Throughout my journey from customer success to sales, I've learned just how important it is for everyone on the team to be on the same page, especially when it comes to how we are going to grow the business. From my days of tinkering with AI, analyzing trends at Gartner, to my current role overseeing strategy and growth, I've seen a lot of what works (and what doesn't) when it comes to keeping customers around and growing our business in a smart way.
The Net Contract Value Increase (NCVI) model is a strategy I've come to champion, designed to boost the growth of existing customer accounts by aligning the incentives of customer success teams, account managers, and sales teams. Simply put, it's about making sure everyone involved with customer accounts is working towards not just keeping the business but actively growing it. More on this later.
Churn, or customers leaving us, is always a big deal. But the way things have been changing lately really shows we need to do more than just try to keep customers from leaving. We need to turn those challenges into opportunities to grow existing revenue from customers. It’s important to pay attention to customers who might want to spend less with us instead of leaving altogether. This doesn't get enough attention today. Really understanding what our customers need at every stage of their journey with us and then taking proactive action on it is key to keeping our growth strong and steady.
Having a methodology of continuously and scalably checking in with customers like TheySaid’s CPV-Journey can help identify, segment and convert the four types of customers into new revenue opportunities:
Identify Key Stakeholders: Beyond understanding the Total Addressable Market, identify and map out the key decision-makers and influencers within each account. This involves creating a hierarchy or influence map that highlights the relationships between different stakeholders and their impact on purchasing decisions.
Assess Needs and Opportunities: Use the TAM analysis to pinpoint specific areas where your products or services can address unmet needs or improve upon current solutions. This could involve personalized product demonstrations, tailored solutions, or strategic discussions on how your offerings align with their business goals.
Prioritize Accounts Based on Potential: Not all accounts are created equal. Use your TAM analysis to prioritize accounts based on their growth potential, strategic importance, and readiness to buy. This helps in allocating resources more effectively and focusing efforts where they can have the greatest impact.
Define Upsell and Cross-sell Strategies: Clearly define what constitutes an upsell versus a cross-sell within your organization. Upsells involve selling more of the same product or upgrading to a higher tier, while cross-sells introduce complementary products or services.
Tailor Communication and Offers: Customize your approach based on the type of sale. For upsells, focus on how additional features or services can enhance the customer's existing setup. For cross-sells, highlight the value of adding new products or services to their portfolio.
Define Ownership: Ensure that AMs, CSMs, and AEs know who owns each type of expansion strategy. Clear role definitions and understanding of responsibilities can prevent overlaps and ensure a cohesive customer experience.
Recommendation:
The Net Contract Value Increase (NCVI) model plays a pivotal role in bringing our teams together with a common goal: enhancing the value of our customer accounts. This model encourages everyone, from sales to customer success to account management, to work hand-in-hand. It's about creating a culture where the entire team is motivated to contribute to account growth, which in turn helps in significantly reducing churn and fostering a proactive, growth-oriented mindset. Click to download commission/ bonus calculator for CS, AM and Sales, it can be apply to a boarder team.
ERWU, or Early Renewal with Upsell, is a strategy that combines renewing customer contracts before they expire with offering upgrades or additional products. This approach is key for a few reasons:
The conventional metrics such as Net Promoter Scores (NPS) have their place, but my focus has shifted towards more indicative metrics like Net Revenue Retention (NRR) and Gross Dollar Retention (GDR). These metrics, however, only scratch the surface. The essence of my strategy is to measure 'decision confidence' among customers, a predictor I've found to be far more potent in forecasting long-term loyalty and expansion opportunities.
Improving customer confidence is critical to helping customers make bold, decisive purchases and establishing healthy, continually growing accounts. Decision confidence works because it builds a bridge from status quo to change, helping customers feel capable of overcoming challenges as they believe in themselves, their logic, their process and their decision-making skills.”
We strive to make our customers feel certain that partnering with us is the right choice. This involves more than just delivering great products or services; it's about demonstrating undeniable value that aligns with their key priorities. Through targeted actions and clear communication, we aim to reinforce their confidence in our solutions and our ability to meet their evolving needs.
To help improve decision confidence, we advocate for a shift towards metrics that truly reflect the impact we're having on our customers. Moving away from superficial indicators like NPS, we focus on metrics that capture the essence of customer satisfaction and engagement. By adopting measures like customer perceived value scores, we gain deeper insights into how customers feel about the value they're receiving, enabling us to adjust our strategies in more meaningful ways.
Together, these strategies form a comprehensive blueprint for not only meeting but exceeding customer expectations and driving sustainable growth through strategic account expansion.
Adopting the NCVI commission model and sales strategies focused on expansion entails a clear definition of success metrics shared across sales and customer success teams, deep understanding of account potential, and a dynamic strategy that evolves with customer needs and priorities. This model is not just a framework but a philosophy that champions strategic alignment and collaborative effort for sustainable growth.
The Net Contract Value Increase (NCVI) model came from my desire to get our Customer Success, Account Management, and Sales teams all working together to grow the value of our existing customer accounts. We do this by rewarding teams as part of their commission structure when they successfully increase the overall value of a customer's contract with us. This way, everyone is motivated to not just keep the business we have but to actively find ways to make it more valuable.
Here's the simple breakdown:
Instead of just trying to land new customers or stop current ones from leaving, the NCVI commission incentivizes adding more value to what we're already providing our customers. This could mean selling more services or products (upselling), selling different products (cross-selling), or just making our service so good that the customer ends up wanting more from us. The main goal is to end the year with the customer's contract being worth more than it was at the start.
What's great about the NCVI model is its straightforwardness and how it encourages teamwork. When our sales, account management, and customer success teams all work in the same direction, we're doing more than just trying to prevent customers from leaving—we're making them more eager to grow with us. It's a win-win situation: our customers enjoy greater value, and our business naturally grows through the customers we already serve.
Component
Description
Example & Calculations
Sales Quota
The initial sales target for the representative.
$1 million quota.
Quota Adjustment for Churn
Adjusts the sales target based on churn, retention, or any contract changes.
If a $100,000 contract renews at $50,000, new target becomes $1,000,050
$1,000,000 + $50,000 = $1,050,000.
Commission Calculation
How the commission is calculated based on net value increases and sales performance.
Selling $100,000 deal with $50,000 churn adjusts the target to $950,000.
Commission is calculated on net growth.
If target is $900,000 and sales are $1.5 million with $50,000 churn per quarter, commission is based on effective performance above the target.
Churn Impact
The effect of churn on the sales target and how it requires selling more to compensate.
Losing $50,000 requires selling an additional $100,000 to compensate and grow.
New target after churn = Original target + 2*(Churn amount).
Target Setting with High Churn Risk
Setting realistic targets considering the churn risk to ensure fairness and achievability.
For a company with 30% churn, setting a target that anticipates needing to sell 30% more to compensate.
Quota = Expected revenue + (Expected revenue * Churn percentage).
Accelerated Commission Rate
A higher commission rate applied after reaching a certain percentage of the sales target.
Commission rate increases after 75% of the target is met.
If $675,000 is sold, a lower commission rate applies; above this, a higher rate accelerates earnings.
Effective Commission Rate
The overall commission rate achieved after accounting for all sales and churn within the period.
Example: Selling $1.5 million with $200,000 churn results in a higher effective commission rate than just meeting the base target.
Effective rate = Total commission / Total sales.
My path through the realms of AI, customer success, and strategic growth has been both challenging and rewarding. Sharing these insights and the NCVI model is my way of contributing to a broader dialogue on how we can better navigate the complexities of customer relationships and market dynamics. By focusing on strategic metrics, aligning team incentives, and prioritizing customer decision confidence, we can transform challenges into opportunities for growth and innovation.
Building career paths is one of the most rewarding parts of being on a leadership team. You get to see people grow and develop, and you’re able to support them through that process. But if you haven't created career paths in a while, it can be a bit daunting.
Before I share tips on how to build out a career ladder, I want to acknowledge there’s a lot of different paths CSMs can take that are outside of moving up as an individual contributor or into CS leadership. But I’m going to focus on creating career paths for growing within the CSM team.
The first part of creating career paths that I focus on is identifying competencies or “key skills” that people need at each level. You can’t just compare CSMs on their numbers because not every book of business is the same—you have to take their performance across metrics and pair that with an evaluation of how they’re demonstrating key CSM skills.
