If your approach to helping customers succeed is spread across account management, customer service, training, sales, customer marketing, etc., you’ll get a great return by consolidating it.
Forrester published a study (subscription required) that analyzes the costs, benefits, and risks of dedicating a team to customer success management, outfitting them with purpose-built technology, hiring a leader, and enabling them to drive consistent experiences that lead to retention and growth. Our results show that a composite $1 billion firm with 5000 current accounts will likely:
- Accrue a net-present cash flow of more than $13.4 million. Our model CS program returns a net present benefit of more than $26.1 million over the first three years, well ahead of the approximately $12.6 million the business spent to set up and maintain it.
- Gain double the benefits. Primary benefits in our model originate from: 1) improved customer retention (by 5 percentage points compared to customers not actively involved with the CS team), 2) additional cross-sell and upsell opportunities (delivering a 6% bump in revenue per account in the program), 3) higher new customer conversions from better insights, more insightful success stories and less time spent on rescue activities, and 4) a reduced number of support calls.
- Recover the full investment within 3 years. Our model produces a risk-adjusted ROI of 107% by the end of year 3.
The Business Case For Customer Success Consolidation
The report uses Forrester’s Total Economic Impact™ (TEI) methodology to develop the business case for these returns. Explicitly, it shows how basic customer success investment can help you:
- Take a more proactive approach to guiding customers toward their goals. Dedicated CS managers collaborate regularly with customers to ensure they are actively working towards measurable business outcomes. As customers succeed, you benefit from higher retention rates, lower costs to serve, and more cross-sell and upsell opportunities.
- Remove barriers that slow customers’ progress. A centralized CSM team has the tools and processes needed to monitor account progress more consistently. This helps your customers avoid problems, determine the best fix when problems arise, adopt best practices, and achieve value faster.
- Connect your customers’ success to your business success. A mature CS function helps the business establish longer customer tenures and increase loyalty. Longer tenures and greater loyalty lead directly to more predictable business growth.
Please read the report to learn more. Even better, download the Total Economic Impact™ (TEI) Model For Customer Success toolkit and enter your own numbers to learn how quickly you can see a similar – or better – return.
