“There’s a SaaS for that”: Why Customer Success will be the next vertical to explode in SaaS solutions
By: Eugene Lee
Tags: Customer Success, Venture Capital, SaaS

“There’s a SaaS for that”: Why Customer Success will be the next vertical to explode in SaaS solutions Eugene Lee Follow Feb 16 · 5 min read

Image by Tumisu from Pixabay

The other day, I was chatting with a coworker and the question came up as to whether the role of ‘Customer Success’ was just a tech thing, or whether it extends to other industries. My philosophy is that the importance of customer success exists in every business that has customers! It boils down simply to a desire to keep customers or not  and more importantly help them grow. The discussion really had me reflecting on why organizations have been so focused on bringing in new customers rather than increasing value to (and as a result generating more revenue from) existing ones.

Over the last 10 years or so, the way that software is sold has changed dramatically, which caused a massive shift in the sales function, more specifically how organizations use software to acquire customers. Not only has software made acquiring customers more efficient and measurable, but the buyers have also changed. With the ease of new customer acquisition comes the ease of customer loss — anyone willing to purchase on a credit card makes it just as easy to hit cancel on that product. But yet we still focus and talk about new customer acquisition as the be all and end all of business growth.

Today, Customer Success is at a similar inflection point that sales was at 10 years ago. We’ve built software to help get us customers in the door but now we need to have software that helps us keep them before they move onto the next door. I predict that in the coming years, we will see an explosion of purpose-built tools far beyond what exists today, focused on the customer journey post purchase.

And when there is proactive focus on the customer and post sales process, we’ll change the notion that customer success teams are here to prevent those customers from leaving to one where they drive real revenue growth into the organization.

The History: evolution to customer success

Now, it’s true that the Customer Success role was introduced by tech companies. Software was once installed on-premise with large upfront costs and long, complex deployments, which created large switching costs. Innovation at this time was about lowering costs by creating an inside sales team vs. a field sales team. If we could acquire that customer, the company knew they would stick due to these heavy upfront costs. And thus the org chart for most software companies was pretty basic with little specialization and primarily focused on sales. For the most part, it looked something like this.

By the 2000s, as software shifted to cloud-based SaaS solutions, software became available with no upfront costs, low ongoing costs, and easy deployment. There was a continued focus around acquiring customers and new ways to do so with Salesforce’s entrance and creation of the sales and marketing ecosystem. By the 2010s, we saw an explosion of SaaS tools primarily focused on sales and marketing and how to acquire customers more efficiently. Yet switching costs in a SaaS world became minimal. Customer Success became increasingly important to prevent customer churn and you started to see CS teams start to form within organizations.

I pulled together the graphic below to demonstrate how CS has evolved into what it is today, including a few strategies that have become the norm.

The Future: changing the mindset

I’d be remiss not to mention what Nick Mehta and Gainsight have done to lead the way for the CS category and what it is today. But now, we’re ready to build on top of that and move into a new era for Customer Success. The mindset has begun to shift from customer success being a function of an account manager’s role to prevent client churn to one that can be a driver of growth.

Earlier waves of B2B SaaS tools focused on the sales stack. Now that the customer acquisition funnel has been optimized, customer success teams are the ones who have the opportunity to engage the customer throughout their journey and, as a result, create more business (equaling more revenue!). Whether it’s running an adoption campaign or customer education program, all of these customer success driven activities build towards happier customers that want to use your product more. And these programs will become the norm.

As a result, we need to shift the narrative of customer success being thought of as a cost center to being seen as a revenue driver. Companies have sometimes forgotten that there are two ways to grow a business: 1) adding new customers, duh or 2) make the customers you have successful and they will grow and come back for more. If you do that, customers become advocates for your product and selling gets that much easier. And why waste what your sales and marketing teams worked so hard to convert!

The explosion of SaaS tools for sales helped create more specialized roles within that function. We went from field sales and inside sales to more formal roles like Account Executives (AEs), Business Development Representatives (BDRs), Sales Development Representatives (SDRs), sales engineer and sales operations. And within these specialized roles come specialized tools. For example, these teams use Gong for conversational intelligence, Highspot for sales enablement, Outreach for engagement, WorkRamp for sales training and Klue for competitive intelligence.

So, what about CS? You are already seeing the specialization on the CS form in terms of roles. We now have roles under CS for customer success managers, customer education, account managers, onboarding managers, customer support, community managers, and CS operations. More importantly these roles are beginning to report into a VP of CS or you’re hearing of a Chief Customer Officer role vs. a COO role. Now, the customer has a seat at the table on the executive team.

And obviously much like sales, CS teams need tools to help better serve customers. But the customer success tools landscape is less than a quarter as full as the sales tools landscape. This is why there’s a huge opportunity today to build tools for Customer Success teams. We’re seeing great strides in Catalyst and Nuffsaid for CSM platforms, WorkRamp or Skilljar for customer education, Cast.app and Appcues for onboarding, Acquire and Forethought for support, Commsor and Orbit for community and hopefully much much more!

As we see more tools focused on the customer and how we make them successful, we’ll see more alignment across the org on building the right product, the right company for the right customer. And with that, we’ll start to see the fundamental shift towards customer success teams driving growth at a company. If you’re building a SaaS tool for Customer Success ecosystem, I’d love to talk to you.