How are you monetizing customer success?
Customer success is a key function in the subscription economy. One can argue it is the key function. It is also getting more and more recognition in all B2B business models. Successful customer success requires significant investments in people, their skills, process and technology. How are people approaching the monetization of customer success?
Some possibilities:
- Capture through renewals and upsells
- Charge for services
- Tie to customer outcomes
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#1 We do have targets for renewals both in terms of $$$ value and on-time renewals & for upsells we track leads generated by the CSMs and their successful closure.
#2 for As I mentioned if you want to charge for a CS service then they need to be value for the customer, e.g. some education services credits, full operational review with SLA/SLO achievements, PS T&M, etc...
#3 I see how this could apply in some industries and for specific solutions but the successful delivery of an outcome also depends so largely on the customer's own organisation, efficiency, commitment etc.. How do you protect yourself against this when delivering complex solutions to large Enterprise companies?
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One and Two. #1 is obvious and #2 requires adding some deliverables to your portfolio that customers can identify value for and can put a $$$ value to.
#3 sounds tricky , are you suggesting customers payments tied up to achieved outcomes, loosely similar to a SOW for a PS engagement?
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Hi @David Perrault , yes #1 is the standard reason for having customer success, but I am not convinced that these are always measured and forecast with as much discipline as they could be. Do you have some thoughts on how to decide what goes into #1 and what goes into #2?
#3 There are a few companies doing this I think it is going to be the long-term trend in B2B pricing. It is commonly referred to as performance-based pricing or outcomes-based pricing. As we get better at predicting business impact of solutions and gain experience in evidence based approaches this becomes more practical. These are already used extensively in healthcare and ways to manage the causal models are advancing quickly.
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Hi @David Perrault This has always been the objection to outcomes-based pricing. The same issue arises in healthcare and evidence-based medicine and they have gone a long way to address this. Healthcare outcomes almost always have complex causes and are dependent on. patient actions. Check out The Book of Why by Judea Pearl (there are plenty of more technical treatments of this but this book is actually an enjoyable read).
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Thanks @Steven Forth - I would definitely be interested to hear if anyone has been successful implementing outcome-based pricing within the Enterprise complex SW industry.
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Hi @David Perrault Where I have seen this be most successful is with energy management platforms. There are pricing models for everything from energy consumed by servers to energy management at large industrial sites. Another interesting one I was reviewing recently is a shift scheduling platform for gig workers that only charges per slot filled.
Perhaps this will work best, in the short term, for hybrid solutions that combine software, data and services so that the vendor has more control over outcomes.
I wonder if some of the current work in value stream management will also feed into this.
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