What is Customer Success?

Table of Contents

1. What is Customer Success?
2. Background of Customer Success
3. Benefits of Customer Success
4. Skills Required for Customer Success
5. Summary

1. What is Customer Success?

In recent years, companies that offer subscription-based services have been increasing their efforts in customer success. In the past, there was not much consideration for customer success as the focus was on customer support. However, now more and more companies are not only providing support, but also working towards customer success, which is the support that leads customers to success.

Definition of Customer Success

"Customer Success" refers to the success of customers, as the name suggests. Generally, it is defined as "efforts to lead customers to success".
What is customer success? It refers to the state where customers who use a product or service can achieve the expected results and success by using that product or service. Customer success serves as motivation for customers to continue using the product or service.
Subscription-based services cannot generate revenue unless customers continue to use the service. In a situation where products and services are flooding the market and customers are easily switching to other companies' services, it is important to consider "how to keep customers using the service". Companies with a strong focus on customer success can achieve stable business and further increase in revenue.

Role of Customer Success

Understanding what results the customer expects by using the service and supporting the realization of those results. It also involves helping to bring out the value of products and services.
An essential perspective for this is the concept of "Customer Success," which involves understanding and fulfilling the customer's essential needs.

Difference between Customer Support

First of all, as mentioned earlier, the roles of customer success and customer support are different. The role of customer support is to solve problems when they occur. It aims to improve customer satisfaction through problem solving, but it is a continuous response because it is a response when a problem occurs.
On the other hand, customer success aims to lead customers to success, increase customer satisfaction, and maximize LTV (Lifetime Value). Therefore, it is characterized by accompanying customers from the introduction of products or services and continuing to work towards success, building long-term relationships.
In other words, customer support is basically in a "waiting" position, while customer success can be seen as an "attacking" position. This is because the goal is to anticipate and remove the buds of issues and problems so that customers do not fail.

There are also other differences as follows.

	Customer Support	Customer Success
Difference between KPI and KGI	Number of customer problem resolutions.	Churn rate (cancellation rate) decrease, final LTV based on GRR (gross retention rate) and NRR (net retention rate).
Man-hours & Speed	Quick response. Emphasizing the ability for customers to continue using products and services "as usual" quickly.	To ensure that customers can continue to use products and services smoothly, we proactively approach and repeat. In case of any issues, we aim for fundamental solutions that lead to customer success, rather than prioritizing speed.
Position	The basic principle is to complete customer support within the department.	Emphasizing collaboration with the department responsible for sales, product and service development. Working with each department to rally the entire company towards the success of our customers.
Contribution to Sales	Costs are incurred to solve customer challenges. Basically, there is no revenue.	Supporting customer success to achieve contract extensions. Contributing to sales by aiming for upselling and cross-selling.
Organization	Organization necessary for all companies.	Especially necessary for startups and SaaS companies. In startups, there is a focus on maintaining existing customers for continuous revenue and profit assurance.

2. Background of Customer Success

The changes in business models and sales styles are increasing the needs for customer success.

Business Model Changes

The subscription-based business model has become widespread, where users pay for the duration of use rather than "buying things". In the B to C industry, there has been an increase in subscription-based services, such as Toyota's KINTO. Even in the B to B industry, the traditional business model of paying a large initial cost for packaged products has shifted to a monthly billing model for services provided online by SaaS vendors like Salesforce.

Changes in Business Style

When the business model changes, the tasks required for sales also change.
In the case of sales of one-time purchase products, the goal is to close the contract if the product is sold. On the other hand, in the case of monthly subscription products, the contract marks the start of the relationship with the customer. If the expectations are not adjusted and the goal is not set with the customer, the contract will not be continued. In addition, for SaaS services, there are often areas that need improvement at the time of release. After that, the functions will gradually be updated and the product will grow along with the customers and the market.
In sales for subscription-based businesses such as the SaaS industry, it is necessary to have the motivation to gather feedback from customers and improve the product's capabilities.

For SaaS companies, unlike the one-time sales model where revenue is maximized at the time of purchase, LTV (lifetime value) increases gradually as customers continue to use the service. Therefore, customer success support is essential for success.

