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The Ultimate Toolkit for Designing Your Customer Success Strategy

Everything you need to know before designing your customer success strategy...

Noah Edis
HR Tech writer and content marketer
July 14, 2022
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Reading this article means you’re probably looking to implement or improve a customer success strategy for your business. Customer success is closely linked with customer loyalty, which can be achieved by providing a great customer experience. Although these three things are closely related, you must understand what customer success is in isolation in order to build a customer success strategy with measurable benefit.

This article unpacks what customer success is, what it isn’t, and how you can apply measurable data to build and assess your unique customer success strategy.

What Is Customer Success?

Customer success is how easily your customer can achieve their desired outcome (success) with your product.

You can think of customer success as the learning curve, implementation period, or onboarding phase a user must overcome before the solution you provide takes care of their problem. It is also a long-term journey to ensure that, as your product evolves, your users keep up and stick around. For example, using an applicant tracking system (ATS) that is overly complicated can slow down hiring instead of aiding it.

Although customer success is often referred to in the context of a SaaS business model, the same thinking applies to any product or service where a customer’s experience depends on how well they interact with the product. An air fryer that is so cumbersome to use that you keep ruining the meal failed at its primary purpose - aiding the user.

Poor customer success is evident when the outcome is a burnt chicken.

Good Vs Poor Customer Success

Typically, poor customer success is a scenario where your customer gets frustrated, confused, disengaged, or discouraged by using your product. It can also be that they like the solution you offer, but they do not implement it correctly to get the best possible result.

Good customer success looks like this: The customer has a need or pain point which your product can solve. You introduce them to the solution, guide them through an initial discovery phase (onboarding), and thereafter assist incrementally as they become more adept at using the tool themselves. This ongoing assistance is to ensure their knowledge and confidence in using the solution grows. It is not to be confused with overcoming technical hurdles - that’s customer support.

Customer Success Vs Customer Experience

If a customer is delighted by your friendly sales team, how quickly you respond to their queries, or how informative your website is, you have given them a positive customer experience by providing good customer service. It is only when they’ve engaged with your product and solved their initial pain point that you’ve achieved customer success.

Customer Success Vs User Experience

Although customer success is largely influenced by how intuitive your solution is, you can’t exactly call it a synonym for user experience (UX).

In the context of an ATS, customer success would be knowing, for example, that you can filter applicants based on geographic location and how to go about it. The user experience would be measured by how many steps, clicks, and frowns are required to do so.

Applicant tracking system (ATS) filtered by location

Customer Success Vs Customer Loyalty

Customer success and customer loyalty are also not synonyms, but are undeniably connected. A frustrated customer will undoubtedly try a different solution provided by your competitor, or just go without. No one is prepared to, or should be expected to, struggle indefinitely.

Even if your product can solve your customer’s problem, a tool that is difficult to use, or fails to improve their process for any other reason, will fall out of favor. A good customer success journey increases the likelihood that users will stay loyal because you’ve not only provided the solution, you’re actually solving their problem.

Why Is Customer Success Important?

Research has shown that, for every customer complaint you receive, 26 other customers have silently given up on your product. A delighted customer, on the other hand, will most likely become an avid promoter. 72% of consumers will share a positive experience with 6 or more people.

Formula for calculating net promoter score

Naturally, you’ll want as many of your customers as possible to fall within the promoter camp for the sake of acquiring new ones. But a customer must achieve success with your product before they can have a positive experience to recommend. Additionally, with a subscription-based, SaaS, or any other recurring service, your customer success drives your customer retention. Customers will continue spending where they see value.

Ultimately then, customer success is important because it influences your bottom time.

Using The Customer Success Toolbox

Based on what we understand about customer success, it is an aspect of your business worth investing in. Despite this, according to a recent survey, 37% of companies don’t have a clearly defined customer success strategy. In other words, the responsibility for achieving success lies primarily with their customers.

The goal of customer success is to share the responsibility of achieving success with your customer. But, when it comes down to the nuts and bolts, how do you do this?

Companies have invested heavily in answering this question. It is now common for larger companies to have a person or a whole department dedicated to customer success. These are the people mandated with boosting customer engagement, satisfaction, and retention.

Where exactly a customer success department has influence depends on a company's product and business model. Generally, the main touchpoints that drive customer success are these:

The Key Tools of a Customer Success Strategy

  • Offering set-up and/or installation assistance: Part and parcel with the signup, not as an additional expense.
  • A continuous product training solution: This can be in-person demos or online training.
  • A formal onboarding process: With clear KPI’s to ensure the client is understanding the product, not just nodding along.
  • Integrations with other solutions your customers use: This can be an API, adaptor, or whatever is appropriate for your product and target market.
  • Ongoing customer upskilling opportunities: Offer these opportunities as new features and upgrades are introduced to get feedback and aid retention.
  • Access to expert user insights: A help center, YouTube tutorial channel, and/or a user community are invaluable resources in the SaaS landscape especially.
  • Regular check-ins with key clients: Preferably by a dedicated account manager.
  • Customer feedback opportunities
  • Software to manage and measure customer success

What is a customer success strategy?

