I was speaking with a headhunter recently about some of the roles she was recruiting for and there was one that captured my attention. It was a posting she had for a customer success manager at one of your favorite three letter software companies. And, as she extolled the merits of the role I found myself thinking that the management practice of organizational change is still so immature. There are still so many missing tools and mindsets in the organizational behavior area of management science.
What I found so captivating about the responsibilities of a customer success manager, is that the kinds of tasks she described are exactly the kinds of activities that need to be performed as part of any organizational change effort. The difference is that software companies have recognized that they need to have people dedicated, ideally from the very beginning of the process, to help connect the cross-functional dots for the customer behind the scenes, actively manage expectations and outcomes, ensure a mutual understanding of what success looks like, and to make sure that it is ultimately achieved.
Technology companies everywhere seem to be racing to embrace the role of customer success manager as a new member of their army of service professionals. And, the customer success manager, above all else, strives to ensure that every customer moves beyond purchase, beyond installation, beyond first use, to productive use, deepening engagement, and the holy grail of retention and referral.
And retention is key in SaaS businesses because the churn rate (13% per year on adverage) is higher than other subscription type businesses (6-8% per year according to Recurly Research), but lower than the churn rate for some wireless carriers (which averages between 1-3% per month). Churn rate is a statistic measuring those customers who choose not to renew their service, or to switch their service to another subscription provider. A churned customer doesn’t write you a check for next year, or future years either.
The main reason SaaS customers churn, especially after their first year, is that the perceived value of the subscription is insufficient relative to the price to justify renewing it. They may have bought the software but didn’t install it, installed it but never really got up and running with it, or just found it too hard to get the value out of the software that they were promised. The old technology sales model didn’t care about these situations. Tech companies just focused on closing the sale, recognizing the revenue and moving on to close the next prospect. With the SaaS model, sales are no longer king, adoption and engagement are king. If the customer doesn’t adopt, engage and expand their footprint with your SaaS offering then it is easy for them to switch to an offering of a competitor.
So, if customer success managers are so instrumental to the success of technology companies in the era of the cloud, why shouldn’t they also be considered instrumental inside of our organizations as the key to successful change?
The problem is that too many organizations are still stuck in an upside-down paradigm where change management is seen as a bolt on to project management, instead of truly architecting our organizations for successful change.
Companies that want to be successful over the long term understand that change is not an event but a constant. They strategically select those capabilities and competencies needed for the next phase of their evolution, plan a portfolio of change initiatives that executes upon their strategy, and understand that change saturation and change readiness must always be considered. Companies that succeed in this era of unending change will constantly manage the expectations of their people around each change initiative and how the process will work and what the technology can and can’t do.
It is not surprising that companies would first embrace a role that adds tremendous value on the revenue generating side of the business first. Technology companies have determined customer success managers are critical to helping customer organizations adopt changes imposed by new technologies while ultimately increasing the lifetime value of each new customer. But for similar reasons internal to the organization, companies must also now embrace the need for a role I’d like to call the change success manager.
A change success manager is a change manager on steroids. However, in today’s business climate most people think of a change manager as the person a project manager brings in near the end of a software implementation project that does the training or communications. That may be how companies are doing the so-called people side of change today, but it is wrong!
This new role of change success manager is intended to lead each change initiative inside the organization from beginning to end. A change success manager is brought in at the beginning of the process to reach across the organization and identify a cross functional team specific to the needs of each change initiative for the purposes of convene as part of a change planning workshop. This change planning team will facilitate each change planning workshop using tools like the Change Planning ToolkitTM to identify the change leadership team that will take decisions and remove roadblocks for the change management team that will facilitate the actions necessary to advance the change initiative to its desired outcomes.
And, unlike the current model of change that many organizations follow, a change success manager will have one or more project managers on their change management team to identify the appropriate pace for the project, and the right size for the work packages, in order to maintain momentum across the entire duration of the change initiative and increase the adoption of internal change – just like a customer success manager increases the adoption of external changes!