Customer Success and Key Account Management: 2 Intricate Cogs of the Same Wheel
When Jeff Bezos founded Amazon in 1994, he did so with the mission of becoming “Earth’s Most Customer-Centric Company. ”Fast-forward to 2020 and one can argue that customer success, and rather customer obsession is the sole pillar that Bezos’ entire $1.7 Trillion empire rests upon. But while the vision during the early days was in place, the definition was nowhere in sight.
As Bill Price, former Global VP of Customer Service Amazon explains, Bezos interestingly (and maybe even purposely) resisted accurately define his vision for several years. Eventually, things took shape and Bezos took the first major decision that would drive his point home – allowing customers to review the products – a decision that attracted strong initial backlash owing to possible sales detraction. But Bezos was firm in this belief – “We don’t make money when we sell things. We make money when we help customers make purchase decisions.
“Over the decades, this vision has transformed into a near maniacal culture of customer success, one in which Bezos leaves a chair empty at conference tables as a reflection that it has been occupied by the customer – “the most important person in the room”. Today’s blog is a journey into customer success, the benefits that it can reap for your organization, and what it looks like in practice!
What is Customer Success All About?
In essence, customer success is about making your organization’s culture, philosophy, department, or role all about the customer. And especially in a manner that your customers can easily find ‘success’ with your products and services. When customers interact with a brand, they expect a specific desired outcome via an experience that can be tagged as ‘meaningful’. Customer success is about meeting such expectations time and again. As Jeff Gardner puts it – “The fastest you can help customers understand and extract value from your product that is in line with their business goals, the stickier and more successful they’ll be.”
Misconceptions About Customer Success
Since customer success is a rather newer concept in the management world, a lot of misconceptions exist, especially when managers deploy customer success programs for the first time.
Myth 1: Customer Success Always Translates to Hands-on Service
Customer success might translate to being obsessed with customers. But this does not necessarily mean that CSMs are engaging with customers round-the-clock. Customers prefer minimal interactions and the fewest possible touchpoints for their queries to be addressed. Hence, customer success, in this case, would mean optimizing such touchpoints for smoother onboarding, documentation, automation, etc.
Myth 2: Customer success is a single department drive
This cannot be farther from the truth. While it is true that customer success cannot thrive without ownership, it has to be a pan-organization effort. Assigning customer success to specialists is just the tip of the iceberg and would amount to nothing if the rest of the organization does not follow suit and work collaboratively towards a single objective.
Myth 3. Customer success translates to feedback collection and analysis
Don’t get me wrong. Feedback is one of the most crucial building blocks of customer success. But assuming that customer success is only about customer satisfaction surveys and Net Promoter Scores is highly erroneous. Surveys might be good for specific queries, but they lack in-depth insights about products, customer behaviors, trends, correlations, and more.
Why Does Every Business Need Customer Success?
“Until you know what it takes to achieve success from your customers’ perspective you will just waste valuable time.” – Jason Whitehead, Tri Tons Your business’s success closely depends on the success of your customers. That is the crux of this blog. There is no point in selling a product or service if your customers are not “winning” (constantly) after making their purchase decisions.
Jeff Bezos is a billionaire NOT because he has created an automated sales ecosystem. It’s because he has created thousands of millionaires around the world through Amazon in the form of star sellers. It is also because Amazon helps end customers to make the best purchase decisions for their available budgets. If that’s not convincing enough, here’s why customer success should be at the helm of your business strategy in 2021:
- Reduces Churn: When you listen to your customers and accordingly iterate your service or product, it’s only natural for their satisfaction graph to rise and for them to stick around longer. At a proactive level, this also translates to solving issues of customers even before they can spot them!
- Drives Revenue: It should not come as a surprise that the majority of your revenue comes from (or should) post-sales relationship building. That’s simply because it is much easier and economical to up-sell and cross-sell instead of acquiring new ones!
- Improves the Renewal Process: For businesses functioning on SaaS and subscription models, renewal conversations and decision-making on the part of their customers are fairly common. With customer success, users are more likely to keep renewing and stop questioning their decisions time and again.
Customer Success in Key Account Management
If customer success is all about aligning the definition of success of clients with your organization, then how does Key Account Management (KAM) come into the picture? In essence, KAM is a subset of Customer Success. Think about it. If 80% of your revenues come from 20% of your clientele, customer success would translate to successful KAM for these accounts simply because they matter the most.
To achieve the best results, you must merge the two management styles to ensure the most optimal outcomes for your business. During implementation, this is not a complex feat to achieve since KAM and CS are two sides of the same coin. This also brings us to their key differences:
- Client Focus: In a typical Customer Success scenario, you would not want any client to be left behind. The idea is to help each one of them succeed to the point of no return. On the other hand, KAM expects you to cherry-pick the clients that add the most to your revenues and give priority to their success first. In such a scenario, focusing on the success of 100% of your client might be taxing for your overall revenues.