A good way to start identifying the competencies CSMs need at different levels is to think about the most successful CSMs you have currently or have worked with previously—as well as some of the less successful CSMs you’ve worked with—and consider what expectations they were over-performing or underperforming on. What consistent behaviors set the great CSMs apart from everyone else?
Start with a list of “general competency areas” like relationship building, product and industry knowledge, ability to talk about product use cases at different levels within an organization, organizing time to focus on the right customers, the ability to listen and tailor the product to a customer’s specific goals, and so on. Start with these higher-level skills then define what the expectations are around those skills within each level.
Ownership
We expect CSMs’ to own the strategy and activities across their account, whether they are the ones executing the action (pulling a report) or driving it internally (communicating feature requests). In moving to a Senior CSM role, this expectation may also include owning team projects, sharing best practices internally, and aligning all needed stakeholders to an overall strategy.
Relationship Development
We expect CSMs’ to be able to develop relationships across their customer base. Rather than relying on a single contact, we look to see that they become multithreaded throughout accounts. As they become more senior, these expectations rise: CSMs at higher levels need to be building multithreaded relationships across multiple teams within accounts, and consistently creating and maintaining relationships with executive sponsors.
Curiosity
This includes the ability to prepare insightful questions to drive further engagement and customer awareness, which then evolves to include bringing insights and questions from industry trends and previous customer conversations.
Once you’ve documented those competencies for the different CSM levels, you’ll need to check the language you’re using in the career ladder (and in your job descriptions) is aligned to clearly communicate how you define success in the role. In designing career pathing documentation or job descriptions, it can be easy to fall back on “marketing jargon” and vague explanations. Try to be as specific as possible about what a candidate will need to demonstrate to be successful.
If you’ve written both documents, it can be easy to become biased on the language used. Look to get feedback internally and externally on how you’ve positioned the role and levels. You might also consider doing surveys on whether people’s job experience is different than what they expected coming in.
Even after you’ve done work to make job expectations as clear as possible, it can be a real benefit to the individuals using that document when you add real-life examples of what an expected behavior looks like in practice. It can help CSMs take something from a concept to actually visualizing how they can demonstrate in their day-to-day work. When we look at the competency of ownership, we provide examples such as: Develops account strategy and communications/receives input from necessary stakeholders; Drives projects to completion, communicating timelines, risks, etc. internally and externally; Acts as the customer's "go to" person.
One of the biggest challenges in implementing a career framework is avoiding a “check the box” mentality in your team. For example: In early iterations of our career ladder, before we started fleshing out the competencies needed in each role, we were referencing things like performance in a certain scenario and even time in seat as qualifiers for moving up into a more senior position. This ended up creating the expectation of “I did that item, so now I get a promotion. I’ve checked the box.” As mentioned earlier, not every CSM will have the same opportunities or engagement given their book of business, so not only will you set poor expectations around time v. skills, you may also put some team members at a disadvantage if they do not have the ability to execute against a specific scenario.
While I love to see career growth and have the ability to promote people, we also want to incentivize people to grow the skills they need to be successful both at their level and the next level. The best way we’ve navigated that is to move towards competencies (as in tip #1). Now, it’s not a one-time event that qualifies people for growth within the company. It’s continued performance against expectations, which is what we really want to see. And ultimately, this has also led us to have more clear and actionable performance and coaching conversations. We only have so many career levels we can offer, so providing a path for someone to continue to grow and hone their skills will allow them to be set up for success—both within your company and beyond.
Additional Considerations:
When to create career levels: Our approach has been to build levels out as we need them, using our original framework as a guide. For example, if you know a Junior CSM role will be needed in 12 months, you can add it into your documentation, but I wouldn’t create all the competencies descriptions or job write up until it gets a bit closer, as the focus of the role may evolve. If you only have one level today and see team members beginning to demonstrate skills that may move them to a more senior role, then that is a sign it is time to create another level or two, to help guide through career planning discussions.
Management needs a career path
Oftentimes, focus on career pathing is allocated to the individual contributor path, or getting into a front line manager role. Once you promote (or hire) someone into a manager role, you need to provide them with coaching and guidance on what success and continued growth looks like.
Performance cycles
At a smaller company, the ability to promote when appropriate can trump a more formal process. As you begin to grow, you may get feedback from leadership or Human Resources around a more structured process and timeline. Even if your process is an annual or bi-annual review for promotion, you should be working with your team members at least quarterly to discuss feedback (in a more formal setting—feedback should be happening continuously!), understand their career objectives and work through their individual career plan. This allows for fewer surprises come promotion time, where you as a manager feel confident in someone’s ability to execute at the next level and can bring examples to support that internally.
To hear more from Emily, go follow her on LinkedIn.
[Podcast] Signs You Have an Everything Department
Rav Dhaliwal, venture capital investor at Crane and former Head of Global Customer Success - EMEA at Slack, breaks down the common growing pains that Customer Success leaders face as they scale their team.
Listen to 8-min episode on Apple Podcasts, Spotify, or Transistor
Scaling the Startup Mountain
Alex Hardy, former Co-founder at Liveoak (acq by DocuSign), shares his lessons learned building a company. One of his points: “Investing in Customer Success let us double down on our biggest competitive advantage: speed… Speed meant rapidly developing the killer features our customers told us they wanted. By doing this, we created a compounding benefit.” And another gem from Hardy’s piece: he says implementing a formal goal structure gave “each team member a common language for conversation.”
Remote Work is Lonely. Here's What Companies Can Do to Foster Community
Jennifer Raines-Loring, Head of People at Postscript, shares tactics for creating team camaraderie when everyone’s apart.
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.
We asked Customer Success leaders from different industries, backgrounds, and current company sizes to answer the question, “What's one thing every Customer Success leader should know?”
Using their advice—from “reframing your perspective around preventing churn to forecasting retention” to “over-communicating about what you do”—will accelerate your career.
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CS Leaders should fully understand and enable their teams to understand that the impact they can drive for their organization is greater than any other department. CS is not just service and support—it’s the department that has the ability to influence compound growth for their organization by delivering and articulating continuous impact for customers.
Every CS leader should clearly understand WHAT actions their CS function is responsible for doing, HOW their CS function can perform those actions to the highest standards of quality and productivity, and WHY their CS function does those things (i.e. what value the CS function delivers to its customers and hence to the company that pays for its existence.)
CS is the new kid on the block and most people, even inside your company, will not know what you do. Therefore, over-communication about what you and your organization do along with the value you provide should always be at the top of your priority list.
We know CS is not a major in school (just yet) and is learned on the job. So the best qualities to look for when building a CS team is someone’s desire to learn, ability to be coached, and possession of a genuine interest in the company's product or service. Hiring for these qualities will bring strong professionals that will continue to grow with the company's growth.
Onboarding feedback surveys are critical for both an honest temperature check at a critical point in the customer lifecycle AND improving your processes. Take every response to heart and for those with constructive feedback, ask yourself "Have I already made process adjustments in my department or another department that would have addressed their concern? Or should I make adjustments as a result of this feedback?"
Know how to actively listen. Walking into a conversation thinking you already know the questions they will have and the answers you will give them prevents you from fully hearing the person you are speaking to. Start dialogues without preconceptions, and listen as they speak—they might reveal concerns and questions you hadn't considered. This will truly allow your customers to feel heard.
Research shows that the #1 factor of perceived meeting effectiveness is if an agenda was used and completed. Encourage your CSMs to leverage agendas for their client meetings.
Be paranoid! Complacency is the worst enemy of a CS leader. Always be building, evaluating, experimenting and creating! Don't be afraid to make mistakes - just make sure you learn from them. My favorite line to my team: Don't lose alone—there will always be churn and contraction, just make sure we're aware and we've tried everything we can to make a difference.
It doesn't matter if you’ve been in CS for 10 years, or 10 minutes—don't ever fall into the trap of thinking you know it all. Businesses are different, customer outcomes are different, and the industry is frequently changing. There’s no “one size fits all” for Customer Success.
Always have bias towards action. Too many times we wait until it's perfect, until everyone gives their feedback and is on-board, until we have the fancy dashboards to track results. We're wasting precious time to go live, get results, and iterate.
Churn isn't just a CS problem; it's a company-wide problem. Look at churn holistically including whether you're selling to the right customer, properly setting expectations upfront, getting customers to see value quickly, and measuring product indicators that predict customer health.
