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Surveys have been a go-to for businesses to understand their customers, improve products, and drive growth. But let’s be real—traditional surveys often feel outdated. They’re a pain to create, boring to complete, and slow to give you the insights you need. Enter Artificial Intelligence (AI), ready to shake things up and breathe new life into how businesses gather and use feedback.
Here’s how surveys usually go:
This process is slow and often leads to low engagement and fragmented feedback. Traditional surveys struggle to provide real-time insights or adapt based on what respondents say, which makes them less effective.
Here are some common issues with traditional surveys:
Many industries also follow a seasonal or scheduled approach to surveying, which isn’t very effective. For example, retail companies often conduct customer satisfaction surveys around the holiday season. While this can provide insights, it misses feedback throughout the year. Similarly, annual employee engagement surveys in large corporations might miss ongoing concerns that affect daily operations and employee morale.
Imagine if your surveys could think for themselves, asking the right questions at the right time and analyzing responses instantly. That’s what AI brings to the table. AI tackles many of the challenges posed by traditional methods. By integrating AI, businesses can benefit from:
Traditional Approach:
AI-Enhanced Approach:
Traditional Approach:
AI-Enhanced Approach:
Traditional Approach:
AI-Enhanced Approach:
Traditional Approach:
AI-Enhanced Approach:
Many industries follow a seasonal or scheduled approach to surveying, which can be ineffective. For example, retail companies often conduct customer satisfaction surveys around the holiday season. While this provides valuable insights, it fails to capture feedback throughout the year, missing out on trends and issues that may arise in off-peak times. Similarly, annual employee engagement surveys in large corporations might miss ongoing concerns that affect daily operations and employee morale.
AI-Enhanced Seasonal and Scheduled Surveys:
AI-enhanced surveys can transform various industries by offering deeper insights and more personalized experiences, making them particularly effective in the following sectors:
View a real AI survey conversation for e-Commerce.
TheySaid addresses the limitations of traditional chatbots:
For example, TheySaid implemented a survey for a user-testing feedback scenario where respondents interacted with an AI-driven conversational interface. This approach resulted in an average conversation depth of 10.5 interactions per respondent, demonstrating high engagement and detailed feedback collection.
In this AI-driven survey, the conversation dynamically adapted to customer feedback on an e-commerce experience. For instance, when a customer expressed frustration with the checkout process, the AI followed up with specific questions about payment options and ease of use. Similarly, concerns about delivery times led the AI to ask about expectations and preferences. This adaptive approach provided the company with detailed insights into customer preferences and pain points, enabling them to optimize product recommendations, streamline checkout, and improve overall user experience, ultimately driving sales and customer retention.
In this AI-driven survey for a travel company, the conversation adapted to customer feedback, providing specific follow-ups based on responses. For example, when a customer mentioned difficulties with the booking process, the AI asked for details about what was confusing or frustrating. When a customer praised a particular travel package, the AI explored what they liked most. This adaptive approach provided the company with actionable insights to simplify the booking process, tailor travel packages, and improve overall customer satisfaction, ultimately driving repeat business and loyalty.
This resulted in::
Other survey tools like Typeform and SurveyMonkey have also integrated AI, but their offerings often focus on enhancing specific aspects of the survey creation process— but don’t consider AI applications for the survey taker’s experience. For instance:
While these tools offer valuable features, TheySaid’s comprehensive approach—spanning from question generation to real-time analysis and user engagement—sets it apart.
Looking ahead, the integration of AI in surveys is expected to evolve further. Potential developments include:
AI is transforming the survey landscape, making the process more efficient, engaging, and insightful. TheySaid’s AI-powered survey solutions offer a comprehensive approach that enhances every step of the survey process, from creation to analysis. By adopting AI in surveys, businesses can stay ahead of the curve, gaining more precise and actionable insights.
Experience the future of surveys with TheySaid. Sign up for a demo or trial today to see how AI-powered surveys can revolutionize your feedback collection process.
As we commemorate Customer Service Week, an occasion dedicated to spotlighting the contributions of those who nurture customer relationships, it's important to highlight these professionals' evolving roles. The modern business landscape echoes the sentiment that Customer Success teams are not just relationship custodians but are also the driving forces behind revenue growth.
At the heart of every successful business lies the relationship with its existing customers. This isn't merely built on trust; in a business context, it thrives on value. The role of the modern Customer Success team transcends traditional support. Their day-to-day centers around proactively engaging with customers, anticipating needs, and ensuring continuous value delivery. Their metrics, such as health scores derived from product usage and feedback, are not just indicators of satisfaction; they're measures of business health.
Yet, delivering value and understanding customer nuances come with its own set of challenges. Often, the data that informs their strategies is siloed, fragmented, or misaligned with their core objectives. They strive to decipher the evolving needs of their customers while also decoding the reasons behind customer growth or attrition.
It's clear: while Customer Success teams are responsible for nurturing relationships, they also shoulder the equally crucial role of driving revenue. Which often can feel like working against each other. Their initiatives directly influence a company's bottom line, from onboarding and renewals to upselling and cross-selling. Their proactive approach and understanding of customer needs position them to best spot opportunities for revenue growth.
At TheySaid.io, we recognize and deeply resonate with these twin challenges, especially during this significant week. Our mission is to empower Customer Success professionals in both these domains. We understand that their role isn't just about maintaining relationships; it's about using customer voice to elevate these relationships to partnerships that drive mutual growth.
Our platform, TheySaid.io, is designed with this dual mandate in mind. We offer actionable insights using our Pulse methodology that is proactive, actionable, and continuously detecting churn and upsell that not only help Customer Success and other revenue teams understand their customers better and identify revenue-driving opportunities. With real-time feedback mechanisms, teams can proactively address potential risks and capitalize on upsell or cross-sell chances.
To support the mission of Customer Success teams during this celebratory week, we are excited to share a selection of our most popular resources and our favorite articles from other Customer Success leaders.
Customer Success Events
Many significant events to attend for professional learning and networking throughout the year. While many of these have already taken place, this comprehensive list will excite you for what’s left in 2023 and what’s to come in 2024.
https://staircase.ai/blog/top-13-customer-success-conferences-to-attend-in-2023/
In closing, as we raise our glasses to Customer Success Week, let's celebrate the indispensable role of those who harmonize business growth with customer trust. With partners like TheySaid.io, these professionals can elevate their impact further. Cheers to the harmonizers of business growth and customer trust! 🎉
Featuring Rachel Orston, Chief Customer Officer at SmartRecruiters
This article is part of our 2.0 Leadership Series, where we provide practical insight into what strategic Chief Customer Officers are doing so the rest of us can level up more quickly.
CCOs often believe that if they’re handling the demands of managing their team—hiring, running training programs, talking with customers—they’ll be seen as a strong member of the leadership team. But then, when important company decisions are being made like a restructuring of responsibilities, they’re passed over as being “not strategic.” They’re stuck. What could they be doing differently?
