Sales, pre-sales and post-sales are considered the trifecta of hunting new business. The three work in perfect harmony: the salesperson gets the introduction, the engineer showcases the product and the customer success manager supports the user to implement and optimise it.
Your Customer Success Manager (CSM) is the key point of contact for supporting your customers as they transition from sales prospects to active users of your products. As a general rule, they’re focused on building close, long-term client relationships and often stay with the same customers as long as they continue to work with your business. It sounds like a critical part of the sales puzzle, yet all too often we’ve seen this step left out of the sales process, and when that happens the whole house of cards comes tumbling down.
Why isn’t customer success being prioritised?
With the economic turbulence of the last year, many companies, particularly in the cyber-SaaS space, have held off on hiring decisions. This is compounded by a reduction in VC funding in the first half of the year. In fact, in Q2 2023 venture funding for cyber security was 63% less than in the same period in 2022. With a crowded marketplace fighting for just $1.6 billion in investment, cyber vendors have been severely stress tested this year.
This has led to some roles, such as the CSM, being cut. The value of a customer success function is often overshadowed, and the responsibilities of these employees are frequently put on to other team members until the situation becomes critical.
Where’s the value in the CSM function?
Recently, a lot of cyber vendors are realising that in order to promote their key differentiators - product quality and reputation - customer success efforts cannot be sidelined and are in fact crucial to accelerating growth, even in times of crisis. As the market stabilizes in Q3, we’re witnessing a U-turn on the decision to cut the CSM out of the sales triad.
So where does the Customer Success Manager add value to an organisation, and why should you make hiring them your priority?
1. Customer Satisfaction
Customer experience (CX) is often a matter of simple economics – if a customer is happy with a product or service, they will continue to use it, and if they’re unhappy they’ll look elsewhere.
Whilst companies are currently putting the impetus on new business sales, maintaining your current customer base is increasingly important. Research from Groove tells us that the probability of selling to an existing happy customer is 14 times higher than to a new one; it’s so important therefore to support your clients or customers, and this is where the CSM really comes into their own.
By having a customer success function, you have a clear contact point for the consumer, whether they need someone to:
Ensure proper deployment
Escalate or resolve any issues
Discuss renewals
With one clear contact point, you can build a proper relationship with that customer, which will benefit your business in both the short and long term. 89% of customers are more likely to make another purchase following a positive customer service experience, so this relationship results in clear financial returns.
2. Churn Rate
What’s the point of investing in a fantastic new business sales team if a few years later your customers decide to go to one of your competitors?
A recent Microsoft study shows that 96% of customers see the service they receive as an important factor in whether or not they become loyal to a brand. Poor customer service can make a business lose valuable consumers. Moreover, it can be the reason why some sales leads don’t ultimately convert. It’s difficult to find a baseline level for churn rate, but by some estimates the computer software industry loses 14% of customers each year, while Pacific Crest found the annual median churn rate for SaaS providers is 10% or lower.
From our experience at Trident, we’ve seen that most businesses have around twenty enterprise accounts for every CSM. If we assume that the annual reoccurring revenue (ARR) of each account is £50k, then an annual churn rate of 14% will be costing businesses £140k a year.
By cutting the churn rate, you not only confirm that customer satisfaction is high - leading to more sales - but you also guarantee growth at a quicker rate and reduce the financial losses you incur.
3. Net Retention Rate
Losing business will play a big part, but what you do with the business that you do have is where customer success really comes into its own.
Net retention has become, by far, one of the top metrics that people look at in SaaS. It’s an essential driver of stakeholder value and a big influence on the growth rate. While customer loyalty is a strong indicator of the number of clients that stay with your business, the net retention rate tells us of their purchasing power. To keep your high-value customers you have to ensure their needs and requirements are consistently being met.
Here at Trident Search, we see the average CSM with twenty or so accounts managing around £1 million in annual contract value (ACV). That’s a financial incentive in itself, but within these accounts there’s a huge amount of untapped potential. The most skilled CSMs can advise on renewals and upgrades to increase the profit margin and are vital to ensuring your customers are satisfied with the product or service they have.
They’re converting “happy” users to “engaged” users. CSM’s understand the pain points of their customers, the reason they bought the product and what additional features they might require. Whilst they’re checking in with customers to ensure their goals are being met, they’re also assessing whether the product is being used to maximum effect. This in turn drives growth as a high usage of the product will translate to an improved ROI.
If we look at our hypothetical churn rate of 14%, your CSM is there to counteract that £140K loss by cross-selling and upselling to existing customers to maximise the value of those accounts.
4. Product Optimisation
As the direct point of contact for the customer, the CSM has a unique insight into the needs and wants of the product user, making them a vital part of the development cycle.
By engaging with customers to demonstrate product features or discuss platform changes, they are able to obtain crucial information on how these will be received by the market and whether customer needs are being adequately met.
Through in-depth conversations with those who use it each day, the CSM is able to help improve the product in real time, rather than relying on the less effective model of a development team telling the customers what they think they should want or need. They’re therefore the middle point between the product development team and the end user, and are able to communicate vital information to both sides.
The CSM: an essential role in your sales powerhouse
From what we’ve seen, companies that always think about how to bring value to their users are the ones that will grow faster and have more success. Giving customers a great experience will keep them loyal and will help to reduce the churn rate of new business.
Yet the CSM does so much more than just keeping the customer happy. They have a full understanding of their various accounts: why they bought the product, what they want to achieve, and what developments would make their lives easier. They’re an essential part of the product development process and are the critical link that ensures the user’s voice is heard.
Ultimately, and especially in an uncertain economic environment, creating a good customer experience isn’t just a nice-to-have, it’s an absolute must, and your CSM is vital cog in this process.
With a vast database of skilled CSMs and an in-depth understanding of industry trends, we can help you to find the best professionals for your sales team. Get in touch with our experts to find out more and to start building out your CSM function today:
