Customer delight, customer focus, customer commitment, customer satisfaction, etc., are more than just buzzwords in today’s highly competitive global business landscape—they’ve become strategic imperatives. Studies suggest that new customer acquisition costs range from 5 to 25x that of customer retention. As such, businesses increasingly realize that keeping existing customers happy and engaged is just as important as acquiring new ones. Enter the Customer Success Manager (CSM), a role that’s rapidly gaining prominence in organizations across various industries. In this blog post, we will explore the role of a customer success manager, define their responsibilities, pinpoint the right time to hire one, and provide statistics demonstrating their impact on company performance.
Defining the Role: Who Is a Customer Success Manager?
A Customer Success Manager (CSM) is a dedicated professional responsible for ensuring customers achieve their desired outcomes while using a product or service. Unlike traditional customer support or account management roles, CSMs proactively advocate for the customer’s success. As such, they engage with customers, understand their unique needs and goals, and work collaboratively to drive value. The CSM role is different from that of a Customer Service Representative (CSR) or Sales. All three, the CSM, CSR, and sales rep, engage with customers and contribute to shaping the customer experience. However, they appear at different points of the customer journey. In short, the main differences between sales, customer success, and customer service are as follows:
- Sales: Focused on activities that drive conversion and purchase of a particular product or service. Sales reps typically appear early on in the customer journey.
- Customer Success Manager: CSMs typically become involved during onboarding and remain engaged post-sales. They are focused on enhancing the customer experience.
- Customer Service Representative: CSRs focus on short-term transactional or one-off issues, e.g. tech support, sign-ups, etc. Although important, CSRs are not focused on building long-term relationships compared with Sales reps and CSMs. However, they significantly impact the customer experience and retention more often on the downside.
Companies such as Hubspot offer a range of CRM, marketing, and sales solutions. Additionally, Hubspot maintains an excellent and robust knowledge base to support Customer Success Managers and sales teams. Check out the resources here.
Sales Versus Customer Success
Source: Hubspot
Main Activities of the CSM
- Onboarding and Adoption: CSMs facilitate a smooth onboarding process for new customers, guiding them through product setup and usage to ensure a positive initial experience.
- Relationship Building: They build strong, long-lasting relationships with customers, acting as a trusted advisor who understands the customer’s business and objectives.
- Customer Education: CSMs educate customers about product features and functionalities, helping them unlock the product’s full potential.
- Monitoring and Feedback: They continuously monitor customer usage and satisfaction, seeking feedback and addressing any issues promptly.
- Problem-Solving: CSMs proactively identify and resolve customer challenges, ensuring a seamless experience.
- Upselling and Cross-Selling: By understanding the customer’s needs, CSMs can identify opportunities to upsell or cross-sell additional products or services that align with their goals.
- Churn Prevention: One of the most critical roles of a CSM is to prevent customer churn. They identify at-risk customers and take proactive steps to retain them. The churn rate is defined as the rate at which customers stop doing business with an entity.
When Is the Right Time to Hire a Customer Success Manager?
Hiring a Customer Success Manager should be strategic and timed appropriately. Below are some key indicators that suggest it’s time to bring a CSM on board:
- Rapid Growth: If your business is experiencing rapid growth, it’s an ideal time to hire a CSM. Increased customer acquisition often leads to a higher workload regarding customer support and account management. A CSM can help manage this influx effectively.
- High Churn Rate: If you’re noticing a high churn rate among your customers, it’s a clear sign that you need a CSM. They can identify the underlying causes of churn and take steps to prevent it.
- Complex Products or Services: If your product or service is complex and requires a deeper understanding to realize its full potential, a CSM can guide customers through the complexities, ensuring they derive maximum value.
- Customer Feedback: If you consistently receive customer feedback or complaints about their experience with your product or service, a CSM can be instrumental in addressing these issues and improving customer satisfaction.
Many industries integrate customer success managers as part of their sales cycle. You can find CSMs in industries such as retail, finance, healthcare, B2B, software, hospitality, insurance, etc. For example, Deel an all-in-one HR platform and the fastest-growing SaaS company, deploys a CSM for every customer onboarded. Deel’s approach reflects a more proactive one. Moreover, for Deel, it is necessary, given the speed of their growth, global customer base, and risk of churn. However, for other companies, CSM may, at times, be reactive. Company leadership plays a large role in the success of the CSM. Leadership needs to drive organizational and employee alignment toward a customer-centric organization. If customer-focused alignment exists, then CSMs can operate with better clarity and a stronger impact on value creation.
The Key Skills for a Successful CSM
The nature of the job function of the CSM suggests the need for well-rounded individuals with unique skills. Knowledge work is a key component of the CSM role. As such, soft skills are essential. According to the consulting firm Bain & Company, CSMs in the tech sector tend to share common traits and motivations.
Source: Bain & Company
The Required Educational Background for A Customer Success Manager
What is the best educational background for a successful Customer Success Manager? In short, it doesn’t really matter. However, certain degrees do help, depending on the product. These include business, engineering, healthcare, etc. Most importantly, the key to a successful Customer Success Manager lies in soft skills. However, soft skills such as conflict resolution, collaboration, teamwork, empathy, etc., must be present to ensure customer success. At times, CSMs will encounter challenging or difficult customers, so having a thick skin or nerves of steel e.g., patience, is important.
Impact of a CSM on Company Performance
Here are a few statistics that highlight the positive impact of having a Customer Success Manager in your organization:
- Reduced Churn Rates: HubSpot Research found that 93% of customers are likely to make repeat purchases with companies that offer excellent customer service.
- Increased Customer Retention: Increasing customer retention by 5% can boost profits by 25-95%
- Improved Upselling Opportunities: The probability of upselling to an existing customer is 60-70% versus 5-20% for a new prospect.
- Enhanced Customer Satisfaction: According to a Zendesk survey, 73% of customers will switch to a competitor after multiple bad experiences.
- Boosted Customer Lifetime Value (CLV): CLV measures the average customer’s revenues generated over the entire relationship with a company. Companies that prioritize customer retention over customer acquisitions are 60% more profitable.
Focus on Your Customer to Create Value
Finally, in an era where customer-centricity reigns supreme, the role of a Customer Success Manager has become indispensable. As Girish Mathrubootham, the founder of cloud-based customer service company Freshworks, recently stated, “ You can only build a successful company on the foundation of happy customers.” CSMs are one of the most important catalysts to achieve this result. Additionally, the comment from the Freshworks founder further reinforces the importance of strong leadership. Nevertheless, CSMs’ ability to foster strong customer relationships, drive product adoption, and reduce churn makes them valuable assets to any organization.
If you’re experiencing growth, high churn rates, or need improved customer satisfaction, it may be the right time to consider hiring a CSM. The statistics speak for themselves—companies with dedicated CSMs consistently outperform their counterparts regarding customer retention, satisfaction, and revenue growth. Embracing the role of the Customer Success Manager can be a game-changer in today’s competitive business landscape, ensuring both your customers and your company thrive.
To learn more about the Customer Success Manager or to discuss ideas for your business reach out to our team at ClearSky 2100 Ventures anytime. We’re always here to help.
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