Working in Customer Success means being part of the most connected function within a company. Armed with deep insights into the customer, the product, and the process, CSMs are the multi-tools of any organization. Customer Success understands the customer better than any other department and yet, in many organizations, Success doesn’t have the strategic influence needed to help customers be truly successful.
If the department that is the most in-tune with customers—the only group dedicated to helping customers achieve their goals—holds the least amount of power in an organization, what is truly being conveyed is that the company doesn’t value the quality of the relationship with the customer.
They don’t value their customers as much as they value other parts of their business.
So, consider this a helpful framework for understanding how your company perceives Customer Success—and how important it is for them to invest in their customer experience. Ask these questions to see where your company sits. Then, use the “poor, average, excellent” scales to advocate for your Success team and help put the customer at the center of your business.
Knowing the answer to this question is fundamental to understanding how much a company values Customer Success. If the top Success leader is a VP (or below VP in smaller companies), if they report to anyone but the CEO, or if the role doesn’t exist at all, this is the first indication that a company might not prize the opinion of the customer to the fullest extent.
Poor: The Success leader reports to the CRO with a VP or below title.
This is controversial for many readers, but hear me out. In this scenario the top Success leader is a VP and therefore and isn’t perceived to have equal power to other C-level executives. The executive who is closest to the customer is not present at the decision-making table.
Also, under this structure all feedback from the top Customer Success leader is filtered through the biases of the person who generally cares more about revenue than whether customers are receiving value. For example, a CRO is more likely to set an internal revenue goal (e.g., “We’re going to get a 90% renewal rate” or “We’re going to increase our Promoters by 5%”) than an external customer goal (e.g., “Our customers on average will rate us a 9/10 for value received ” or “Customers report a 10% increase in hitting their goals after adopting the product.”)
Your customers don’t care about your NPS score, they care about whether they’re achieving their goals with your product. That perspective needs to be present on the executive team.
Average: The Success leader reports to the CEO, but not a member of the executive team.
This happens when the Success leader is considered more junior than the other members of the executive team.
The benefit is that the CEO gets regular, direct access to the Success leader and their insights about Customers. The drawback is that the Success leader has limited influence with other key executives in Sales, Product, and Marketing.
In this scenario, the company won’t make the best possible decisions because the only pure advocate of the customer is not present at the decision-making table.
Excellent: The Success leader reports to the CEO, is a member of the executive team, and has a title that is equal to their peers.
With a seat at the executive table, Customer Success leaders can influence all major strategic decisions and can ensure that the voice of the customer is included in every business decision. Essentially, no decision will ever be made without the customer having a seat at the table.
Success leaders have a tough choice to make when weighing in on who owns renewals. On one hand, they know they can deliver a better overall experience to customers if they own everything, but carrying the weight of a large customer portfolio is daunting. Some Success leaders say “just give renewals to the people who are good at talking about money.” Even if that’s your belief, we’d advocate that the person doing the renewing/upselling needs to report up to the Chief Customer Officer.
This is a controversial topic, so we’ll outline our position:
Poor: Sales execs lead all commercial activity including renewals, while CSMs engage in non-commercial activities like onboarding, driving engagement and relationships.
Customers are required to interface with a “money person” during every renewal, and that Salesperson often lacks the historical understanding of the account to set appropriate commercial terms, or deal with tough personalities. Unnecessary tension is added to the renewal experience.
Average: Customer Success owns the renewal, but Sales owns all “new” revenue activities including upsells and cross-sells.
The Success leader doesn’t feel as much ownership of the net retention rate number, often leading to an underwhelming number of upsell opportunities and referrals for upsells. The Sales team feels like they are the true owners of the account because they have to do all the hard work.
Excellent: Many people say that Success does not need to own commercial activities with the customer, or that Success doesn't have the skills to renew effectively. But if the Success leader doesn't own a quota, what number do they own for the company? NPS? Customer engagement? Today, there isn't an equally respected number for Success to own, which means without a quota, the Success team is essentially perceived as Customer Support. The Customer function isn't recognized as an equal on the executive team until they carry a quota.
In Excellent companies, the Customer Success team owns renewals and upsells while the Sales team focuses on new business and cross-sells. The person managing the transaction of the renewal or upsell doesn’t need to be the CSM—but in companies that position the CCO as an equal to the other C-level execs, this responsibility lives in the Customer function.
The Success leader now has total ownership of every existing customer contract. Renewals and upsells are either owned by the CSM or Account Managers / Renewal Specialists who report up to the Chief Customer Officer.
Success and Sales partner to identify accounts with the most potential for cross-sells based on internal initiatives and related business units.
