VS1 Cloud Blog
Time moves quickly in the business world. With subscription products on the rise and recurring-revenue business models becoming the darling of CEOs and Wall Street alike, Professional Services organizations are finding themselves in the midst of a revolution. If they want to keep up, Professional Services teams will need to redefine their definition of success, embrace new technologies, and put the customer’s needs at the forefront of every new operation. Only then will they be able to drive outcomes that deliver value to client and company alike.
Professional Services and the Age of Subscription
Subscription and recurring-revenue models are taking over. According to Gartner’s 2017 Market Trends, “By 2020, more than 80% of software vendors will change their business model from traditional license and maintenance to subscription”—regardless of whether the software resides on-premises or in the cloud.
As this tidal wave of change ripples out, it’s leaving a shift of perspectives in its wake. With a constant stream of new competitors entering the market, customers have a wide range of choices at their disposal. No longer locked into the massive upfront cost of legacy solutions, clients are free to easily switch between solutions. Companies that rely on recurring revenue understand that making customers successful for the long-term is now more important than ever. Delivering exceptional experiences and valuable business outcomes is no longer a luxury, it is a necessity. This is driving Professional Services organizations in particular to rethink their approach and change the way they define success.
Prior to the subscription model, the definition of success for most Professional Services teams came from an internal perspective—finishing a project on-time and under-budget was considered a success. While this worked in a legacy transaction model, where implementation was a large up-front investment by the customer, those operating within a recurring revenue landscape will find this definition no longer applies to Services that support subscription products. “The unremitting, industry-wide transformation toward new technology consumption models is generally undermining PS’s traditional, core cash cows and competencies (product-led, project-based, deployment-oriented services) and forcing them to explore and deliver on new ways of being relevant in a B4B context,” shared TSIA in their State of Professional Services 2017 Report.
Redefining success for your Professional Services organizations starts with redefining what success means to your clients. When a client enters a services engagement, they do so in order to achieve business objectives. If your goal as a Professional Services provider is solely to finish the project on time and on-budget, your head is in the wrong place—these are table stakes to a client. To drive success for your business, you must define success in your client’s terms: Has your involvement produced positive outcomes that align with the client’s goals? Have they been given proof that you’ve achieved these goals? Do your other Post-Sales teams know what’s been going on in the account to ensure a smooth handoff? Instead of asking, “What’s the quickest, least-expensive way I can onboard this customer?”, change the question to, “How can I provide services to this customer so they achieve exactly what they wanted from our product/service?”
Delivering exceptional client outcomes and experiences is a necessity because in a recurring-revenue business model, customers represent not just one opportunity to grow your revenue, but three:
Growing Pains: Evolving Your PS Team
If your company is or will be introducing subscription options, your PS org is bound to experience some growing pains. These can arise in the form of overloaded resources, higher customer expectations, and new ways of engaging with customers, just to name a few. To overcome these roadblocks, you must first be conscious of them. So, we’ve compiled a list of common pain points Professional Services can encounter when adapting to subscription-service clients. Then, in the following chapters, we’ll provide tactic-rich processes to move your organization forward into the future.
Customer Overload: Onboarding is a critical milestone in the customer lifecycle. A superior onboarding experience will set clients up with a solid foundation. As you move from legacy to subscription services, you may be expected to onboard more customers with the same amount of resources and often at a lower price tag. Implementing a fully automated or a blended onboarding strategy with the help of technology can free up your time while still giving clients the attention they desire.
Higher Expectations: One of the benefits of purchasing subscription services is the quick time-to-value. Your clients will want to get up and running ASAP and expect a short, low-effort engagement to get them there. If your team is engineered to deliver large, custom implementations, it can take some additional strategy and technology to find the balance between efficiency and service level.
Outcomes & Expectations
Bad Handoffs: If you’re committed to being customer-centric, there needs to be superior alignment between teams. This means sharing customer goals, milestones, and other data during handoffs. Without this open flow of information, every team suffers a lack of insight from which the customer ultimately suffers.
Lack of Customer Sentiment Data: You aren’t sure about the customer’s sentiment during the project or how they feel upon completion. If you’re lucky, you’ll get a survey after the project closes but chances are, you’re in the dark. While this might not have mattered in the past, knowing how your customer feels is paramount to driving Services Success. Asking for customer sentiment, whether that’s through NPS/CSAT surveys or in-person interactions, gives you the opportunity to proactively remedy negative sentiment and leverage positive sentiment.
Reactive → Proactive: Reacting to escalations can waste valuable time. By monitoring customer health, you can work proactively to mitigate fires before they start, resulting in happier customers and more time on your hands to dedicate to valuable processes.
Proving Value to Clients: Instead of focusing solely on internal successes, like hitting utilization or project margin targets, put client outcomes as the top priority. If you don’t have a way to measure or demonstrate what you’ve helped them achieve, they won’t fully realize the value your services provide.
The Customer Journey
Tracking Post-Project Success: You end a project on a good note, but a few months later, the client churns. What happened? If you continue to track customer health after a project, you can see if it had a positive or negative effect and react accordingly.
Leveraging Advocates: Producing satisfied clients is great, but if you’re stopping there you’re missing out on a major growth opportunity. Leverage client references and reviews to boost growth without increasing customer acquisition costs.
Identifying Customer Needs: Understand what events drive a customer to expand. By knowing what to look out for, you can proactively market your solutions and capitalize on the opportunity.
3 Goals to Propel Your Org Forward
Adopting new processes and mindsets can be daunting. You need to establish new frameworks, add to your technology stack, drive adoption within your team—not to mention find the time and money to drive all this! Not to worry, we’ve rolled up important PS initiatives that drive customer-centric operations into three key goals. They’ll set you up with a solid foundation so you can provide Customer Success at scale.
Goal #1: Scale your onboarding options
Segment your clients into categories based on the amount of outreach they require to get ramped up
Implement a ‘tech-touch’ approach to offer a low-cost, standardized onboarding option for SMB customers
Utilize both 1:Many and personal outreaches to create a blended approach for medium-cost, standard onboarding packages
Improve the project experience for enterprise customers who have lengthy or customized implementation needs
Goal #2: Don’t just deliver projects, deliver customer outcomes
Train your Sales team to gather a customer’s objectives in the sales cycle
Center team handoffs around the completion of customer objectives
Establish a process to measure the impact of service engagements on a customer’s objectives and overall success
Goal #3: Drive the customer journey beyond implementation
Develop targeted services offerings that solve common customer issues
Gather data that will enable you to proactively identify opportunities to sell these targeted services to your customers
Work with the Sales team to create a process that will allow you to capitalize on these opportunities with minimal friction