If you work in the Customer Success (CS) profession (in its broad sense including: Professional Services, Technical Support, Customer Management, Education and Training, etc.), 2019 was a heck of the year! CS is maturing and growing fast:
- A CS function exists in almost every company
- Investors pay closer attention to CS impact
- Metrics become more common and standardized
- More software companies develop tools and provide services to CS
- More CS titles, jobs and people appear on LinkedIn
- More posts, blogs, books and other write-ups are published
With so much activity, how to know what would 2020 look like?
We are here to help!
In our January event, Omid Razavi and I summarized what we believe are the top trends that will shape the CS function in 2020. We hope that this curated list will help you gain better visibility and align yourself, your team and your activities to it.
Top 10 trends shaping the Customer Success profession in 2020
- Companies will Hire Execs to Lead CS Earlier
- CS is Becoming Truly Omni-Channel
- Data is King – More Data-Driven Decision-Making
- Increased Investment in CS Tools
- Increased Focus on Revenue Growth
- Higher Specialization will Lead to a Multitude of Organizational Structures
- CS and Marketing will Work More Closely Together
- CS and Product will Work More Closely Together
- “Mo Cowbell”, I mean More Training…
- More Focus on Customer Outcomes
Let’s take a deeper dive:
1. Companies will Hire Execs to Lead CS Earlier
The need for people to engage in CS work (deployment, driving growth and adoption, address support cases, etc.) exists from the moment a company signs their first customer. But, the need for an exec to lead such a team only emerges later as the company starts to scale. Up until not long ago, senior heads of CS (reporting to the CEO) were only emerging post series C funding at startups. We see a trend of hiring such execs after B rounds and even as early as after the A round. This is a clear indicator for the increased importance of the function in the company.
2. CS is Becoming Truly Omni-Channel
While the notion of different “touch” levels (high touch, low touch, tech touch) has been around for quite some time now, there seems to be further expansion of the channels, with which CS is interacting and impacting customers and in more coordinated ways. Among those we see in-product/in-app contacts, channel success (working via partners, as opposed to direct to customers) efforts, mobile channels, and more. The head of the CS function is required for more and more sophistication in the processes, technologies and best practices to address that multi-channel operations.
3. Data is King – More Data-Driven Decision-Making
One of the main reasons CS is so much more prevalent among SaaS companies is the availability of customer usage and behavior data. The elevation of the use of data to drive decisions over subjective assessment is a clear sign of maturity for the CS profession! We do not see the personal/subjective assessment of situations disappearing, but we definitely see the use of data distinguishing good companies from great ones, a trend that will be demanded by more executives and investors.
Following the Transformations in Marketing and HR
In a way, you can think about this movement in the CS function as similar to the transformations that happened to the Marketing profession and is happening to the HR one in the last decade. Both of these functions transformed themselves from very subjective, relationship-oriented, creative-focused to extremely objective, numeric scientific ones. Customer Success is following suite and we’ll see that trend accelerating in 2020!
We expect to see predictive health scores that are beyond vanity metrics, focusing on providing insights into customers’ usage AND its impact on their desired outcomes, better visibility into segmentation and more. It will also alter the roles and responsibilities of key functions within the CS team. Tomasz Tunguz, for example, suggested in his assembly of 5 Predictions for 2020 that “Data Engineering is the new CS”.
4. Increased Investment in CS Tools
A natural outcome of the previous point: more focus on data will enable as well as require demand for more tools to extract and utilize these data. Also, as vendors embed AI into their offerings, tools will significantly alter the work of the CS teams (mainly Support and CSM), empower them and increase their productivity, which will enable their funding. Two key implications of that trend are:
- More point solutions: An interesting recent trend that we believe will accelerate in 2020 is a move towards more point solutions. Next to the broad CSM Platform tools (like ChurnZero, ClientSuccess, Gainsight, StrikeDeck/Medallia, Totango and others), a wave of players is emerging with a focus on specific capabilities in user communications management, user adoption, reporting and metrics, training, engagement and sentiment analysis, and more. We believe that many companies will choose to start by deploying point solutions and only later expand into full-fledged CS Platforms.
- CS-Ops is becoming a hot job: Growing investment in tools leads to an increased emphasis on CS Operations as a critical role, just like the emergence of Sales-Ops in the past few years.
5. Increased Focus on Revenue Growth
With the maturation of CS comes greater emphasis on revenue growth beyond churn-reduction. The main implication of this is the need for more proactive planning. It will also require deeper coordination with the Sales team, mapping of customer journeys in more creative ways, and more thoughtful segmentation of customers.
