Journal Junkie Vol.3: The Organizational Shift

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Vol.3: The Organizational Shift

Welcome to the Third 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 aim to provide you with up-to-date research in the field, as well as interesting insights.

Previous Series Publications

Vol. 2 Recap

We started with the definition of Customer Success and the fact that Customer Success was becoming the norm. Customers were no longer slaves to hardware and had freedom and power over vendors. We discussed the function of Customer Success and how the market started to take notice when the industry started to see results. Customer Success Management provided a needed function and assumed primary responsibility for the customer relationship after the sale. Even though most know the function of Customer Success is to Increase retention, Reduce Churn, Drive Growth and Product adoption, what Customer Success cannot do is largely debated in terms of owning revenue for renewals and up/cross-sell. The fact was that there is no universal answer yet but that the trend is for Customer Success to own more overall revenue. The journal concluded with an overview of the Sales-Services Ambidexterity Conundrum, which argued that findings indicate that commitment to service quality and sales performance are highest when employees are singularly focused on one or the other. However, while ambidextrous employees experience role conflict, they are more likely to use creativity in their selling activities. These positive and negative consequences of ambidexterity underscore both the potential risks and rewards of a dual-orientation on the front line.

The Human Touch

The Internet is a revolutionary force, having shaped the business landscape since its commercialization in the mid-1990s (Sheth and Sharma 2008). The diffusion of new Internet-based technologies, applications, and services for business and e-commerce has proceeded apace. Sales-force automation, customer relationship management (CRM), and web-based tools and applications are increasingly accessible, prompting notable changes in the composition of sales structures (Mantrala et al. 2010). These technologies generally enhance sales efficiency and effectiveness across different stages (Ahearne and Rapp 2010; Piercy and Lane 2003), leading some researchers to predict that Internet technologies will reduce the importance of sales forces and replace sales personnel for tasks such as order management, information exchange, and delivery tracking (Sheth and Sisodia 1999). Others still emphasize the value of personal interactions and the non-substitutability of the "human touch" in buyer-seller interactions (Lewin, Biemans, and Ulaga 2010).

Customer Centricity Paradigm Shift

An ideal customer-centric organization implies having all functional activities integrated and aligned to deliver superior customer value. This contrasts with a typical product-centric company that is organized around functional silos and defined by product categories or product types. Such companies have product managers and sales managers assigned to each product or product category. As such, the organizational structure and resources are based on the type of product(s) being manufactured and sold. Such a structure is not conducive to customer-centricity as each product/sales manager may end up pushing different product offerings to the same customer without first determining what the customer’s true needs are. There is mounting evidence that organizational structures are evolving toward closer alignment with markets, especially for firms that are implementing solutions, strategies, and/or with assertive customers that want a single point of contact (Day 2006). This development is being applauded by organizational theorists who endorse smaller, customer-responsive units. The challenge of moving from product-centric to customer-centric arises from the fact that functional differences are deeply rooted in incentives, backgrounds and interests, time scales, and task priorities. Hence, any effort to improve alignment is tantamount to balancing numerous contending forces (Day 1999). For example, one of the key benefits of a customer-centric organization structure lies in creating accountability for managing customer relationships.

Social Exchange Theory

Social exchange theory emphasizes the advantages of close, long-term relationships (Gundlach and Murphy 1993; Webster 1992), noting that relationships involve ongoing exchanges of resources (Lee and Cadogan 2009). The resources exchanged can be tangible (e.g., goods, money) or intangible (e.g., social services, friendship). A general assumption is that relationships form and persist because it is rewarding for both parties to enter and remain engaged (Homans 1958; Lambe, Wittmann, and Spekman 2001). For example, through social exchanges with a salesperson, a customer can decrease decision uncertainty (Hakansson and Ostberg 1975)—a benefit that was particularly important in traditional sales exchanges, which featured significant information asymmetry between buyers and sellers such that buyers depended on knowledge from the salesperson. In these exchanges, buyers and sellers establish mutual trust related to their ability to meet expectations and engage (Blau 1964). As the relationship develops over time, a relationship quality mechanism emerges, functioning as a shock absorber in crises (Pardo, Salle, and Spencer 1995). This mechanism might involve mutual developments, communication styles, and dyadic rules that get shaped, reinforced, and adapted through interactions and create a framework for future exchanges (Pardo, Salle, and Spencer 1995). Social exchange theory also requires the active participation of customers through repeated encounters for the development of personal and professional relationships because they reduce social distances between buyers and sellers (Czepiel 1990).

The Rise of the Customer Success Organizations

Recently, the practice of Customer Success Management (CSM) has exploded in popularity. Fewer than 5000 individuals held the “Customer Success Manager” job title in 2015, yet over 30,000 individuals claimed the job title in 2018 (Gainsight, 2019). LinkedIn ranked “Customer Success Manager” as the 6th most promising job role on LinkedIn for 2019 (Pattabiraman, 2019). Marketing practitioners and consultants have launched popular CSM practitioner conferences, CSM digital tools and technology platforms, CSM books, and CSM business press publications (Arona, 2016; Mehta, 2019; Mehta, Steinman, & Murphy, 2016; Murphy, 2019) in recent years. Despite the newfound popularity of CSM, academic research is just beginning to wrestle with defining CSM and articulating a research plan. Given that CSM has yet to receive considerable academic attention, a skeptical researcher is left to wonder whether CSM is just the latest management fad or a valuable innovation in customer management practice. However, investment by companies in their customer success function leads us to believe that a paradigm shift over to a customer-centric business model is underway. With it, structural changes within organizations are also undergoing a change in order to support this new model.

Final Thoughts

So, what does the future hold for the Customer Success organization? How will it end? Customer Success and its organizational Identity is still undergoing transformation. Every day new Customer Success roles are appearing like Technical Customer Success Manager and Strategic Customer Success Manager (LinkedIn Search, May 2021).  Who Customer Success reports to is still in flux in most organizations as the Chief Customer Officer is yet to establish itself in most organizations, but it is on the rise! (Bliss, 2015). Customer Success may have transcended from a buzzword but it is still solidifying its position in the organization. Well, that is it for Vol. 3, I hope you found it insightful. We will continue to explore the questions raised in journals and by the industry, so look out for – Volume 4 in June for more, where I will continue to share my findings and key insights.

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! 😊

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Bibliography

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