Monetized Customer Success : Motivation, Challenges and Strategies

(I find myself discussing Monetized Customer Success in a number of conversations of late, at Pulse, TSIA and other events that I have attended recently. Multiple senior leaders have asked me about my opinion about why it originated, how would I design something from first principles and what are some of the lessons learnt. In this blog I will share a summary of my opinions, learnings and some practical ways to approach this systematically. To manage people’s attention span, this will be over multiple parts.)

Customer Success in B2B SaaS industry continues to be a rapid evolution. If you are in B2B enterprise SaaS Industry, you have heard about Monetizing Customer Success as a way to develop a sustainable model for customers to achieve their Business Outcomes and Priorities. The Industry continues to grapple with this challenge today. In fact according to Gainsight CEO — Nick Mehta, it is one of the top 4 priorities for Customer Success Leaders in B2B SaaS organizations. I led Success 360, a monetized success offering at VMware, enterprise leader in the Multi-Cloud industry and here are some thoughts on this topic from my experience.

Customer Challenges

B2B SaaS industry is a fascinating industry, where customers are constantly evolving their organization with technology enabled systems and tools to manage their business activities. Any SaaS vendor will tell you that each customer is unique with Complex business priorities that need multiple vectors to come together to delivery business value — software, process, operations, sponsorship etc., the list goes on. What complicates this is customers are different levels of organizational maturity in leveraging various products and technologies. But to really go to first principles let us examine where it all starts — enterprise grade technologies.

“Enterprise Grade” Technologies

Enterprise grade technologies, a combination of complex systems, applications and platforms are fairly complex and needs significant engineering effort to develop and deploy. CRM software, Point-of-Sale technologies(POS), Supply Chain Management(SCM), Enterprise Resource Planning(ERP), Human Resource Management (HRM) softwares etc., B2B SaaS industry is replete with companies looking to address certain use cases and business needs with technology. Since these power multi-billion dollar businesses, even a little downtime or a functionality lapse can result in millions of lost revenues. Hence the need for high resiliency in built into these applications. The need for faster time to market, delivering innovations at ever dizzying rates means that B2B SaaS companies are constantly updating products which translates into even higher need for managing this complexity.

Most enterprise B2B SaaS companies deliver a clear set of instructions, methodologies, use cases to deploy the software within customer environments. However customer often lack the technical skills and capability to manage this themselves. Most B2B SaaS software companies address this gap through in-house professional services and/or partners who customize the software with detailed implementation to address the specific business outcomes that the software was bought for. However it is not just upfront implementation services that customers look for, they need help with nagivating the training, use cases, peer group evaluations, planning and organizational alignment to deliver on the business outcomes. A very valid question at this point is how does Customer Success differ from Professional Services.

Customer Success, Professional Services, Partner Services

Most B2B SaaS enterprises have created an ecosystem of services and partners to enable customers to deploy their products and get value realization. The primary difference between Professional Services, Partner Services and Customer Success is the delivery modality. A professional services portfolio will likely be clearly defined Statement of Work (SOW) that dictates the scope of work that the delivery team will complete in a fixed duration of time. A lot of back and forth likely happens to ensure customers are clear about the scope, nature and focus of the effort. This can be executed by a team internal to the B2B SaaS vendor (Professional Services team) or Partner teams that work in collaboration with the customer and the vendor.

The main distinction that is being adopted in the industry is the duration of engagement — a Monetized Success Offering is a continuous engagement typically for a year or two with no stipulation in terms of scope. The hi-touch resource leading the success offering takes responsibility to manage value realization. A Professional Service SOW is a defined scope that has a beginning and an end. Subsequent services are renegotiated. Partner Services fall into the category of fixed-SOW.

Customer Success: Motivation for Monetized Offerings

Over the last decade the practice of Customer Success — a function that had its roots in Customer Support but since has expanded to offer a full portfolio of offerings like Technical Account Managers, Technical Architects, Solution Architects, Support Managers and the often discussed Customer Success Manager. The primary goal of all these roles in the post-sale part of the customer lifecycle is to improve the familiarity of the customer with the B2B SaaS product, help customers nagivate the complexity and achieve business outcomes.

However customers continue to ask for more help in delivering faster value realization — a term that looks at how quickly the software is up and running, delivering the outcomes and justifying the costs incurred in software procurement stage. As organizations invest more into certain products and software (e.g., Salesforce CRMs, ServiceNow ITSM) there is a need to de-risk their prior investments and a corrresponding willingness to pay. Monetized Customer Success has become a must to deliver these coutcomes. Customer willingness to pay for dedicated teams and the rising costs to support these teams to deliver customer awareness, adoption and value realization means that B2B SaaS vendors create monetized success offerings that customer can buy on their success journey. Let us also look at the customers point of view.

Monetized Customer Success: A customer perspective

Picture a large financial bank that has multiple business units — Retail, Commercial, Consumer Small Business, Investment Banking, Wealth Management etc. Each of these have dedicated sales and marketing teams that have unique sales cycles and processes. Over the course of the last decade through internal investments and acquisitions, they have built up significant CRM installation across various business units. Sales, Account Managers, Marketing and Account teams actively leverage this to track, report and keep the Rythm of business going. A single day of downtime, would probably affect millions in revenues. The internal Center of Excellence for CRM is struggling to keep up with the changes from the CRM vendor, internal applications, training of the admins and analysts who are actively managing the platform. With a few million or more in investment made in the CRM platforms, the CFO is actively flagging their investment as an enterprise risk to continued business operations.

The above scenario happens more often than customers realize and proactive planning with a Monetized Customer Success offerings is the way to address this scenario. The investment with a Premium Monetized Success Offering will likely pay off fairly quickly with benefits to the customers in terms of Faster time to Value, Quicker response time from the B2B SaaS vendors for any downtime incurred and risk assurance for the entire CRM platform which is the heart of the business operations.

Customers might also percieve this as yet another cost of doing business on top of the license and subscription fees that they have to incur. In the early days of their investment in technologies, they will likely have dedicated free resources (investment on behalf of the vendor) from the B2B SaaS vendor and the transition from having free resources to paid resources and capabilities is challenging. However various industry research from Gartner, IDC and other thought leaders have indicated the industry is actively moving towards this direction as a sustainable way ot delivering customers with the right level of Customer Success that is needed. There is a third element to this conversation too. After all the monetized offers have to be sold to the customers, so lets the Sales team perspective on the Monetized Success Offers.

Monetized Customer Success: Sales team perspective

Sales teams within B2B SaaS vendors have different perspective. Services sales organizations are often managed to a different cadence. While license and subscriptions sales take the limelight, services sales organizations are attached to deals, often competing for customers share of wallet. In organizations that have services sales in addition to monetized customer success, conflict is inherent.

As rule of thumb anytime the services attach is more than 17–20% of licenses/subscription within a large enterprise deal, it becomes challenging to position the value. The role of services GTM design becomes how to align a portfolio so there is little overlap with the other existing offers — whether it is professional services or partner offers. Yet another challenge is to align sales compensation to incentivize monetized success offerings on par with other offers (more about this in later blogs).

In summary, Monetized Customer Success came about as intersection of multiple forces — customer need to accelerate value realization and B2B SaaS vendors need to find a sustainable way to deliver success. As in all things today, market decides the final outcome.