Rachel Orston has seen all sides of what it means to be an ally at the executive level. She’s led teams in Marketing and Operations. She’s been a CEO, a Founder, and a Board Member. And today as Chief Customer Officer at SmartRecruiters, Rachel actively thinks about how her role expands beyond her own department.
Throughout her career she’s noticed areas where executives—and specifically CCOs—often get stuck on their path to becoming a strategic leader:
Below, Rachel shares steps CCOs can take to overcome each blocker.
Probably the most common pattern I see with CCOs is a tendency to get too much in the weeds. They're stuck in a whirlwind of dealing with people and the day-to-day tactical issues their leaders throw at them.
Don’t get me wrong, CS leaders who are stuck in this trap aren’t bad people leaders. In fact, their teams usually love them: they're the go-to person who solves all the problems. But leaders in this habit become exhausted, and they don’t get any strategic or proactive work done because they've spent all day reacting to the problems du jour.
This problem is felt in all company sizes. Leaders managing global teams at companies with $100 million+ in revenue have come to me completely drained and drowning in tactical work.
There’s a 3-step system I’ve used to help CCOs get out. In short, it’s a People, Process, and Systems analysis.
Before we dive in: even after doing this analysis, CCOs must reframe how they think about their priorities on an ongoing basis. No more “I’m going to get 30 things done on my task list.” Focus on the work the company needs you to do and the big strategic rocks you need to accomplish to take the company to the next level of growth.
Step 1 of your analysis: Do you have the right People?
Sometimes leaders get so close to their work they can’t see beyond it. A year passes, and the CCO realizes that the skills and people they have supporting them today are not the roles they need for the business tomorrow. This is a tough realization, but an important one and impacts roles at all levels.
As an example, the head of CS needs to regularly assess if the right CSMs are being hired to drive the right outcomes, to deliver the right value. In growing companies, you’ll find that the CSM profile your company needs will evolve quickly.
Before you proceed with hiring a new profile of CSMs, ask these questions:
I'm a firm believer in team development and building folks from within your team. But there are times, for example, when you start to close multi-million dollar accounts and the profile of someone who can manage those relationships is very different from the CSMs that are managing 40-50k deals and have only 2-4 years of experience.
Step 2 of your analysis: Are you building a proactive muscle with the right Process?
One way to determine if a CCO is operating strategically is if they regularly review churn causes and customer feedback with their CS Ops team. Do they provide insights to the rest of the company with clear action plans and recommendations to support? Do they spend time digging into the reasons behind low adoption and lost accounts, instead of accepting high-level and unactionable reasons like “our champion left” or “the company lost budget”? Do they surface patterns in both causes for churn and in behaviors of “successful” customers, and then share that information with the departments that need it?
And from a team perspective: Is there a CS Ops team that identifies common activities their team does that either leads to success or loss, and then shares that information with the team?
Proactive CCOs have the right processes in place to identify patterns (with customers, and with their team) to make strategic decisions that drive company growth.
Step 3 of your analysis: Do you have the right Systems to drive the desired behaviors in your team?
The mistake too many leaders make initially is when they start with a system (e.g. purchasing AI or fancy reporting) before they think about the people and processes to make that system effective.
Once you have the correct people in the right roles, proper processes in place, and when you understand where you are creating your own problems, then it’s time to think about the best way to automate it. Do you need a playbook? Do you need a new system? Do you need a tool?
When you’re adopting new systems to support your business, think about behaviors you want your people to follow. How are you going to drive consistency in the business? What predictable behaviors do you want to see as a result of implementing a certain system? How would a new system change how you lead day-to-day?
Take call recording tech as an example. I love listening to call recordings and I spend time doing it because it drives a behavior that I expect of leaders—to coach their team, to listen, and to detect patterns. By using a recording tool, leaders can not only coach the individual on the call, but also the broader team.
Part of purchasing new technology is considering what culture you want to drive with the tool. If you don’t present a call recording technology in the right way, for example, team members might think you’re auditing them or using it as performance management. If you instead introduce the tool as being part of your coaching culture where the team is constantly learning and sharing from collective experiences, people will be more willingly adopt it.
Running a People, Process, and Systems analysis will help leaders get out of the daily technical work and identify longer-term initiatives that’ll have a larger impact on the business.
Two dynamics exist in many companies: Either the Marketing leader doesn’t naturally think about existing customers (they’ve spent their entire careers focusing on MQLs), or there aren’t company-level retention metrics that require Marketing to think about customers. In either case, if no one cares about marketing to customers, Customer Success must take ownership of that area.
These dynamics are so common that I foresee in the next 5 years that Customer Success will expand its influence over Customer Marketing as an extension of how to further drive value to customers. (By “Customer Marketing” I mean a combination of community, engagement, and customer advocacy that drives demand with existing customers and keeps customers wanting your product year over year.)
But today, Customer Marketing is highly under-invested in and there are few companies doing it well. The problem with no one owning Customer Marketing is simple: without a dedicated person creating onboarding materials, sharing ongoing product communications, and hosting customer webinars, CSMs have to scrape together this content on their own (and they have enough work to do already).
If a team is drowning in this type of work, it means the CCO isn’t scaling themselves effectively.
“I foresee in the next 5 years that Customer Success will expand their influence over Customer Marketing as an extension of how to further drive value to customers.”
So for CCOs new to building Customer Marketing programs, I’d recommend considering starting a customer community. They can be one of the most scalable ways for companies to connect with their customers, provide education, promote advocates—and for customers to connect with each other.
Here are some tips on running a stellar community:
Customer communities today are powerful, purpose-built solutions for engagement across the customer lifecycle. I aspire to provide a platform for customers to build a community upon—where customers are truly learning from other customers and improving their crafts together. When you've achieved this standard, you’ll hear customers say that their personal careers have grown because of their engagement in your community.
Type “Customer Success Ideal Customer Profile” into Google. You’ll see dozens of resources about how to create an ICP but almost zero on the role Customer Success should play in defining it. Why is it that the leader who is most in tune with customers doesn’t have a real impact on the process of defining what a good customer looks like?
Whereas problem #2 (“no one owns Customer Marketing”) means the CCO isn’t scaling themselves, the problem of not proactively influencing the ICP means the CCO isn’t showing peer leadership. They’re not thinking beyond their team. And it hurts their team’s performance, especially if the ICP is incorrect and the company is acquiring bad fit customers.
“I believe that the CCO’s imperative is to come into a company and ultimately define what success looks like for the customer and then align the company to deliver those outcomes.”
And it’s true that many CCOs don’t play enough of a role in defining the Ideal Customer Profile (ICP). But the ICP is an ideal; it's fictitious to some degree and it needs to be constantly revisited and compared with reality. CS should play that role of sharing “the reality” and that insight should drive the ICP definition forward.
Here’s how they can get more involved.
We're in the early stages of evolving this, but one of the things my team has in place is a program for CSMs to earn advocacy points when they surface win stories. CSMs fill out a form that gets put into a database to be shared with Marketing.
