverage technology as an enabler of marketing and business outcomes.

Tabish Khan VP, Solutions

Tabish is a subject matter expert in the domain of customer success. He works with senior executives from various teams such as customer onboarding, customer satisfaction and customer engagement. His research focuses on identifying, creating, driving and delivering innovative strategies focused on revenue maximization for clients.


Notes

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Notes


Notes

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About RegalixRegalix is a Customer Acquisition and Customer Success company that re-imagines digital experiences across hi-tech, ad-tech, and retail domains. The company has partnered with some of the largest global B2B organizations in their efforts at customer acquisition, growth and retention. Regalix works with businesses, supporting their customers through the entire journey, to deliver reliable products and services in today’s subscription-based economy.

Regalix has a long history of creating award-winning ventures with enterprises through co-innovation and idea-driven frameworks that inspire companies to think different. Headquartered in the Silicon Valley — Palo Alto, California — Regalix has offices in Europeand Asia.

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