Bring up burnout proactively and transparently. By nature of the CSM job your team members will end each day knowing there's more they could do, should do, want to do, and this can easily lead to burnout. Discussing burnout proactively will let your CSMs know these feelings are allowed in your organization and don't pose a risk for their career growth. These conversations can become a coaching moment, if a CSM can build confidence with prioritization and boundaries in their current role they’re set up for success in more senior positions, and an opportunity to build trust by sharing your own experiences.
Be creative and try new things. The joy of being in CS is it’s still a newer role and field and there are no clearly defined rules on what is right or wrong. Building a new process or creating a new way to interact with your customers will go a long way in your relationship with your clients and how your internal teams perceive you. Do what no one has done before and do it better!
Scale your CSM's account portfolios with built-in flexibility. As you scale your teams to align with growth and product-market fit, use the variables of industry segments, products/technologies, number of accounts/portfolio, ARPA, and NRR segments to add agility and flexibility to match your teams’ abilities and your customers' needs. You can't predict the future, but you can implement a dynamic strategy to serve it!
The combination of your team, the village surrounding your team, and your customers make up the 3 legs of the stool for CS. If one of those legs is broken or not quite right, spend the time to diagnose and fix it in order to achieve the right balance. When all 3 legs of the stool are working together in harmony towards the same goals, the results are truly powerful!
Customer Success is a long game—it takes time to build a good program. Implement it in small, incremental steps. Start out with small wins (basic customer engagement, references) and add from there.
CS is about putting the customer first. Everyone in your business, not just CS should understand and epitomize this philosophy. Concentrate on working in partnership with your customers to find ways to achieve their results together, rather than focusing on your bottom line. Your growth will inherently follow through proactive renewals, upsells, referrals and advocacy. Their success=your success.
#23 Ronald Schnackenberg, Head of Customer Success at Agari
Many in CS believe that the customer comes first, but something every CS leader should know is success starts with your team. You'll never maximize customer satisfaction if your team isn't happy, motivated, and bought in to give customers the best experience possible.
CS leaders should be exceptional in listening to their customers and understanding their challenges. Based on that insight and experience from other engagements, a CS leader can help the customer to gain value out of their investment much faster.
We need to make sure our teams centralize around the customer's goals. Build playbooks and strategies to put this at the center of your approach. You can't discuss positive results enough: repetition signals importance.
Imposter syndrome is a real thing. Trust your intuition and experience. Support your CS vision with data and an incredible team.
Customers don't buy or expand unless they have to. No one is trying to spend money.
Every CS leader should have an understanding of the key business outcomes their customers came to the product to address and the one thing that, if changed or improved, would most impact customers meeting these outcomes.
Net Revenue Retention (NRR) is not a metric you want to own. If you are the sole "owner" of NRR, you will find it hard to get other teams to prioritize work. Instead, you want to be the "champion" of NRR, and coordinate efforts to improve it in collaboration with other cross-functional leaders.
Although there are many pressures from the business to do various tasks associated with customers, the key to success is to go back to the foundational discipline of CS. One of the biggest contributing factors to success for our customers is a robust and informative onboarding program. If you get onboarding right, it will inform you of how to engage better and individually with each customer. Onboarding is the crux of the foundation in CS, get it right and you are destined for success.
Focus on the outcome of your customer's customer! Your success is dependent on how your customer succeeds. Their success is your success.
You have to know what links together the features in your product and the challenges faced by key people in your accounts. You then need to know how you use that understanding to generate revenue for your company.
The cardinal sin of Customer Success is not churn. It’s unexpected churn! The key to high retention is to stop trying to prevent churn and start learning to predict it.
Every day is an opportunity to stretch and grow. No two experiences, bugs, contracts, or interactions with an employee/co-worker are the same. Stay flexible and open to new ideas. You can walk in with the most airtight playbook in the world, but if you can't budge from time to time, it is very hard to progress personally, or as a team.
CS needs to be a company-wide priority. As a CS leader, the tighter feedback loops you create with Marketing, Sales, Product, and beyond, the more successful your customers and your team will be.
Once you become a CS Leader, you are no longer directly responsible for customer outcomes. You are now responsible to take care of the individuals who are responsible for customer outcomes. Treat your people with kindness, empathy, respect, and accountability...and they will do the same for your customers.
A startup CS leader should know the P's & T's of Customer Success: Prioritize, Program, Tools & Team. First, a leader needs to assess what she has and which area of the Program (Onboarding, Engagement, Renewals, Advocacy) she needs to focus on to build or improve as the foundation for the customer journey and the other program elements. She needs to understand what Tools she has available to her (tech platforms, metrics, VoC, change management, community, automation, etc.) and when to employ them. Finally, for each stage of the company, she needs to understand what sort of Team is needed to get the job done and how to effectively recruit and build the Team and culture to implement the programs and meet the needs of their customers.
Your greatest asset is your ability to listen. As a CS leader, all your answers will come from listening—to your team, to your customers, to your management and most of all—to yourself. Listening will give you the answers you're seeking and guide you in all you do. You just need to add a little stillness to hear those answers loud and clear.
One thing every great CS leader should have in mind is learning how to listen to the customer's needs rather than project their own.
Leadership is all about leading by example. Are you truly interested in your team and your customers, their ambitions and challenges? Then you, your team, and your customers will be assured a long-term win-win and sustainable growth.
Your customers, your CS team, and your leadership are all humans. At the core of all healthy relationships is building trust through strong relationships. Your plan might differ with whom you are communicating, but without trust success is impossible.
When choosing a new role, it is important to interview the leaders at the company to determine if CS is a company-wide mindset. You can only lead best when you are supported 100%.
As a leader, it is so important that I take good care of my people, and help train leaders whose focus is on treating direct reports well. When you take great care of your people, they take great care of your customers.
If you're new to an existing CS team, you'll want to focus on listening to your team and learning from your customers. If you do a great job, you'll see an inflection point where you start to learn from your team and listen to your customers. Of course, this takes a tremendous amount of time, and if you can use technology to scale the understanding of these conversations, you will succeed as there are only so many hours in a day.
Every CS leader should know the journey their customers go through to gain adoption of their products and they should understand what types of value-based outcomes their clients can achieve with their products or services. Once they understand this, they will be in a better position to help drive retention and expansions.
CS leaders need to know how to be more strategic at the exec level. In order for CS leaders to become more prominent at the executive level, they need to influence strategy across departments by providing each department head with the customer data they need. Product needs organized and prioritized data about customer feature requests, Marketing needs to know which customers are good advocates and what recurring questions there are, Sales needs to know which titles, industries, and company size are most successful with the product. When CS leaders proactively use that information to drive strategy, they become an equal member of the executive team.
Splunk’s Chief Design Officer, Jehad Affoneh, with a clear template for pitching an idea. Many of the steps Jehad lists come from an understanding that executives are busy and listening for specific details to make a decision. Start with the conclusion. Share what you’re currently doing about a problem, share what competitors are doing, explain the solution. (And so on; this list is worth bookmarking.)
Keri Keeling, Head of Customer Success Innovation & Intelligence at VMware, shares the interview questions she asks to hire rockstar CSMs. Here’s a favorite from her list: “Can you share a story about a time when a customer chewed you out?” Keri explains that the answer to this question indicates if a CSM can handle “adversity in a professional and productive manner (without allowing it to impact them personally).”
“If you’ve been following [me] for a while, you know that I fall solidly in the camp that believes CSMs should sell…However, when I do see CS teams selling it often looks random and disorganized.” In this piece Kristen Hayer makes the case for treating Customer Success like Sales, with a predictable pipeline of opportunities.
Has your CFO asked about your plan to “be more efficient?"
Customer Success is the only department that grows at (almost) the same rate as overall revenue growth. Sales and Marketing scale with the amount of new revenue acquired, Product and Engineering scale with feature and bug goals, and G&A scales with company headcount. Unfortunately that leaves CS as the CFO’s favorite target for budget reductions.
What’s worse is that, while Product, Engineering, Sales, and Marketing can argue for additional budget that leads to increased revenue or engagement, Customer Success is tied to financial metrics like “revenue per CSM” or “Customers per CSM” (efficiency metrics).
It’s time to flip the conversation from being one around efficiency to one about how the company can invest more heavily in Customer Success to increase revenue. We’ll outline how to do that here, from starting with an understanding of where the CFO is coming from to creating an expense and forecast spreadsheet.
Short on time? Here’s the TL;DR:
The Board and the CEO hold the CFO accountable for profitability and (in some cases) overall company growth. Those numbers are difficult to control, so the typical CFO manages a suite of other metrics that allow them to control both profitability and growth. If a Customer Success leader demonstrates a deep understanding of the underlying business metrics combined with a “company before department” attitude, they’ll build a strong relationship with the CFO at any stage of growth.
At fast-growth companies, the CFO focuses on new revenue acquisition, caring less about CS which is a very small percentage of overall expenses.
At mid-growth companies, the CFO focuses on the efficiency of the CS team and probes for ways to reduce costs.
At slow-growth companies, the CFO is hyper-focused on CS as the main lever for sustainability and company growth.
In SaaS, typical metrics include cost to acquire a customer (CAC), lifetime value (CLTV), profit margins, renewal rates (NRR, GRR), OPEX, lead funnels, and many more. These metrics are owned or shared by different departments. Improving these metrics directly impacts the company’s ability to make money -- and that’s what matters most to the CFO.
For Customer Success, CFOs love the cost to retain revenue.
So even if they don’t say it directly, the number one metric the CFO wants you to care about is the cost to retain revenue. The calculation is:
Total CS expenses (people, tools, services)
Total $ managed by CS
Most Customer Success teams' cost to retain revenue is between 5-15%. Meaning for every $1 of revenue, the company will spend $0.05-0.15 on Customer Success expenses.
The CFO wants to see a decreasing trendline on the cost to retain revenue over time—again, that’s one of the levers they’re pulling to make sure the company becomes healthier. And they want you to be a partner in helping the business reduce this cost over time.
Depending on how effectively you use the framework below, you’ll end up with a budget equal to one of the following:
LOW CS BUDGET
The CFO reduces cost to retain revenue (e.g. 15% to 13%), then multiplies that rate by next year’s projected renewal revenue. So if you plan to renew $10M in 2021, your budget is $10M x 13% = $1.3M. If you end up with this number, you’ve failed in negotiating.
MED CS BUDGET
You commit to increasing renewal rates, enabling you to hit the 13% cost to retain but with more budget. So rather than committing to the $10M renewal revenue number above, you instead commit to $11.5M. Your 2021 budget is $11.5M x 13% = $1.5M.
HIGH CS BUDGET
You commit to increasing renewals, including upsells and cross-sells but it means increasing the cost to retain to 16%. So rather than committing to the $10M renewal revenue number, you instead commit to $13M. Your 2021 budget is $13M x 16% = $2.1M. This is an $800K budget increase over the CFO’s desired number, but an increase in revenue of $3M, an almost 4x return on investment.
Pro-tip #1: Calculate your own cost to retain revenue and make sure it aligns with the CFO’s calculations.
There’s a chance your CFO could be bundling in other costs not included in your number including CS team benefits, paid time off, travel and entertainment, services, and tools. The CFO might include the cost of Customer Support in their calculation when you’re not. They might look at GAAP revenue managed, not ARR managed. Catch these misalignments early.
Pro-tip #2: Define cost retain revenue calculation for each business segment (SMB, Mid Market, Enterprise).
You can show the CFO which segments need new investments and which segments are likely to produce the most growth. For example, the CFO will expect ongoing investments in automation via a pooled CSM or tech-touch model as the company scales.
Pro-tip #3: Get clear about when the budget is available
If you get new budget in December, does that mean on Dec 1 or Dec 31? Are ramp times for CSMs built into the budget model?
Pro-tip #4: Get credit for total revenue managed, not total revenue renewed.
Both new customers AND customers that churn need CSMs to manage them. For example, an account that churns on 12/31 needed a CSM for the entire year! A simple rule of thumb is that CSM costs should be budgeted for 50% of annual churn revenue.
Use this excel sheet as your starting template for building a revenue and expense forecast.
Step 1: Fill in your CFO’s forecast in yellow, including:
Step 2: Fill in your expected increases in green:
Step 3: Review the charts produced on the right side of the spreadsheet.
The CFO still cares about reducing the cost to retain revenue. Even while you’re showing them your plan to increase revenue and decrease the overall cost to retain revenue number, they’re likely to poke and prod to find other ways to cut costs. Meaning, they’re going to keep trying to shift the conversation from investing in Customer Success to making CS more efficient.
Here are some “go-to” strategies they might use to steer the conversation, and how you can handle those questions to bring it back to your original focus.
1. “I need you to be more efficient next year, so where are we going to cut costs?”
An appropriate response could be something like this: “I understand what you care about is making the Customer Success functions more efficient so that we reduce the cost to retain revenue. But reducing the cost to retain revenue doesn’t have to mean cutting costs. In fact, we may even want to increase the cost to retain revenue in exchange for more revenue and profit. I’m going to show you a few options for us to discuss.”
2. “I gave you $x budget for tools this year, where are the efficiency gains?”
The temptation is to respond to this question by examining the performance on “revenue per CSM” or “customers per CSM.” But that keeps the conversation focused on efficiency, and we want to shift it towards investment.
In addition to showing the expense and revenue forecast you created, respond to this question by showing progress in areas of investment. Demonstrate how previous investments have improved overall business metrics, even if the cost to retain revenue remained constant. You might show improvements in:
Improvements in the above metrics will impact higher-level trends like the company’s growth rate, portfolio health, or profits—which are all trends the CFO cares about. They also demonstrate how Customer Success isn’t a cost center but instead a department that can drive overall business performance.
3. “What’s your long-term plan to get our cost to retain revenue below x%?”
The best response to this question is to position Success as the key driver of the company’s growth.
There’s an inflection point in a company’s maturity when its growth rate falls below 100%. At that point, revenue from existing customers exceeds revenue from new customers, meaning Customer Success should become the most important lever to build a sustainable business.
If Customer Success is perceived as a cost reduction center, then the business will never invest the necessary resources to maximize growth and retention. For that reason, any discussion about the cost to retain revenue must include a discussion about investments for long-term sustainability and growth. Customer Success must seize responsibility for influencing and driving expansion revenue (upsell and cross-sell) which, combined with renewals, is called the net renewal rate by most companies.
In planning meetings with the CFO, present a plan that shows how Customer Success will drive improvements in expansion revenue. This could include things like adding account manager roles in Success, focusing CS Ops on expansion opportunities, partnering with marketing to drive better Customer Marketing programs, asking better expansion questions during onboarding, etc. Then ensure that Customer Success receives credit for the net renewal rate in the cost to retain revenue calculation.
Combining growth campaigns with cost to retain revenue is the best way for the business to both meet efficiency goals while also maximizing revenue and profit.
4. “How are you measuring high and low performing CSMs?”
This is another way to ask whether Customer Success is wasting money on low performing people. It's also another way to reframe the conversation around efficiency; the CFO is wondering if you can cut some budget out by releasing low performers without a significant impact on CS performance.
Respond to this question by showing the CFO what your expectations and standards are for the team including quotas, renewal rates, activity levels, etc. Allow the CFO to challenge your standards (required to get buy-in), but also be prepared with strong responses about why each standard has been set as it is.
Once the CFO agrees to your standards, and once you commit to holding team members accountable to those standards, you’ll remove this topic from the conversation.
5. “How are you going to handle salary increases for your top talent?”
This is another efficiency question, only it’s more forward-looking. The CFO is thinking, “I know you want more budget/promotions for your high performers,” so they want to know how you plan to increase salaries while also increasing the team’s efficiency.
What the CFO wants to hear is that you’ll increase salaries as people take on more quota. But since most of your team is already maxed out on workload, you’ll have to focus on ways to make each member of the team more effective.
The right response is to show how budget invested in new tools, training, or processes will make CSMs more efficient—those investments will allow each member of the team to manage more customers as the business grows. Even small improvements in team efficiency spread out over a large team create substantial cost savings relative to the cost increases of salary bumps for top performers.
CS leaders need to flip their conversations with Finance from being about efficiency to being about investing in Customer Success to drive revenue.
Some takeaways on how to do that:
In the end, we’re all in sales. Leverage quantitative data while telling a story, and make it easy for your CFO to advocate for you.
Have you tried something that helped shift budgeting conversations towards investing in Customer Success, that's not included here? Tell me on LinkedIn.
