Four Touch Models of Customer Success

Table of Contents

1. What is Customer Success?
2. What is a touch model?
3. Four Layers of Touch Model
4. Benefits of Touch Models
5. Summary

1. What is Customer Success?

In recent years, companies that offer subscription-based services have been increasing their efforts in customer success. The goal of customer success is to "guide customers to success" through their products and services. In order to efficiently achieve this goal, a "touch model" is used to change the approach for different customer segments.

2. What is a touch model?

Customer Success, which supports the success of customers by utilizing their products and services, is one of the objectives to maximize their LTV. In order to maximize the LTV of customers, a method called "touch model" is used to classify customers based on their transaction amount and service unit price, and to approach each of them with the most suitable approach. We will explain the relationship between LTV and touch model in customer success, as well as the benefits of segmenting customer segments.

LTV and Touch Model

LTV stands for Life Time Value, which means "customer lifetime value". It refers to the profits that a single customer brings to a company from the time of contract to cancellation. In SaaS, LTV is typically calculated using the following formula.

LTV=ARPA (Average Revenue per Account=Average Monthly Unit Price per Customer) ÷ Churn Rate (Cancellation Rate)

Example: If a company with a monthly transaction amount of 1 million yen and a company with a monthly transaction amount of 100,000 yen cancel their contract, the churn rate will not change if we consider them as the same company. However, in terms of ARPA, the impact of a company with a monthly transaction amount of 1 million yen on LTV will be greater than that of a company with a monthly transaction amount of 100,000 yen. Therefore, by prioritizing the company with a monthly transaction amount of 1 million yen, we can aim to maximize LTV.

In other words, high transaction amounts and service unit prices have a significant impact on LTV, so it is important to classify customers based on transaction amounts and prices and determine priority from top customers using the "touch model". For onboarding that accompanies the introduction of services, it is important to use the touch model to maintain top customers.

3. Four Layers of Touch Models

At Customer Success, it is necessary to segment customers based on LTV and allocate limited resources in order to achieve overall optimization. There are four specific segments as follows.

• High Touch
• Low Touch
• Tech Touch
• Community Touch

High Five

This segment refers to the response to the layer that is contributing or expected to contribute significantly to LTV. Customers who use high-priced services or have a large transaction scale can be considered as customers contributing to LTV. In addition, for customers with high brand recognition or other benefits for the company, we can provide high-cost support.
As an approach, it is essential to implement customized and thorough support for each company. This aims to maximize LTV through improved customer loyalty and retention. Possible approaches include the following:

• On-site implementation support
• Constant monitoring and support of customer situations
• Frequent regular meetings with customers, internal study sessions, and training sessions

In general, high-touch is the segment with the fewest number of customers. Individual support through face-to-face interactions is the main focus, and we provide services similar to consulting, such as customization of functions and individual goal setting and regular progress checks for utilization.

Rotouch

This segment refers to the response to a group that has a significant impact on revenue, although not as much as a high-touch approach. We cannot allocate resources as much as a high-touch approach, but we need to have direct contact with customers and provide efficient support. However, while providing support to a certain extent as a group, we do not customize for each customer.

• Packaged implementation support
• Workshops with users
• Regular monitoring and support of customer situations

Tech Touch

This segment refers to the support for customers with a large number but low contribution to revenue. This includes customers who use low-priced services or have small transaction sizes. Generally, because this group has the largest number of customers, we prioritize efficiency by utilizing technology to support them. This includes providing content such as tutorials and learning guides on our website, self-service support that encourages customers to solve problems on their own, and automatic support through email distribution.

• Information sharing through operation guides and video manuals
• Providing tutorials for the service itself (encouraging self-resolution)
• Utilizing emails (such as service update information)

This method, which solves common improvement requests through functional implementation, is also included in Tech Touch.

Community Touch

This segment refers to responses based on "community" such as community sites, unlike the classification based on the expected LTV amount. In community touch, the company creates a foundation and works on it in the initial stage. After that, once it gets on track, users will generally communicate with each other to solve questions and issues. Although it takes time and cost to introduce, once it starts to run on its own, there is not much need for the company to put in effort, making community touch cost-effective. In addition, by discovering new ways to use through communication, it can lead to the creation of value that is different from what the company provides to customers, which can also contribute to branding. It may also lead to approaches from customers to the company and contribute to product improvement.

4. Benefits of Touch Models

Benefits of dividing into touch models

The advantage of a touch model is the efficient use of limited resources.
The customer base is typically pyramid-shaped, with a small number of customers at the top who use high-priced services and have a large transaction scale, and a large number of customers at the bottom who use low-priced services and have a small transaction scale. The top customers have a significant impact on LTV, so they require strong support.
While it would be ideal to provide the same level of support to all customers, it is not realistic to provide the same level of support as the top customers to all customers. This is because costs and resources are limited. However, if we prioritize equality and provide support to the bottom customers, it will result in insufficient support for the top customers who have a significant impact on LTV.

Therefore, by segmenting customers based on LTV, we can divide our approach into four categories, allowing us to provide the most suitable approach for each customer's situation and needs. This enables us to optimize the allocation of our company's resources and provide efficient and cost-effective support even with limited resources. As a result, we can maximize cost performance.

Customer Segmentation Method

Customer segments based on four touch models are classified by LTV, product utilization maturity, and potential for future contract expansion. LTV can be calculated by multiplying average purchase price, purchase frequency, and purchase continuity period, but other factors such as customer ARR (annual recurring revenue), loyalty, IT literacy, and current phase can also be understood.

By checking the Annual Recurring Revenue (ARR) obtained every year, you can understand the actual profit of a subscription-based service. Additionally, if the loyalty towards the company's products is high, you can expect an increase in the future Lifetime Value (LTV) which cannot be measured quantitatively. Furthermore, the level of IT literacy of the customers can also affect the need for support, making it another factor to consider.

When customers introduce our products and services, the phases change in the following order: [Establishment] → [Utilization] → [Self-sufficiency]. If the customer is already in the [Self-sufficiency] phase, support is not necessary, but it can be an opportunity for upselling and cross-selling. On the other hand, if the customer remains in the [Establishment] phase, there is a high possibility of cancellation, so detailed follow-up is necessary. Confirming the customer's utilization phase of our products and services can also help with segmenting.
By using not only LTV but also other indicators as criteria, it is possible to make a more optimal approach.

5. Summary

At Human Science, we have a wide range of services available for our customers in the Customer Success department. In order to achieve success in Customer Success, we believe that the quality of the content provided by the department to customers is one key factor. We have a proven track record in creating user training texts and providing consulting for improving e-learning content.
In the theme of "Touch Model," we also touched upon internal study sessions and training in the explanation of "High Touch." The quality of training texts used in such training is also important. Furthermore, in the explanation of "Tech Touch," we mentioned the use of educational content such as video manuals and learning guides as a key point, and we also have a lot of experience in creating such content.

We also offer the following services.

•Improvement of manual and training text quality
We propose the most suitable instruction manuals, technical documents, help, and FAQs for your environment. We provide consulting services from evaluating current manuals to creating and operating multilingual support systems and CMS.

•Support for creating educational content and introducing LMS (Learning Management System)
Just like manuals, we will propose the most suitable educational content for your environment. Starting with evaluating your current content, we can also optimize LMS and provide multilingual support.

•Chatbot Implementation and Construction Support
Many companies are adopting chatbots to streamline customer support. We will propose the most suitable chatbot for your environment. We offer one-stop support from chatbot system implementation to content creation.

The following are achievements for the Customer Success Department.

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.