Some foundational questions still require attention in our growing customer success community. These questions include customer success funding and reporting, as well as appropriate customer segmentation. As SaaS companies mature, they are presented with bigger challenges that are associated with scaling.
Over the years, TSIA has conducted surveys, published research, held webinars, and virtual summits in the customer success community. These efforts are geared towards presenting viable solutions to the challenges of building customer success at scale. Mature SaaS companies are generally more concerned with the elements of scaling customer success. Their inquiries include the best approaches to:
- Operationalizing the customer journey
- Defining the role of Partners in the customer success organization
- Acquiring analytics and data science skills for the CS team
- Scaling sales capability with customer success
- Choosing the right technology for the customer success team.
- Crafting a low-touch/digital customer success strategy
In this blog, we’ll explore the discoveries of one of such TSIA studies on creating an effective customer success strategy for the long tail of customers. Starting with the segmentation strategy, we’ll discuss observations from the study and popular myths.
Segmentation Strategy
Proper customer base segmentation precedes an effective low-touch/digital customer success strategy. Customer-centric businesses aim to deliver excellent customer experience at all levels of segmentation. However, a growing customer base results in limited CSM resources. Interestingly, the best customer experience doesn’t always require a Customer Success Manager (CSM).
To remedy the limitation, companies invest in their customer experience capabilities and execute customer journey maps to uncover the best experience for each segment. Segmentation is often based on revenue or ARR but it can also be based on geography, industry, product, etc. This splits the customer base into SMBs, mid-market, and enterprise companies.
A customer-to-CSM ratio is then applied for each segment, with as low as 1000:1 for the digital touch model and as high as 15:1 for the high touch model. The right segmentation is crucial to success since each customer’s experience is ultimately determined by their assigned segment.
The Low Touch Study
In 2018, TSIA worked with 30 members to explore the low touch/digital strategy. It aimed at discovering operational metrics and useful practices that have increased customer success in the segment. Some questions asked in the survey were similar to the core TSIA benchmark. The TSIA core benchmark is the gold standard with results that are similar to the high touch model using a 15:1 CSM ratio.
Defining the Low Touch Segment
The survey revealed how the participants defined the low-touch segment in their organizations:
The threshold for Low Touch Segment
39% of the participants set their low touch threshold at $50k. This indicates that there is no common practice for the segmentation of low-touch capability.
The threshold for low touch CSM ratio
46% of the participants identified with a 100:1 customer-to-CSM ratio. This indicates that there is no common practice for the segmentation of low-touch capability.
Resources Distribution
28% of the customer success team’s total resources are dedicated to the low-touch segment.
Key Observations from the Low Touch Study
Here are the three key observations from the study:
1. Time is of the essence.
Although CSMs play a key role in the low-touch segment, they cannot focus on tasks that require heavy time commitments. CSMs are introduced 73% of the time but activities that require human customization instead of digital engagement must be evaluated as a challenge.
There is a significantly lower focus on escalation management and time that CSMs dedicate to the renewal activities, in the lower touch model.
2. Technology and Analytics are critical to Scale
Mature companies investing in advanced technology and analytics to expand their lower touch capability. This is evident in their acquisition of a dedicated customer success platform such as Gainsight, Totango, Client Success or Bolstra One can find the full list of customer success systems on the Customer Success Association portal.
In general, we note that there’s a larger investment in data analytics functions and a customer health score in an organization with a heavy concentration of customers in the low-touch segment. This investment reduces the need for additional CSMs to manage the SMB segment.
3. Deal with the long tail and leaky bucket
Companies with a higher volume of churn typically have a larger low-touch segment of small customers. Participants in the study combat the volume churn by implementing new billing and payment processing systems. The new systems allow for recurring monthly or annual credit card charges in order to promote frictionless renewals. They are usually more commonly implemented for organizations with an annual contract value of below $10k ARR.
Myths Debunked By the Study
Outputs from the study debunked two common myths in the customer success community:
1. NPS drops in the low-touch segment
There is only a 2-point difference between the NPS scores obtained from the low-touch study and the TSIA benchmark. Hence, customer satisfaction and loyalty can be retained in the low-touch segment with adequate investment in technology and a digital-first approach.