Thanks to everyone who contributed to and shared feedback on this piece, including Jennifer Dearman, Matt Myszkowski, Kristina Valkanoff, Andrew Marks (← If you want coaching on the above, talk to Andrew), Maranda Dziekonski, Alex Farmer, Jay Nathan, Jeff Breunsbach, Mike Pundmann, Tien Ahn Nguyen, and Nhi Ha Truong.
Marley Wagner shared her company’s sophisticated Digital Customer Success maturity framework. Marley waslk us through each of the five stages of Digital CS maturity and cover everything from what it takes to lay the right foundations to implementing advanced digital communication channels.
If you'd prefer to listen rather than read, tune into the full episode. Otherwise, you'll find a summarized version of Marley's interview below.
MARLEY WAGNER, VP OF MARKETING & DIGITAL CS AT ESG:
Digital CS STAGE 0 - Foundations & Prerequisites
Having these elements in place before you begin will help ensure a successful digital journey
ESG previously published four stages of Digital CS maturity, but what we realized since then is that companies need to have certain basics in place before launching a Digital CS program to enable a successful digital journey.
We see a lot of companies that have a strong CSM organization, and their CSMs build fantastic relationships with their customers, but then for any number of reasons, they’re asked to incorporate automation and digital into their Customer Success strategy.
It's easier said than done in a lot of cases because there are foundational elements that need to be in place before a Digital CS program can get started.
Here are the prerequisites:
Going through each in detail:
Customer Feedback Automation platform: This is one component that people don’t think about. What will you send automated messages out of? That system is really important.
Permission to contact your customers: Have you considered the legal ramifications and requirements that your in-house legal team has put in place for communication? You’ll need to connect with your legal team to understand what your company's perspective is on working with existing customers.
Segmentation: Have you segmented your customers? Do you have tiering involved with that? Are there personas identified? Have you defined what the engagement model will be for those different segments, tiers, or personas? What's the best combination of automation + humans for each customer group?
Resources: If you’re thinking about sending out emails, in-app notifications, push notifications, and other content, have you thought about what, exactly, you’ll be sending out? Do you have the resources, PDFs, webpages, screen recordings of your product, and other assets ready and available to be able to use in digital communications?
Once these pieces are in place, you can start creating email campaigns.
STAGE 1 - Basic Customer Success Email Campaigns
“Low hanging fruit” — start here with simple messaging that can apply to a wide swath of your customer base
Most people are hesitant to start small, especially in this area of Digital CS, I think everyone wants the moon and wants to do really complicated things, right now. I don’t recommend that. Starting small is actually a really smart way to do it.
What is the low-hanging fruit? Usually email is the simplest channel to start for two reasons:
Start your Digital CS outreach with basic email campaigns. Consider this: what are the messages that everyone should be getting regardless of segment and persona? What does every customer need to know?
This could look like:
Is there a message every single one of your customers should get 30 days after onboarding? Probably.
When you get started with Digital CS, think about those things that are simple, that don't require a lot of complex automation, and that don't have tons of data coming into your system. We know that can be a place where you can get slowed down.
STAGE 2 - Customer Success Managers Tasks & Complex Email Automation
Automate repetitive CSM tasks — CSMs spend less time on to-dos, more time on strategic conversations
For some companies, Stages 1 & 2 can bleed into each other. But Stage 2 is about sending more complex emails by connecting with other systems to pull in automation along with using automation to make internal stakeholders more efficient through CSM tasks and internal notifications.
Something that’s often forgotten within Digital CS is that it's not 100% customer-facing. Your automation can be so powerful for your internal team. How can you leverage the same customer messaging system to make your CSMs lives easier? Or Sales? Or Operations?
How can you automate things like alerts? Think about a scheduling reminder for a QBR. If a CSM doesn't have to manually create a QBR reminder, how much easier is that for them? There are more complex alerts like churn risk notifications. When should someone on your team be altered if XYZ happens?
Stage 2 also requires you to think more about usage-based emails for customers. For instance, if your data shows that it's been two weeks since a customer has logged in, you can trigger an automatic email to remind them of how long it’s been and tell them other value they may find in your product.
In Stage 2 of Digital CS, you need to ask, ‘What does my customer’s usage of the product tell me about how I can continue to engage them and encourage them to adopt even more deeply?’
This is usually the phase that most people want to get to. And I believe as long as you can get to this stage, you’re in really good shape in terms of your Digital CS strategy.
STAGE 3 - Self-Service Capabilities
Enable customers to find answers & solve problems independently — both CS & Support can focus on higher priority items
Stage 3 introduces self-service capabilities in your Digital CS program. It’s an interesting stage because there may already be somebody in your org who owns a version of it. Support may own a knowledge base. Marketing might own a community.
Up until Stage 3 it’s been all about the “push” — with the emails you send out, you’re pushing information, right? But what about the pull? Where can customers go to pull information in a self-service manner? As individual consumers, we all appreciate the ability to find answers and problem solve on our own. I don't think enough B2B companies are creating that self-service environment for customers.
Your customers should be able to find answers in 1) a knowledge base or 2) from other users in something like a community. I know community is continuing to increase in popularity and prevalence in the CS world — that's a good sign.
STAGE 4 - Advanced Channels
With a strong foundation in place, you can explore new and innovative communication channels and methods
Stage 4 of Digital CS is about those advanced, fancy, shiny channels. Like in-app notifications. You’ll likely push similar messaging as your usage-based emails straight into your product, whether that's a pop-up or a walkthrough guide. Some companies choose to build this directly into their product by working with their developers, while others use third-party tools like Pendo or WalkMe.
This is a super powerful channel. We always talk about meeting customers where they are. Guess what? Customers are in your product. Talk to them there.
You could even consider new channels like Slack or text messaging. And more and more in the CS landscape you’ll see new tools that can do above and beyond crazy things: AI in CS, advanced if/then logic, etc.
So if you have your CS platform in place, you have a great foundation. The next step is to think about different technologies to utilize on top of that foundation to continue engaging with your customers in all the ways that they want to be talked to.
DATA
CS Ops Compensation Benchmark Survey Results
Up until this report, the world had been without data on CS Ops compensation. In a project led by Seth Wylie, Gainsight changed that in January 2022 with a benchmark survey that received 296 responses. Dig into the results that show CS Ops manager’s salaries versus CS Ops individual contributor’s pay, comp data based on title and region, and much more.
How to Write Something Compelling
Writing is a skill that can be beneficial across functions, yet it’s often undervalued. Think about it, learning to write well can help you influence how your company works and what your company works on. In this post, Justin Mikolay offers a few tactics to make your writing more powerful.
7 Ways to Increase Customer Value as a Customer Success Team
“Ready to show value, but not sure where to start? Here are some ways my team has driven customer value.” This piece, by Emily Garza, VP of Customer Success at Proton, is a good one to share with your team. I particularly like her tips on how CSMs can connect various business units across a customer account.
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.
Back in 2019, when Google acquired Looker for the small sum of $2.6B, Brian LaFaille’s team quickly went from selling to 100-200 logos per quarter to 500-600 logos per quarter. “With customer acquisition going through the roof,” he recalled, “we knew we needed to start leaning into what our light-touch motion was going to look like and what our overall digital success strategy would be.”
Today Looker has one of the most sophisticated Digitally-Led CS offerings in the SaaS industry. Brian was on the TheySaid podcast to talk through the thinking behind how they’ve built out their digital CS team and program. Note: Brian has since left Google and is taking a "Gap Year" to travel. We will be looking forward to his return in March 2024 to see what he does next.
If you’d prefer to listen instead of read, tune into the full episode. Otherwise, you’ll find a summarized version of Brian’s interview below.
Brian: We had an interesting challenge as a scaling company. Our customer acquisition was increasing rapidly and the type of company that we brought on board was skewing towards the enterprise. Both of these factors made us think about how we could change our focus as to how we went to market with Customer Success.
That meant both focusing our CSMs on the companies where they could have the most profound impact with those very large strategic accounts, where CSMs could have a very consultative engagement. And then we saw that if we had 40-50 CSMs around the globe covering 3-4 accounts, that would mean only 100-150 customers would have CSMs. We realized that was going to be a detriment to the whole coverage model of our customers. What do we do with everybody else?
So starting back in 2017, we knew we needed to really start leaning into what our light-touch motion was going to look like and what our digital success strategy was going to be.
