The inaugural issue of our new Customer Success magazine, 2.0, is out today.
Now that Wall Street understands the impact of retention on overall growth rates, CEOs are finally focusing on the post-sale lifecycle of a customer.
Customer Success leaders have seen the trend. Other department heads do too. And as Sales and Marketing leaders also look to grow their position at the executive level, we’ll see these leaders try to take more responsibilities from the customer function—reducing the role and influence of the Chief Customer Officer.
This requires proactive leadership from Customer Success leaders to think about their role in the future of the company’s growth. Whether they unify a decision-making team with Marketing, Sales, Product, and Finance will ultimately influence the part that customers play in the company’s strategy.
So for our inaugural issue of 2.0, titled The Rise of the Strategic CCO, we explore how to increase the prominence of Customer Success—and with it, the customer—at the executive level.
Over the course of 11 chapters, we cover topics like:
2.0 will be printed twice a year and each issue will dive into one topic. Available in print, pdf, and ePub, it also features interviews from top CS leaders at companies like Box, Sumo Logic, GitLab, and Gainsight.
Enjoy!
Strategic CS Ops teams are the backbone of a proactive Customer Success function.
The average CS Ops team is focused on delivering a more efficient Customer Success operation. Often the scope of the team includes tools, processes, reporting, and forecasting. But for CS to play a more prominent role in the company, the CS Ops team must evolve to own both operations and strategy.
That future of Customer Success, which we refer to as 2.0, requires leaders to spend less time on running a better Success team and instead focus on using customer data to run a better company. That means arming other executives with the customer data they need to make better decisions (pricing, ideal customer profile, product roadmap, content, etc), which will lead to the biggest improvements in retention improvement.
Without a mature CS Ops function, the CS leader is left with anecdotes, NPS, usage data, and health scores to drive decisions, which most other execs will ignore.
So in this article we’ll explore how a CS Ops team matures, including reporting structure, scope of ownership, and metrics—and we hope to inspire you with 1-2 things you can do this quarter to level up your CS Ops team.
A special “thank you” to Gainsight for teaming up with us on this piece, and everyone who contributed to this article by way of interviews and feedback: Zeina Marcotte, Jeff Beaumont, Seth Wylie, Alisa Melville, Jeff Justice Williams, Beth Yehaskel, Richard Adams, Ben Timmons, Jaakko Iso-Järvenpää, Andy Mowat, Lea Boreland, Paul Reeves, Boaz Maor, Daniel Rose, Alex Farmer, Stephen Danelutti, Jeff Heckler, Ed Powers, Emily Garza, David Ellin, Edgar Ramirez Vilchez.
CS Ops is the team that provides standardization, intelligence, planning, and ultimately strategy for Customer Success.
We interviewed 30+ companies of different sizes to create the table below. This represents the broad scope of potential responsibilities of your CS Ops team. Later we’ll discuss how CS Ops increases responsibilities as it matures—with the aspiration of adding “Strategy” to the most advanced teams.
Most CS Ops teams follow a similar path as they mature: the team is born out of a specific CS need, they begin taking on more responsibilities, and then they take action to become proactive.
Most companies have one of three structures: CS Ops reports under the CRO, the COO, or the CCO. Before we share a path for deciding on reporting structure, here are some of the common arguments for and against each scenario.
Note: CS Ops is increasingly centralized under a RevOps function that includes Sales Ops, Marketing Ops, and CS Ops. For this article, we’ll focus on which executive owns this Ops group.
If CS Ops isn’t a part of RevOps, you can model your CS Ops reporting structure by comparing it to your Sales Ops team. For example, if Sales Ops reports to the CRO, then CS Ops should report into the CCO.
If under the CRO or COO, this usually means Ops is centralized under a RevOps or company-wide Ops team. A prominent argument for having a centralized Ops function is the holistic business view it provides: instead of being siloed within Customer Success, CS Ops in a centralized team has visibility into what’s working for other teams. They can also easily work with other Ops members to ensure the handovers between teams are efficient.
You’ll hear more arguments against having CS Ops report to the CRO than the COO. Oftentimes if CS Ops is nested under Sales, the team “shares” responsibilities with Sales Ops…. And inevitably the Customer Success team’s tasks will not be the first priority. The obvious solution is to have clearly defined responsibilities between CS Ops and Sales Ops. Still, if RevOps reports to the CRO then the CRO has final say over their roadmap. And unless other agreements are made, the CCO simply doesn’t have full control.