The only exception to this recommendation is accounts that have extremely long sales cycles of 12-24 months. Those accounts are often large ($5M+) and the Salesperson invests extensive time building relationships with key customer executives. In those accounts, the Salesperson who closed the initial deal should continue to be the main point of contact for all commercial transactions to avoid the risk of switching points of contact.
The customer’s journey includes touchpoints created by Marketing (ads, content, website), Product (mobile and web apps), Sales (Renewals and Upsells/Cross-sells), Services (Onboarding and training) and of course Customer Success. Thankfully each of these teams owns a customer experience metric for their team, right?...
Here’s how we know how much a Company values customer success:
Poor: There is a company-level customer retention goal, but only Customer Success is expected to deliver the results.
Average: There is a company-level customer retention goal, and each department has one or more supporting goals to improve retention rates.
Excellent: The customer’s desired outcomes are documented, and there are company-level, department level, and team goals to help the customer achieve those outcomes.
When everyone is accountable for the customer’s success, the entire organization re-orients around the customer.
The actual number, whether it’s <5% or over 25% doesn’t matter.
What matters is how sophisticated the company is at understanding the costs of retaining a customer. The Finance leader has bought into a model that allows the CS leader to access additional budget as the team scales, and that model is updated yearly at a minimum.
Note: typically we see CS costs in the 5-15% range for established companies and less than 5% for large organizations.
Poor: Company does not have an established cost to retain customers.
Decisions about hiring are made with anecdotes from the Success leader, pleading for more budget and often denied by the Finance leader. The Customer Success team is often overworked and their contributions are not valued.
Average: Company has rule of thumb metrics like “$2M ARR per CSM” or “50 Customers per CSM.”
CSMs are often asked to stretch well above established thresholds until new CSMs are hired and onboarded. The result is that customers are often assigned and reassigned to new CSMs, creating a bad experience for Customers.
Excellent: Company has well-defined costs to retain the customer and pre-defined agreements about allocating additional budget.
The Company forecasts revenue and logo count for the current quarter and next quarter, provides ramp- up time for new CSMs, and provides budget for hiring ahead of the Customer load. CSMs consistently manage a portfolio that allows them to provide an excellent experience throughout their journey with the company.
Many companies’ customer health scores are largely fed by product usage and NPS data. But these metrics are very company-centric: a metric like NPS is something the company cares about, not the customer. Further, these metrics are rarely actionable and don’t help companies understand the real underlying reason for churn risk.
A company-centric metric is one that a customer doesn’t care about. A customer-centric metric is one that is focused on helping customers reach their goals with the product. Every company should have both company-focused metrics and customer-focused metrics to track customer health.
Poor: Health scores are primarily fed by company-centric metrics (NPS, product usage, etc).
Company-centric metrics tend to be lagging indicators of renewal, and are therefore not actionable and don’t accurately reflect customer health.
Average: Customer health is determined by a combination of both company-centric and customer-centric goals. The company may still include product usage and NPS in their health score, but they also are collecting customer-centric data including:
With more sophisticated tracking, the company’s retention forecasting is more accurate. The difference between “average” and “excellent” however is that average companies have sophisticated tracking but don’t take action based on what they’re seeing.
Excellent: The company measures the customer's perception of value received plus customer outcomes.
In excellent companies, the CS team views “value” and “outcomes” as separate: a customer can achieve their desired outcomes and still churn for other reasons (e.g., competitive alternatives, the problem being solved is no longer severe enough to justify the price, etc.). So outcomes are recorded and measured, but the customer’s perception of the value they’re receiving is also taken.
CS leaders in this phase also understand that NPS and CSAT scores don’t capture “perception” of value. So listening posts are implemented along the customer journey to record how customers perceive various components including the problem being solved, the product, their training, the pricing, and so on.
Customer Success leaders in excellent companies can take insights about their customers and drive strategic discussions with other exec team members:
Companies that value their customers aren’t surprised by churn events. They’ve organized their business around early indicators of risk, and implement and monitor structured playbooks to address the problems. They don’t accept weak churn reasons and continue to probe further to understand why a customer isn’t delighted with their experience. Here’s how to detect a company’s maturity in understanding lost customers.
Poor: The company is blindsided when a customer churns; feedback about customer churn is qualitative, ad-hoc, and lacks any organization or structured reporting. Weak reasons for churn like “not enough product usage” or “we lost our champion” are common.
Average: There is an organized structure for looking at the reasons for customer churn, and this information is reported out to all members of the executive team. However, the data is often missing enough detail to be actionable and there is minimal improvement in company operations over time.