At Looker today we have the top 3% of our customers working with named CSMs, but everyone else, north of 3,300 customers, are in a pooled model. But as we were planning this out, we needed to consider how were we going to communicate with all of these customers? How are we going to engage proactively? What is the offering that we're going to give to these customers across a multitude of channels.
It was a slow roll at first. We started to move these customers from a CSM’s portfolio over to this pooled model, batch by batch, as they renewed.
The way that we structured the team to support that was by developing:
1) A dedicated Programs team, which is what I lead, to really focus on the digital channel creation and the programs that are going to support all the customers en masse, regardless of segment.
2) We stood up a specialist organization that focuses on the light touch. This org performs proactive, short burst engagements across those 3,300 customers in the pooled model.
Digital CS Takeaway #2: Digital CS works best when most interactions are digital, but humans can jump in for short bursts to fix engagement problems.
Brian: Our short burst engagement team adds that proactive human element that most customers need at some point in their engagement history with Looker. We're able to rotate a customer out of the pool and move them into the light-touch CSMs portfolio for a short period of time, so they get that extra white glove experience for a brief stint.
The customer is ideally driving towards some desired outcome (i.e. to roll out to some new department, a data migration, escalation, etc.) Then they roll off. And we try to be as transparent as possible with our customers about this. In the CSMs opening email they’ll say, ‘Hey, I'm going to be here with you for seven days. I really want to make sure that we're able to accomplish X, Y, and Z. Here are the resources I'm going to use to do so. When can you meet?’ This approach usually lights a fire under the customer to engage with us because they know there's a time limit associated with that engagement.
Digital CS Takeaway #3: Automated touch points should be time-based and behavior-based.
Brian: It’s easy to start to key off of time-based touch points initially. As we matured and began to understand product telemetry, we were able to engage with our customers based on behavior. We use both campaigns because they play off of one another. There are going to be certain things that happen during onboarding that will remain consistent—all customers need to know about it. But then other things are going to be more custom to the customer.
Digital CS Takeaway #4: Guided in-app experiences can substantially improve retention rates.
Brian: CEOs, business users, and admins all care about different aspects of Looker. That’s why we’ve built sets of guides that take customers and users through the product based on their persona. It's been one of the most impactful digital channels that we've had to date. We've expanded our reach and increased both our completion and retention rates. In looking at the cohort of users that have gone through our guided, in-app experiences, we're seeing a 12% uptick in user retention.
Digital CS Takeaway #5: Digital CS can be an excellent way to detect growth opportunities.
Brian: I can't stress the importance of data behind the scenes enough. Product telemetry drives many of our campaigns. When we think about expansion opportunities, it's no different:
All of these are signs of expansion opportunities. In Digital CS, we usually treat ourselves as the growth engine of funneling opportunities to the Sales team.
👉 Check out TheySaid's CEO, Lihong Hicken walk through the 5 Stages of Upsell and Cross-sells.
Takeaway #6 Share the responsibility of Digital CS communications across the organization.
Brian: There's three key teams that influence our Digital CS program at Looker:
Customer Marketing: They’re responsible for the messaging, the copy, and the things that we want to send out to customers
Product: Anytime we're trying to do anything in the product, we need to make sure that it fits the style, guidelines, and all the things that go into the product experience itself. Finally, there's customer success and customer success brings that voice of what are the customers asking? Right?
Customer Success: CS knows the customer better than anyone and can bring that voice of ‘What are the customers asking? Where do they have questions? Where can we add value as customers start to mature in their journey with Looker? ’ Customer Success hears all this feedback on the front lines.
These three teams are very collaborative. I have a weekly sync with a PM and a Customer Marketing manager to really dissect what the customer experience needs to look like. While Customer Success is accountable to and owns the cadence of how and when customers are communicated to, I'm not a copywriter, right? So I lean on the experience of the Marketing team and all their design chops to make sure that the messaging resonates and fits in with the rest of the brand.
Meanwhile, I'm not a product expert, either. I lean on our PM to fix any of the hashing issues or things like that that we might have in anonymizing user data, for instance. With our experience combined, we’ve become a really powerful trio.
Optimizing Your Workspace for Productivity, Focus, & Creativity
This piece proves that our physical workspace affects us more than we might think. Read through the list of science-backed tips to improve your experience in the arenas of both work and life.
CCO Maturity Model
Here's Rod Cherkas, Founder and CEO at HelloCCO, with a 1-pager that breaks down the skills needed to grow from Director to VP, to Sr VP, to CCO.
When to Delegate & When to Say No
Lara Hogan offers a prioritization framework for anyone who is overwhelmed with work. “[I]t’s our job as leaders to figure out which fires to let burn. Sometimes we just need to walk away and return another time, even if those fires will keep growing. This will help us invest our energy, attention, and skills in the fires that we are best-positioned to address today.”
In this newsletter, you’ll read insights from Jyo Shukla’s book about building customer-centricity into the DNA of your organization’s growth strategy.
The excerpt below is from Chapter 8 “Delivering Value at Scale” where Jyo breaks down the importance of personalization within a digital Customer Success program using the HEART framework (Humanize, Empathize, Align, Respond, Track).
We are fans of this approach, especially the suggestion to actually ask the customer about their experience with your company and product.
Customer Success Mindset is offered on Amazon in both physical and Kindle versions.
I love automation! It is such an amazing and powerful way to save time, increase efficiency and help people focus on things that need their attention by taking a few repeatable tasks off their hands. And being the forward-thinkers that they are, SaaS companies across the world have leveraged the power of automation to scale touch points with their customers.
The tech-touch motion, also popularly known as digital Customer Success, is a game changer for companies looking to scale their CS program.This strategy makes use of automated touchpoints via digital channels to deliver success outcomes to customers.
I love automation! (not a typo, I said it again because I really do love it) But, like most of us, I’m also very frustrated with unwanted emails, webinar invites, SMSes, and other forms of digital outreach coming my way, even from brands I love and constantly buy from. Because all of them are generalized, they mostly don’t speak to what’s important to me.
"If your digital customer success strategy means sending a flurry of emails with generic information after someone signs up and pays for your product, it is highly likely that you are clogging your customers’ inboxes with irrelevant information."
They are more likely to ignore all of it, which means even if you send them something relevant, they might miss it because they simply wouldn’t care to read it.
I recently joined a popular online forum for professionals. Within the first couple of days of joining, I received an email that looked like it came from the founder of the community, asking me what are the main goals that I’d like to achieve from my membership. It was a great email and though I knew the founder didn't write it on their own, it was a great example of a digital touchpoint and I was quite impressed. Given the intent of the email was to hear from me, I responded and sent them a couple of things I’d like to achieve from my time and interactions in the forum. Guess what happened next - nothing!
And I don't mean anything as I didn't hear back, I did. But it was not in response to my email to say my goals had been acknowledged or even something relevant to the things I had stated in regards to my goals. It was just another generic email that was probably “email number 2” sent out to a new user. What followed was exactly what you’d imagine, a series of templated updates, none of which really spoke to me as a member of that community. Disappointing right? It made me wonder, would I have had lower expectations if I hadn’t been asked what I wanted to achieve and still have received a generic mix of relevant and irrelevant content?
This is the perfect example of the right intentions turned into undesirable results for your brand image because the implementation of the idea did not take the customer’s needs and the importance of closing the feedback loop into account.
So, the biggest question isn’t—do you need a digital CS motion? The answer to that is yes, definitely! The big question is—how do you scale your CS program in a way that keeps the basic intent of CS alive, which is to retain and grow your customers by delivering value and helping them achieve their outcomes? And most importantly, how do you scale trust and operationalize the empathy displayed during human interactions in the digital world?
A good first step is to start simple. Like every other process or strategy you build, there is a maturity curve to digital or low-touch / no-touch models for CS, too. Instead of trying to automate everything, start with a few repeatable tasks that can be digitized.
Many things you have done in your CS strategy so far will help you in taking the next steps in the digitization of your CS program including:
A good digital strategy for Customer Success begins with your users. A digitally-led model for CS should focus on the journey of the end users and how you can guide them towards their outcomes using meaningful content. From a self-serve onboarding to continual self-serve touchpoints, and even automated renewals (we’ll talk more about these in the next chapter), look at parts of your user journey that can be digitized.