When reporting to the COO, you’ll usually see a structure where CS Ops reports into the COO but has a dotted-line matrix structure to the CCO. In this case, CS Ops straddles both the operations and CS teams. This encourages 1) the freedom to advise CS without fear and 2) alignment between CS Ops and CS, whom they serve.
Another advantage of reporting to the COO: the needs of CS Ops (such as resourcing or program spend) can be highlighted to both the CCO and COO, thus creating more visibility.
One other strong argument for *not* having CS Ops report into Customer Success is the ability for CS Ops to push back on the priorities of the CS leader. They might want to push back because the CS leader has unrealistic expectations of what’s involved in a project, or CS Ops sees other initiatives as having a greater impact on the team and company. Not reporting into the CCO gives CS Ops the ability to be a thought partner to the CCO.
A counterpoint to that argument: “A good CS Ops leader should be able to push back on the CS leader’s strategy, even if they report into CS.” We can talk theory all day but common sense says it’s easier to debate with someone who is not your boss.
Three points usually surface when arguing for having CS Ops reporting to the CCO:
CS Ops people that report into the CCO generally say that they wish they could learn from other Ops people at the company. They feel like their personal growth is limited. And since other Ops teams are also overloaded, it’s slow/difficult to make changes in systems owned by those teams (e.g. Sales Ops owns SalesForce).
CS usually hires the first Ops person when there’s a specific problem, like implementing a CS tool, that needs to be solved (more on the “stages” of Ops below). It makes sense for the team to stay nested within Customer Success as it begins to grow: it’s taking on more operational and tactical work based on specific needs the team sees within CS.
But there are signs it’s time to move CS Ops from within CS to a centralized function that reports to the COO. Namely, when every team is working in their own data silos, there’s no single source of truth, and it’s hurting the company’s ability to take action—those are signs it’s time to make a structural change.
💡 Compare your team with how other CS Ops teams are structured
We’ve started a database of CS Ops team structures here, which includes the roles within CS Ops and where CS Ops reports at different companies.
You can anonymously submit your team’s structure through the above link to help other leaders benchmark their teams.
Stage 1: There’s an acute need from Customer Success
CS Ops is often born out of the need to implement tooling. The first CS hire might be able to band-aid together the software they need, but at a certain point the job requires a greater investment.
💡 Hiring your first CS Ops role
From Jeff Heckler, Global Head of Customer Success at Pipedrive
“Even at scale, the skill sets and focus of an Ops function will depend on your business model—if your company serves tech-touch and medium-touch market segments where you have tens of thousands of customers, you’re going to need Ops people who are good at analyzing a lot of data to see where process improvements can be made.
“If you’re serving enterprise customers on the other hand, the ability to analyze large amounts of data is less important. You might need someone that’s good at listening to customer calls and identifying points of friction, creating onboarding plans, and transferring that knowledge across the team.
“No matter the business model, I’d say the ability to wire up and manage Customer Success software is necessary and the ability to report on metrics is too. Other than that, having experience running drip campaigns and email nurtures, or building out training programs, are all bonuses when hiring in CS Ops.”
Most CS Ops teams own “data and systems administration” because that’s the first and foundational part of their role. They can’t be strategic if things are breaking; the team must be sure that the right tooling and data infrastructure is in place so CSMs can do their job.
Some CS Ops teams at this stage will have already started doing some strategic activities, like proactively reporting on customer risk or CSM performance so CS leaders know where to focus their attention.
Stage 2: CS Ops becomes a reactive “everything department”
Once the “acute need” has subsided, the team will start taking on a growing amount of responsibilities. Whenever someone asks, “Could someone help me with this?” Ops is the go-to. Updating the health score calculation, training CSMs, or configuring in-app notifications for tech-touch programs are all examples of tasks that start overloading the CS Ops team.
The tendency in this stage is to become reactive; “the everything department.” As CS Ops grows, they must stay focused on the responsibilities they can and cannot take on, and create a planning process for larger initiatives.
Editor’s note: We stole “the everything department” phrase from Rav Dhaliwal (Venture Partner at Crane). Thanks, Rav!
💡 Staying focused in Stage 2
From Seth Wylie, Director of CS Ops & Admin Community at Gainsight
For CS Ops teams to be successful in this stage, they must create a single-source-of-truth roadmap. It needs to be based on input from executive priorities, team manager struggles, and CSM input—and it needs to be communicated back to all three groups.
