Deloitte Study: Customer Success Gaining Momentum, but Yet to Become a Boardroom Priority

SAN FRANCISCO, May 20, 2019 /PRNewswire/ -- Technology companies are increasingly setting up customer success (CS) functions within their organizations to help customers achieve positive business outcomes from using their products or services. However, according to the latest research from Deloitte, it's not enough to just establish customer success teams; customer success needs to become an organization-wide mindset and a strategic boardroom priority to reach its full potential in growing and sustaining customer value.

In a first-of-its-kind Deloitte market study, nearly 50 customer success leaders from enterprise-scale technology businesses were surveyed to better understand how they are setting up their operations, what they are achieving, and the challenges they face. The Deloitte "2019 Enterprise Customer Success (CS) Study and Outlook" found that businesses that adopt and instill customer success principles more broadly within the organization drive deeper customer relationships and uncover more revenue growth opportunities they might have otherwise missed.

"Many tech companies have established customer success operations to help their customers maximize value from their technology investments," said Gopal Srinivasan, principal, Deloitte Consulting LLP. "However, the research revealed many of these efforts create impact only up to a certain point if they are not elevated to the C-suite. Those that make customer success a cultural mindset from the top down are better able to understand customers, deepen those relationships, and drive long term customer value."

Key insights from the study

CS goes mainstream and is driving tangible value - More and more tech companies are formally embracing CS functions:

• Approximately 70% of respondents have had CS teams in operation for more than two years, while 45% reported having a CS team that is more than 4 years old.
• More than half of the respondents with CS teams gained 10% higher upsell and cross-sell revenue, renewal rates and annual recurring revenue (ARR). ARR was the most positively impacted metric with nearly a third of respondents seeing a 20% or greater uptick.

CS = happier customers - Respondents have seen noticeable improvements in the level of customer satisfaction and brand advocacy as a result of their CS efforts:

• Half are experiencing a rise in customer satisfaction scores (CSAT) by more than 20%.

CS has yet to get the required boardroom attention - Most companies understand the need for establishing a dedicated CS function and its potential business value. But very few tech companies have been able to elevate the strategic importance of CS within their organizations:

• Just one-third of respondents said their CS function is led by a C-suite executive (Figure 1). A mere 30% report that CS is considered a strategic priority by the board of directors (Figure 2). Only 26% say CS finds a regular mention in official business communications.
• Companies that consider CS as a strategic priority saw higher improvement in metrics with roughly twice the number of companies reporting a double-digit improvement in renewal rates.

Traditional companies are still behind born-in-the-cloud (BITC) companies in making CS a strategic priority - The industry's transition toward on-demand subscription-based services for technology requires embracing CS principles beyond just establishing a CS team. In fact, 50% of responding BITC companies have already elevated CS topics to the C-suite and boardroom, and ascribe CS to be a strategic priority, as compared to just 25% of businesses that traditionally offered on-premise offerings and are now starting to shift to subscription-based solutions.

Customer Success mindset is starting to permeate across the enterprise, but more work must be done to make it an organization wide philosophy - The "2019 Enterprise Customer Success (CS) Study and Outlook" revealed ways to infuse customer success principles across the enterprise. It found that an organizational customer success mindset exists where a constant focus on the customer is maintained throughout all touchpoints, with teams making proactive efforts to maximize value for customers. However, the study found that customer success functions tend to focus on customers only after a transaction occurs:

• The majority of the customer success team's time is spent on post-sales activities with members spending approximately two-thirds of their time ensuring proper customer onboarding, driving higher adoption and upsell/cross-sell opportunities, and reducing churn. Less than one-third of their time is spent on providing input for designing better products, delivering more accurate business models, defining success plans, and creating package structure more aligned with customer needs.

"For customer success to permeate the organization, companies need to develop operating models in which the customer success function works more collaboratively with internal teams," Srinivasan said. "The study indicates that while companies have started to define clear customer success operating models, they are challenged in implementing them in a cross-functional-team way. For most organizations, it will require allocating more funding for customer success initiatives to establish that consistent, companywide focus on the customer."

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