Why Customer Success and Value Realization Are Trending
Manufacturers considering a software-as-a-service model should understand these two terms.
More and more, manufacturers are positioning themselves as full solution providers, including software and data-rich innovations. They start to compete directly with pure SaaS (software-as-a-service) providers and may acquire relevant start-ups in their space. In the process, they must also transition from selling their existing software solution as perpetual licenses to selling them as subscriptions. They also may consider becoming cloud-based solution providers.
This is a long way from selling products and equipment. So, industrial leaders need to pay close attention to the trends in the SaaS world.
Two of these trends are the emergence of the customer success function and the increased adoption of value realization programs. Let us look at what is happening in SaaS in these two categories.
Learnings from Customer Success
One of the fastest-growing functions in the SaaS space is the customer success function. In 2019, 40% of high-tech companies had a customer success team, and that percentage has grown amazingly fast since then as more companies are investing in digital transformation and the as-a-service model (XaaS). In fact, the number of customer-success positions is increasing over 150% year-over-year.
What do customer success professionals do, exactly?
I am sure you can find plenty of content on the web about that role. First, customer success is not the same as customer support. From my perspective, the whole reason for the existence of this function is to ensure financial success for customers when they select, deploy and adopt a software solution.
Simply said, once a contract is signed, the customer success team takes over to onboard customers, increase adoption of the solution, and reach the pre-defined success KPIs as soon as possible.
These teams can also provide excellent internal feedback on how customers are doing, what their pains are, and what product teams should focus on next. The space is so successful and promising that customer success platforms are booming right now. And customer success professionals are in high demand.
What Is Value Realization, and Why Is It Important?
The SaaS space is getting more crowded by the week. With over 16,000 companies selling their SaaS solutions to the B2C and the B2B sectors, they also must focus more deeply on customer value realization.
A straightforward way to explain value realization is to make sure customers achieve their improvement targets as promised prior to the purchase. For that, value realization and customer success teams track the impact of their solutions post-deployment and focus on time to value (the time it takes customers to realize full value).
To compete in the SaaS and XaaS (anything as a service), it is becoming a must-have in front of procurement teams when the time comes to renew and show the impact your company made to the customers’ business. If not, procurement teams will focus only on what went wrong with your company and will ask for compensation.
Implications for the Industrial World
So, you get it. Competing in SaaS and high-tech without customer success teams and a value realization process is impossible. The next question is then: how is this applicable to the industrial world? It is indeed a pressing question and industrial companies are starting to see the light. There are four main reasons driving this new awakening:
1. Increased Competition. Software is becoming part of their overall business portfolio and about 50 to 60% of their software is sold under a SaaS model. As they compete against pure SaaS players, they must invest in the right organizational design and the right support functions. Companies like Honeywell, Siemens, Thales, Airbus, Being, Rockwell Automation, and others have a significant software portfolio. Stellantis, one of the largest automotive OEMs, recently named a Chief Software Officer (What’s in a C-Suite Name? | IndustryWeek). Whether they sell on-premises licenses or subscriptions, customers become the heart of the business model.
2. Developing Relationships. Because of the increased focus on recurring revenue streams, industrial companies realize the lifetime value of their customer base and have a desire to secure long-term relationships. They cannot continue to focus on short-term transactions only. Once a product or service is sold, it must maintain the customer relationship and keep track of its performance in use. The concept of value-in-use is an essential part of value-based strategies. Too often, industrial companies sell to a customer, celebrate, and move on to the next customer. This is no longer acceptable.
3. Learning from Customers. Some industrial groups have invested heavily in customer-focused innovation programs, launching new products and services. But innovation does not stop once the product, service, or software is deployed. It’s important to learn from customer behaviors, usage patterns, and preferences. Customer success teams can provide great insights into these. They complement after-sales service teams and technical support teams because they are much more focused on impact and on lifetime value. They interact with different stakeholders and have a 360-degree view of the customer. Traditionally, strategic account managers performed these duties. But they are also doing another million tasks!
4. Emphasis on Differentiated Products. Differentiated industrial companies that provide superior customer value and monetary impact through product, equipment, and machinery can also embrace customer success and value realization processes. Nothing stops them from doing so. In fact, we see more companies starting to invest in these areas. Sure, a product is not a piece of software. But the reality is that differentiated products must be followed along the product lifecycle the same way that software is.
Why Should Business Leaders Care?
There are many benefits coming from a greater focus on customer success and value realization. Here is are just a few:
1. Getting closer to customers whether they buy products, services, or software.
2. Making sure customers are happy, successful, and realize the full value of their purchases.
3. Providing the opportunity to upsell, cross-sell and encourage increases in the share of wallet.
4. Improving customer retention and customer experience.
5. Discovering the next big innovation through closer customer relationships.
6. Reducing discounting and increasing average selling price by focusing on value and not just on price.
Are you focused enough on the success of your customers? Is it time for your company to embark on a customer value realization program? The reality is that more companies are embracing customer value and customer success and are turning them into a competitive advantage.
Stephan Liozu is Founder of Value Innoruption Advisors, a consulting boutique specializing in industrial pricing, digital business, subscription-pricing models, and value-based pricing. Stephan has 30 years of experience in the industrial and manufacturing sectors with companies like Owens Corning, Saint-Gobain, Freudenberg, and Thales.
Original post here.