Customer Success explained (so your mom can tell her friends what you do)

August 11, 2015 Jodi Schechter

customer success management

Hurray! You’re part of the customer success industry. You know how important your role is—not only to the success of your company, but to your clients’ success as well. But how do you explain to friends and family what you do? It’s a new business practice, so we’ll have to enlighten.

Let’s begin by pointing out that there have been two key changes in the software industry in the past decade or so: how software is purchased and how it is paid for.

The old school software purchase

A few years ago, if you ran a business with a dozen sales reps and needed a software package to track your prospects and customers, you’d head to the nearest Business Depot. In the software aisle you’d pick Maximizer or Act (or other contact management solution), bring it to the cashier and pay for it. In fact you might buy a dozen boxes of the software—one for each of your sales reps.

Back at the office, a techie would tear the shrink wrap off each box and install it on the PC of each of your reps. The software would stand alone and be accessible only by login to that specific computer.

The software manufacturer got paid up front for the purchase and worried little about how many of the product features you actually used. If you had a problem, you’d call Tech Support.

Software as a Service (SaaS) — the new way

Fast forward a few years and the arrival of Cloud Computing makes web-based software usage a reality. Now you license the software solution you need, and with a simple login, access it from any computer at any time—never having to physically install it. This new delivery method is called software-as-a-service (SaaS).

Salesforce, a pioneer in this space, disrupted an entire industry by offering their Customer Relationship Management (CRM) software as a service; usurping all previous contact management solutions—and built a platform for myriad software applications along the way.

SaaS vendors don’t actually get paid up front when you choose their solution. They use a subscription model which typically recognizes revenue on a monthly basis. Much like a gym membership, you may sign up for a year but get billed monthly.

The subscription renewal model obliges the SaaS company to make sure the customer is on board, logs in regularly, and uses the features and functions available to achieve their business goals. The more successful the customer is with the software, the more likely they are to renew their subscription. In short, customer success.

A few familiar examples of SaaS subscription services that even your mom has heard of are Netflix, Spotify and ZipCar.

Here’s a handy chart to illustrate the differences:

  Traditional SaaS
How you purchase software At the store
Through a distributor/reseller
How you pay for software Before use. Cash / Credit Licensing / Subscription
Installation Physically on your computer No installation. Web-based
Accessibility / Login Tied to a specific computer Online. On demand.
How the software company gets paid Up front
No recurring revenue
Subscription model
Relies on recurring revenue
Post-Sale Customer Support Reactive when called Proactive approach
Commitment to helping users leverage feature/function set No commitment Fully committed
User outcomes matter
Customer Success teams Do not exist Critical to success of the customer and the company

So there you have it. A simple explanation of why customer success teams exists and why they’re critical to SaaS success. Your mom will be proud.

#CustomerSuccess explained (so your mom can tell her friends what you do) #GrowthHacking
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