Your customer data makes your strategy for digital Customer Success smarter and more meaningful. Sending communications to a customer after certain moments that define activity or inactivity can trigger meaningful action on the customer’s end. For example, you can send an email helping the customer with some self-serve material with next steps once they complete their product setup successfully. On the other hand, if a certain period of time has passed and the customer still hasn’t completed their setup, you could send communication offering resources and even manual help from your team if they need it.
Your account segmentation strategy can become a great feed into your digital CS program. As your customer base grows, the volume of their activities, goals, and outcomes become larger. Handling such a large volume of behavior patterns can be quite challenging, and that’s where your segmentation strategy comes into play. You can group customers according to commonalities in their sentiments, goals, outcomes, interests, etc, and tailor communications you send to them based on the segments they belong to. It makes sending relevant content at scale so much easier.
The above points make it really clear that your high-touch strategy has a great role to play in your low-touch / no-touch strategy for Customer Success. It also indicates that a digital CS program is not just for customers in the mid or low-tier revenue segments. When done right, this program can serve your strategic and high-value accounts equally well.
There are several low-touch or no-touch ways to execute your digital Customer Success strategy, ranging from but not limited to emails, webinars, ask-me-anything sessions, customer summits, customer communities, social media etc. Irrespective of the medium of delivery, the same core components that make your high-touch Customer Success program a success are also the heart of your digital customer strategy. HEART is an acronym for Humanize, Empathize, Align, Respond, and Track. Let’s look at this in more detail:
Humanize
Humanizing digital CS is a crucial step. People can often tell if a communication sent to them is coming from a real human being or an automated process. They are also more likely to respond if they think it’s coming from an actual person. Think of the welcome email I mentioned in the example I stated earlier in the chapter, asking about my goals. It looked like it came from the founder’s email address, urging the addressee to respond and asking very clear questions about their goals. That’s how you want your digital communications to look like (it was the only great part of my experience in that whole scenario!).
Stop using no-reply or generic email addresses when corresponding with your customers. Sending emails from addresses that customers can respond to by simply replying to the email sent to them are much more seamless than no-reply addresses that redirect customers to look elsewhere for help if they need it.
Secondly, never lose the human touch. Letting your customers know that they can contact one of your actual team members if they need to speak with a human being is very reassuring and encourages two-way communication. The digital world can often be a lonely one, despite the vast majority of information available. A bit of a human touch when it’s needed can make all the difference.
Empathize
Empathy is a huge buzzword in the CS industry, and while most organizations promise empathy, very few are actually able to live up to the hype. So, how do we make our digital touchpoints empathetic? It starts with the little details such as simplicity in delivery, ease of use in your resources and staying in context when it comes to your customers’ needs.
Keeping these things in mind will enable you to tailor your touchpoints in a way that customers feel like they’re receiving value in a timely manner, make it clear and easy for them to understand how they can make your product work for them, and they walk out of that experience (whether its an email, a webinar or a help page on your website) feeling like it was a good use of their time. Your digital content can help nurture positive emotions if it is clear, easily accessible and well-aligned with what customers need.
Align
Alignment is important both internally and externally. Internal alignment is necessary to keep track of the outreach to your customers via different channels and from different teams to ensure they’re not receiving duplicate information or similar instances of messaging through different methods (it’s the quickest way to end up in your customers’ spam folder).
When it comes to aligning with customers, the series of conversations created through your digital touchpoints should speak to their needs and outcomes. Again, it goes back to understanding your customers well and ensuring relevance in your communication strategy.
Respond
If your digital touch points ask your customers a question, or for feedback, please don’t let them feel that it goes into a blackhole. You wouldn’t leave your customers hanging if they opened a support ticket, gave you a phone call, or had a conversation with you in person. Your digital strategy needs to replicate that behavior.
"Opening up the channel for two-way communication and responding to your customers is a great way to scale trust."
Track
You know your customer’s goals and you’ve sent them resources and information that you think will help them achieve their desired outcomes. But do you have a way to track if they actually did? You can rely on your customer health and usage data to predict the answer to this question, or, better still, you can ask the customer.
Use feedback mechanisms to track whether they were able to accomplish what they wanted to using your product and how your digital touchpoints played a role in that journey, and how you can improve. If you’re using self-serve materials, be sure to track which ones are being used by customers. Closing the loop and showing that you care about your customer’s results even when it’s through a scaled program shows your customers that they matter to you.
The insights and analytics that come from tracking your customers’ interactions with your digital touchpoints are a gold mine of information for continually improving your overall program.
The intelligence in automation and artificial intelligence comes from humans who create these programs. As such, your digital programs continually improve by learning from human interactions. Even when you’re leading with digital touchpoints, make sure you make it easy for your customers to contact a human when they need to. This is a key part of making the digital-first experience seamless for your customer base. These simple options instill positive emotions and behaviors in your customers, even when they’re not always talking to you in person.
You will also always have customers in every segment that are unresponsive to any form of outreach, but that doesn’t mean they need you any less. I had one such customer who hadn’t responded to any emails, marketing outreach, webinar invites, survey, and feedback requests in months. Their usage stats showed that they were logging in and using our platform (less than regularly, but this was the only sign of a heartbeat their sentiment was showing).
So, I picked up the phone and gave them a call. I was surprised when they said they hadn’t been receiving any communications from our team. A bit of a nice chat followed by a gentle request for investigation from their end revealed that their “very advanced” company email filters were somehow blocking all communications from our company’s email domain. My chat with them revealed that they were very happy with what our product did for them. They were the kind of customers that kept quiet, used what they needed, and didn’t have the time to go exploring the product beyond what was important to them. But the point here is that we would have never found out, had it not been for that one phone call from a very curious person in the CS department who wanted to know why there was no response to any outreach going their way.
So, my suggestion to all my SaaS-y friends is to never forget the humans at both ends of the automation. When planned and executed well, your digital-led (and human-supported) strategy can not only increase retention but also lead to increased advocacy and expansion across your account base.
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Connect with Jyo on LinkedIn and order your copy of her book today!
How Are We Going to Deal With This Economy?
I believe now is the time to invest in Customer Success, not reduce team size.
Nick Mehta thinks you have to focus on strategies to make your product more "sticky".
Predicting a Stakeholder Change
Guy Galon, VP of CS at Hysolate, shares a great framework to help predict the “stakeholder role change” scenario. This is one of the better articles I’ve read from the CS space recently.
Stop Overcomplicating It: The Simple Guidebook to Upping Your Management Game
“Managers are failing everywhere, and no one is helping.” Here’s a First Round Review article focusing on the lessons within Chief People Officer, Russ Laraway’s, new book titled When They Win, You Win. He claims that a simpler management approach is needed today where leaders concentrate on the “big 3” elements of leadership including helping their team members with direction, coaching, and career.
Pre-sales (PS) plays a critical role in ensuring customers are a good fit, which begs the question: should the function report to Customer Success org rather than Sales?
We asked this question on LinkedIn, and included the three areas Alex Hesterberg (Delphix CCO) takes into account when making this decision:
1. Most companies operate in pooled models where Sales or Solutions Engineers (SEs) are shared resources. That’s where the tension emerges between Sales and CS: the SE’s capacity is limited.
2. If the company’s growth revenue is primarily coming from new customers, then Pre-sales can live within Sales. Their focus is more on “hunting.”
3. If the company’s growth revenue is primarily coming from existing customers, then Pre-sales should live within Customer Success and be aligned with Sales. In this case, Pre-sales is more focused on landing the right use cases.
Alex also mentioned, “This is definitely not a one-size-fits-all concept, but more about being open to using traditional teams/organizations in what may be considered non-traditional ways as customer demands, competitive landscape, and business needs shift.”
Below you’ll read through some comments from my post about where Pre-sales should live within a company and a few of my responses. Each person we highlight below either voted for Pre-sales to report up to Customer Success or Sales?
Moving the function is actually harder and, practically speaking, less likely to happen. I think this should be a shared resource that equally supports pre- and post-sales and that more and more it will be rebranded from Pre-sales consulting to value consulting, which should span both prospects and customers. I think this aligns to the shift we're seeing of CS moving out of a Cost of Goods sold (COGs) bucket. I also believe we'll see this shift happen much earlier in leading companies.
My reply: A collaborative, shared resource definitely feels like the best culture for the company. But when there are inevitable competing priorities from Sales and CS, who gets to decide where the resources will be focused?