Here’s an example of how our roadmap looks:
There are 4 areas of responsibility that CS Ops may take over in stage 2:
💡 On CS Ops bandwidth:
“Many companies are not as well-staffed in CS Ops as they could be, and the role of CS Ops is often pretty broad. Given the many asks that come our way, the team needs to be smart about planning and creative in scaling its capabilities to create more leverage. Turning common questions into docs, running office hours, creating dashboards for self-service reporting… The mentality of ‘how can I multiply my reach’ is important in CS Ops.”
— Zeina Marcotte, Customer Success Strategy & Operations at LinkedIn
Stage 3: CS Ops becomes a strategic advisor to Customer Success
There are two major changes required to move a CS Ops team from Stage 2 to Stage 3. The team needs to move into a centralized Ops function that reports to the COO, and they must add “strategy” to their responsibilities.
Moving CS Ops to a centralized Ops team under the COO
A fully mature CS Ops team serves as a strategic thought partner to the Customer Success leader. At this point they tend to report into a centralized Ops function under the COO for two reasons:
There is one downfall here: pulling CS Ops out of the CS team into a centralized function means that Enablement can no longer live within the Ops team’s scope. Even if the team is “embedded” in CS by way of meetings, they’re no longer the experts in CS and so enablement needs to be passed off. By this time, CS usually invests in a dedicated Enablement team that lives within the Customer Success department.
Note: This is when it becomes especially helpful for CS Ops leaders to have a background in CS. The more CS Ops can intuitively understand what their CS leader is thinking, the tighter that alignment will be.
Adding “strategy” to the team’s scope of responsibility
While a Stage 2 team asks, “How can we make the CS team ‘run better’?’” the Stage 3 team asks, “What can we do to move the needle on our goals?” The focus is still on improvement, but it’s more about identifying opportunities and placing bets than just iterating on how the team currently works.
Stage 3 CS Ops teams enable CS leaders with the data they need to drive decisions across the company. For example, they might:
The analysts on the CS Ops team must have a working knowledge of statistics to find the signals within the noise.
They use data to provide strategic recommendations to the CS leader. And then depending on the project, they may also be the team executing on the recommendation. For example, we’ve heard of teams who incorporate “strategic bets” in their annual planning — these “bets” are the projects that vary most year over year.
💡 How LinkedIn’s CS Ops team plans their priorities
From Zeina Marcotte, Customer Success Strategy & Operations at LinkedIn
1. Foundations
These are the things you must get right because nothing else can move forward without them. The two categories that fall into this bucket are:
2. Business As Usual Priorities (BAU Priorities)
This category usually includes ongoing responsibilities that have been and stay with CS Ops, things like annual headcount planning, territory building, QBRs. These are the basic expectations of the team.
3. Strategic Initiatives
Only when the foundations and BAU are tackled do you get to move on to the fun strategic projects. Here we prioritize by looking at what is the most impactful work and what is our ability to deliver on it. We also add a lens of what is most important for the business right now? Where does this fall on the company’s overall priorities? These projects could be things like rethinking service models, exploring paid services, thinking through scale and partnerships, rethinking accountability and the appropriate metrics for the business.
Given the maturity of the CS Ops team, you may be able to specialize roles on the Data & Systems side so the rest of the team splits their time between BAU (~60%) and Strategic Work (~40%).
In summary, here’s how CS Ops teams mature:
The CS Ops team’s goals should be aligned with the Customer Success team’s goals. Customer Success has an OKR of driving a certain percentage increase in NRR, CS Ops should have initiatives that contribute to that goal.
How the Ops team directs their focus is straightforward, but “quantifying” an Ops team’s impact requires more effort. Two good options:: 1. Survey CSMs to identify friction with tools and processes, or 2. Calculate cost savings from CS Ops’s work.
1. Survey CSMs to identify areas of friction (and track improvements)
Some CS Ops leaders will survey CSMs to identify areas of pain, gauge the severity of those problems, and then track improvements after changes have been made.
💡How to think about surveying CSMs
From Jeff Beaumont, Director of CS Operations at GitLab
How I think about surveying CSMs will differ based on the company, team, and current goals. However, the basic questions fall into these themes:
Periodic NPS
Question: “On a scale from 1-10 with 10 being outstanding, has CS Operations sufficiently served your needs?”
Purpose: The goal being to establish a cadence of “are we improving quarter over quarter or year over year?” If our score ticks up, that’s a good thing. If it’s dropping or is stagnant, that’s an indicator that either CS Ops is missing or setting poor expectations, or we have a lot of new employees who may need help.
