Customer Success. Mehta Nick
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recurring revenue / Nick Mehta, Dan Steinman.
Description: Hoboken: Wiley, 2016. | Includes index.
Identifiers: LCCN 2015040939 (print) | LCCN 2015051466 (ebook) | ISBN 9781119167969 (hardback: alk. paper) | ISBN 9781119168294 (pdf) | ISBN 9781119168300 (epub)
Subjects: LCSH: Customer relations. | Customer services. | Success in business. | BISAC: BUSINESS & ECONOMICS / Customer Relations.
Classification: LCC HF5415.5 .M4344 2016 (print) | LCC HF5415.5 (ebook) | DDC 658.8/12 – dc23
LC record available at http://lccn.loc.gov/2015040939
Cover image: Tom Merton/Getty Images, Inc.
Cover design: Wiley
Gainsight Book Foreword
The term Customer Success has become a buzzword in today's business world. Customers all expect it, and vendors all aim to deliver it. But who decides when it's been achieved? If you are truly a customer-centric company, the answer to that – and all other questions – should come easily: The customer ultimately decides.
As this book illustrates, the cloud era has necessitated a shift to a true customer-first model, and it has also proven that customer satisfaction and customer success are not always synonymous. In a subscription model, you never stop working to win your customers. When done well, every single day is spent with a relentless focus on their success, not yours. Each and every customer deserves an amazing experience and an unwavering commitment to success from their vendors. But success cannot be standardized, and the companies who understand this are the ones poised to reap the greatest rewards.
Adopting a customer-first philosophy ultimately means listening to your customers and operating in ways that help them get closer to their customers – particularly through the embrace of cloud, mobile, social, and analytics technologies. And, of course, being truly customer-centric means having a deep understanding of your customers' unmet needs. Once you know this, you will have a great foundation on which to build the strategy, team, and mechanics that drive Customer Success in your organization.
In my role as the president of Sales and Customer Success at Salesforce, I have a unique vantage point to watch the Customer Success movement unfold. Sixteen years ago, Salesforce pioneered the concept of Customer Success. It was at the very heart of Marc Benioff's vision and, all these years and customers later, we are as committed to it as when we had just a few customers. This commitment stems from the fact that Customer Success drives everything we do. It's not just an idea or a department; it's a core value, and it's everyone's job.
In the six years since I have been at Salesforce, we have brought even more rigor to Customer Success by transforming the organization into a proactive, data-driven group that drives customer utilization, adoption, and success. My team of nearly 4,000 experts is dedicated to the mission of helping our customers get full value from our products – and ultimately transform their businesses. In my time here, I have seen firsthand the transformative power of a customer-centric culture. I have witnessed our customers soar to incredible heights by using our platform to connect with their customers in innovative ways, and I've seen our own success follow suit.
In my 30 years in technology, I have never seen the kind of mutual loyalty that exists between vendor and customer, as it does with Salesforce. I truly believe that it is because we are willing to invest in Customer Success, and customers are willing to invest in ours. That's “attitudinal loyalty,” to steal a phrase from the book
Customer Success is not a one-size-fits-all proposition and it is evolving at the same accelerated pace as the technology that underpins it. Delivering success requires constantly checking in with customers and adapting products and services based on their needs. At Salesforce, we are continually reimagining our success offerings by adding expertise, innovation, and intelligence that make our customers' unique visions come to life. In fact, today we use data science technologies – including big-data analysis and sophisticated business intelligence – to accelerate time-to-value and, ultimately, success.
Like every other organization, Customer Success has to also adapt to the changing business landscape. In our case, CRM has evolved over the years from simple sales force automation into something more akin to a customer platform, covering sales, service, marketing, analytics, apps, and IoT (internet of things). As the definition and scope of CRM have grown, Salesforce has evolved from being deployed in just one instance to running a customer's entire enterprise. This has required a change in strategy for our Customer Success team as well – from a group focused primarily on the success of individual deployments to an organization with a seat at the boardroom table, assisting with business transformation.
I'm often asked how to justify the financial investment one must make in Customer Success. It is my belief that, when done right, Customer Success needs little justification at all. It preserves the company's book of business, opens up doors for additional opportunities, and creates lifelong advocates in our customers. When optimized, Customer Success is the best sales and marketing engine possible. As described in the following pages, Customer Success is more than just the right thing to do; it is a business imperative. For this reason, my team is held accountable for customer usage, adoption, and ultimately revenue. Our success is directly tied to that of our customers.
I am extremely happy to see our partners at Gainsight documenting the history of Customer Success in this book and sharing their insights into this growing discipline. This book is a wonderful guide to help companies embark on – and thrive in – their application of Customer Success to their day-to-day businesses. This is an incredible time to be a customer-centric company, and the opportunity is limitless for those who can look into the future through the lens of the customer. The future, in fact, is already here.
Part I
Customer Success: The History, Organization, and Imperative
Chapter 1
The Recurring Revenue Tsunami: Why Customer Success Is Suddenly Crucial
In the Beginning
In the spring of 2005, Marc Benioff gathered his lieutenants together for an offsite in the sleepy seaside town of Half Moon Bay, California. San Francisco–based Salesforce.com was on a roll, the likes of which has been seldom seen, even in the technology world. After a swift five-year run to a successful initial public offering (IPO) in June, the remainder of 2004 brought more good news in the form of 88 percent bookings growth. Nearly 20,000 customers had purchased the company's customer relationship management (CRM) solution, up from less than 6,000 two years prior. The year 2004 concluded with Salesforce sporting a market cap of $500 million, and that number would quadruple by the end of 2005. All charts were pointing up and to the right, just the way you'd want them if you were an employee or an investor.
The offsite was pretty typical, celebrating the success of the company, planning for continued hypergrowth as the market continued to expand, and generally mapping out a glorious future. And then David Dempsey stepped to the podium to deliver the presentation that would earn him the nickname Dr. Doom.
By 2005, the Irish-born Dempsey was already five years into his Salesforce career. He had spent 11 years at Oracle before moving on, just as the dotcom bubble burst. Unfazed, he and two other ex-Oracle executives approached Benioff in early 2000 with a proposal to bring Salesforce.com to the European market. After several months of negotiations, the deal was struck. Today, Dempsey is a senior vice president and the global head of renewals, which, as is the goal of all recurring revenue businesses, carries 70 to 80 percent of Salesforce's annual bookings responsibility. In 2015, that renewal number is approaching $5 billion.
When you have that kind of responsibility, you quickly begin to understand the levers of the business and what it takes to be successful. Great sales leaders and CEOs have made their careers by understanding what's happening in the market