What is Customer Success?

2. Background of the Growing Attention on Customer Success

Changes in business models and sales styles are increasing the demand for customer success.

Changes in Business Model

The subscription-based business model is becoming widespread, with users opting to pay for usage rather than purchasing products outright. In the B to C sector, subscription services are increasing, such as Toyota's KINTO. In the B to B sector, the traditional model involved paying a large upfront cost for packaged products, but now, monthly subscription models provided by SaaS vendors like Salesforce, which offer services online, have become mainstream.

Changes in Sales Style

When the business model changes, the tasks required for sales also change.
In the case of one-time sales products, if the sale of the product is the end goal, then the conclusion of the contract is the target. On the other hand, in the case of subscription models, the contract marks the start of the relationship with the customer. If expectations are not aligned and goals with the customer are not set, the contract will not be renewed. Additionally, in the case of SaaS services, there are often many areas that need improvement at the time of release. After that, features are gradually updated, and the product grows together with customers and the market.
In subscription-based businesses like the SaaS industry, it can be said that there is a need for motivation to provide customer feedback to the product and enhance its capabilities.

Unlike traditional one-time purchase business models where sales peak at the time of purchase, for SaaS companies, customer lifetime value (LTV) increases progressively as customers continue their subscriptions. Therefore, ongoing support through customer success initiatives is essential.

Content Creation Support Services and Case Studies to Consider CX

3. Benefits of Customer Success

There are two benefits: improved service quality for customers and enhanced performance.

●Quality Improvement: Enhancing Products and Services
Customer success is in a position close to the customer, allowing for the accumulation of information that leads to improvements in products and services, which can be fed back internally. By utilizing that information for service development and product enhancement, it not only improves the satisfaction of existing customers but also leads to the acquisition of new customers.

●Performance Improvement: Branding
By continuously engaging with customers after purchase through customer success, we can instill a positive impression in them. Providing a positive perspective on the brand and creating fans leads to expansion into other internal businesses or departments, resulting in various benefits such as additional purchases and increased purchase frequency.

Furthermore, customer success leads to the following three benefits.

Maximizing LTV

LTV stands for Life Time Value. It refers to the profit that a customer brings to a company over their lifetime. Through customer success, you can improve the LTV of your products and services.
There are several methods to calculate LTV, but it is generally calculated using the following formula.

Average purchase unit price × Continuation purchase period (or average purchase frequency)

Through customer success experiences, we can promote an increase in average purchase value, an extension of the repeat purchase period, and an increase in average purchase frequency, thereby increasing the profits derived from the customer's lifetime.
Additionally, this leads to a reduction in the churn rate. The churn rate refers to the percentage of customers who cancel or stop transactions within a certain period, and is commonly known as the cancellation rate.
It is an indicator used to enhance the repeat purchase period in LTV, and by keeping the churn rate low, customers are encouraged to use products and services for a longer time. Through customer success activities, quickly addressing customer dissatisfaction and maintaining a high level of satisfaction leads to a longer repeat purchase period, which ultimately improves LTV.

Acquisition of Upsells

Upselling is a sales technique that encourages customers who have previously purchased products or services to make additional purchases. It focuses on increasing the 'quality (unit price)' rather than the 'quantity' of customers. It often involves suggesting the purchase of similar and higher-tier services or products, and in subscription-based businesses, methods such as gradually increasing the contract amount from 'free plan ⇒ paid plan ⇒ optional contract' are also used.
To maximize LTV in this way, it is necessary to aim not only for the extension of the contract period through continuous use of the service but also for the improvement of customer unit price through upselling.

Acquisition of Cross-Selling

Cross-selling is a sales technique that encourages the additional contracting of related services. This is also a method to increase the customer's average spending. While upselling is a method that recommends increasing the usage amount of already contracted services (switching to a higher plan), cross-selling is a method that recommends additional services.