Customer Success Practice Blog Series #1

By Jonathan Lee – ISSI Customer Success Practice Lead

Hyperscale cloud providers have recently updated their partner program to include elements of Customer Success. Microsoft Azure has launched a new cloud program [1] that is based on partner growth and customer success. The Google Cloud MSP has a new requirement to show the Customer Success plan. Similarly, customer success is fundamental to the AWS MSP program. Does this focus from the major cloud vendors mean now is the right time for the Cloud Partner community to adopt the Customer Success approach?

In this, the first of the customer success blog series, let’s examine when is the right time for Customer Success to be adopted by the cloud partner community.

The current state of Customer Success in the Cloud Partner community

From my experience consulting with channel partners, I generally do not see many having a “dedicated” Customer Success team.  The TSIA LAER [2] life cycle for customer engagement defines four phases:

Land – the sales marketing activities to identify and “land”  new customers.

Adopt – all the activities that go into making the customer is successfully adopting the new solution.

Expand – working with the customer to identify new opportunities to help them achieve their business objectives.

Renew – working with the customer to ensure a seamless contract renewal phase.

Most Partners target the “land” and “renew” phases by offering a range of consulting and managed services from a service catalog e.g. migration, optimization, cost management, etc. However, none of these are a function of Customer Success, which focuses more on “Adoption and Expand”, by working to enable the customer to achieve their business goals from the technology investment. Pragmatically this means  “use case” realization, knowledge transfer, persona mapping, health score analysis, etc. Since many partners are transitioning from the traditional transactional system integrator model to becoming a recurring revenue solution provider. The current focus is still on “achieving the service level agreement performance and “break-fix” service targets”

The role of Customer Success in  the Cloud Partner community

Let’s examine further the role Customer Success could play within the Partners’ recurring revenue Cloud business.

First, there should be a mindset change – “Adoption” does not happen naturally once the workload is migrated into the cloud. JB Wood, in his book “Complexity Avalanche” [3], presented the term “Consumption Gap” – the difference between what enterprise technology companies deliver and what their corporate customers use. This can be due to a lack of time, understanding, usability, etc. Customer Success takes ownership of the “consumption gap” through adoption activities such as training/knowledge transfer, change champion, etc.

Second, many of the cloud solution providers also advocate “business outcomes” in their sales engagement with customers. However, there is no ownership in helping the Customer realize the outcome post-implementation; this is not the job of the project manager, implementation engineers, or post-sales engineers. Customers do not necessarily know how to realize business outcomes themselves and are frustrated with the lack of an owner to guide them. Customer Success provides this ownership by managing the outcome realization through linking adoption activities to the business case/processes.

Third, Cloud being a new platform means that many customers do not migrate their workloads all at once. They will migrate 1-2 workloads to test the Cloud reliability, usability, customer experience, etc. Hence, Customer Success through their intimate knowledge of the Customer environment and usage of the existing workload can play a major role in convincing customers to migrate more workloads onto the Cloud. Besides, it is much easier and cheaper to sell more to existing customers than to new customers. A recent article from Forbes titled “Why Customer Success Is More Critical Than Ever At Cloud-Native Companies” [4] further reinforces this point.

Last but not least, the typical channel partner contracts with their customers have an “End Date.” If the Cloud Service solution providers do not monitor the Customer’s health in terms of consumption level, customer satisfaction, and related factors, there is a significant churn risk.

As you can see, Customer Success does play a major role in supporting the Customer post-migration onto the Cloud.

How Customer Success supports the Partner’s Cloud business

To summarize, Customer Success supports the following “new” functions for cloud channel partners:

  • Drives the organization to ensure that customers realize the business outcomes promised by sales.
  • Supports customers in “Adopting” their solution through activities such as “knowledge transfer”, use case workshops, persona mapping, change champion, and program management, etc.
  • Implements a “Lifecycle” approach in terms of “Land-Adopt-Expand-Renew” and improves the Customer Lifetime Value (LTV) by creating business value for the customer.
  • Examines “Expand” opportunities for migrating more workloads by studying the current usage, features used, and customer’s business requirements (Data-driven Expand selling).
  • Set up a “Customer Success Health Score” to measure the “health” of the customer in terms of Utilization, financial growth (Annual Recurring Revenue, Upsell/Cross-sell), Customer Satisfaction, Support, etc.)
  • Incorporating Customer Success into the Quarterly Business Review – discuss the traffic usage, use case implementation, golden features usage, etc., beyond the current SLA focus discussion

In the industry, Cisco Systems has successfully implemented probably the first Customer Success specialization (they called it Customer Experience Specialization). Research has shown that Partners investing in Customer Success service have gained tangible business benefits in terms of increased renewal rate, incremental sales and increased win odds.

Conclusion

With the hyperscalers now implementing Customer Success into their programs and the quantifiable business benefits derived from successful Customer Success implementation, as evidenced by Cisco Systems. Now is the time for the Partner community to start adopting a Customer Success approach in their business. Without Customer Success, partners not only miss the business benefits of reducing customer churn and identifying & winning more upsell/cross-sell opportunities but also risk non-compliance in their program status. Strategically they open up the risk of losing a competitive edge to those partners with an effective Customer Success capability.

In conclusion, ISSI recommends that partners start to build Customer Success capabilities now. After all, building a new capability and the underlying practice does not happen overnight.

Look out for my next blog post, which will discuss how to build this capability by first understanding the current status through an “assessment.”

Jonathan WM Lee is the Customer Success Practice Lead. He holds the following certifications – Prosci Certified Change Management, Cisco Customer Success Manager, Microsoft Services Adoption Specialist and has extensive experience of over 100 engagements in training, consulting, and auditing of Customer Success programs, processes, and tools. He is the co-author of the Cisco Advanced Customer Experience Specialization Checklist and Juniper Networks Business Model Transformation Blueprint/Playbook. He has previously spoken in the ISSI-TSIA webinar on “Identifying Strengths & Gaps of your CS Practice.” [5]  

References

[1] https://blogs.microsoft.com/blog/2022/03/16/evolving-microsoft-partner-network-programs-for-partner-growth-and-customer-success/

[2] https://www.tsia.com/blog/laer-explained-a-new-customer-engagement-model-for-a-new-business-era

[3] Complexity Avalanche: Overcoming the Threat to Technology Adoption by JB Wood (2009)

[4] https://www.forbes.com/sites/dharmeshthakker/2020/11/18/why-customer-success-is-more-critical-than-ever-at-cloud-native-companies/?sh=1c0292923582

[5] https://www.tsia.com/webinars/identifying-the-strengths-and-gaps-of-your-customer-success-practice