Journal Junkie - Vol.1: In the Beginning

image

Welcome to the first of many, Journal Junkie volumes. Join me every month, as I battle my way through my Ph.D. journey on Customer Success. I intend to explore the depths of academic journals across the world on SaaS, Customer Success, Customer Relationship Management, Customer engagement/experience, and more. As your Journal Junkie, I will aim to provide you with up-to-date research in the field, as well as interesting insights.

There are so many insightful journals out there that I want to share and review with you, that I thought it important that we all have the same grounding and starting block, to begin with. So, let's start at the beginning with the history of our Customer Success world.

The History

A long time ago in a galaxy far, far away.... actually, it was 22 Years ago, somewhere in San Francisco, where the world’s most popular Customer Relationship Management platform was officially established, I am sure you are all familiar with a little company called Salesforce.com. By leveraging the internet Salesforce (the first SaaS built from scratch company) made its services accessible to the masses.[1]

However, did you know that the SaaS business model has been around since 1960! Yep, that’s right because of the size and cost of computers at the time few small and medium-sized businesses could afford to own a computer. Thus, the Software as a Service industry was born, however, at the time it was called ‘the time-sharing system’. Overtime as computers got cheaper and as the internet became more accessible (the 1990’s Dotcom boom) and as technologies advance more, more industries were adopting the ‘as-a-Services' model.

Today, Salesforce is one of the most valuable cloud computing companies in the world. It has a market capitalization of over $55 billion. Interestingly, the company has never actually turned a GAAP profit in any fiscal year since being conceived in 1999.[2] However, Salesforce was not the first SaaS company, some say Concur was, even though it initially started as a packaged software service, after the 2001 crash they moved to purely SaaS. 13 years later, in 2014, the company was generating more than $600 million in annual revenue. SAP bought them for $8.3 billion later that year, making it the largest SaaS acquisition to date.

The Cloud Era

SaaS is synonymous with cloud computing. It’s used interchangeably with infrastructure as a service (IaaS), platform as a service (PaaS), data as a service (DaaS), managed software as a service (MSaaS), and now customer success as a service (CSaaS; esg). These terms are all part of the general nomenclature of cloud computing.

What was so important about this SaaS/Cloud computing era? It paved the way for subscription-based licensing. This meant that customers now had the flexibility and to some degree power over vendors as they had choices[3]. Customer loyalty became an issue, the Churn factor was real. There is an interesting journal by Gordon Fullerton on ‘When does commitment turn to loyalty?’[4] where he investigates the roles played by different forms of commitment in the relationship between customers and their service provider. It was found that when customer commitment is based on shared values and identification, it has a uniformly positive impact on customer loyalty. However, when customer commitment is based on switching costs and dependence, it has mixed effects on customer loyalty.

The Birth of CS

So, how could companies reduce churn, create customer loyalty and grow ARR? That answer is easy, it's with Customer Success of course. More and more companies saw the need to bridge the gap between sales, products, support, and its customers. Many companies had Account Managers and various other roles performing a CS-like function, but it wasn’t until around 2015 when there were a shift and uplift in demand for the role of Customer Success Manager. Even though Customer Success has been around for a while (roughly 12 years) called by many names, CS as a clearly defined function has been around closer to 7 years."

We are still only touching the surface in terms of research in this area. Figure 1[5] shows Customer Management practice keyword search results by year in Popular Press and Academic Press. Interestingly since then, there has been an uptake in academic research and publications. We will look to revisit these stats towards the end of 2021, to examine the advancements in research.

Figure1

image

Well, that is it for Vol. 1, I hope you found it insightful. Some of you may have known some of it already but now that we are all on the same page this is where the real journey begins. Next time we will go deeper into journal research to find key insights.

Look out for - Vol.2: The Rise of Customer Success!

image

Did this article spark any questions? Do you have any research questions or areas of research you would like me to look at? Feel free to reach out on LinkedIn! :)

Sources

[1] Benioff, M. and C. Adler (2009). Behind the cloud: the untold story of how Salesforce. com went from idea to billion-dollar company-and revolutionized an industry, John Wiley & Sons.

[2] https://bebusinessed.com/history/the-history-of-saas/

[3] Mehta, N., et al. (2016). Customer Success: How innovative companies are reducing churn and growing recurring revenue, John Wiley & Sons.

[4] Fullerton, G. (2003). "When does commitment lead to loyalty?" Journal of Service Research 5(4): 333-344.

[5]Hilton, B., et al. (2020). "Customer Success Management: The next evolution in customer management practice?" Industrial marketing management 90: 360-369.