Keep in mind, not everything has to be a full-blown case study. We get ourselves trapped because we think of win stories as needing to look really beautiful, be seamless, and published to the website. Sometimes we get so focused on the deliverable that we don't break down the wall to just start getting the data flowing. Don’t worry if everything ends up being polished or not, let's just start surfacing win stories.
In a previous company, we actually took the win form with a summary of what the win was, what the customer saw, and why this led to a success milestone. Then this got pumped to a Slack channel that the whole company could check in on. Everyone wanted to hear about the wins.
Usually, when a new CCO is hired, it’s because another executive thinks “we have a retention problem.” The result of this is that CCOs tend to focus on decreasing churn by running a better Customer Success team. All the while, what the market actually needs CCOs to focus on includes the areas that impact the entire customer journey.
Instead of being “churn fighters”, what if instead our first thought in CS was to create more successful customers? I believe that the CCO’s imperative is to come into a company and ultimately define what success looks like for the customer and then align the company to deliver those outcomes.
“To start with retention feels like there’s a problem in a bag that one person is holding. Instead of owning “retention” (which is another word for churn) CS needs to own what good looks like, what success looks like, and what best looks like.”
Making sure that customers are successful is not a CS initiative. It's a company initiative. And the CCO is the person best suited to drive that motion. The CCO of the future is ultimately the champion of the customer who:
It's easy to focus on what's not working, but one of the first things I do at a new company is ask to see the successful customers. I line up all the other executives individually and ask, “What does success look like?” There’s a problem when 10 executives have 10 different answers. Therein lies, do we even have a shared interpretation of what a good customer looks like?
Every company has unhappy customers. But there are a lot of reasons why they're unhappy and the job should not necessarily be to fix all unhappy customers. Clearly, you want to save them, but that's how the whirlwind starts.
If we truly want to get out of the tactical work and start aligning the company around the customer, we have to start with what success looks like.
If my sole responsibility and my success is based on addressing negative retention problems rather than magnifying what's already working well for happy customers, I’m on the wrong path to be a strategic, effective CCO.
Managing these 4 areas where CCOs often get “stuck” will help them become more influential at the executive level:
After interviewing dozens of Chief Customer Officers and VPs of Customer Success, I realized that almost every company reports the same reasons for churn. And most CS leaders agree that those churn reasons aren’t actionable, leading to departmental campaigns that are not based on actual business problems.
In no particular order, here are the churn reasons that everyone reports:
Here, I’ll walk through each of the commonly accepted reasons for churn, explain why they’re too high-level to be actionable, and offer ways to surface the underlying activities that lead to the customer’s success or failure with the product.
Ultimately the goal is to help increase your company’s ability to understand customer churn risk and level up one or two levels.
At Level 5, your company understands all of the early signs of risk and provides daily risk reduction tasks to people throughout the organization and notifications to leaders about overall trends.
For now, let’s focus on moving your organization from Level 2 to Level 3...
Whether you’re a software company, services company, or something else, lack of adoption of your offering always makes the top list of churn reasons. The Success Leader generally responds to this churn category with the following solutions:
Each of these solutions might add value to the customer, but it’s difficult to know without understanding what caused the lack of adoption in the first place. That’s because product adoption and usage are outcomes of the activities the company does first to get the customer using the product.
For example, let’s say a Success leader decides to overhaul the onboarding process and decrease the time to value by 50% in order to increase adoption of the product. But, the real reason customers aren’t using the product is that the product doesn’t have all the necessary features for them to complete the task they intend to do with the product. The result: months spent fixing the wrong problem.
The Success leader should define the reasons why a customer would have low product usage and encourage CSMs to routinely look for each situation in their accounts. CSMs will begin to communicate the specific situations that are happening with customers; Success leaders will use these deeper insights to define leading indicators of churn risk and create playbooks for CSMs to address the problems.
This is one of my favorite churn reasons because most companies think this is mostly out of their control. I disagree.
The typical playbook to reduce this risk includes:
In theory, these seem like good things to do. But CSMs are rarely provided with enough training to execute the playbook, it’s not clear what success looks like, and the result is weak execution and frequent churn from lost champions.
The Success leader then develops a playbook for each example of a low-quality champion: low-quality title, weak role coverage, minimal org influence or pessimistic outlook on the future.
An example playbook when selling into the enterprise is to follow the 1, 2, 3 Rule for mid-market accounts. For each account, the CS leader should have one executive sponsor, two champions and three power users. The Success leader provides detailed tasks for CSMs to build from champion to power user and from champion to executive sponsor and then measures progress across the portfolio. This way, if any of these people leave, the Success leader will have enough relationship coverage to recoup before it impacts the renewal.
“Budget loss” is often listed as a top 3 churn reason. Similar to losing a customer because “my champion left” or “they’re not using the product,” budget loss tends to be indicative of an underlying issue - the product doesn’t add enough value to justify the price.
But even that reason isn’t sufficient to take action. To improve the operations of your business, you must gather data for each churning account:
Rather than reporting that “budget was lost” and shrug shoulders, the Success leader can recommend a change in the feature set or price to counter competition, a change to the prospect targeting strategy to onboard new customers that have severe problems the product can solve, or a change to improve the quality of the experience at specific points in the customer journey.
When a customer feels like they’ve been oversold, the breach in trust is sometimes so severe that the company is never able to recover the relationship. If the customer provides even the smallest hint that the product or service does not match their expectations, the Success leader must immediately identify the issue and prevent it in the future.
These questions can help reveal the underlying cause of overselling:
The monthly “closed-lost report” or “churn report” must include the items above at a minimum, so the Success leader can spot actionable trends.
For example, let’s say that xyz feature is consistently oversold in the Sales process, the Success leader can look at other data to pinpoint the problem
Another example: if it turns out that high churn accounts are 50% more likely in the last week of a quarter, the CS leader can request additional deal-desk vetting or sales engineering coverage during that week.
Bringing well-defined data and examples like this will give them the information they need to take quick action.
“Poor onboarding” is an interesting churn reason because the need for onboarding highlights a flaw in the product. Well-built, fully-featured, and easy-to-use products need very little onboarding. In fact, a self-serve product that creates delight within minutes is one of the core tenants of product-led growth. Onboarding is the process of asking humans to do the work that the product is supposed to do. So when you say you have poor onboarding, what you’re really saying is you have major product usability flaws.
If we accept that the product will take a long time to improve, then what does “poor onboarding” mean for most companies?
Phew, that’s a heck of a list. But which of these reasons will cause the customer to churn in 12 months? It varies for each business but let’s consider a few cases.
If it takes 90 days for the customer to start using the product, but after they use it they’re in love, then time to value is a “nice to have” but doesn’t impact your renewal rate.
If you provide insufficient training for the product, and the customer walks away from onboarding feeling overwhelmed, then they’re unlikely to use the product. That will lead to a lack of usage which will lead to a churn event. In that case, “bad training” is the specific cause of churn, not “bad onboarding”.