- Customer Lifecycle: KAM involves managers and leadership alike to be present throughout the entire lifecycle of key accounts. This might mean taking a short-term approach with newer accounts and instead selecting a few clients to be strategic partners with. Under a traditional Customer Success approach, newer accounts would receive the same amount of care and attention as older ones, even if they show little promise at first.
How Customer Success Approaches Certain Key Functions
To paint the entire picture of Customer Success, let’s look at some key areas that dictate how ideal domain practices can be implemented:
- Client Focus: As discussed in the previous section, Customer Success is about retaining as many customers as possible. This translates into focusing on personalized touchpoints for every possible account, not just the top ones.
- Revenue Generation Methods: Since the goal is to engage customers for the long haul and boost the CLV (Customer Lifetime Value), Upselling and Cross-selling are the usual talks of the town.
- Customer Lifecycle: Customer success does not come with any added responsibility for bringing in new business. Driving sales is not part of the roles and responsibilities of CS Managers. Instead, they focus on retaining the existing clientele with a 100% success rate.
- Level of Interaction: Customer Success managers are often responsible for driving the success of multiple (or all) clients at once. This means that they do not need to focus on one or two customers in particular. Instead, they try to improve entire processes, concepts, or strategies for a high-level effect.
- Timeline of Results: Since Customer Success is a long-term strategy that demands pan organization buy-in, it can take a few months for tangible results to kick in. Though this can be significantly better than in the case of pure Account Management Process.
- Measuring Success: Measurement of Customer Success can be both simple and complex, depending on how you look at it. The end goal is to measure how easily can customers accomplish their goals.
How Can Key Account Managers Increase Customer Success?
When it comes to Strategic Account Management, Customer Success becomes a function of how well key account Managers can work together with customers to develop long-term relationships. Since they are dealing with the most revenue-rich customers, certain principles or practices become the bedrock for growth to propel:
- Fostering a culture of clear communication: Communication as a culture is a must for CS to thrive. Account Managers must be able to scope customer expectations and concerns before proactively addressing them with clear action plans. They should also vividly layout precise communication plans for every key account and identify key touchpoints for effective strategy updates.
- Expert negotiation skills that boost CLV: Negotiations can make or break deals at any point of the entire customer lifecycle. Skilled account managers know this and always negotiate smartly with 100% satisfaction as the only takeaways for customers.
- Selling value and not the product: Executing value-based selling is another foundational practice that account managers need to follow. This might mean effectively communicating the true value of your product or service, personalizing offers according to customer needs, delivering consistent support post successful cross-selling up-selling, or more.
- Developing extensive product and organization knowledge: It would be difficult to execute any of the steps above without proper knowledge to back up the claims. Skilled account managers know that they need to present the best opportunities for their customers with custom offers or recommendations. This is only possible when they are armed with an extensive knowledge base to support themselves.
How to Measure Customer Success?
Once you can implement the best Customer Success practices, the journey doesn’t end here. For further optimization, you need to track key metrics that keep you in tune with the ground reality. These include:
- Churn Rate: This depicts the number of customers that a rep loses. It reflects the cancellation rate of your product or service and helps to weed account managers who are not putting in the requisite efforts to drive relationship management.
- Monthly Recurring Revenue: How much has the spending of your customers grown since they have been onboarded? The MRR gives insights into this and showcases the amount of money that customers are spending every month. Especially relevant for SaaS businesses, the MRR shows whether your customers are succeeding consistently.
- Customer Lifetime Value: CLV gives an account of the total revenue that you can expect from a single customer throughout their lifecycle of engagement with your product/service. By tracking this over time, you can know whether the customer experience is ideal or needs tweaks.
- First Contact Resolution Rate: The most overlooked of metrics, the FCR rate is a measure of the time that your organization helps customers save when they encounter queries. It is calculated by the percentage of customer queries that are resolved within the first interactions.
- Customer Satisfaction Score: CSAT keeps a track of the experience that customers are having with your organization. It does not track the overall brand experience but instead focuses on individual experiences, making it perfect to analyze multiple customer touchpoints.
Organizations, such as Amazon, are successful only when they can ensure the continued happiness of their customers. With a dedicated customer success blueprint that proliferates the requisite culture within the organization and makes customers feel supported throughout their journeys, sustaining long-term relationships can become second nature to Key Account Managers. Sooner or later, valued customers always come back. And this might just be the key to unlocking your next growth hack strategy.
In case you want to explore why DemandFarm is the ideal product for your organization, check out our blog on the Battle of KAM technology software where we consider multiple KAM software like Revegy, Altify, and others and pit them against DemandFarm.
Ready to discuss your Account Management Needs?Talk to our Product Expert
About the Author
CEO & Co-Founder, DemandFarm
Milind is CEO & Co-Founder of DemandFarm. Having practiced and evolved the ‘account farming’ principle for over a decade he established DemandFarm and is passionate about delivering the best B2B key account management tool to serve the needs of key account managers. Milind also serves on the Board of LeadEnrich & is a Strategic Adviser.