This article is based on a presentation given by Mike Sasaki at #GTM23 in San Diego. As a GTM Blueprint member, you can enjoy the complete recording here. For more exclusive content, head over to your membership dashboard.
Let me tell you a story. The year is 1998, and Blockbuster is crushing it. They have 85,000 employees, they have a market cap of $3 billion, and everyone’s heard of them.
Then the year 2000 comes around, and Blockbuster gets the chance to buy Netflix (at that time, a DVD mail-out service) for $50 million, but they pass on it.
Fast forward to today, and Netflix is crushing it – meanwhile, Blockbuster is down to its last store.
Now, you might be thinking, “Cool story, Mike – but what does any of this have to do with customer success?” Well, right now, customer success is facing a choice – be like Blockbuster or be like Netflix. The market landscape has changed and if we fail to adapt, we’ll fall by the wayside like Blockbuster. To become Netflix, we have to evolve.
What customer success used to look like
Before we get to grips with what the future of customer success (CS) looks like, we have to understand where we started.
When I started out in CS, my role looked pretty different from how it looks today. These were my main responsibilities:
- Retaining customers – doing whatever it took to make them stay, from offering credits to outright begging.
- Collecting payments – sending invoices and chasing debts.
- Reactive support – each customer success manager (CSM) had so many clients to look after that it was nearly impossible to proactively support them.
- General assistance – we assisted sales and support teams and we didn’t have any kind of leadership role.
What customer success looks like today
The present state of CS looks much better. Why? Largely because our function is now tied to key business metrics – net revenue retention (NRR), net promoter score (NPS), churn rate, and customer health score. These metrics have really matured over the past 15 years.
However, we don't directly own any of these metrics, and that’s a challenge. Not being fully responsible for any metrics that matter to the business makes it hard to justify our existence.
Why customer success needs to change
The business landscape has shifted from prioritizing growth at all costs to focusing on profitability. In the days of growth at all costs, we could afford to have multiple roles involved in the day-to-day support of the customer – everyone from sales execs to CSMs to billing teams and beyond. Rapid growth justified those investments.
Now that the focus is on profit and loss - being profitable as a company and supporting our customers – we have to be efficient. The role needs to become more operational and less about abstract “customer success.” That’s why, in my view, the future points towards a “customer management” function rather than customer success.
What the future of CS looks like
The problem is that having both a CSM and a salesperson for every customer is too expensive. You can do that for some customers, but adding implementation and professional services makes it unsustainable.
CEOs and boards of directors are asking, “How can you support customers profitably, grow them, and stay operationally efficient?” An operational customer management function is the answer. This means taking responsibility for revenue growth within accounts.
Traditionally, CSMs avoided revenue and contract discussions, preferring to take on the role of trusted advisor. Those days are gone. If we cling to that advisor position without revenue responsibility, we risk ending up like Blockbuster. Jobs will be at risk, as we saw in 2022 when customer success teams were hit hard by layoffs.
The key to the future: Dynamic customer segmentation
So, how do we make the CS function more efficient, take a more focused approach to revenue, and ensure a brighter future for CSMs? The key is dynamic customer segmentation.
The traditional way of statically segmenting customers based solely on revenue – low/SMB, medium/mid-market, high/enterprise – is flawed. It means you end up over-servicing some customers while neglecting others.
We need to take a more dynamic, signals-based approach. That way, we can be sure to apply the right resources at the right times. Let me walk you through a quadrant that’ll enable you to do just that.
