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ANALYZE THIS!: Customer success management

Emerging role of CSM: do whatever it takes to enable the customer to successfully capture value from its use of the software.

Vijay MehrotraBy Vijay Mehrotra

More than a decade ago, I worked at an enterprise software company whose scheduling product was based on a novel and proprietary machine learning algorithm. Though I had fallen into this role as a result of my background in modeling and optimization, I quickly received an education in how the world of enterprise software worked back in those days. Acquiring customers was challenging, and sales cycles were often long and expensive; but once a buyer had made a commitment to purchase the software, there was a distinct shift in the power dynamics.

After taking on large up-front fixed costs (hardware acquisition, software configuration, user training, etc.), the customer was left with the challenge of trying to figure out how to capture that value from the software that the vendor had promised during the sales process. And for the vendor, annual (and sometimes longer) product release cycles meant limited opportunities for new features or complicated fixes. Occasionally, a customer would ceremoniously “throw out” one software vendor and replace it with another, but more commonly the customer would have little choice but to muddle unhappily along.

Those days are mostly over. The rise of cloud computing and open source software has fundamentally shifted the enterprise software market toward hosted software as a service (SaaS) solutions. As Gartner’s Christy Pettey wrote in 2015, “The debate is over about whether the software industry will move to a new licensing and revenue model. Most new spending will be under the subscription model of software-as-a-paid-for-service, with payments made over time and/or based on usage” [1].

Customers Now Truly Kings

Most new spending will be under the subscription model of software-as-a-paid-for-service. Photo Courtesy of | © Sergey Gavrilichev

Most new spending will be under the subscription model of software-as-a-paid-for-service.
Photo Courtesy of | © Sergey Gavrilichev

It is the last part of that sound bite (“…payments made over time and/or based on usage”) that has fundamentally shifted the dynamics between software vendors and their customers. Nowadays, the buyer has the opportunity to try out a desired portion of the software on a chosen subset of its user base while risking only a minimal up-front investment (no cumbersome and costly software licensing contract, no major hardware infrastructure investment, no budget allocation for in-house IT support resources). As a result, in today’s enterprise software world, the customer truly is king, largely because monthly recurring revenue (the key financial metric for subscription-based businesses) depends on customers’ willingness to continue to make ongoing payments based on the business value provided to them by the software.

The news is not all bad for today’s software vendors. Given the increased efficacy of remote communications technologies and digital marketing methods (and the low up-front risk for customers described above), acquiring customers is easier than ever. Hosted solutions also enable vendors to closely observe and analyze customer software usage data. New software releases for hosted software solutions are much easier to implement, no longer requiring digital media to be shipped in the mail and installed by client IT staff.

Emergence of the Customer Success Manager

With all that said, the shift in the power dynamics has forced software vendors to pay far more attention to their existing customers, not only to initial implementation and user training, but also to the ongoing usage frequency and patterns. This has led directly to the emergence of a new role called the “customer success manager” (CSM). The role of the CSM is to be the software vendor’s primary post-sales point of contact for a customer organization, and the objective of the CSM is to do whatever it takes to enable the customer to successfully capture value from its use of the software.

The Customer Success Management Association (one of several professional groups that have emerged for CSMs) offers up the following more formal definition of the role: “Customer success management is an integration of functions and activities of marketing, sales, professional services, training and support into a new profession to meet the needs of recurring revenue model companies.” Steve Bernstein, co-founder of a consulting firm called the Waypoint Group that specializes in Customer Success, offers up a more concise job description: “CSMs are the lynchpins of the ‘Land and Expand’ business strategy” [2].

Over the past few years, many of my former students have been hired as CSMs in the software world after finishing their MBAs. With their encouragement, I am currently heading up an area of emphasis within our MBA program on customer success. My charter is to train students to become successful CSMs through a collection of curated courses and industry projects. As far as I know, we are the first formal academic program focused on customer success roles (if you are aware of any others, please let me know).

What makes a successful CSM? In talking to dozens of customer success professionals over the past two years, some clear themes have emerged: solid spreadsheet capabilities, excellent organization and communication skills, the ability to work effectively across departments, a knack for exercising influence without formal authority, and a strong sense of empathy, resilience and emotional intelligence. As such, I have spent a lot of time telling a lot of different people – students and faculty colleagues, deans and provosts – that my customer success initiative is not about analytics. The other day, I realized that I was actually wrong about that.

It’s All About Analytics

As we all know, mathematical algorithms are increasingly being embedded into software that is being applied to all kinds of business problems. Of late, the term “systems of intelligence” [3] has been used to describe a broad class of software applications that utilize data and machine learning to solve important problems, usually in business-to-business (B2B) contexts. And as cheaper and better solutions for implementing algorithms (open source packages for R and Python, Google’s cloud-based machine learning tools, etc.) continue to emerge, the marketplace success of an aspiring system of intelligence will often depend on: (a) understanding the wisdom and experience of the human employees whose performance these systems are trying to improve, and (b) connecting this understanding to the improvement of the embedded algorithms and logic that are at the heart of these systems.

Oh, and one more thing: Even as more data is being captured, analyzed and utilized by ever more systems of intelligence, our broader population is increasingly uncomfortable with its own ability to cope with the changes that are happening. A recent Inc. magazine article entitled “A Lack of Data Literacy is Costing Your Business,” cites a recent study that estimates that “only one-third of all workers feel confident in their data literacy skills for the Analytics Economy” [4]. Which makes the CSM’s job more challenging … and renders the CSM’s customer insights even more valuable.

So, my fellow analytics professionals, I encourage you to get to know your customer success managers. They are your window into what truly makes your analytics application intelligent. And you’ll be seeing more and more of them – and will depend on them far more than you realize – in the years to come. y

Vijay Mehrotra ( is a professor in the Department of Business Analytics and Information Systems at the University of San Francisco’s School of Management and a longtime member of INFORMS.

References & Notes

  2. For more about “Land and Expand,” see
  3. For more on “systems of intelligence,” see:

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