Customer Success Management, Part I: Piloting a CSM Program at Personio
The Customer Experience team at Personio, of which the Customer Success team is an integral part, can best be described in one word: innovation. We’re playing the ball that’s ahead of us, making sure we are constantly improving and trying new things. This innovation approach is viewed through a crystal clear customer lens that, hopefully, helps us surprise and delight them with something they never even knew they needed.
In this series on Customer Success Management I’ll share the journey of Customer Success (CS) at Personio — a journey that has been shaped by the needs of our product and customers, and that has been nothing short of an adventure! But first, let’s take a more broad look at Customer Success in general before diving into CS at Personio.
An Introduction to Customer Success Management
We start with these two questions, which may seem simple but are in fact quite difficult to answer:
- What is Customer Success ?
- What does a Customer Success Manager do?
According to CS-centered software pioneer Gainsight, customer success is “a business method that uses a company’s product or service to help customers achieve their objective. It’s relationship-focused client management that aligns customers with the company’s goals, igniting beneficial outcomes for everyone involved. Ultimately, effective customer success strategies create less customer churn, lower acquisition costs, and create more upsell opportunities.”
A few interesting facts about the world of CS:
- Customer Success Management is predominantly used across a range of B2B sectors to change the approach of customer-life-cycle management
- It’s just getting started! Having been around for fewer than 15 years, CSM is still in its infancy.
- CSM as a career path is booming. The fight for talent is real, with salaries surging over the past few years. The Customer Success Specialist role was ranked sixth in the U.S. and third in Germany in LinkedIn’s ‘2020 Emerging Jobs Report.’
- It’s also key to note that Customer Success and Customer Support are not the same thing. The latter can often be reactive, focused on issue or contact resolution and taking more of a short-term perspective. Customer Success, on the other hand, is proactive, focused on building long-term relationships with customers and deriving value from the product.
In fact, Customer Success Management can mean a lot of different things to a lot of different people. It all depends on your company size, stage, business model, and, most importantly, your product. There really is no one size fits all. For example:
- While CSMs are sometimes tasked with driving renewals and upsells, there are other cases where this is outside of their scope
- Sometimes the cost of Customer Success Management is packaged into the software pricing, and sometimes it’s an add-on service, but it’s never really free.
- CSMs can sit in a variety of teams, from Sales to Support to Professional Services to Customer Experience.
- The customer portfolios of Customer Success Managers can range from one or two accounts, to hundreds of customers. The range is so broad that there are companies with multiple CSMs on a single account, and companies with CSMs who manage portfolios of over 200 accounts.
As you can see, there’s no single blueprint or playbook when it comes to building up a Customer Success organization. This opens up an opportunity for every company to decide what CSM looks like for them and how to implement it within their own structures.
Implementing Customer Success Management at Personio
Back in February 2019 we asked ourselves if our customers really needed a dedicated contact person to guide them through their lifecycle with Personio. We knew that a successful Customer Success function could be a key profit center for the company, but a poorly-implemented one could become one of the heaviest cost burdens in the Customer Experience organization.
Customer Success should deliver and capture value, and is not meant to fill value gaps.
In 2018 we offered our customers a guided (one-to-few) implementation until their go-live date, then handed them over to a more reactive support team (one-to-many). But as Personio continued to change and mature as a business, the product and customer support needs of our customers also changed. Our customers became larger and more complex, and their Human Resources departments were undergoing constant change — which meant that digitizing HR was no longer a one-time event, but an ongoing journey.
We also kept evolving our product alongside our customers, which further increased its complexity and scope. But all of these customer and product evolutions soon exposed the weaknesses of our customer support strategy. For some customers, the offered implementation period and approach — which was key to their setup and training — was insufficient. Not yet aware of this insufficiency, the Implementation team would hand unfinished projects over to Customer Support team, which in turn could not succeed with this scope.
As we continued to scale, this strategy became a significant problem. It resulted in decreased product adoption, a significant rise in our customer contact rate, decreased customer satisfaction, and an increased detraction and churn risk. Each of these metrics became a clear problem statement and evidence in support of the need for a Customer Success function.
Piloting the CSM Program
Fortunately, we had established very strong and trusting relationships with our customers. This foundation allowed us to gather feedback to better understand the various challenges they faced in their journey with Personio.
Who better to tell you what our customer needs than our customers themselves?
At the same time, we also began piloting a white-glove service to start solving some of our problems. We knew it was crucial to select a strategic and creative employee from the customer-facing organization for this pilot, particularly one who had already established excellent relationships. By doing this we learned which customers were seeking more guidance, and what kind of support they were seeking in the different chapters of their HR digitization journey with Personio.
We ultimately identified three elements of the journey that we wanted to address with our largest and most complex customers (which that the time we identified as organizations with more than 300 employees):
- Customer education and ongoing training
- Product adoption and employee self-service
- Best practices and feature activation
As we mentioned earlier, Customer Success should always be a value-driver. Even if the service comes with a price tag for the customer, it is ultimately meant to lower their costs. That said, we knew that we couldn’t focus on generating revenue through CS when we were just getting it off the ground. Instead, we invested heavily in understanding the value proposition of our CS function for the customer. We knew that our early adopter customers would be key to our success, and therefore it was much more important to begin by nurturing knowledge-sharing rather than charging them for a service that could also be a risk for them.
Although we were confident in our understanding of the various needs of our target customers, we struggled with the concrete scoping of the roles and responsibilities of a Customer Success Manager. Where should the service start and end? We weren’t sure. Consequently, we chose an approach that is common in the evolution of Customer Success in SaaS: the all-in-one solution.
So, when we launched Customer Success in February 2019, it was intended to be a full-service, white-glove offering for Personio’s largest customers. A customer would pay for a single point of contact to handle the entire service spectrum and throughout the complete customer lifecycle: from implementation, to ongoing support, to elements of consulting and advisory services, and even renewal and expansion management.
While we saw great success early on, the role quickly became too much for one person to handle. In Part II of this Customer Success Management series, we’ll dive into how we expanded our team while simultaneously focusing and sharpening the scope of that team.
Interested in learning more about Customer Experience in the meantime? Read all about How We Built our Three-Year CX Strategy from Personio COO Jonas Rieke.
