In a recent interview with VARBusiness (see below), IBM software chieftain Steve Mills accused software companies of being only interested in selling software, then moving onto the next opportunity without following up to see whether the software was implemented to meet their customers’ needs. It might be a self-serving statement, but unfortunately, there is some truth in it. Disagree?  Keep reading, then let me know what you think.
 
Why should you care about customer success?  On a strategic level, it is a way for a smaller company to compete with the gorillas.  Even if you do not compete with a gorilla head-to-head, you are competing on budget and attention.  Most gorillas in the enterprise software market have superb execution skills and the capital to bankroll a marketing and selling machine.  Trying to beat the gorillas at their own game can be a painful experience; reality is that you cannot behave like a gorilla until you have become one.  
 
At the same time, as Philip Lay describes in in the latest issue of Under the Buzz, gorilla companies operate with the premise that transactions matter more than relationships.  This is good news for the smaller software company.  Strong customer relationships can set you apart from the competition; not only the gorillas themselves, but also the smaller competitors who seek to imitate the gorillas’ ways. 
 
On a more tactical level, there are many benefits that come with being consumed with customer success.   But to be honest, it is not really a matter of choice: power is back in the hands of the customer (as it should be), so catering to the customer is a matter of survival. 
 
Now that you are convinced, the question is, what does it really mean?  For many companies that bought into the illusion of the bubble market, it entails undoing some of the gorilla-like behavior adopted during that time.
 

	Gorilla Approach	Customer-Centric Approach
What’s Important	Don’t confuse selling with installing	Installing is what’s important (in many cases it comes first)
Revenue Model	Licenses are golden	Recurring revenues from subscription and services
Product	Platform: cover a lot of ground	Solutions: deep functionality customized to specific needs
Delivery	Let someone else worry about it	The key to customer success
Partnerships	Can you sell my product?	Can you help my customer?
Sales	Selling to the top	Selling to all levels (true consultative sale can only happen if you talk to all levels)
Marketing	Vendor front and central: spend, splash, and buzz	Give the stage to the customers
Organizational Model	We’re all in sales	Who is responsible for customer success?

 
“Don’t confuse selling with installing”
This was the mantra during the bubble days.  I’d be lying if I said you didn’t hear me saying it at the time.  Customers were buying faster than they could implement.  Billons of dollars worth of shelf-ware made software company revenue numbers look great, but delivered no value to customers.  The statement still holds, but its meaning has been transposed. 
 
If you make customer success your primary concern, you should have no problem selling.  Companies that allow their customers to realize value first have little problem getting customers to pay for their software or services.  This is one of the most compelling features of software as service (see Sharon Wienbar’s article in the August issue). 
 
Revenue Model
Multi-million dollar license deals fueled the growth of high-flying software companies during the Internet boom, but once the flow of these deals slowed, these companies saw a significant drop in revenues and plunged into heavy losses. Revenue models that include larger service and subscription components are more sustainable. Such models more closely tie revenues to customer success, so selling shelf-ware is not really an option.
 
Product
Featured in our July issue, Michael Tanner’s article Killing The Platform Legend drives the point better than I could.  Rather than looking to develop a platform that can be used across a broad range of market segments, early-stage companies would do better by focusing on specific niches and delivering solutions that really solve customer problems in ways that would be difficult for others to match.  
 
To do that, you must collaborate with your customers from the get go.  IMPRESS Software, a provider of packaged integration applications, serves as a good example for such collaboration.  The company doesn’t develop a new product until it has lined up customers that would be willing to buy it, provide input to product requirements, and actively participate in the development cycle. 
 
Delivery
Let’s face it: the product is important, but what makes the difference between success and failure in most cases is how the product is implemented at the customer organization.  Enterprise software companies driving towards a license-heavy revenue model have relegated product implementation to customers and system integrators.  This model is a must in a high-growth environment, but it is not a necessity otherwise.  Even if you partner with system integrators, you should try to construct the deals such that your people are involved hands-on in every implementation. 
 
Partnerships
It is highly unlikely that you can help your customers solve their problems on your own.  You need partners to help you deliver a complete solution.  In some cases, you may make money on reselling a partner product; in other cases, you will not.  Your biggest gain is that your customers trust you as someone who is interested in their success and can help them beyond your limited product scope.  How many marketing and sales dollars do companies spend to gain such level of trust?
 
Sales
Enterprise purchase decisions are rarely made by individuals anymore (if they ever were).  Combine this with the fact that getting the attention of top corporate officers is becoming nearly impossible, and you realize that the selling processes is going to involve multiple layers in the buying organization.  Rather than looking at it as an obstacle, embrace it as an opportunity to gain better understanding of the issues that will ultimately dictate your customer’s success. 
 
Marketing
Marketing with customer success in mind is different from the buzz-filled days of years past.  Marketing role is to establish a dialogue with prospects and customers.  Customers will be much more interested in a dialogue that is focused on their issues rather than on your solutions. 
 
Let your customers do the talking.  Provide them with a platform to discuss their business issues.  It can be in webinars, user group meetings, or in your newsletter.  Make the customers and their issues the focus of these activities.  Always give them the opportunity to learn more about your solution, but don’t push it. 
 
To establish a dialogue, take the time to learn more about your customer business and be a listener first. Think about the following pitch: “Hi, my name is Eran Livneh and I am calling from Enterprise Software Company. We work with customers in your industry such as ABC and XYZ. As a matter of fact, I cannot sell you anything. My role in the company is to learn more about the business issues faced by companies in this industry. Will you take an hour of your time to meet with me and discuss these issues?” I can guarantee two things: first, you will get more meetings this way; second, at some point, the customer will ask you about your solution.
 
WARNING: do not use this method unless you are genuinely interested in learning more about the customer and are willing to invest the time.  This method is not going to work well for salespeople.  Even if they are genuinely interested, the customer is going to be skeptical, and the salesperson will have hard time wearing two hats in front of the same customer.  The people attending these meetings should be able to converse intelligently with customers, so good industry knowledge is a pre-requisite. 
 
The cost: this is not an inexpensive proposition.  I am convinced, though, that it can pay for itself within a couple of years.  Next time you are looking to hire a salesperson, consider hiring a “customer/industry expert” instead.  With the appropriate skill set, personality, and executive support, such a person can impact more incremental revenues than any salesperson would.
 
Organizational Model
Who is actually responsible for ensuring the customer gets value out of your solution?  You might say it is the person in charge of professional services.  The problem is, in most software companies, this role takes a backseat to sales, marketing, and R&D, and is not strong enough to rally the entire company around the customer.  Furthermore, professional services organizations are under pressure to increase billable utilization and operate as a profit center.
  
In my mind, this is where most companies fail to implement a customer-centric strategy.  Here is an example.  We all know that demonstrable customer ROI is crucial for future sales.  I have yet to see one software company that has a person responsible to ensure the customer gets a demonstrable ROI by using their software.  I have seen managers and employees in software companies compensated on sales, on-time product release, customer satisfaction (rarely), but never on customer ROI.  If customer ROI is important, how come nobody gets a bonus when it is achieved? 
 
Until you nominate an executive with authority, budget, and incentives tied to customer success, it will always be an afterthought. 
 
What do you think?  Let me know!