Bad churn reasons are symptoms of the underlying problem, and they include reasons like:
Those reasons don’t allow a company to take meaningful action to improve the problem. Good churn reason examples include:
By deeply understanding the true reasons for customer churn, you can develop early indicators of risk that will allow the organization to react quickly to problems, and more accurately forecast the risk of an account.
In the ever-evolving landscape of SaaS metrics, one key indicator has risen to prominence: Net Dollar Retention (NDR). This metric has become a game-changer, not just for investors, but for Customer Success (CS) leaders as well. It's time to reshape our budgeting narrative and position CS as a significant driver of growth within the business.
In the past, budgeting for Customer Success often revolved around efficiency metrics, leading to a perception of CS as merely an overhead department. However, with the increasing importance of NDR, the narrative has shifted dramatically. Investors, including private equity, venture capital, and public markets, now prioritize NDR as a key metric for company valuation.
As Mackey Craven of OpenView Ventures aptly puts it, "Retention is the metric we care about most." NDR reflects not only customer satisfaction but also their willingness to expand usage and derive more value from the product.
Here’s how we used to budget for Customer Success: “I need one CSM per $2,000,000 in revenue.” But that approach was fraught with problems. Mainly, it taught the world to treat CS as a department that needed to become more efficient. That’s why your CFO squeezes your budget every year. But in the past several years, Net Dollar Retention (NDR) has become a critical metric for investors of all types. Private equity, VC, and public market investors are now using NDR as a key metric for overall company valuation.
Customer Success can no longer be an overhead department that has to become more efficient over time. It’s critical that CS Leaders re-educate their CEO and CFO on how the market now treats NDR, and then advocate for their budget by anchoring to company value created, not efficiency.
Here’s the maturity framework most CS leaders go through. Think about where you are, and what can be done to “move up” in your journey.
At this stage, you’re advocating for budget using the basics. You’re likely using rule of thumb metrics like “One CSM per $2M in revenue” or “One CSM per xx accounts”. Those are tools for knowing how many people you’ll need to hire each year. However, using efficiency metrics like this puts a huge target on your department: the CFO will think of CS as an overhead department that needs to become more efficient over time. The result: decreasing investment in CS as a percentage of revenue as the company grows, making it hard (or impossible) for the CS leader to grow net dollar retention.
CFOs often care more about growing revenue than cutting costs, so at this stage you position Customer Success as a revenue growth function (much like Sales). The best approach is to show how a greater investment in CS will lead to increased Net Retention Rate. Think, “$1M additional investment will lead to $2.5M in retention rate improvements.” This framing gets the CFO comparing the return of a CS investment to other places where they can invest.
You can use this CS Revenue and Expense Forecast Planner as a starting point to calculate the ROI on a greater investment in CS.
The ultimate goal is to align CS budgeting with company value creation. By forecasting the impact of retention rate improvements on company valuation, CS leaders can illustrate the significant role NDR plays in determining the company's worth.
Here’s how:
Start by forecasting the impact an increased retention rate will have on the company’s valuation. If you don’t have your own numbers, you can use the study below by Gainsight that analyzed Bessemer Venture Partners’ Cloud Index on net retention metrics (https://bit.ly/NDR-Gainsight). The conclusion is that retention rate explains about ½ of a company’s revenue multiple (EV/Revenue).
On average, we see that for every 1% point increase in net retention, enterprise revenue multiple increases 0.7x!
This has astounding implications for investments in CS. Let’s assume a company is doing $250M ARR. Based on the chart above, if the company has a 100% retention rate, then the revenue multiple for that company will be about 5x. Let’s see what retention rate improvements will do to company value:
• 100% retention = 5x multiple x $250M ARR = $1.25B
• 101% retention = 5.7x multiple x $250M ARR = $1.425B
• 105% retention = 8.5x multiple x $250M ARR = $2.125B
If the CS leader can drive just a 1% increase in revenue retention, they can increase company value by an incredible $170M. Where else can the CFO invest to see those kinds of returns on company value?
Obviously there are other factors that impact company value like overall growth rate projections, profitability, earnings history, management team, etc. But because retention rate is so critical in the eyes of investors, it will play the biggest role in determining company value.
And that’s why it’s so important for CS leaders to reach this stage of the conversation with their CEO and CFO. It’s time to get away from treating CS like an overhead department that needs to become more efficient every year. Instead, it’s time for companies to make outsized investments in Customer Success to drive outsized
increases in company value.
In conclusion, NDR has reshaped the landscape of SaaS metrics, emphasizing the critical role of CS in driving growth and company valuation. CS leaders must move away from viewing CS as an overhead department and instead advocate for substantial investments that align with company value creation.
It's time to rewrite the budgeting narrative and position CS as a strategic driver of success. Embracing the power of NDR enables CS leaders to propel their organizations toward unparalleled growth and profitability in the competitive SaaS market.
Acquiring these efficiently could be a game-changer for most companies. Aligning marketing and sales efforts to business outcomes like new revenue and growth is more crucial than ever. We are not strangers to metrics such as Marketing Qualified Leads (MQLs) and Sales Qualified Leads (SQLs.) But now, the focus is on a more nuanced metric: Customer Qualified Leads (CQLs.)
CQLs are leads that represent sales opportunities emerging from your existing customers. This results in customer growth, higher net retention, and lower acquisition costs — which boards and investors love to see. In companies where existing customers are managed by the customer success team, this new lead source is called Customer Success Qualified Leads (CSQLs).
Forget the old playbooks; if you’re not tracking CSQLs, you’re leaving money on the table. This post explores CQLs and CSQLs, their significance in sales, and how they can unlock growth and enhance revenue strategies. Ready to find out how these game-changing metrics can supercharge your growth? Let’s dive in.
Customer Qualified Leads represent a progressive step in lead qualification, emphasizing leads generated from existing customers. These leads are typically associated with higher conversion rates as they come from users who have already shown trust and satisfaction with your products or services. Unlike MQLs, primarily based on engagement, or SQLs, which are sales-ready opportunities, CQLs are deeply embedded in customer success and retention strategies.
The journey of lead qualification in sales and marketing has traditionally been dominated by two well-known metrics: Marketing Qualified Leads (MQLs) and Sales Qualified Leads (SQLs). MQLs are identified as prospects who have expressed interest in a product or service through various marketing activities yet are not ready to purchase. These leads are nurtured through marketing efforts until they reach a level of engagement sufficient to transition into SQLs—leads ready for direct sales engagement, having met specific criteria that suggest a higher likelihood of closing a deal.
However, diversifying revenue channels beyond acquiring new customers is crucial in today's market. Traditional metrics like MQLs and SQLs primarily focus on new lead generation and customer acquisition, often at the expense of engaging with existing customers. This oversight can be rectified by integrating Customer Qualified Leads (CQLs), which build upon the foundation set by MQLs and SQLs to offer a more dynamic benchmark for growth, particularly from existing relationships. By capitalizing on this often-neglected segment, businesses can unlock untapped revenue opportunities, strengthen customer loyalty, and enhance overall business sustainability.