Their reply: My stake in the ground would be CS. When the team responsible for delivering the outcomes is the same team scoping and setting expectations, you increase the value outcome likelihood for your customers and your business. It's about winning good business, not winning business.
1. CS is home of Pre-sales. Absolutely. We know the customers and product best.
2. This is a good question, Chris. I've been of the mindset that SEs should be under CS. This is for a couple of reasons: SEs and PS usually have very similar tech skillsets. They can be trained together and I've found that they often work well together. The main difference is that SEs tend to live in a theoretical world (perfect environment situations: labs, test environments, etc.) whereas PS deals in reality (production environments where sometimes unknown/unrealized hurdles exist). These two teams working closely together can help develop both teams' skillsets quicker, and new features from development can be understood faster.
As a "shared resource" as you mentioned above, the SEs need to split their time between Sales, CSMs (current customer renewals, upsells, etc.) and channel partner team/program (if this level of maturity exists in the company). Sales usually has the "hunting" mentality, so their focus is singular and understood. However, channel partner teams/programs and CSMs tend to be more focused on growth within a customer environment or within a partner's customer base. Those functions are more aligned with CS and may have a greater need for SEs, depending on your organization's business model.
My reply: Both great comments. Especially what you said about SEs and PS having a similar skillset. There's a good argument that SEs will be better overall performers if they pair with other people that do similar work.
CS is post-sales. That’s not to say they don’t collaborate on things. But the job responsibilities should never be blurred between SE’s and CSMs. If they are, the SE always becomes the de facto CSM. The best CSMs I have seen are Support folks that could be SEs but don’t want the stress of Sales or being a BDR with technical chops. They are scrappy and know how to get things done. It would set off alarms to me if an SE wanted to transition to a CSM role. Unless they were running the org.
I have done both roles and I am not a fan of combining them. SE's and CS should work hand-in-hand though throughout the customer journey!
The best Pre-sales people know the product first (from a prior role such as in Services). But they need to be trained on selling skills so mentoring/training will be more effective if they reside in the Sales organization. They will also have better relations with the salespeople if they’re on the same team. They can foster a more symbiotic relationship.
My reply: The counter-argument I've heard from CS is that Pre-sales people must deeply understand customers, use cases, and value received. If they're deeply embedded with CS, they'll be much better armed to speak to prospects.
Note: You’ll notice that most people we quoted in this piece voted for having Pre-sales report up to Customer Success. That could be because I have more Customer Success leaders in my network than Sales leaders. If you have an opinion to contribute, I’d really appreciate you adding it to the comments here.
As a people leader in times of crisis, “It’s expected and okay to not have all the answers, as long as you’re keeping lines of communication open and taking your staff seriously when they tell you they’re struggling. Be clear that you know that there are challenges, name the challenges you expect, and be open to understanding that others are likely facing difficulties you hadn’t even considered.” Here’s a relevant piece about how to help your team right now.
What I would change in this piece by Jason Lemkin is the idea that low NPS is the #1 reason for stunted growth. Here’s my reasoning: I could come up with 25+ companies that have fantastic NPS scores that have stalled out. The consistent pattern is that companies fall in love with their product, but not their customer. The result: poor product market fit, low retention rates, and low NRR.
Leading a Remote Team Through a Crisis
As a people leader in times of crisis, “It’s expected and okay to not have all the answers, as long as you’re keeping lines of communication open and taking your staff seriously when they tell you they’re struggling. Be clear that you know that there are challenges, name the challenges you expect, and be open to understanding that others are likely facing difficulties you hadn’t even considered.” Here’s a relevant piece about how to help your team right now.
The #1 Reason SaaS Companies Stall Out at $15m-$20m ARR
What I would change in this piece by Jason Lemkin is the idea that low NPS is the #1 reason for stunted growth. Here’s my reasoning: I could come up with 25+ companies that have fantastic NPS scores that have stalled out. The consistent pattern is that companies fall in love with their product, but not their customer. The result: poor product market fit, low retention rates, and low NRR.
Desperation-Induced Focus
"I have nothing against process. But I think startups generally implement them way too early and way too often. [...] In reality, process is not my problem. It’s what discussions around new processes often preview within a company. Lack of focus. Peacetime thinking. Complacency." Ex-COO of Instacart, Ravi Gupta, with an excellent post about the advantages created from having your back up against a wall.
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The voice of the customer is more than just feedback; it's the cornerstone of a thriving business. When customers share their thoughts, they're essentially guiding the company on how to meet their needs better. According to a Microsoft study, a staggering 90% of Americans use customer service as a factor in deciding whether or not to do business with a new company. This statistic alone underscores the critical role that customer voice plays in business success.
Why It Matters: Customer voice helps in product development, improves customer service, and even guides the marketing strategy.
Unfortunately, the customer voice often gets lost or diluted as it travels through the different departments in a company. Sales might hear one thing, while customer service hears another, leading to a fragmented approach to problem-solving and product development.
This inconsistency often leads to missed opportunities and can even cause customer churn.
In many companies, each team—be it Sales, Marketing, or Customer Success—works in its own bubble. They collect and analyze data independently, which often leads to a disjointed understanding of customer needs and wants.
The Downside: This siloed approach makes it challenging to form a cohesive strategy for customer engagement and satisfaction.
Many Voice of Customer (VoC) programs are excellent at gathering data but fall short when it comes to translating this information into actionable insights.
Here are some important numbers to show how often we use this data and how it’s collected;
The Gap: The data collected is often voluminous but not structured in a way that makes it easy to act upon.
It's common for teams to focus on metrics like user engagement and time spent on the platform. However, these metrics don't necessarily translate to customer satisfaction or value.
The Oversight: High usage doesn't always mean high satisfaction.
In this section, we'll explore specific approaches that teams typically take to gather and interpret customer voice. While each team has its own set of methods and metrics, they often come with inherent limitations that can hamper a unified understanding of the customer.
Product teams are often the architects of the customer experience but ironically can be far removed from the actual voice of the customer. They usually rely on hard data and user research to make decisions, but this approach has its pitfalls.
Challenges: The focus on quantitative data often leaves a gap in understanding customer sentiment and nuanced feedback.
Customer Success teams serve as the face of the company for existing customers. They are not just relationship custodians but also significant contributors to revenue growth. This dual role makes them crucial in both maintaining customer satisfaction and impacting the company's bottom line. However, balancing these two aspects can sometimes lead to challenges.
Relying too much on relationships can lead to biased or incomplete feedback. This approach may not represent the broader customer base and could miss out on critical data points that could drive revenue.
Sales teams are focused on one thing: closing deals and often net new customer acquisition. They often rely on win-loss data to gauge their performance and understand customer needs. However, this narrow focus can lead to missed opportunities for deeper insights.
This binary approach doesn't provide insights into why a deal was lost or won, missing out on valuable feedback.
Marketing teams play a crucial role in understanding what's hot and what's not. They keep an eye on market trends and customer likes and dislikes to create campaigns that hit the mark. But how they gather this info can sometimes be a bit old-school and come with its own set of problems.
High costs, time lag, limited scope, and data overload can make it difficult to get actionable insights.
Having a unified strategy for collecting and interpreting customer voice is not just beneficial—it's essential. A well-aligned strategy ensures that all teams are on the same page, leading to more effective decision-making and, ultimately, increased revenue.
The Upside: A unified approach can lead to better customer retention and more effective up-selling and cross-selling strategies.
An effective customer voice program is continuous, targeted, actionable, and trusted across the organization.
Continuous Feedback: The program should be designed to collect feedback at every customer touchpoint.
Asking the Right Questions: The quality of feedback is often determined by the quality of the questions asked.
Making Feedback Actionable: The program should translate feedback into actionable tasks and goals.
Trust and Consistency: Data should be consistent and trusted across all teams to be effective.
In today's competitive business landscape, the voice of the customer is more crucial than ever. Companies that invest in understanding and acting upon this voice are more likely to see sustained growth and customer satisfaction. It's high time for businesses to re-evaluate their current strategies and align themselves more closely with what their customers are saying.
Ignoring the voice of the customer is no longer an option. It's a necessity for survival and growth in today's market.
Unlock actionable insights across your teams today with a unified customer voice strategy—because asking the right questions at the right time can transform your business. Learn more about TheySaid’s Customer Journey Pulses.
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