Content Creation Support Service and Case Studies to Help You Consider CX

3. Benefits of Customer Success

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

●Quality Improvement: Improving Products and Services
As a Service Consultant, we are in a position close to the customer, so we can gather information that leads to the improvement of products and services and provide feedback within the company. By utilizing this information for service development and product improvement, we can not only improve the satisfaction of existing customers, but also acquire new customers.

●Performance Improvement: Branding
By using Customer Success, we can continuously engage with customers after their purchase and leave a good impression on them. This can lead to a positive perception of our brand and create fans, which can also benefit other departments and businesses within the company by increasing repeat purchases and frequency of purchases.

In addition, customer success leads to the following three benefits.

Maximizing LTV

LTV stands for Life Time Value. It refers to the profits that a customer brings to a company throughout their lifetime. By focusing on customer success, a company can improve the LTV of their products and services.
There are several methods for calculating LTV, but the most common is the following formula.

Average Purchase Unit Price x Continuation Purchase Period (or Average Purchase Frequency)

Through the success experiences of our customers, we can promote an increase in average purchase price, extension of continuous purchase period, and increase in average purchase frequency, thereby increasing the profits obtained from the customer's lifetime.
This also leads to a decrease in churn rate. Churn rate refers to the percentage of cancellations or suspensions of transactions within a certain period, and is generally known as the cancellation rate.
It is an indicator used to increase the continuous purchase period in LTV, and by reducing the churn rate, customers will be able to use our products and services for a longer period of time. Through customer success activities, we can quickly address any dissatisfaction and maintain a high level of satisfaction, resulting in a longer continuous purchase period and ultimately improving LTV.

Upsell Acquisition

Upselling is a sales technique that encourages customers who have purchased a product or service to make additional purchases. It focuses on increasing the "quality (unit price)" of customers rather than the "quantity". It often involves proposing the purchase of similar or higher-level services or products, and in subscription-based businesses, a method of gradually increasing the contract amount by offering a "free plan ⇒ paid plan ⇒ optional contract".
To maximize LTV in this way, it is necessary to not only extend the contract period through continuous use of the service, but also to aim for an increase in customer unit price through upselling.

Cross-Selling Acquisition

Cross-selling is a sales technique that recommends additional contracts for related services. It is also a way to increase the customer's unit price. While upselling is a method of recommending an increase in usage fees for services that are already under contract (upgrading to a higher plan), cross-selling is a method of recommending additional contracts.

4. Skills Required for Customer Success

The base skills required for customer success are communication skills to gain trust from customers. These can be summarized into three categories.

• Relationship Building Skills
• Information Analysis Skills
• Problem Solving Skills

Relationship Building Skills

Building relationships requires accurately understanding the needs of customers and maintaining close communication. By doing so, trust can be built by demonstrating a commitment to always strive for the success of the customer, increasing the likelihood of becoming a long-term client.

Information Analysis Skills

At Customer Success, you will be responsible for collecting information about various customers. In order to extract and analyze information that will contribute to future product development and improvement of services and performance, you will also need skills in analysis. In order to propose improvements based on analysis, it is necessary to clearly communicate customer issues to developers and service designers.

Problem-solving skills

In addition to the skills to solve the challenges that customers face with our products and services, it is also necessary to have the ability to communicate effectively. Some challenges cannot be solved by the Customer Success department alone. Therefore, it is necessary to have good communication with other departments and seek support when needed, in order to coordinate across departments and groups.

5. Summary

At Human Science, there are many services available for customers in the Customer Success department. In particular, we believe that the quality of content provided by the Customer Success department is the key to success. We have a track record of creating user training texts and providing consulting for improving e-learning content. The following is an example of our work.

WingArc1st Inc.: Consulting and content creation services for the Customer Success department, including content evaluation and improvement consulting.
https://hs-learning.jp/case/wingarc1st/

We also offer services that can handle the creation of easy-to-understand "manuals" and "video manuals", as well as e-learning content, which are necessary for customer success, all in one stop. Please take advantage of them.