You've already heard of Everything-as-a-Service (XaaS), the trend towards building continuous engagement with customers through digital connection. If you're a services business, or the services organization within a larger enterprise, now you need to get used to Services-as-a-Business (SaaB). This describes the transformation of services delivery in an XaaS world. Speaking at last week's FinancialForceX virtual event, Scott Brown, CEO of cloud ERP and PSA vendor FinancialForce explained why the company has coined the new acronym:
Everything from the moment a customer has an interest in your product, all the way through the entire lifecycle to renewal and repeat business, needs to be a seamless business. And that's what Services-as-a-Business is all about.
The crucial ingredient to success with Services-as-a-Business according to Brown is having the tools to understand the end-to-end business metrics of your services business and how customers experience it. Both aspects play to FinancialForce strengths, of course, and the main purpose of the event was to introduce the vendor's spring release, unveiled last month. New functionality in reporting and FP&A, resource management and tracking customer success KPIs were among the featured highlights. The keynotes also included an interview with Neeracha Taychakhoonavudh, EVP Global Customer Success at Salesforce — more from her below.
The conditions for the rise of this new philosophy of Services-as-a-Business stem from what Brown has called the "slingshot effect" as the services economy bounced back from the setbacks of the pandemic, with the professional services industry posting 20% revenue growth in the US last year. But that bounceback has been accompanied by technology, economic and social disruption and "the need for new business models as we shift to an as-a-service and accelerated service model" says Brown. Services businesses are both subject to those disruptive forces and also a major facilitator as enterprises adapt to this new world. He explains:
As disruptions accelerate, so does the market for services. In fact, in developed countries, today, three quarters of GDP output is in fact in the service economy. Knowledge work and professional services represents, every single day, a growing percentage of overall GDP.
Services businesses are therefore pioneers of the continuous transformation that all enterprises are now going through as they adopt digital technology and become more connected to customers. They have to adjust to new digital ways of working and doing business, increase their focus on customer experience and outcomes, and become more agile as an organization. None of this can happen without a connected technology platform to provide the necessary automation and intelligence as an enabler. Brown sums up:
Technology needs to reinforce the strategy by bridging across those organizational silos, by escalating the key information and making small incremental changes quickly along the way ...
Companies are focused on these three key pillars: the digital transformation of the company and really putting that on steroids; the customer experience and from beginning to end making a phenomenal experience for the customer; and then ultimately having organizational agility built into your DNA.
Customer success at Salesforce
The interview with Taychakhoonavudh picks up the theme of the customer experience and explores how Salesforce developed its customer success function. This dates back to the 2008 financial crisis and the realization that retaining existing customers was just as important to revenue growth as acquiring new ones. She explains:
We saw a spike in attrition, due to the 2008 financial crisis, and that was a real wake up call ...
Stopping the leaks at the bottom is just as important as booking new business. It turns out, retaining a dollar of revenue happens to cost less than hunting down a new dollar. That's when we really formalized and operationalized customer success as a company.
The first step was to start collecting metrics around usage and adoption. If these were below trend, this was a useful early warning signal that things were going awry and that the renewal might be at risk. Initially, that was all done by a single customer success contact for each customer, but over the years it has become more of a digital-first engagement. The metrics have become more sophisticated, adding in sentiment analysis of customer surveys, case satisfaction and other interactions, along with an implementation health rating based on various technology architecture factors. Collecting and analyzing all of this data requires a lot of automation, but in the end it's still important to augment the machine analysis with knowledgeable humans, who can interpret the data in the specific context of each customer. She advises:
We have AI, we have so many more tools now, that you can do a ton of data-driven personalization right off the bat. If you have a digital-first mindset, you're able to make a lot of progress, and then insert the humans as necessary. But don't start with the humans as you're designing the whole model.
The customer success team at Salesforce nowadays has several different components, with some aligned with the go-to-market organization to look after specific accounts, while others focus on product, with specialists that can dive down into specific industries or competency areas such as governance, security or compliance. Technology is crucial to keeping all of these different activities aligned. She explains:
That technology platform is what enables us to keep the customer at the centre, where you could have a success manager, you could have a data integration specialist, and then a Marketing Cloud specialist, all engaged around that customer, and that knowledge is preserved in the system. We have such powerful tools these days around digitally managing all this, and even expressing the output to the customer as the seamless body of work. That's been game changing for us.
Increasingly, the metrics aim to encompass what the customer is aiming to achieve, rather than simply looking at their use of the product. She explains:
To Salesforce, customer success is servicing and retaining our customers. But the metrics you mentioned — adoption and usage — are very internal. So really, it's what does customer success mean to each and every customer? What is the value they're getting from their investment? What is the business outcome they're seeing?
Therefore Salesforce now captures metrics from the value engineering business case that's developed in the pre-sales cycle, as a basis for measuring the value delivered. While these metrics may change over time as the customer's business evolves, it's a useful starting point for tracking the outcomes that matter to the customer.
One dilemma that Salesforce increasingly faces when planning an implementation with the customer is how to give advice that customers may not want to hear. What the customer believes they want is not always the best path to achieving a successful outcome. She elaborates:
One of the interesting things that we are faced with now is, how you balance the customer need versus the advice you give them. So customers have a very particular point of view, and they'll say, 'This is what we need, and we know.' As an advisory team in services, it's finding that balance to say, 'Well maybe, no, you don't.'
It's that agreement with the customer, versus the actual being much more prescriptive and saying, 'Well, yes, that's fine. But based upon our experience, we think you should do this.' Finding that balance when you're in a service culture, and you just want to please and actually execute on what the customer has asked for, that I think is interesting in terms of a cultural mindset change that we've seen.
I'm not sure how keen I am on further expanding the universe of 'X-as-a-Y' acronyms, but the point underlying Scott Brown's Services-as-a-Business play on hyphenated words is well made. Too many enterprises view the services function as a cost center rather than a revenue generator, with the result that many services organizations have very little insight into the contribution they make — or fail to bring — to the wider business. Similarly, external professional services firms too often go along with a transactional relationship rather than working to become partners in the success of the client business. In both cases, the traditional services mindset lacks a business perspective that is sorely needed in today's more joined-up and fast-moving economy.
All of this requires more data to inform a more engaged relationship with the customer. Along with colleagues, I've recently been probing the notion of customer success and in many cases have found it wanting. Therefore it's interesting to hear how Salesforce has evolved its own customer success function to go beyond simply tracking vendor-centric metrics such as adoption and usage. Much of what Taychakhoonavudh describes matches up to what we're seeing at other leaders who are pushing the envelope on delivering outcomes. I'll pick this up again soon when I return to this topic in other articles.