2. Monetized customer success stops in the low-touch segment.
42% of TSIA members who took the study monetize some portion of the low segment which is similar to the TSIA benchmark.
Summary
Customer Success in the low tail of customers can be achieved with appropriate investment into technological and analytical support. Through this, fewer CSMs will be required to handle the segment. Monetization can also be achieved by adding suitable payment options that accommodate SMBs.
January 30, 2020
Hello! Someone in my Myspace group shared this website with us so I came
to take a look. I’m definitely enjoying the information. I’m bookmarking and will be tweeting this to my followers!
Wonderful blog and wonderful design.
January 30, 2020
Thanks so much! I appreciate your kind words, Irit
February 19, 2020
That’s awesome! Hugely helpful and much appreciated.
February 19, 2020
Good point. Much appreciated.
August 6, 2020
People that share an interest in a particular subject usually have a number of other characteristics in common as well.
August 14, 2020
I believe this internet site contains some rattling excellent information for everyone :D.
September 17, 2020
Hello, i believe that i noticed you visited my site so i came to return the prefer?.I’m attempting to to find things to enhance my site!I assume its good enough to
make use of some of your ideas!!
October 9, 2020
Nice post. I learn something new and challenging on blogs I stumbleupon everyday. It will always be useful to read through articles from other authors and practice a little something from other web sites.
November 15, 2020
There is definately a great deal to learn about this subject.
I really like all the points you’ve made.
November 18, 2020
Excellent items from you, man. I’ve take into account
your stuff prior to and you’re simply too
fantastic. I really like what you have got here, really like what
you’re saying and the way in which in which you assert it.
You’re making it entertaining and you continue to care for to stay it smart.
I can not wait to read much more from you. This is really a terrific website.
November 23, 2020
Hello there! This post could not be written any better!
Reading this post reminds me of my previous room mate!
He always kept chatting about this. I will forward this write-up to him.
Pretty sure he will have a good read. Many thanks for sharing!
November 26, 2020
What’s up to all, for the reason that I am genuinely keen of reading this web site’s post to be
updated daily. It contains fastidious information.
December 2, 2020
Thank you for sharing your info. I really appreciate your efforts and I am
waiting for your further write ups thanks once
again.
December 3, 2020
Wonderful, what a web site it is! This blog gives valuable information to us, keep it up.
December 4, 2020
Excellent, what a blog it is! This blog provides useful facts to us, keep it up.
December 12, 2020
Thanks for finally writing about > Customer Success for
Your SMB Segment < Loved it!
January 3, 2021
Good blog you’ve got here.. It’s difficult to find
quality writing like yours these days. I really appreciate people like
you! Take care!!
January 7, 2021
I was very pleased to find this site. I wanted
to thank you for your time for this particularly fantastic read!!
I definitely loved every little bit of it and i also have
you book marked to see new stuff in your web
site.
January 11, 2021
I do not even know how I ended up here, but I thought this post
was good. I don’t know who you are but certainly you’re going to a
famous blogger if you are not already 😉 Cheers!
January 11, 2021
Thanks for your personal marvelous posting! I truly enjoyed reading it,
you will be a great author.I will ensure that I bookmark your
blog and definitely will come back down the road.
I want to encourage yourself to continue your great writing, have
a nice evening!
January 24, 2021
Wow! After all I got a blog from where I know how to actually get helpful information concerning my study and knowledge.
January 24, 2021
I like what you guys tend to be up too. Such clever work and reporting!
Keep up the great works guys I’ve incorporated you guys to
blogroll.
January 26, 2021
Thank you for your appreciation. We acknowledge your ideas and opinions. Please sign up for our newsletter. Here’s the link: https://csmpractice.com/newsletter-sign-up/
February 1, 2021
I could not resist commenting. Well written!
February 26, 2021
It’s going to be finish of mine day, except before end
I am reading this fantastic post to increase my experience.