Excellent: The company has laid out well-defined early indicators of risk, along with trending data for each risk. The Success team is held accountable to playbooks that address each of the indicators of churn risks. Churn reasons are reviewed by the executive team and projects are initiated to mitigate problems.
Those indicators include but aren’t limited to:
Playbooks are created and tracked for each indicator of risk.
One area of Customer Success that remains underdeveloped in many companies is how they measure the value received by customers. Customers don’t want “products”, they want solutions to their problems. So Customer Success teams should focus their efforts on helping customers solve those problems, and they should measure the extent to which customers feel they’re getting value from the product.
Poor: The Success team focuses exclusively on adoption and utilization as indicators of value.
Average: The Success team focuses on aligning the usage of the product with the customer’s goals.
So if a customer has a goal of increasing revenue by 3%, the CSM follows a playbook that shows the customer how to use the product to achieve that goal.
Excellent: The Success team understands the full ecosystem of people, products, and processes required to achieve customer goals, and has processes in place to detect and record the value customers are receiving.
There are no products that own the entire ecosystem of people, tools, and services required to hit a company’s objective. If your customer wants to increase revenue by 3%, your product is only one part of that story. Excellent companies understand where their product fits in that ecosystem and then can coach customers to leverage all the moving parts required to hit the customer’s goal.
Excellent teams are also able to record and detect whether the customer received partial value. Since a failure in the ecosystem (e.g., with another product) could lead to the customer failing to hit its goals, the company must be able to identify weaknesses early. Periodically (monthly or quarterly), the entire ecosystem is reviewed and evaluated by the company and the customer.
The majority of feedback a company gets is about either support or product. In most instances, companies have a Support team that is well run and good at following up on tickets. Customer Success generally owns product feature requests.
It’s not unusual for Success teams to feel like their customer’s feature requests are being sent off into a void. They create tickets with customer quotes and may even have Product managers talk directly with their customers, but once the request is out of the CSM’s hands, it’s difficult to hunt down. Even worse, many teams have no way of knowing why Product prioritized one feature request over another.
But the fault isn’t on the Product team, it’s on the process. Excellent companies have a well-defined feature request process. The Success team regularly organizes the feature requests by account size, expansion opportunity, renewal date, and severity of the issue. And there’s a process in place for letting customers know how their request has been prioritized and when it’s completed.
Poor: Bug and feature requests are sent to the Product team by the most vocal customers or CSMs. Product prioritizes fixes reactively when accounts are on fire or at risk of being lost in the near future.
Average: The company gathers bug and feature requests primarily from customer support. The requests are organized, prioritized, and presented to the Product team regularly. Product can’t see the ROI of requests so they are often ignored for many quarters. CSMs feel like bugs and feature requests disappear into a black hole once they make requests because there’s no feedback loop.
Excellent: The company gathers bug and feature requests (including urgency, and impact on the relationship) from Success and Customer Support, and maps each request to a customer account (including contract size, proximity to renewal, health score). Monthly, the Success leader partners with Product leaders to compile, organize, and prioritize high impact requests by customer segment.
Product consistently takes action on recommendations from Success.
The requesting CSM or Support person is tagged on each request so that anytime the company makes progress on a bug or feature request, the CSM or Support is alerted.
Executive focus on customer feedback is a strong indicator of how much Success is valued. In fact, executive team culture around customer feedback is often a defining characteristic of a company’s culture and whether or not they follow through on their “Customer comes first” core value.
Poor: Customer feedback is collected, organized, and prioritized into a deck that’s reviewed by the executive team every 3-6 months. In the meantime, customer issues grow and damage the quality of the customer experience.
Average: The entire executive team meets to review customer feedback once a month. Action items are assigned with an owner and completion date, and progress towards action items are reviewed at each meeting. All executives are expected to participate in fixing customer problems.
Excellent: Customer feedback is reviewed daily by top executives. Every member of the C-level team regularly spends time with key accounts listening to feedback directly.
Some of the most successful companies in recent history have CEOs that review customer feedback every day (examples: Jeff Bezos, Amazon and Eric Yuan, Zoom). It is that important.
A company that cares about its customers is one that puts Customer Success at the center of its business. Success leaders, armed with their deep insights and understanding of the customer, are seen as allies to other executives and are key stakeholders in making strategic decisions across the company.
If your company sits in the “poor” or “average” groups in any of the 9 questions, use this as a framework for advocating for the changes required to move to the next level.
Thank you to Jay Nathan and Jeff Breunsbach of Customer Imperative for your contributions and feedback on this piece.
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