Alex Farmer, Chief Customer Officer at Nezasa, one of the Top 25 CS Leaders to Watch, and founder of Customer Success Excellence, gives his stamp of approval on the effectiveness of this growth strategy. He successfully utilized CQLs to boost qualified upsell leads from existing customers by 40% and reduce the time to first upsell from 18 months to just 6 months. His strategy demonstrates not only the potential of CQLs in maximizing revenue and their role in accelerating the sales cycle. You can watch this video to learn more.
The strategic shift toward Customer Qualified Leads is part of a broader change in the business growth landscape. This transition from a traditional, siloed approach focused solely on customer retention to a dynamic, team-based strategy aimed at comprehensive customer growth is captured vividly in the "Reframe the Growth Equation" graphic. On the left, the conventional model depicts the Customer Success (CS) department as an isolated entity, primarily concerned with renewals and seen merely as a cost center with a defensive posture—focused on not losing the business. In contrast, the right side of the graphic advocates for a "Team Sport" approach where growth is driven through a Go-to-Market (GTM) mindset, involving collaborative teams that engage across the entire customer lifecycle.
This model emphasizes driving outcomes through scalable upsell and cross-sell strategies encapsulated in Customer Qualified Leads. This shift promises enhanced growth and fosters a more sustainable business model through active customer engagement and strategic expansion.
In a market where customer retention and lifetime value are increasingly critical, CQLs represent a significant evolution. The shift towards Customer Qualified Leads reflects a more profound understanding of the customer’s journey and the importance of leveraging existing relationships. In environments where acquiring new customers is costlier and more challenging, maximizing the potential of current customers through upselling and cross-selling can lead to more sustainable growth and profitability. CQLs focus on the quality and readiness of leads based on proven customer engagement, making them a vital component in strategic sales planning. This approach improves efficiency and enhances customer experience by ensuring timely and relevant communications and offers.
To effectively measure Customer Qualified Leads (CQLs) similar to MQLs and SQLs, developing a set of processes and rules that accurately identify and categorize these leads in your CRM is crucial. This step involves mirroring the strategies of your best-performing reps, who consistently ask the most impactful questions at optimal times throughout the customer lifecycle. You can scale their success across the entire Go-to-Market (GTM) team by codifying these effective interactions into your processes.
This approach ensures that the insights and techniques that lead to high conversion rates are not confined to individual top performers but are instead leveraged by your entire team. It’s about creating a systematic way to capture and replicate the most effective sales behaviors and strategies throughout the customer journey, thereby maximizing the potential for growth and revenue generation across all customer interactions.
Talking and listening to your customers is the best way to uncover upsell opportunities, but how can you do it at scale? Across all GTM team members, almost no company can achieve it. Most companies only have 1-2 star CSMs or AMs who know how to ask the right questions to uncover untapped customer needs. Mirror what your best rep does to uncover growth signals through intentional questions!
For example: I have found some top reps use the following growth signals:
You can find your company’s unique customer growth signals if you talk to your best account managers. Scale it to all of your customers by implementing a Customer-Journey Pulsing program.
This process-oriented approach ensures a seamless integration of CQL measurement into your tech stack, enhancing your ability to capitalize on existing customer relationships and drive growth.
This approach enhances the effectiveness of your sales strategies by focusing on the most promising leads and improves customer retention by ensuring that interactions are timely and relevant. By integrating tools like TheySaid, which provides automation and integration capabilities for customer journey pulses, you can seamlessly sync these insights into your CRM or other systems, ensuring that your team has the most up-to-date information at their fingertips.
Customer perceived value (CPV) is crucial in any discussion about optimizing sales and marketing strategies. CPV reflects the customer’s perceived worth of a product or service based on its ability to meet their needs and expectations. In our strategic approaches, CPV is pivotal in identifying and nurturing Customer Qualified Leads (CQLs).
What is CPV, and how can it be used as a leading indicator of revenue?
CPV is a leading indicator that helps identify if a customer is receiving value, influencing their purchasing decisions. This insight is invaluable as it allows us to predict which customers are more likely to engage further and convert into Customer Qualified Leads (CQLs), especially in scenarios involving upsell or cross-sell opportunities.
Suppose CPV data shows that customers highly value a specific feature of our product. This feature can be highlighted in targeted marketing campaigns aimed at existing customers, effectively increasing the likelihood of upsells. These campaigns directly generate CQLs by focusing on the aspects of our offerings that customers perceive as most beneficial.
Practical Outcomes of Integrating CPV with CQLs:
By aligning marketing content and sales strategies with the high-value elements identified through CPV, businesses can enhance customer engagement and improve the efficiency of their lead conversion process. This targeted approach ensures that communications and offers are timely and highly relevant, increasing the overall effectiveness of sales efforts and customer satisfaction.
Integrating CPV into the assessment of CQLs enables a more nuanced understanding of the customer journey. It helps forecast customer behavior more accurately and tailor marketing strategies that resonate deeply with customer needs and preferences. This strategy supports better alignment between customer expectations and company offerings and optimizes conversion by targeting the most informed and strategically valuable leads.
Embracing Customer Qualified Leads is more than adding another metric to your sales and marketing reports. It's about cultivating a deeper understanding of your customer base and leveraging that knowledge to drive growth. As businesses strive to be more customer-centric, CQLs offer a pathway to more targeted, effective, and ultimately successful marketing and sales strategies.
Interested in learning more about how CQLs can transform your business?
Reach out for a consultation or join our upcoming webinar on leveraging customer insights for revenue growth. Let's explore how we can turn your existing customer base into your most valuable sales asset.
In our conversation with Randy Wootton, CEO of Maxio, we discuss intricate challenges and shifts within the SaaS (Software as a Service) industry amidst fluctuating economic landscapes. Wootton, with a distinguished career that includes spearheading significant growth at Microsoft and Salesforce and refining marketing strategies at RocketFuel and Percolate, brings a wealth of experience and a unique perspective to the table. His tenure at Maxio, a company at the forefront of bridging the go-to-market gap for B2B SaaS companies, positions him as a leading authority on the subject.
Our discussion unfolds at a crucial time, touching upon a contentious debate: Is the SaaS go-to-market strategy fundamentally flawed, or are we witnessing the sector's evolution in response to unprecedented challenges? Drawing on insights from the Maxio report and Wootton's extensive background—which spans from optimizing marketing efforts in the digital "space-time" continuum at RocketFuel to enhancing content personalization at Percolate, and now, at Maxio, empowering companies to navigate financial operations with greater agility—this conversation seeks to unravel the complexities SaaS companies face today.
