Customer Success. Mehta Nick
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its loyal fans (some weren't even customers) intact, and, then, when it started to make products that partially justified that fanaticism, the ride to the top (most valuable company in history) was full-speed ahead.
So, what's the point, and how does it relate to customer success? Customer Success is designed to create attitudinal loyalty. Marc Benioff and Salesforce figured it out and, over the past 10 years, have invested massive amounts of time and money into customer success. Behavioral loyalty wasn't really an option in the early years because Salesforce was never going to be the only game in town, and customers weren't sticky because they hadn't invested emotionally or financially into the integrations and processes that make switching really expensive. One could argue that lots of Salesforce customers today are behaviorally loyal because the product has become central to the way they do business and too difficult to swap out. But many of those customers are also attitudinally loyal – check out Dreamforce (their annual conference) sometime if you don't believe it – and that's the best of both worlds.
Steve Jobs also knew that attitudinal loyalty was critical, and, in addition to creating it with elegant and beautiful products, he also invested in customer success. But, being the marketing guru that he was, he came up with a different name for it – Genius Bar. When Apple decided to create retail stores, the naysayers were loud and numerous. Hadn't history proved that retail stores for computers didn't work (RIP Gateway)? What Jobs banked on correctly was that retail stores for a consumer technology brand, at least one with a core fanatical following, could work. And, of course, it did. One could argue that the publicity derived from the long lines outside Apple stores three days before the release of the new iPhone was worth the investment in all the stores combined. But Jobs took it one step further. He didn't settle for having stores only showing off and selling his products, no matter how many helpful salespeople there were in every store. He also created a place in the back of the store staffed with customer success managers. We'll explore in detail what we mean by customer success manager later in this book, but the simple role definition is this: individuals that help customers get the most value out of your products. That's clearly what Apple Store geniuses are intended to do. It wasn't cheap for Apple to decide to have 10 or 20 geniuses on the payroll at every single store. As we said, attitudinal loyalty is not cheap. But it changed the nature of the relationship between vendor and customer by personalizing it and extending it beyond the purchase. That's something that very few business-to-consumer (B2C) or retail companies have figured out how to do. Maybe Zappos and Nordstrom have with their emphasis on customer service. Maybe Amazon has in a different way by adding Prime to its offerings. But I bet you can't think of a lot more. Interestingly, we all know that some of the geniuses at the Apple Store are not really geniuses at all. Many of us have even had frustrating experiences with them. The fact that they exist to touch and help real customers and build even the slightest relationship drives attitudinal loyalty. That's the art of customer success. Most vendors don't start with the fanaticism and loyalty that Apple does (a two-edged sword by the way), but we desperately want our customers to become advocates, not just customers. We need attitudinal loyalty not just behavioral loyalty. Customer success is the means to that end.
Marc Benioff created customer success out of his need to reduce churn. Steve Jobs created customer success out of his intuition that it would increase attitudinal loyalty to Apple products. We're lucky today that we can follow in the footsteps of two icons who have proved that customer success works regardless of your business model. It may seem more obvious, and more imperative, in a recurring revenue business, but it can be no less valuable in a traditional consumer business.
Tien Tzuo was the eleventh employee at Salesforce and, not coincidentally, in the room in Half Moon Bay for Dr. Doom's presentation. He is currently the CEO at Zuora, where he coined the phrase the subscription economy to describe the changing landscape as traditional businesses were getting disrupted by the move to a recurring revenue model. He also said, although he may not have been the first, “In traditional businesses, the customer relationship ends with the purchase. But in a subscription business, the customer relationship begins with the purchase.” That's a powerful distinction and Benioff and Jobs both realized it and invested heavily in it. Benioff created the most successful subscription-based software company in history. And Jobs brought the subscription thinking and attitude into a nonsubscription business in a way not previously done. Many other traditional companies will choose the same path in the coming years, while recurring revenue businesses will not have the luxury of choice.
The Subscription Tsunami
Customer success sounds like a catchy phrase your marketing team might come up with, doesn't it? Or a mantra some PR firm concocted for their CEO to make it sound like she really does care about customers. But in today's recurring revenue businesses, customer success is much more than a catchy phrase or a slick marketing campaign. It's a necessary part of any subscription business, as Mr. Benioff and Salesforce proved, and it requires investment, attention, and leadership. It's not lip service around “putting customers first” or “the customer is king.” Those phrases sound good but such campaigns often start off with a bang and then fizzle quickly unless they are driven by a passionate and charismatic leader (like Tony Hsieh) or by a business imperative. Customer success, as we'll discuss throughout this book, falls squarely into the latter category. It does not require a passionate or charismatic leader, although that helps, because it's nothing less than life or death in the subscription economy.
Real organizational change in business is rare. Think about our organizations today – sales, marketing, product development, finance, and services. Those have been the fundamental components of an enterprise for hundreds of years despite the enormity of change within the business world during that time. One could argue that human resources is new, but the reality is that it was always being done, just not led by a separate organization. As far as fundamental organizations go, information technology (IT) might be the only truly new invention in the past 70 years, driven obviously by the ubiquity of technology in every aspect of our jobs. Customer success is the next big organization change. As with IT, customer success is becoming a thing because something else is changing – in this case, the business model. Subscriptions are all the rage. From software to music to movies to diet programs. The way to the heart of investors and the public markets is to establish a business that creates monthly recurring payments from lots and lots of customers. If Wall Street and the investment community love something, so do the CEOs. If a business is not subscriptionable, it is probably becoming pay-as-you-go, which has all the same characteristics and imperatives. Subscriptions are obviously not new, but the movement of existing businesses from a nonsubscription business model to a subscription model most certainly is. Everyone is searching for a recurring revenue component to their business model and, ideally, the whole business, not just a component. This 15-year-old movement started with the software world, but the splash caused by that boulder is rippling across virtually every other industry, too.
Thus, the need for this book. The subscription tsunami is well under way and having a massive impact on the software world. Customer success is one of the secondary waves being drawn in behind the tsunami. But customer success is not only a new organization but also a philosophy sweeping its way into nonsoftware, nontechnology, and non-B2B companies. It may not have been referred to as customer success until recently, but it's happening everywhere, as witnessed by the Apple story, driven by technology and the availability of information (i.e., the Internet). No matter what kind of business you are in, now is the time to understand what to do about this wave. Let's start by exploring the origins of customer success in B2B software because that's where this all began.
Software is eating the world. That statement was only slightly controversial when Marc Andreesen first wrote his famous essay in 2011.
“Why Software Is Eating The World” —http://www.wsj.com/articles/SB10001424053111903480904576512250915629460
Today, his notion has moved from bold and futuristic to indisputable. If there's any truth to it at all, it's critical that every business leader understands what is happening in Silicon Valley. The software industry has gone through a dramatic transition over the past 15 years, and the customer is at the center of this transition. This change has been driven by the ubiquity of the Internet and the advent of that thing called