An examination of some of the most successful and profitable companies reveals the way they have used customer success to directly contribute to growth and profitability. This article by Shreesha Ramdas, SVP & GM, Strikedeck-Medallia, examines how such companies have utilized customer success and identify some traits that set such customer success practices apart.
There are lots of formulas and must-do’s to fast-track corporate growth. An examination of some of the most successful and profitable companies today reveals the way they have used customer success to directly contribute to growth and profitability.
Palantir, Snowflake, and Salesforce are some of the best examples of customer success, not only ensuring that fundamental customer needs are addressed but also providing strategic guidance and insight that directly connects to corporate growth and profitability. Using customer success as a strategic function rather than just a tactical remedy creates a flywheel for growth and long-term success.
How the Three Companies Use Customer Success
Palantir, with a market cap of over $42 billion, is best regarded for its strong and continually growing market position that extends well beyond the government intelligence community. Transformational success came in matching a powerful core technology with specific customer problems and needs. Their use of customer success to listen to customers, monitor, and ensure the success of each and turn a technology into a valuable solution is near legendary in customer success circles and among those in the know. The strong customer focus matched the company’s primary marketing program, word of mouth, and their reliance on referral selling rather than a sales force. For this strategy to work, Palantir had to ensure that customers were extremely happy. Similarly, a significant portion of company growth has come from growing and expanding existing customers.
Snowflake, one of the hottest companies in recent years, has a similar story in terms of very high customer satisfaction and traction. Last year, the company reported a Net Promoter Score (NPS) of 71, approximately 3.5 times higher than the industry averageOpens a new window for high-tech B2B companies. Their Data Drivers AwardOpens a new window showcases customers that “represent individuals and organizations using data-driven strategies to innovate, expand business value, and deliver enhanced customer experiences.†Both NPS and the awards either reflect or augment the work of customer success, but neither replace the relational work of a mature customer success practice.
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Salesforce, another runaway success company, counts customer success as a critical driver of its growth and fortitude. A clear indication of the strategic role of customer success at Salesforce was the company’s performance during the 2008 financial meltdown. During that time when other companies faced significant decline, the company increased revenuesOpens a new window from $497 million in 2007 to over $1 billion in 2009. Early in the company’s history, it suffered churn rates of some 8% per month. According to one account, “Focusing on customer success not only led to a reduction in attrition [of Salesforce customers] but also maintained momentum in acquiring new customers. Potential customers began seeing established customers succeed, and they wanted to enjoy the same outcomes.†[ibid]Â
Interestingly, all three of these are considered product companies that have used technology in superior ways. Their secret has been to go beyond just simply building a better mousetrap by connecting with customers in a disciplined, give and take manner.
How Customer Success Becomes a Flywheel for Growth and Profitability
A flywheel might seem like an odd simile for customer success. First, it seems like something still around from the industrial revolution and not remotely belonging to high tech. Second, it may seem like an exaggeration — something that captures and utilizes momentum to sustain a continued movement. Apart from the non-techy image, this is exactly what customer success achieves.
Most companies start with a great idea. Many actually produce that better mousetrap. The trick is getting customers to pay money for it and believe in the value it provides. Entrepreneurs and tech visionaries are gifted at enabling this, but as a company grows and needs to move beyond early adopters, the process becomes more difficult and less scalable.
Customer success involves continual dialogue with customers throughout their complete lifecycle. Continuing a true dialogue and then converting it into actionable information is most akin to the role of a mechanical flywheel. These functions take discipline and maturity. True listening apart from transactional concerns and being able to understand success from the eyes of a customer is a genuine, difficult to acquire competency. Converting the dialogues and input to something actionable is another.Â
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Actions ensure that each customer achieves success by their own definition. It results in long-term retention and the potential for expansion. It also produces strong, positive word of mouth and prompted and unprompted reference selling. These results cause continued and sustained growth.
Companies with particularly mature customer success practices will also hone information that shapes product and service offerings and potentially informs nearly every aspect of the company to work in a way that has optimal effects on customers, from marketing to sales, support, partner relationships and finance. These effects drive success and growth.
Customer success is a flywheel for growth, but it is also a vital contributor towards health and viability and a hedge against the potential ill effects of change. Rather than be seen as mundane or little considered part of the business, the most successful companies know that customer success serves a critical, flywheel role for forward momentum.