Getting back to our initial goal of improving your company’s customer success, we have the “Why” and the “What” covered. Your customer success strategy is the “How” of achieving this goal.

As with any important aspect of your business, customer success is a strategic function. Meaning it should be

  • Measured on an ongoing basis and adapted accordingly
  • Prioritized as part of the core business functions
  • Set up for growth in order to scale with the business

Bearing this in mind, the bare bones of your customer success strategy will look like this:

Step 1: Assessing user data to identify customer success barriers

Step 2: Procuring and implementing the tools and resources required to overcome these barriers (possibly from the list above)

Step 3: Re-assessing to determine whether customer success has improved

No customer success strategy is perfect, and even if you get close, no strategy will work forever as the company grows. Companies who know this are therefore constantly assessing their customer success - looking for ways to improve in this department.

The axel on which this wheel of assessment, improvement, and reassessment turns is user (customer) data - data you can only obtain from customer success metrics.

Customer success strategy tracked by customer success metrics

Measuring Customer Success is the key to Improving It

In your quest to improve customer success, the only way to ensure you’re making the right decisions and using the right tools is by monitoring their effect. Metrics on customer success are the data points you can use to do so.

These metrics are also the ones you’ll use to project ROI before incurring spend, and to confirm the accuracy of your projections.

For example, when you change how customers receive product training, how do you foresee these improvements affecting your success metrics, like customer satisfaction, retention and profits? And, when looking back at the change down the line, how did your forecast compare to the actual result?

Accurately measuring the effect of an implementation like this is possible and very easy when you’re using customer success software. In turn, the value of implementing customer success software itself can also be measured by looking at the ROI it generates.

How Important is Customer Success Software?

Customer success metrics are necessary to track the effectiveness in driving positive outcomes in customer interaction, such as increased adoption, engagement, and revenue. These data-driven metrics have been considered to amplify the customer’s voice, as stated in this Wall Street Journal article. The article states that to improve customer experience, companies need to understand why their customers feel the way they do.

The return on investment of implementing customer success software comes from how accurately these metrics can be monitored over time. The data gathered by the software contains information that helps you make better decisions about allocating resources to improve customer health. Thereby it is an essential part of your overall customer success strategy.

A case study of customer success implementation and measuring its effect

Let’s say your company is receiving too many tickets from users who can’t figure out essential steps to updating your software. Your strategic solution is implementing a troubleshooting chatbot on your site, which you believe may reduce user assistance tickets by the desired rate of 20%.

Let’s also say your cost of hosting and maintaining the chatbot is $500 per month.

If users are interacting with the chatbot, and your tickets do decrease by 20%, you’d be happy with a positive outcome from introducing the chatbot. But is it really improving your customer success?

The value of implementing your customer success software would lie in how deeply and accurately you track and derive data from user experiences after implementing a change. For example, how the chatbot’s helpfulness influenced your user retention rate and your user engagement rate.

Perhaps the users who consulted with the chatbot were frustrated by it, and didn’t log a ticket because they had already decided your product isn’t worth their trouble.

Based on measuring various customer success metrics, not just chatbot inquiries, you can pinpoint whether the chatbot made a positive difference to your customer success instead of assuming it.

If your user retention is positively affected by your chatbot, you’ve proved its implementation was a good call and that, in time, it should positively affect your bottom line.

The ROI in implementing the customer success software, in turn, lies in how well you spend your money. If your chatbot’s $500 monthly spend did not add any value, you should remove it and redirect that spend into, for example, a more intuitive update dashboard.

By tracking and knowing where your customer success efforts make a valuable difference, every dollar you spend on customer success improvements will work harder to keep your customers around. The increased yield you see in customer retention, referrals, and sign-ups will result in increased profits. And that is your customer success software’s ROI.

So, how do you monitor whether our customer success efforts have a positive effect?

By looking at these customer success metrics:

Customer Success Metrics You Can (And Should) Monitor with Customer Success Software

Customer Lifetime Value (CLV)

Does the adage, “it costs 5X more to create a new customer” still apply today?

According to Forbes, the cost-benefit of retaining customers isn’t the point, mainly due to the use of business analytics and machine learning to increase customer loyalty. Instead, the aim is to provide an overall great customer experience and benefit from the lifetime value of both a new and existing client base.

Customer lifetime value (CLV) is a customer success metric that estimates the Dollar value of a customer over the entire duration of their relationship with a business. It takes into account the initial purchase as well as all subsequent purchases and interactions with the company.

CLV can be measured for a variety of reasons, but the following are some of the most common:

  • To understand how much money a particular segment or customer type is worth.
  • To help decisions about which customers to target and how much effort to put into retaining them, and;
  • To estimate the impact (ROI) of marketing campaigns on CLV.