Wootton's leadership philosophy, fueled by his passion for tackling significant challenges and his commitment to addressing the modern buyer's dilemma of information overload, provides a compelling backdrop to our exploration. Through Maxio, Wootton has focused on offering solutions that balance flexibility with the complexity necessary for scaling SaaS subscription-based businesses, making him an invaluable guide through the current SaaS landscape.
As we navigate through this dialogue, we aim to discern whether the industry's current strategic shifts signify a departure from traditional practices or are indicative of an adaptive stride toward future success.
Reflecting on our observations and the latest Maxio report insights, we've witnessed a significant recalibration in SaaS spending from the past to the present.
This graph means back in 2020, SaaS companies are spending $1.5 to acquire $1 of first year revenue and that is when we were in the time of growth at all cost. Ironically, Now that investors are requiring companies to grow more efficiently, yet companies are now spending $2.45 to acquire $1 of first year renewal. Ouch. You can blame inflation, Covid, cost of capital, an unstable global environment. Which means, you better have longer lifetime customer value, which means you need to improve retention and Improve Net Revenue Retention.
The truth is New sales has become harder and more costly to acquire now than ever before in SaaS Space. CROs under pressure to hit targets while keeping the cost low have been forced to spend more effort in Growing existing business. Now more than ever, NRR becomes a critical number for any SaaS companies.
The report shows that subscription invoicing models have outpaced consumption models by an annualized growth of 33%, providing critical insights for strategic adjustments. This depth of analysis helps CEOs and business planners not only to understand current growth rates but also to predict future trends, ensuring that SaaS businesses can navigate through periods of market fluctuation with informed strategies.
The landscape is evolving, with SaaS companies now prioritizing tool consolidation and optimizing their budgets more than ever. A notable trend is the shift towards offering a mix of software and services, which has shown to be particularly beneficial for companies with a diverse range of product lines. This strategy not only allows businesses to leverage and deepen existing customer relationships but also to strategically expand their product offerings to fuel growth.
Additionally, the current market dynamics have spurred an increased adoption of hybrid pricing models among SaaS companies. By integrating the best aspects of both consumption and subscription billing, these models offer a pathway to maximize growth potential. The insights from the Maxio report underscore that, although subscription invoicing companies have traditionally held a competitive edge, employing hybrid models can considerably bolster a company's agility in navigating the ebb and flow of market conditions. This strategic balance is crucial for harnessing the full potential of customer relationships and strategically broadening the scope of product offerings to drive sustainable growth.
Right now, the operational metrics that SaaS companies should focus on have taken on even greater significance, especially in the context of the current economic environment. The most crucial metrics include the Annual Recurring Revenue (ARR) growth rate, gross retention, net retention, and the Customer Acquisition Cost (CAC) ratio. These metrics serve as the bedrock for assessing a company's health and potential for growth.
The CAC ratio, in particular, has emerged as a pivotal metric. It effectively measures the cost associated with acquiring new ARR in relation to the expenditure on sales and marketing. This ratio is not just a number; it's a reflection of the efficiency and effectiveness of a company's growth strategy. The insights from the Maxio report highlight the importance of these metrics by examining growth rates, industry performances, and billing strategies. This comprehensive analysis illustrates the direct impact of these operational metrics on a company's growth potential and operational efficiency.
By prioritizing these metrics—ARR growth rate, gross retention, net retention, and particularly the CAC ratio—SaaS companies can lay a robust foundation for navigating through the current economic challenges and driving sustainable growth. These metrics are indispensable for any SaaS business aiming to thrive in today's dynamic market landscape.
This is a critical issue underlined by the Maxio report. We're witnessing a considerable shift in the landscape where the cost of acquiring new customers has surged. This escalation is directly impacting the ability of SaaS companies to achieve growth efficiently. The increase in customer acquisition costs requires businesses to meticulously analyze their sales and marketing expenditures in relation to the new Annual Recurring Revenue (ARR) they generate. It's no longer business as usual; there's a pressing need for innovation in customer acquisition strategies.
This scenario has prompted a strategic pivot towards adopting more efficient and effective models for reaching and converting potential customers. The challenge here is to find acquisition strategies that not only mitigate the rising costs but also optimize the overall marketing spend to ensure a sustainable growth trajectory. The insights from the Maxio report highlight the urgency of adapting to these changes, emphasizing the need for SaaS companies to employ innovative approaches to customer acquisition that prioritize both cost efficiency and the effectiveness of reaching the target market.
Yes, the report offers detailed insights into industry performance. Cybersecurity, Public Sector, and Transportation Tech have shown remarkable resilience, with cybersecurity leading the pack with an average annualized growth rate of 37% over the past two years. Conversely, industries like eCommerce and Retail, Media, and Restaurants, Hospitality, and Leisure Tech have experienced lower growth rates, highlighting the diverse impact of current market forces across different sectors.
Next chapter I will dive in on how companies are driving in to improve NRR cost efficiently, especially with an effective land and expansion strategy. And what happens to the CS org in this changing environment. - coming next with the white paper on customer retention and revenue growth after interviewing 50 CEOs/COOs/CROs in the SaaS space.
It's evident that adapting to market dynamics and customer needs is paramount for sustained growth in the SaaS industry.
The good news is that when you are growing the revenue of your existing customers base, you are not in the business of selling to strangers. The key to selling more to your existing customers is by understanding them, understanding their pains and needs, so you can deliver more value to keep them and grow them.
The best way to understand more about your customers is not by sending automated marketing emails that “Talk At” your customers, nor by having your reps manually talk to your customers 1-1. TheySaid is uniquely positioned to provide “listening Pulses” along the customer's journey that listens to each contact of your customer based with a personalized approach.
This article is part of our 2.0 Leadership Series, where we provide practical insight into what strategic Chief Customer Officers are doing so the rest of us can level up more quickly.
Throughout her career, Rachael Powell tackled roles in everything from Marketing to Sales to HR. But she carved out a single focus: leading the entire customer experience as a Chief Customer Officer.
Rachael’s remit included the entire customer experience—Customer Success, Support, Education, Digital Transformation, Marketing, Communications, and Sales. It was an expansive role within a company of nearly 4,000 employees. Rachael most recently led a global customer team that brought together all the functions that support the customer, including Xero’s regional go-to-market teams that partnered closely with accountants and bookkeepers to support the needs of small businesses.
Leading at that altitude led to a strategy Rachael was passionate about: the “inside-out” approach to a better customer experience. She explained that “It’s all about getting things right on the inside first so a company can then quickly extrapolate that out through the customer base.” And it was especially important in companies who rely heavily on channel partners because those partners are in theory an extension of the organization.
In this exclusive article, Rachael shared the four principles of an inside-out approach:
…Over to you, Rachael!
I originally joined Xero as Chief People Officer. Early on in that HR role, or People Experience as we called it at Xero, we understood that the only way our company would succeed was if everyone at Xero shared a passion for serving the small business community. We realized the importance of winning the hearts and minds of our people first, and how that would lead to winning the hearts and minds of our customers.