Many CS teams already own Renewals (aka “Gross Renewal”, “Gross Retention” or “Churn”) targets. Some own Net Retention targets (the net of churn and upsells). CS organizations are likely to be required to own their number, including all that comes with that such as potential monetization of CS activities and different compensation models. Leaders who shy away from owning a number will see their role in the management team marginalized.
Services versus Software Revenue
This is especially true for growth phase companies, investors used to prioritize revenue from Software solutions over revenue from Services ones (Professional services for deployment, for example). The reason is that software revenue commands higher gross margin and tends to be recurring (MRR or ARR), which drives the company valuation more than one-time revenue. That created a trend where deployment dollars were sacrificed towards increased software recurring revenue. That, in turn, made it harder to appropriate the right amount of effort (people, tools) for deployments. More recently we hear more and more investors agree to invest more in ensuring the customer success over the recurring revenue. That is a very welcoming, mature, trend as it strengthens the company’s ability to appropriately allocate its resources towards ensuring customers are successful.
6. Higher Specialization will Lead to a Multitude of Organizational Structures
The maturation of CS leads to greater use of data for decision-making and actions. More data lead to more tools. More tools lead to more specialization of roles. More specialized roles will lead to more nuanced organizational structures.
Common debates over such questions as: Should CS report to Sales? Should Support report to CS? Who should own Renewals/Upsells? are indicative of companies continuing to struggle with defining the right split of activities and responsibilities among teams and explore new and different structures.
In 2020, more companies are likely to align all “post sales” functions (initial deployments, customer care and tech support, training and enablement, professional services and consulting, data engineering, customer success management, CS-Operations) under one roof with a senior executive (often titled Chief Customer Officer) to lead them. At the same time, we also see a growing trend at companies to have a Chief Revenue Officer (CRO) and some of those will take responsibility over the Customer Success function alongside Sales.
7. CS and Marketing will Work More Closely Together
Two drivers for this trend: A) the emphasis on driving more revenue growth aligns the goals of the two functions closer together, and B) the focus on more data and more measured results aligns the operating modes of the two functions. Customer Marketing will garner more emphasis because content for CS is different than content for prospects and it’s necessary.
For a more in-depth assessment of the driving forces behind this trend and how to best address it, you may want to check out this article: “Why the CMO and CCO should be BFF”.
8. CS and Product will Work More Closely Together
The generation of more data FROM customers on their usage patterns (usually coming from product telemetry) and the increased importance of growing revenue from existing customers, will foster the need for closer relations between the CS function and Product. The need to delight customers earlier and faster will place CS deployment needs as well as input from CS at higher priority for the product team to feed into the roadmap. Expect (and drive!) more Customer Advisory Board meetings, sharing of roadmap with customers, and closer-loop on feature requests.
9. “Mo Cowbell”, I mean More Training…
- Increased demand for Training: Training for CSMs will become more mainstream. The growth in the number of CS people (especially, CSMs, which is one of the highest growth job titles on LinkedIn), requires more training for CS. At the same time, the increased emphasis on revenue growth will provide justification for the Head of CS to request and for the CFO to approve more budgets for training.
- … is met with an increase in supply: It is another sign for the maturation of the CS profession: more knowledge and “best practices” exist. Specifically, more companies provide training and certification programs. Many of those are small regional consulting companies, often single-digit number of people firms. This begins to look a lot like the companies focused on sales training and some of those may start aligning their sales methodologies and to CSMs as a natural extension.
10. More Focus on Customer Outcomes
Driving for Customer Outcomes is the heart and fundamental goal of CS. Yet, it is often the hardest to define. For those companies where the impact of the product or service can be quantified (increased revenue, reduced cost, increased employee retention, etc.) it will be much more emphasized in 2020. For those where it is more nebulous, more intense focus will be demanded from investors and management to define it. And if you can’t – expect increasing frustration with the CS function over it.
In summary, it is said that predictions are a fool’s game. We do not try to forecast the future. Rather, we try to identify where major trends are impacting the CS profession, so we can focus attention and activities in them. We hope this Top 10 list has been useful and welcome your feedback!
Boaz Maor is a serial start-up executive with passion for Customer Success. Most recently, Boaz was SVP of Customer Success at OpenGov. Before OpenGov Boaz founded and led the Customer Success team at Mashery (acquired by Intel, then divested to Tibco). Before that, Boaz held customer success executive positions at newScale (acquired by Cisco) and FreeMarkets (IPO and then Acquired by Ariba).
Considered one of the early executives to help drive the development of the Customer Success profession, Boaz is a frequent speaker, writer and presenter at conferences and events, and an advisor to a number of startups. In 2017 he won the “Innovator of the Year” award at CS-100 for his invention of the Customer Maturity Index concept and methodology. Boaz holds an MBA with honors from Carnegie Mellon University.Boaz Maor