Customer Acquisition Costs (CAC)

Customer Acquisition Costs (CAC) are the total expenses incurred to gain a new customer. This includes advertising, marketing, and sales expenses.

The crucial importance of this customer success metric is to help businesses measure how much money they are spending to gain new customers and see how it stacks up to CLV. This metric can help determine whether a business is targeting the right market, and making a profit on new clients.

You can also use CAC to determine which marketing channels to use to acquire new clients. For example, using customer success software to plot CAC against projected gain shows you the ROI to expect from a particular channel.

Customer Churn Rate

Customer churn rate is the percentage of existing customers who discontinue their service or subscription at a certain time. This customer success metric considers both active and inactive users, so the calculation of churn is:

Formula for calculating customer churn rate

For example, if your business had 16,000 customers at the beginning of the month and lost 800 customers by the end, you would divide 800 by 16000 and get a churn rate of 5%.

The opposite of this is the retention rate, which refers to the percentage of customers who continue to do business with a company over the long term. A high retention rate logically indicates a low churn rate within an industry.

Business owners should be wary of high churn rates, especially if it leads to a rapid decline in revenue. This would be the case if your churn rate is higher than the rate of new customer acquisition.

There are several reasons you might experience high churn rates, such as poor customer service, lack of innovation, competition from rivals, or pricing that is too high compared to the benefits you offer.

To succeed, businesses need to closely monitor their churn rate and keep it as low as possible — an ideal application of customer success software.

Net Promoter Score (NPS)

Your net promoter score (NPS) indicates customer loyalty and word-of-mouth marketing potential.

The score is calculated by asking customers a vital question: “How likely are you to recommend our company/product/service to a friend or colleague?” Customers respond on a scale from 0 to 10, with 10 indicating the highest likelihood.

Promoter ratings are scores of 9 and 10 on this scale. Passive scores are 7 and 8, and detractors are scores of 6 or less. You get your NPS score by subtracting the percentage of given scores that are detractors from the percentage that are promoters.

This powerful metric can make a huge difference in driving revenue. In fact, when the jewelry business Taylor & Hart set NPS as their most important customer success metric to focus on, they were able to increase their annual revenue to double their revenue.

Closely monitor your NPS to see how changes you make in customer interactions influence it. This is a surefire way of measuring improvement in customer success. In turn, you should see a positive effect on customer retention and revenue, all because you are focusing on what makes your customers happy.

Tied with NPS is using your customer success software for measuring your customer health score. This is a metric generated by the software surveying customer engagement and satisfaction, tracking customer complaints and inquiries, and analyzing how much money customers are spending with the company.

Upsell and Cross-Sell Opportunities

Upsell and cross-sell opportunities occur when a company offers its current customers additional products and services they may find valuable. This can happen at checkout, via targeting remarketing, or in person.

Upselling is when you convince a customer to buy a more expensive product or service than the one that they initially requested. Cross-selling is when you encourage customers to purchase related products or services.

A survey run by thinkJar established that 86% of consumers are willing to pay more for an upgraded experience. This creates a highly effective channel of potential revenue, but mostly in your pool of existing customers. According to their findings, 65% of companies are able to successfully upsell or cross-sell to existing customers. However, only 12% of companies are able to successfully upsell or cross-sell to new customers.

Customer success software can help you to identify upsell and cross-sell opportunities by analyzing customer data and identifying patterns. You can measure the success of your upsell and cross-sell campaigns by tracking the number of new products or services sold, as well as customer satisfaction levels.

In addition to this, the upsells and cross-sells you make are an indication of how customers perceive your products and services. The happier a customer is with what you offer, the more likely they are to increase their stake in your business.

Our Final Thoughts On Customer Success Strategies

It boils down to this:

We can’t tell you what your customer success strategy should look like, and neither can you if you’re not measuring customer success metrics. By tracking customer success, you can identify areas for improvement and create your strategy accordingly.

Assessing and improving customer success is an ongoing part of growing your business. Your customer success strategy should therefore adapt and scale according to the needs of your customers. It will never be done.

The best way to measure customer success metrics is with customer success software. You’ll quickly see the value of this investment by asking yourself the following questions:

  • How did using the software influence my decisions about improving customer success?
  • If a particular effort or implementation did not improve customer success, how quickly was I able to pivot spend and try something new?
  • If it weren’t for my customer success software, would I have been able to pinpoint this as quickly, easily, or effectively?

Determining the customer success software best suited to your company is a tough choice. We've done the hard work for you by listing the best customer success software that we’ve reviewed. We recommend booking demos with these vendors to learn how they can assist you in creating a delighted customer base.

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Noah Edis

Noah Edis writes with a technical background and has expertise in CRM ERP and HCM systems, as well as customer service systems and knowledge base solutions. In addition to writing, he plays competitive dodgeball and pursues a personal interest in programming.

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