Fundamental to the success of Xero was our people’s belief in our purpose which is to make life better for people in small businesses, their advisors, and communities all over the world. The power of this purpose cannot be overstated. It provided a unifying energy that brought our people together to do their best work and collectively we achieved great things.
In addition, many Xeros (our employees) had owned small businesses themselves or grew up in a family that ran a small business. Because of their background, they believed in what we were doing for the small business economy. That’s powerful—they understood the importance of small business to the success of global economies.
This was critical across the board but especially so in customer-facing roles—it could really improve a customer’s experience with us when the Xeros they were working with (CSMs, Support reps, Sales) “got” them. We looked for a small business background, but that concept could apply to any industry. If you’re selling sales software, consider finding someone with a background in Sales (or recruit them from a Sales role). The same goes for companies selling to restaurants or Marketers or Data Scientists.
When I started as Chief People Officer, we put in the work to make sure we were:
Right from the start, we had been planning and building a future for one million, two million, five million, and even 10 million subscribers.
A future built on creating an engaging customer experience that put technology at the foundation and allowed Xero to scale and grow at a very fast pace while maintaining a truly unique experience for our customers.
We believed Customer Success was about delivering a consistent, frictionless end-to-end experience across all our channels and product platforms. It was about providing our customers with solutions to their problems at the right time and in the right place. That meant anticipating their questions long before they needed to ask.
We developed a platform called Xero Central, a single place where our customers, both small businesses and accountants and bookkeepers, could go to learn and get support. It was set up so customers could find tailored content or find answers to their questions at a time that suited them. It was also smart: Xero Central used machine learning to anticipate what a customer would need to know next based on what they searched for first. Customers could still raise cases with our CX advisors if they were stuck and they needed help from a human being.
Xero Central was sophisticated but the concept was simple: empower customers with the resources and information they needed to effectively use products.
96% of our customers effectively served themselves because of the Xero Central platform and the quality of educational materials available to them, freeing up our CX specialists to spend more time on trickier and often more urgent customer questions.
Appointing a Chief Customer Officer in your organization is an effective way to create a very cohesive and holistic approach to Customer Success.
As CCO, and with the responsibility of revenue, digital and direct sales, partner engagement, Marketing, Support, and Customer Success, I could understand the full picture of what we were trying to achieve and how we would go about achieving it.
Having this structure in place meant I could enact change and move quickly to improve the customer experience, whilst reducing inefficiencies.
“The CCO is hired for their ability to ensure that the customer experience is seamless across touchpoints. Customers need to know that they are cared about during every stage of the customer journey.”
When I took on the role, we initially measured just revenue and subscriptions which are merely ‘points in time’ which I felt was not comprehensive enough to establish clear linkage and action across the whole customer journey.
So I worked with the team to create strong sets of data that informed our decisions and helped us make decisions across every part of the customer journey.
What we have today is a sophisticated data scorecard that we call JEDI. JEDI stands for Journey, Experience, and Data Insights.
It allows us to have a hero metric for each of the 5 stages of the customer journey:
Along with hero metrics for each customer stage, we also had RAG (Red, Amber, or Green) status and could filter by region or sub-metrics.
With the JEDI scorecard, we were able to easily detect which stage needed attention. If Awareness was underperforming, then we knew we invest in short or long-term marketing initiatives. If Delight wasn’t doing well, we knew we needed to lean in and support our customers with proactive Customer Success campaigns that help customers get more value out of our products.
The JEDI scorecard was the tool I looked at every morning. I woke up, checked on our hero metrics, and could quickly understand where I needed to focus my attention.
#4 Keep pushing the envelope on how you deliver a remarkable customer experience
We were living in a world with constant disruption, a once-in-a-century pandemic, and higher-than-ever customer expectations. We didn't have the luxury of setting a five-year strategy, executing on it, and then coming back to it at the four-year mark to try and plan out the strategy for the next five years. Just like customer expectations, strategy should be ever-evolving. We had to constantly check-in and ensure we were staying ahead of our customers' needs and delivering on what they valued most.
I thought that the braver, bolder organizations, the ones that constantly challenged how they could best serve their customers, would see success in the coming years.
I also expected we would see more Chief Customer Officer roles with a broad mandate emerging as organizations realized that establishing a brand promise and then delivering it were sides of the same coin that must be fully connected if they were to shift and change in line with customer demands.
CCOs who read this will most likely oversee CS, Support, Professional Services, and Operations, but may not have responsibility for Sales, Communications, or Marketing. For CS executives who are looking to expand their remit, here are some things to consider:
I worked in Marketing, Accounting, Recruiting, and more—all of which made me highly curious about people. I went back and did a Masters in Positive Psychology to give me further insight into how to help people flourish and to gain purpose in their lives.
Coming into Xero I picked up the reins as Chief People Officer, which was a new mandate for me, but it only added to my skill set. When the opportunity of leading our CX team opened up, I knew I could use my people experience skills and apply them to the customer experience.
Being curious and having a growth mindset put me in good stead to be an executive that could own a multitude of functions.
I certainly didn't do this job alone. I was surrounded by a world-class team—people who were not just experts in their field—but people who were empowered to work together, with a deep commitment to creating a holistic approach to the way we connected with our customers at every point of the journey.
We were in an ever-evolving environment and had a unique opportunity to act as change agents dedicated to bringing greater focus to Customer Success and realigning our organization to deliver on our purpose.
Executives should be thinking beyond their specific discipline, putting in place a clear strategy that is centered around the customer and aligning teams to execute on it.
Following the launch of the 2.0 magazine, we’re hosting a 4-part roundtable series designed to move the function of Customer Success forward.
This discussion theme was “How Customer Success Becomes More Strategic at the Executive Level” featuring Nick Mehta (CEO at Gainsight), Christina Kosmowski (former CCO at Slack), Rey Perez (CCO at New Relic), Sue Fellows (CCO at Workfront), and Mackey Craven (Partner at OpenView).
This newsletter showcases some of the best moments from our discussion including how CS can meaningfully influence the ICP that Marketing and Sales prioritize, what board members are looking for from CS leaders, and the gap between now and when CS leaders become executive MVPs.
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Nick Mehta: This is a logical question and I have a unique purview into this problem because I talk to a lot of CEOs about it too, not just CCOs. The answer: absolutely. Sometimes this does happen. That's not what it should be—that's not the future—but you should know that this is the reality for a chunk of people.
On the one hand, there are some CEOs that just don't ‘get’ SaaS and cloud. Obviously we're all trying to change that, but the number of CEOs like that are actually a smaller percentage than you might think, probably around 20-30% of CEOs.
But then there are other circumstances where a CEO is not getting what they want from their CS exec. And that's why I'm excited about this conversation—I believe in the growth mindset and that we can all grow.
