Filed under: Industry Insights
In a recent article in TechRepublic entitled, “Customer loyalty: why application performance management is a CIO concern,” the author, Brian Taylor provides the highlights of an interview with James Harvey, the general manager of application performance management at CA Technologies. The focus of the interview is Harvey’s assessment that APM is a strategic and central driver for customer satisfaction and loyalty, making customer loyalty a CIO’s (or CTO’s) concern.
We think this assessment is spot on. Your company’s applications are the core of what drives the enterprise as well as the first level of contact with your customers or users. Because users interact directly with your applications without being mediated through a person, it falls on engineering to think about customer success and the user’s perception of application performance.
Here are our thoughts on how CIO/CTOs can place APM – and customer success – at the forefront of their strategic objectives:
Knowing what success looks like
Even though engineers have to think of themselves as the frontline for customer success, that doesn’t mean the rest of the organization is going to move away from it. Companies, in particular SaaS providers and modern web-oriented organizations, typically have a customer care or customer support team that defines what it means for the customer to be successful. That’s their job and mandate, and this means it’s engineering’s mandate to work directly with customer care to find out what it means for the technology team to provide customer success. The basics are self-evident – ensuring the site is up, providing relevant updates, adding value with new features – but there’s a level of operational success beyond simply being able to use the software and the respective leaders have to be in sync on that with the customer success team. Being successful is not just avoiding a service outage, it’s focusing on how the technology is impacting the business. For the customer to be truly successful they need to be realizing a return on their investment. That’s the CIO’s ultimate concern.
Earning happiness, over and over
With today’s applications, ensuring customer success leads to increased revenue. In the past when you sold a product, you had some operational team to keep users happy and hopefully you would get a referral out of them or they would keep paying for the maintenance package or using your software, but none of that had a huge effect on revenue. Today, if your application is SaaS-based, customer success and loyalty translates into more than vague promises of 10% more revenue from referrals and good will. Churn is an enormous part of your business and any reasonably-sized SaaS business will do more in renewal bookings every quarter than they will in new growth. The only way to get your money back from a customer is to have them renew for 2, 3, 4, or 5 years. In year one, you don’t make any money, year two you fund the next version of your product, and years 3, 4 and 5 are pure profit. When you embrace the monthly or annual customer renewal model of a SaaS solution AND you have a CTO who is focused on achieving customer success via APM, you can expect abundant returns ─ like the happy user who moves to another company and brings you with them, replacing your competitor. Customer happiness is incredibly magnified by APM, and SaaS depends on customer happiness to be successful.
Paying it forward
Customer success teams have become more proactive and so should engineering. The product team has a second mandate to not just make sure the customers they have now are successful, but expand the customer base and make sure the customers’ companies are being successful. What that generally means is taking what’s valuable about the application and expanding it. About 35% of an organization’s time might be spent on maintenance, proactive infrastructure improvements and maintaining the status quo from the users’ perspective, but I estimate about 65% is spent on R&D and new features that will ultimately create success for the customers today but should also create success for the customers 6, 12 and 24 months down the road. This is one of the areas in which APM becomes an even stronger mandate around customer success. By implementing a full-stack APM solution, and by proactively addressing and minimizing the time spent on issues, you can get to market faster. CIOs know that ultimately getting product to market faster is all about customer success.
Monitoring, and specifically APM, is absolutely a strategic driver to any business and engineering organization. Customers rely on products, not account managers, to be successful, and customer success is the only thing that matters.