CSM Advisory Board (CAB)
(Note: these questions are generally arranged around the CSM tool, though can be modified for anything)
Questions:
Purpose:
To assess and understand the CSMs view of and depth of usage of the tool. It also means transparency for leadership (CS and CS Ops) into what CSMs are needing.
2. Calculate cost savings to quantify the ROI of initiatives
Calculating cost savings works for any project that reduces the amount of time spent on recurring tasks.
💡Here’s how Alisa Melville, Senior Customer Success Operations Manager at PagerDuty, calculates cost savings:
We start by calculating the amount of time spent by CSMs on processes that could be automated or significantly improved with CS Ops support. (For example, CSMs spending hours creating decks that could be templated by Ops or CSMs spending significant time compiling account data for their book of business when reports could be automated by Ops.)
Based on these time estimates and average CSM salaries, you can calculate the associated cost.
Then, I pair this against the time needed to manage one additional account in a CSM's book of business (or average amount of CSM time consumed per customer). If we can reduce these time-sucking inefficiencies, how much more time would a CSM have? And how many more accounts could they manage based on that newly available time? With increased bandwidth we can then reduce the future headcount needed.
We can also use this information to compare our current projected headcount cost for CSMs against the projected cost if we increase CSM bandwidth.
“Cost savings” can be reported as:
We asked a handful of CS Ops leaders: What’s a tactical win you’ve done that everyone should consider doing?
Here were some of their responses:
To become a proactive Customer Success function, leaders need to invest in maturing their CS Ops team. It’s easy for CS Ops to fall into “reactive” modes where they’re managing the organization’s efficiency, planning, intelligence, and systems.
But they also need to become a strategic advisor to the CS leader to be a mature CS Ops team. And that shift happens by:
Last week we held a live Q&A with four Finance leaders on how senior-level Customer Success executives should approach budgeting and planning conversations.
For context, the decision to hold a panel on this topic was a response to the engagement we saw around a blog post on speaking the language of the CFO. We heard that “finance” tends to be one the Customer Success leader’s biggest areas of weakness and that it’d be useful to have more training on how to improve. So we invited four top Finance leaders to answer the audience’s questions on how to best approach budgeting conversations, what KPIs to track, how to handle salary increases for top talent, and more.
Below, you’ll find a summarized version of the full discussion. If you’d rather listen instead of read, you can find the conversation on the 'wellsaid podcast (on Apple Podcasts, Spotify, or Transistor) or watch the full video below.
About the panelists:
Moderator: Nuffsaid’s CEO, Chris Hicken, moderated the discussion. Chris has 15 years of experience as a leader, investor, advisor, and board member, and was formerly the President and COO at UserTesting.
Chris: Let’s kickoff the discussion with a broad question. Who is the best executive you've ever worked with and what made them the best?
And by the way, the answer doesn’t have to be a Customer Success leader. We want to hear from you, in general, what a great executive partner looks like.
Ed: I've had the privilege of working with many great executives across my time here at Lever, Box, and Salesforce. I'm not going to name names as the list would be too long, but I'll highlight a few of the characteristics that, to me, make executives stand out: clear thinking with great vision, organized and prepared, disciplined and operationally sound, strong convictions but collaborative and open-minded, decisive, high integrity, a great moral compass, and very empathetic.
I've also always appreciated executives that understand the finance fundamentals so that we can speak a common language.
Chris: You said something that’s that's potentially hard to achieve, “strong convictions, but collaborative.” How does one have both?
Ed: Yeah. I appreciate executives that have a strong opinion, but they remain open-minded and can work with others. I don't think having strong convictions necessarily means you’re not open to change. It just means that you have a strong view towards something.
Tricia: I’d also add to that, to the fact that it's really important that you do have a collaborative partner. It's about having a discussion as opposed to feeling like you're being pitched to.
There's nothing that raises my skepticism more than when I'm feeling like I'm getting pitched to. Particularly if, you know, someone's coming in with an answer and trying to convince me of something that the data doesn't necessarily support or an answer that I otherwise wouldn't logically arrive at.
A better approach is to come in and say, here’s the facts, here’s what I know we’re trying to do as a business, and here’s how my team can contribute to that. Or, this is the issue we’re trying to solve, here are three options we can go through, and here’s the option I think solves the problem best.
It's not a pitch, it's a discussion where there's openness just naturally in that type of discussion on both sides to get to the best answer for the business.