In these situations, CEOs aren’t getting the level of strategic thinking from CS leaders that they want. Instead they're getting conversations that are too tactical of an altitude. Later on, we'll probably talk about board meetings. I think the big litmus test is whether someone can deliver a strategic presentation at a board meeting. There's two kinds of board presentations. There’s the presentation where the board says, “Oh, great job. You're doing such a great job. Thank you for all your work.” And then there’s the presentation where they really engage. And actually most executives are in the former—not just Customer Success. Most executives are not considered to be strategic. If you ask most CEOs, my guess is 2 out of their 8-10 execs are considered “strategic.” So how do you break into that? That's hopefully what we'll talk about.
Sue Fellows: To Nick’s point, what I've found is that all CEOs have a background. Maybe they're a Sales person at heart, or a Product person at heart, or a Marketing person at heart. They're not always a Customer person at heart. So if you find that right CEO, who has a customer heart, you're going to be viewed at the same level as other executives. And if not, you need to work hard to turn your CEOs focus towards being customer-led.
On a tactical level, I believe in bringing other executives into customer conversations. So that as a CS leader, you're not just sharing information, but your CEO is actually hearing feedback from customers. When we get a detractor in NPS, every response goes to every executive. Then, one executive is assigned to reach out within four hours. It doesn't matter how big the customer is, or how strategic they are. We have conversations with them and then when we bring data back to analyze and decide strategically how to move the customer forward. We try to balance that with being innovative with our product—balancing how to help the ones we have as well as get the ones that we want.
Christina Kosmowski: In this age of expansion, of companies moving to multiple products, and actual buyers asking for more of a try-and-buy experience, CS becomes so much more important. That's where all of your ARR in SaaS comes from. So I think you can directly say ARR is equivalent to Customer Success, which is an incredible north star metric. At Slack, CS was responsible for ARR. The entire company was bonused on it, but we were the ones that held that target. That was incredibly powerful.
But I actually see the problem of “what do we measure ourselves on?” as being less challenging—instead, most teams either have too many metrics, or they’re tied to the wrong metrics. As for the latter, a lot of old school CS leaders come from a Support or Services background and they often tie to those metrics instead of talking about time to value and how it influences this expansion revenue number. That's the shift CCOs need to make—to move from, “This is my Services revenue,” to “This is how Services is affecting time to value, which is increasing our pace of ARR growth.”
Nick Mehta: Every CEO and CFO ask or think about that question. This isn't judgmental of them. They have to think about everything, right? That's their job. So one way to think about it is what are they asking? They're not asking “What's the ROI of CS?” Instead they’re asking a harder question: “What if none of your people were here? What would happen?” They're trying to understand what would happen in an alternate universe.
It's a hard thing to prove because you don't know what would happen in a counterfactual, but the two things I would really encourage people to do is 1) when you present data, show some comparison points. Most of the time, you can’t have a scientific A/B control group, but you probably have situations where CSMs were more involved than in other cases. Presenting that is actually more compelling than showing NPS or showing renewal rate. You get experiments all the time, just accidentally.
The second thing is to remember that human beings, including CFOs, are motivated by stories. Tell the story. If a new deal comes in, but it’s actually an older customer who wasn’t a fan but the CSM got them engaged and turned it all around, tell that tale. Share the story that the Salesforce order doesn’t.
Mackey Craven: In our experience, the variance in how the CS leader presents is much higher than in the other functions because it is a newer function in general.
Often, particularly if it's a Chief Customer Officer, it's the first time this person is in that role. Unlike Sales, Marketing, Finance, and Product, they may not have had others that they've worked for who were in that role, have seen what success looks like, and understand the core metrics. So the largest challenge you see folks having is being very clear with themselves of what success looks like, how to measure it, and how to clearly communicate and talk about that.
I want to emphasize the point that Nick made, which I think is incredibly important—human beings do respond to stories. The combination of clear data and the stories that tie to individual data points to provide context is very powerful in the boardroom. As a board member, we will go out and talk to existing customers from time to time, but it is not part of our day to day. Bringing those conversations into the room, along with the data and the case studies is incredibly helpful to create the kind of discussion that you want to generate to both show the impact your CS function is having, and also to make it a focus area for the company as a whole.
So that’s really the key.
1) Being very clear and having alignment with your CEO on what those objectives are and having clear data that supports it.
2) being able to bring in certain stories and examples that make it real for those that are sitting on the board.
Rey Perez: For one, CS must become institutionalized by their customers. At my company, our CS org is building these deep relationships because we're asking customers, “What are your problems and initiatives?” We're aligning ourselves with their initiatives to see where we can bring value. So we sell a platform and assess which of our capabilities apply. If some don’t apply, we don't offer them. We don't sell customers stuff they don't need. We just help them and they'll consume what they need. That focus has really helped us align all the way up to the CEO’s.
We have a big account where their strategy is based on our software. We are institutionalized. It doesn't matter if new people come in, we're part of their ecosystem. So how do you do that? How do you have customers depend on you at a high rate? That’s how you become the MVP on the customer-facing side.
Internally, the CS leader needs to be really good with data and telling stories, but they also need to provide a benefit to the company, like efficiencies and focus, so that others can quantify the value that they’re delivering on a day-to-day basis with customers.
Mackey Craven: Ultimately the metric we, as investors or board members, think about the most—more than growth, more than gross profit, more than anything else—is retention. A mistake a lot of businesses make early on is finding customers that they can sell to, but that they can't grow with. They aren't the right ICP. Initially, what's most important is not figuring out which customers are going to have the lowest cost of acquisition or the people most excited about your product. The most important piece is identifying the users that will get the most value from having you as a partner and those that use your product to do a job that they need done.
In my view, there's no better position in the organization than CS to really understand and communicate that back to Sales and Marketing because ultimately CS does own ARR. Even if you're growing 100% a year, if your customers are upselling at all, a majority of your ARR is still coming from customers that have been existing customers in that year. Those are the customers you want, right? So there's a real opportunity for CS to communicate that and in some cases help define what that ICP should be to create some of the most successful and strongest foundations from a customer basis as a business.
Blog About What You’ve Struggled With
If you’re struggling to break into writing about your experiences, read this post by Julia Evans. Her process at a high-level: 1. Struggle with something, 2. Figure out how to solve it, 3. Write a blog post about what specifically helped you. Writing about our lessons learned will help others leapfrog our experience and, in turn, will push the industry as a whole forward.
How Execs Can Better Present to A Board of Directors
Here’s Nick Mehta (CEO of Gainsight) with a LinkedIn post that complements his responses in the featured piece above. He offers a quick list of tips on how execs can improve their board presentations.
Customer Success vs. Sales - A False Dilemma?
Niel Isdale offers another way to think about the focus of Customer Success and makes the case that CSMs should handle the commercial aspects of deals. “Customer Success and Sales aren’t opposites. They are in a relay race, working towards the same goal, working on different time horizons, together.”
Success Happy Hour is a weekly newsletter for Customer Success leaders. Each week we feature one digestible piece of advice or a framework from a top Success leader, along with the best resources from that week. Subscribe here.
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