To charge or not to charge; that is the question. Why you need premium Customer Success packages
Charging your customers to help them be successful continues to be a hot topic for debate in the Customer Success community. I’m all for selling premium Customer Success packages. They may just be your gateway to driving success for both you and your customers when you consider the benefits below.
Benefits of selling premium Customer Success packages
Customers are accountable and engaged
Customers are satisfied and loyal, with higher customer satisfaction
Renewal rates are higher
Your offerings differentiate you from the competition
Customer Success Managers (CSMs) are more strategic as they move away from reactive repeatable tasks
You scale your Customer Success organization more easily
You hire the resources your team needs to meet the growing demands of customers
Sales reps understand the value of Customer Success and are excited to partner with you and your team
While many of these benefits seem too good to be true, charging for premium services really has an impact for you and your customers. That’s why you need to take customer facing services as seriously as you take the software products. Gainsight summed it up well in a webinar when they shared, “In SaaS, where product is developed and distributed as a service, services are developed and packaged as a product.” You turn services into desirable products that customers want to purchase, and then you charge for them. As with any product you bring to market, your customer onboarding and enablement programs need to be branded, marketed, and sold as bona fide products in your company.
There’s a cost to being a cost center
Before Customer Success became common place, companies usually ran services organizations as profit and loss businesses with high margins. Now that the focus is on the ultimate indicator, customer renewals, many companies offer customer onboarding, enablement, and CSM services to customers at no costs. The 2020 Customer Onboarding Report shows that 70% of companies do not charge for customer onboarding, see below. As a result, all these companies and their customers miss the benefits of premium Customer Success packages. A complimentary offering, as much as it helps your customers, does not mean it’s free to build, deliver, and maintain. Even in Customer Success there’s no such thing as a "free-lunch.”
The challenge with giving away valuable Customer Success services is that your team is regarded as a cost center from a business perspective, even when your efforts increase customer retention. Your company suffers in these ways when Customer Success is given away for free:
You get by on limited resources, even when other teams are hiring
You are unable to deliver the best in class services customers need to reach their outcomes
Rather than moving ahead of the curve with proactive and prescriptive programs you are stuck fire-fighting
It’s a battle to get customers to show up for onboarding, implementation, and enablement meetings
CSMs are busy chasing down existing customers while juggling a wave of new customers
Customer retention and support costs increase
Ultimately, you and your team are at risk of being cut
There’s a cost on the customer side as well. Of course, customers say they want to pay as little as possible for your product and your services. However, when they don’t pay, they don’t show up for scheduled meetings, they don’t move forward on their parts of implementation plans, product adoption is low, and they don’t get much value from your product.
To charge or not to charge. That is the question.
Despite the assumption that customers don’t want to pay, research by PWC finds that a good customer experience means your customers will spend more. In fact, 86% of buyers are willing to pay more for a great customer experience. The more expensive the item, the more they are willing to pay. It seems customers are more committed to reaching the agreed upon milestones and deliverables when they pay for your services. They are also more likely to work with you, not against you, on the journey.
When customers hand over their valuable funds, they have more skin in the game. Companies that charge for onboarding consistently share with me their customers are more accountable, and that those customers appreciate being held accountable. Customers show up for meetings, partner during the implementation, complete their required tasks, attend classes, and retain what they learn when they pay for Customer Success services. One company I work with even finds customers use the product more when they pay for onboarding.
What’s in a premium Customer Success package?
Rather than hoping customers buy the services they need to be successful, parcel together everything they need to quickly and easily reach their goals. And then charge for the premium package. The Technology Services Industry Association (TSIA) calls this the ‘complete offer,’ because selling software to customers is no longer enough for customers to be successful. As a result, TSIA encourages companies to include the services customers need, not as an add-on, but as part of the package.
Investing in building, delivering, and selling premium services packages makes sense as long as you drive real outcomes for customers. Charging customers to have a call with a CSMs once a quarter to hear, “how’s it going?” is not a premium offering. Telling customers to “call me when you have a problem,” is not much value either. In order to build a meaningful services product, it’s important to include clear deliverables and outcomes in the offering. Since customers are already used to purchasing support and maintenance, they will pay for programs that drive positive outcomes.
One company I know got out of the “body shop” business. They defined and deliver a methodology of best practices and now package, sell, and deliver proactive offerings that renew every year. They compare their new offerings to “value meals” with the right services included to drive adoption. Onboarding and implementation services are included in the first year, and then performance tuning and health checks are provided the following years. Customer Success services and training are included throughout the customer journey and at different levels depending on the package tier purchased. Consider the examples below for what you might include in premium Customer Success packages that renew every year.
Example premium Customer Success packages
When you sell premium services packages as renewable subscriptions, then you also get recurring revenue, which your finance team and executives really value. You just might get them to sit up and pay attention to what you and your team are doing and the impact you have with customers and the bottom line.