Chris: That's a great description of how to be collaborative, even if you have an opinion going in. Anything else that you would add to the list of characteristics that make a great partner on the executive team?
Tricia: I totally agree with ed about integrity—just having a sense of integrity is absolutely key.
But also, to the finance side, the strong folks I've worked with tend to have a strong command of the key metrics and levers of the business. They understand our five-year plan and what our strategy is to get there. They understand their role in that process. They also understand what drives enterprise value and can speak to their investments in how they grow that enterprise value, as opposed to the small view of here's what I need for my team. I'm hearing that my team is overworked and overwhelmed, and I just need more people. That's a very small narrow view of how to manage a business, but understanding how to link that to how it's going to drive enterprise value is how to get a yes from a CFO.
Marc: I'll just add that empathy also goes a long way in a relationship.
We all have different goals and limitations, and having an understanding and appreciation from executives about the varying priorities we have as an executive team is super important to me.
When someone says “I understand your goals here,” or “I want to understand your goals here at the outset of a conversation is,” I find that powerful. So for me, empathy and communication always rise to the top of important characteristics of a strong executive.
And when you you're working with great executive, the comment about being able to change their mind and being open—like actually being open to changing your mind based on that set of competing priorities—is also incredibly important to me.
Tien-Anh: I totally agree with all the characteristics that Marc, Tricia, and Ed have shared. All three of you did not name names, and I'm going to name some names.
I was recruited to UserTesting from OpenView, a venture capital firm, where I was able to meet a lot of different companies and a lot of executives, but I really fell in love with UserTesting. I joined the company because of Chris right here. And I learned that Chris was a great partner. For me, I valued that Chris was very organized and has a way to structure the strategy of his organization, and communicate the focus and goals of the organization.
That’s an incredibly important characteristic because the CFO really wants to understand what their partners’ number one goals are, and how they’re making priorities and how they fit into the overall company strategy. It’s important for an executive to be able to communicate that they understand the organization’s goals and priorities and how that feeds into the company's goals and hiring these help.
An executive should also be able to show that they can delegate. As a CFO, it helps to know that they can rely on their executive peers to be efficient and that they can build a team that they’re able to rely on.
Tricia: One final thing I’d add that I think Tien-Anh touched on is really important, which is about the building of trust between the team. I find that, just as Tien-Anh said, there are executives on my team that, you know, we've been to battle together. They've said that they're going to do something as a result for an investment, and they delivered. So the next time they come into my office and they say, “hey, this is what I'm thinking. I want to do x, what do you think?” I'm more apt to be like, yep. I know you can handle it, and I'm not going to dig in as much because we’ve built that trust.
When you build trust, you get more flexibility. So I would just advise folks that where you can actually start building that trust and relationship with your CFO, that's going to be key to getting to a yes in the future when you need it.
Chris: That’s great. And Ed, the last thing that I think everyone will be interested in hearing a little bit more detail from you about is you said you appreciate executives who have had at least basic finance training. What does that mean for you? Is that like someone who's has MBA-level finance training, or they've been to courses, or they've just had a lot of experience working with CFOs?
Ed: Yeah, so something that Tricia mentioned that resonated was that I appreciate executives that understand enterprise value, shareholder value. They understand the metrics and the business performance results that drive valuation. And these are not super complex concepts. The metrics are pretty clear out there on the types of things that we have to deliver as a business.
So for starters, I think understanding an income statement is table stakes. I think for folks who are either who I've been in Customer Success for a long time, or are just getting into it, believe it or not finance folks aren't evil and they want to help.
I guess a description that I didn’t including in my list earlier was business partnership. That's something I think most CFOs really appreciate. And a partnership means things go both ways, so you come to your finance partner and we're happy to talk to you about the value drivers of P&L, or why certain accounts and a balance sheet matter more than others, or what cash flow really means and how investors think about it.
When you start that dialogue and you start talking about whether it's your three statement model or whether it's the various ARR metrics that matter. For CS, sit down and have the conversation with us and no questions are dumb questions. Because the more educated you are as CS leaders, the more successful the company is going to be.
Marc: I think that's great. I agree with you, ed. I'll just add that building the connection between what's happening in CS to those broader company metrics is critically important.
Like, to your point Ed about understanding things like what customer success looks like, and are there more profitable customers or not? Are there more demanding customers or not? And what are the characteristics of upsell or resell or renewal? Those are things that are components of the overall company ARR metric, or revenue metric, or head count metric. So what's the connection between what I do on a day-to-day basis and how I think about the customer and the customer relationship, to the overall company goals to the overall company P&L, MRR, and spend target?
