Customer Success: In-House vs Outsourced [Finding the Right Fit]

Key Insights

• It is easy to fall into the mindset that customer success is only about keeping customers happy. In reality, customer success is a vital domain that can help you reach your business goals

• Between building internally and outsourcing, the right decision lies in having a solid grasp on your needs, as well as confidence in yourself

• Take the time to make the right decision, and you will see a big increase in the lifetime value of your customers

Many customer-facing business functions get outsourced regularly. Outsourcing customer success is a standard practice wherein technical teams are used on a contract basis.

So, whether you are in the early stages of developing a customer success team or revamping your existing CS efforts, you may wonder this question: Is outsourcing customer success right for me?

Bringing in an experienced external partner has its benefits, but it is essential to keep your short-term and long-term goals in mind.

Let’s look at the pros and cons of each setup and evaluate which will be the best fit for your organization.

What are the Pros and Cons of Building Internally?

An in-house solution might work for you if you have an organization at scale and the necessary resources who can focus their time and energy on this particular function.

The Pros

1. Company Knowledge: Your people have complete knowledge about the company, its culture, your business goals, and every detail of the product or service. In short, you have a resource pool that has grown with you. Additionally, they share your vision and have been serving customers for years. All this knowledge is already in place when you get to build an in-house CS team.

3. Better Control: You can have complete control of the entire team when it is in-house. You have power over the goals, strategies, budget, and almost everything that has been etched out by the team. So, if your customers are not happy with your CS team, the responsibility unavoidably falls on you.
4. Ownership: You have complete ownership of the logistics. At times, when companies break their partnerships with an outsourced partner, it becomes a daunting task to get everything under control. With an in-house customer success team, you need not worry about this.

The Cons

1. Lack of Good CSMs: While it is one of the fastest-growing jobs in recent years, finding a good Customer Success Manager can be challenging. This is because the demand is much higher than the supply. It is also critical to keep in account that CSMs have a higher attrition rate, up to 20% year over year, according to TSIA’s State of Customer Success report.

3. Consistent Training: If you are building an in-house customer success team, you need to ensure that you have proper training and change management processes in place. Your training module must also match the job roles of the different members of your customer success team.
4. Inefficient Mapping: You have to segment your customers and then assign the relevant CSM for them. If this part is mismanaged, your customer success module will fail as your managers will be working on too many accounts. Consequently, your customers will be unhappy and might move to another organization with better customer support.

What are the Pros and Cons of Outsourcing?

An outsourced customer success model is a viable path for businesses that need to expand their customer base quickly. Let’s look at some of the advantages and disadvantages of this model.

The Pros

1. Streamlined User Onboarding: Increasing retention rate begins at onboarding. When you outsource customer success, your vendor will assign a CSM for each account, ensuring that your customers are comfortable and satisfied through their journey. Likewise, the Customer Success Manager will be instrumental in retaining a customer who is currently on a free trial by guiding them through the process.

2. Cost-effective: Building an in-house team involves more than just paying salaries. You need to consider employee benefits, ongoing training, software, equipment, and facilities. Add to this the high turnover rates of losing your customer success manager. You can save these costs with an outsourcing solutions provider that has already invested in these areas.

4. Expansion: Your customer’s lifetime value is primarily generated through renewals, cross-sells, and up-sells. When you work with an outsourced customer success team, you will be better equipped to identify and convert valuable upsells and cross-sell opportunities. Consequently, you will create a more profound association between your customer and your product.
5. Consistent Experience: Customer success is all about the customer. With an outsourced manager, you can ensure that your customer experience is smooth at all times, even if there are transitions between various points of contact. This is especially important when about 80% of consumers will leave a product after just one bad experience.

The Cons

1. Trust: Establishing trust with an external organization can be hard. Your goal should be to find a solutions provider who is passionate about nurturing customer relationships and has established leading methodologies for customer success. Evaluating your ideal outsourcing agency will be a smooth process once you have done your homework.

2. Loss of Control: If you feel like you need to have visibility and control over every detail of running your customer success department, then an outsourced model might not be the right fit for you. Seamless collaboration can only take place when your outsourcing partner has control over how your CS module should work.

Finding Your Fit

Between the in-house vs. outsource debate, don’t forget to look at the value of having a customer success function.

Long gone are the days when customer success was viewed as a ‘nice-to-have’ function. More than 90% of organizations have identified customer success as a dedicated function in their company.

The reasons to outsource customer success are umpteen and its benefits permeate throughout your organization and work at different levels for the overall success of your business.

Consequently, make a decision after considering how a particular model will affect you in the long term and the cost efficiencies that will come with it.