In B2B SaaS or any other business per se, the competitive advantage is an attribute that allows a company to outperform its competitors. It can come from any part of the business. For example, access to low-cost resources, highly skilled employees, exceptional product, first-mover advantage, and so on.
There can be a multitude of ways you can gain a competitive advantage for your firm. However, customer success is proving out to be one of the main for the B2B SaaS business model.
The most prominent and obvious advantage of customer success which is a prime need of any SaaS business is customer retention. Most of the SaaS businesses already understand this and have been adopting the CS function and strategies at a rapid pace.
But that’s just scratching the surface. Customer success is a much bigger wave in the evolution of business that is yet to attain its prime impact.
So to understand the impact of customer success as a competitive advantage, we will discuss it w.r.t. three forms of generic competitive strategy.
Michael Porter, who is a Harvard graduate and a prolific writer, wrote a book called Competitive Advantage in 1985. It is considered as the ninth most influential management book written in the 20th century.
In his book, Porter describes basically three forms of strategies through which companies can gain competitive advantage.
- Cost leadership strategy
- Differential strategy
- Focus strategy
Cost leadership strategy
This is a form of competitive advantage when you produce the same quality product at a lesser cost than your competitors. The cost-benefit of the company can be transferred to the customers which adds value to them.
So the main question that arises is this:
How does customer success help reduce production cost?
Well, it does in a progressive manner. Initially, when you launch your MVP, customer success doesn’t even exist. So, the production cost at this stage is higher than in the succeeding stages. I will explain why. Stay with me.
As the company grows and acquires more customers, customer success comes into being. The more customers you acquire, the more applicable becomes the customer success function.
After one point of time, customer success grows to such a level where it can create an impact in the B2B SaaS product management strategies.
Based on the customer’s feedback, you start refining your product in a more strategic way. You would stop spending time and costs on building the features, or related products, which customers don’t care about.
So, in a way, when product development becomes customer-centric, the production cost gets more focused on customer outcomes. And that shrinks down the cost of experimenting on unimportant, non-customer-centric features.
Differential Strategy
A differential competitive advantage is an attribute of a product that differentiates it from its competitors. To gain this advantage you need to build a product which makes it stand out from other products built by your competitors.
How does customer success help you gain a differential strategy?
One of the key aspects of customer success is to provide bespoke solutions to the clients. Through strategic discussions with them, the CSM must be able to identify their evolving needs.
They must communicate these evolving needs to the product owner. Then a product owner must perform a proof of concept on those needs to check if they are viable through an advanced version of the product.
If yes, then this translates into the functional design of the product after which the product is made and delivered to the customer. And once a customer finds it more suitable for their business, they would stick with you forever. Why? Because this is the solution which they would never find from your other competitors.
Focus Strategy
Focus strategy allows you to target a specific market rather than targeting everyone. It is more relevant in B2B SaaS companies than anywhere else. The product-market fit is one of the widely used parameters before any company ventures into building a new product.
How customer success helps gain focus strategy?
Customer segmentation is one of the best strategies for customer success. When building your sales and marketing strategies, if you consider customer success inputs, you would achieve better results.
The most important input for the B2B SaaS marketing and sales teams from customer success is to target right-fit customers. These are the customers who stick with you for the long-term which is the most prominent need of a SaaS business.
Through customer success, account-based marketing has proved out to be most beneficial for B2B SaaS startups. By running personalized and specifically targeted marketing campaigns, you can convert high-value potential customers.
A more CS qualified sales executive would know how to set the initial expectations of the customers from your service. This would ensure they avoid making false promises to the clients which is the initial step towards building transparent and long-lasting relationships.
Other competitive advantages through customer success
Apart from Porter’s generic competitive strategies, there are few more advantages that customer success avails. They can be in the form of:
- Customer loyalty programs
- Brand advocacy
Customer loyalty programs
Conducting customer loyalty programs regularly is one of the main responsibilities of a CCO’s in CS matured organization. Through these programs, companies reward customers for continuing their business with them. They regularly dole out points or perks to the customers which keeps them motivated towards the company.
Benefits can include price discounts, coupons, or insider perks like early access to a new launch of a product. Customer loyalty programs keep the relationship intact and prevent them from fleeing to competitors.
Brand Advocacy
There cannot be a more impactful competitive advantage than when your customer base joins you in your mission. When your loyal customers turn into your brand advocates, the impact magnifies immensely. They would not only be immune to any competitor risk but would help you spread that immunity to other customers as well.
Hence, top B2B SaaS companies invest heavily in turning their customers into brand advocates.
Final Thoughts
Customer success has an impact on both the internal and external strategies of a company. All the business functions have something to learn from customer success. They must keep a collaborative approach with customer success.
When applied in both the internal product management or the customer-facing marketing and sales strategies, customer success helps you generate a powerful pack that is hard to beat by any other competitor.
For any growing B2B company, they have to be always on their toes towards understanding customer needs and challenges. With that, a continuous improvement in serving the client becomes indispensable.
And if you are a customer-centric organization and are always prepared to give the best value to the customer, you would find no gaps in outperforming your competitors.
Rakhin has over 10 years of experience driving business development and client services. In his prior roles, he stayed close to customers to understand their requirements and help them achieve their business goals. He is passionate about customer success.
Published September 18, 2020, Updated September 06, 2024
