Why Customer Success became a discipline of its own

Short answer

Why did Customer Success become a discipline of its own?

Because the subscription model moved revenue from the moment of sale to the whole customer relationship. It then became visible that no function owned the customer's outcome after the sale, that much of what was bought was never used, that renewal had no owner, and that usage data was not used for anything. Customer Success grew up to close these gaps.

Customer Success is often described as a new discipline. That is only partly true. Much of the work – helping customers get started, following them up and looking after important customer relationships – has always existed. What was new was that someone was given overall responsibility for it, and that the responsibility was tied directly to the company's revenue.

To understand why that happened, you have to look at what changed in the business model – and which gaps the change exposed.

From licence to discipline

1. Before 2000

   The licence model

   The customer pays at purchase. The sale is the finish line.

2. 1996

   The first Customer Success department

   Vantive makes someone responsible for customers succeeding.

3. Around 2000

   Subscription and SaaS

   Revenue comes over time, and the customer can leave.

4. 2005

   Churn becomes a leadership issue

   Salesforce makes customer success a priority.

5. 2010s

   A discipline of its own

   Dedicated platforms, networks, literature and a shared vocabulary.

6. Today

   Beyond software

   Payments, telecoms, services – and a more commercial mandate.

Before subscriptions: when the sale was the finish line#

For much of the software industry's history, the customer bought a licence. Most of the price was paid at purchase, often supplemented by an annual maintenance agreement.

The model gave the vendor a clear centre of gravity: the sale. That was where the revenue came, and that was where the incentives lay. After the sale, other functions with limited missions took over:

• Consultants and implementation installed the solution.
• Customer Support helped when something did not work.
• Account managers tried to sell more.

None of them was responsible for the question that matters most to the customer: did we get what we bought the solution for? The industry even had a word for software that was bought but never used: shelfware. For the vendor, it only became a problem at the next sale, if at all.

The shift: from licence to subscription#

From the late 1990s a new model grew up: software delivered over the internet, paid for continuously as a subscription – what is now called SaaS (software as a service). Over time the model spread far beyond software, to media, telecoms, payment services and equipment. Zuora founder Tien Tzuo has described the development as a transition to a “subscription economy”.¹

The subscription turned the economics upside down:

• Revenue comes over time. The customer does not pay for the solution at purchase, but for every month or year they keep using it.
• The customer can leave. At every renewal – or every month – the customer makes a new decision to stay.
• The acquisition cost is paid first. It costs money to acquire a customer (CAC), and the cost is only earned back if the customer stays long enough.

Hypothetical example

−NOK 5,600

A customer who leaves after six months has cost more to acquire than they have given back. The acquisition cost is only earned back after ten months.

When does the customer become profitable?

Show the numbers

Month	Gross profit earned
0	NOK 0
1	NOK 1,400
2	NOK 2,800
3	NOK 4,200
4	NOK 5,600
5	NOK 7,000
6	NOK 8,400
7	NOK 9,800
8	NOK 11,200
9	NOK 12,600
10	NOK 14,000
11	NOK 15,400
12	NOK 16,800
13	NOK 18,200
14	NOK 19,600

When customers can leave before they have paid back what they cost to acquire, churn becomes a direct profitability problem – not just a quality problem. Read more about LTV and CAC in How do you measure the value of Customer Success?

The first Customer Success functions#

The answer to the problem was to make someone responsible for customers actually getting value – and therefore staying. One of the earliest known examples is the software company Vantive. The CRM vendor was struggling with many customers failing to adopt the solution, and in 1996 set up a dedicated Customer Success department, led by a former customer.²

Salesforce, one of the first large SaaS companies, became a more important example. At a leadership meeting in 2005, churn was raised as a threat to the whole business model: the company would not be able to acquire new customers fast enough to replace those who left. The answer was to make customer success a priority for the whole company.³

Around 2010 the first software platforms built specifically for Customer Success appeared, and through the 2010s the discipline acquired its own conferences, networks and literature. Concepts such as customer health, NRR and time to value became part of a shared professional vocabulary.³

The gaps Customer Success closed#

It is useful to describe the discipline by the gaps it covered. The gaps existed in the licence model too, but the subscription made them expensive.

The gap after the sale

Without Customer Success

1. Sales
2. Implementation
3. Customer Support

Each function has its part. Nobody owns the customer's outcome.

With Customer Success

1. Sales
2. Onboarding
3. Use and value
4. Renewal and expansion

One function owns the journey after the sale, starting from the customer's goal.

Nobody owned the customer's outcome after the sale#

Sales was responsible for the contract, Customer Support for errors, consultants for the installation. Nobody was responsible for the customer reaching their goal. Customer Success was given overall responsibility for the whole journey after the sale – starting from the customer's outcome.

Bought, but not used#

The value of software only arises when it is used, and often only when it is used correctly. The gap between what customers buy and what they actually adopt gradually became a central theme in the industry – and a direct threat to renewal when the customer pays continuously. Customer Success made adoption an area of responsibility of its own, with onboarding and time to value as the main levers.

Renewal had no owner#

In the subscription model, renewal is as important as the first sale. Yet it was often an administrative event – an invoice being sent – rather than an outcome someone worked for. Customer Success made renewal something prepared throughout the customer relationship, not just in the last few weeks before the agreement expires.

Data without a recipient#

When software moved to the cloud, the vendor could for the first time see how customers actually used it: who logged in, which features were used, and when usage fell. The data existed, but nobody was responsible for acting on it. Customer Success turned usage data into a working tool, for example through health scores and early risk signals.

Customer experience did not reach the product#

Customer Support saw the problems one case at a time. Sales heard wishes from prospective customers. Nobody had an overall picture of where existing customers struggled to get value. Customer Success became a channel for systematic insight from the customer base to product development.

Growth from existing customers#

When revenue is continuous, existing customers can grow: more users, more products, higher volume. That made the customer base a source of growth in its own right. In many companies, Customer Success was given responsibility for enabling expansion, measured through NRR.

Editorial summary.

Beyond software#

The principles are not limited to SaaS. They apply to every company where the customer pays continuously and has a real option to leave: payment services, telecoms, insurance, accounting services, equipment rental and professional services with framework agreements.

In some industries the gaps are even harder to see. Where revenue is based on usage or transactions, the customer does not need to cancel to disappear – they can simply stop using the service. The churn happens silently, and is often discovered late. That makes the need to monitor customers' usage even greater.

What the discipline did not solve#

Customer Success closed important gaps, but also created new questions:

Titles without content. Because the term became popular, many roles got the title without the content changing. That makes the discipline hard to define. See Roles in Customer Success.

Hard to prove the value. Retention and growth are affected by almost everything a company does. That has made it hard for Customer Success to show its own contribution – and has made the function vulnerable when budgets are tightened.

A plaster on product problems. When a product is hard to use, a Customer Success function can compensate for it for a while. But it can also hide the problem. Customer Success works best when it helps remove the causes, not just handle the consequences.

An unclear commercial mandate. Should Customer Success be the customer's advocate, or responsible for revenue? Many companies have moved from the first towards the second. The tension between the two roles has not been resolved, and it looks different from company to company.

What the history means today#

The history provides a useful starting point for companies considering Customer Success: the discipline exists to close particular gaps. The question is therefore not whether to have a Customer Success department, but which of the gaps exist in your own company – and who is responsible for closing them.

Read also What is Customer Success? for an introduction to the discipline as it looks today.