Introduction & History

History of Customer Success Management

Customer Success Management (CSM) began as companies recognized the need to focus on customer retention and satisfaction beyond initial sales. In the early days, enterprise software companies like Vantive developed teams focused on post-sale customer relationship management, including implementation and support, but these efforts often lacked a focus on the customer's perceived value.

In 1996-1997, Vantive, a CRM company, pioneered the first Customer Success group under CEO John Luongo and leader Marie Alexander. They realized that retaining customers was crucial for long-term success. The Customer Success team at Vantive was tasked with ensuring customers were successful using the product, with compensation tied to customer outcomes. This involved setting clear expectations with customers, closely working to achieve their goals, and regularly reviewing progress to prevent churn and enhance satisfaction.

In 2004, Bruce Cleveland at Siebel created a similar team to focus on increasing customer value through improved product use, forming a dedicated Customer Success Management team. By 2005, Salesforce recognized high churn rates and established the “Customers For Life” team, one of the largest Customer Success departments at the time, focused on customer retention through user adoption and strategic up-sells and cross-sells.

These early efforts by Vantive, Siebel, and Salesforce laid the foundation for modern Customer Success strategies, shifting the focus from basic customer support to proactive management of customer value and retention.

What is customer success? 

Customer success is a long-term, scientifically engineered, and professionally directed business strategy for maximizing customer and company sustainable proven profitability. The emerging role is about a solution to the core issues of customer portfolio development, retention and expansion. In practice, Customer Success is an intergration of function and activities of Marketing, Sales, Professional Services, Training, and Support int a new profession. There are three necessary building blocks for this emerging profession: an in depth knowledge of customers, effective expertise in product being sold and extensive domain expertise. 

Key points 

Onboarding: The process starts when a customer first purchases the product or service. Effective onboarding ensures customers understand how to use the product and begin seeing its value quickly.

Engagement: Regular interaction with customers through various touchpoints, such as emails, calls, and meetings, helps maintain a strong relationship and ensures they are continuously deriving value from the product.

Health Monitoring: Tracking metrics like product usage, satisfaction scores, and support tickets to gauge the health of the customer relationship and identify potential issues early.

Renewals and Upselling: Ensuring customers renew their contracts by demonstrating continuous value and identifying opportunities to upsell additional features or services that can further benefit the customer.

Advocacy and Feedback: Encouraging satisfied customers to become advocates and provide feedback that can be used to improve the product and the overall customer experience.

Development of Customer Success Technology

The development of Customer Success Technology (CSTECH) began with the rise of Software-as-a-Service (SaaS) around 2006. This shift required companies to focus on customer retention, as profits were realized incrementally rather than upfront. Additionally, software moved to vendors' servers, allowing real-time monitoring of customer usage. However, it took years for companies to fully utilize this data, leading to the creation of the Customer Success Technology sector.

First Wave (2009-2013): The initial Customer Success Platforms (CSPs) like Totango, Gainsight, and Scout Analytics were introduced, enabling vendors to monitor customer health and usage. Adoption was slow as the concept was new.

Second Wave (2014-2018): Customer Success groups proliferated across industries, fueled by venture capital and the importance of customer retention. CSPs expanded beyond technology sectors to industries like finance and healthcare. New tools focused on early customer engagement and retention.

Third Wave (2019-2024): By 2023, the CSTECH market included over 300 vendors. The role of Customer Success expanded, with new tools for onboarding, analytics, and more. CSPs grew through product expansions, acquisitions, and partnerships, integrating with adjacent technologies like CRM systems.

This evolution reflects the growing importance of customer success as a critical business strategy.