Chris: Since we're already talking about metrics, let's go ahead and segue into the next question, which is focused purely on metrics.
As CS leaders, we all report to the CFO what our retention rates are, our net gross retention rates and our health scores. But those numbers tend to be lagging indicators of portfolio performance and we're trying to predict forward. So what additional leading indicators, um, do you find especially valuable, or what do you wish that Customer Success was reporting to you so that you could do a better job of forecasting?
Marc: Well, I get a weekly Customer Success update from our CS leader that has a whole host of metrics, narrative form, as well the numbers.
One of the places I always look is the zeros—obviously a P0 is a pretty critical indicator of a future problem. Also, Support metrics. How many tickets, what's the response time—those are great early indicators. Customers that are submitting more support tickets that have a slower response rate are going to be part of my problem on renewal.
Ed: I mean, similar to Mark, those are very familiar metrics on our end. You know, one thing, our, our amazing, CXS leader here at Lever focuses on is actually new business customers. So customer inflow based on the different segments that we have, whether it's small business or mid-market or enterprise size customers for our profiles. So we’re looking at what our new business sales teams are forecasting in terms of not just ACVs and ARR, but also the number of customers per segment that they’re estimating are coming in the pipe. That sort of leading indicator allows our success teams, whether they're CSMs or preserve or implementation or support, to make sure that they're prepared to offer the right level of support for the right level of customer and make sure they have the right capacity.
Chris: Ed, does your team also track first year renewals differently than recurring customers who have renewed at least once in the past?
Ed: Yeah. It is something that our CS team tracks. It doesn't necessarily reach me on a repeatable basis, more like on a QBR basis. But the distinction between more tenure cohorts versus new, is something that we, we definitely paid attention to.
Tricia: One key metric that we've found is usage. We think it’s a great leading indicator for retention. So for reference, we’re a community platform. So the number of people who are logging in the amount of activity between all those folks really indicates the value that the client is getting out of our product. And when it comes down to a decision, whether they're going to renew or not, of course, they look at well, what value are we getting from our product?
And if they're not using it very well, or, you know, folks aren't logging in, then that's a main reason why people would leave us. So being able to look at that usage data and then identifying clients who have a low amount of usage and then proactively reaching out to them and saying, “here are our best practices, is anything we can do to support you in order to increase the amount of usage?” — this will definitely help reduce the amount of what I call preventable attrition.
So it's a key metric for us.
Tien-Anh: I agree with Tricia, we look at usage all the time and you know, usage really becomes part of the health score that we review as well. But I would just also add that it really also depends on the scale of the company.
What I have found is that for companies that are the earliest stage in the life cycle, you know, when they don't have thousands of customer or when they don't have thousands of data points, usage is a little hard to measure and a little hard to infer on. And in that case, what I have found to be effective is for the head of finance to actually be embedded in the renewal forecast or the CS forecast meeting, and really understand case by case what is happening with the customer.
But when the company gets to a certain point, when the customer base gets to a certain point, then usage metrics and other metrics become very powerful. I can see that from my own experience at UserTesting into the last five years now, we mostly manage the business on a portfolio perspective.
We'll look at metrics across the different segments, different cohorts, but usually they are becoming more and more predictable for us.
Chris: We have a question that came in from the audience that we'll take offline, but the audience wants to know how you're receiving your KPIs. So is it a dashboard BI tool, CS tool? Is it an Excel spreadsheet? We don't have to answer that live, but people, we, we might take that offline and just get your thoughts on that. I want to keep moving here because we still have a ton of more questions to get through.
So, without boundaries in place, the budget for CS tends to grow linearly with the growth of the company. And so as a result of that, its kind of a favorite place for finance leaders to look for ways to reduce customer success costs as a percentage of revenue. So the cost to retain customers. And so, in the past, what arguments have CS leaders made to convince you to increase your investment in CS as a percentage of revenue?
Tien-Anh: One of the common approaches is to speak to how over-investing in Customer Success now will help ramp up the team quickly and support the growth of the customer base. You can argue for a short-term deficit to level-up the outcome and retention rate in the future.
Chris: So the points that CS leaders have made that convinced you are, they mentioned that retention will improve in the long-term. And the second piece is expansion. So it looks like there's a component of a retention, that's not just the dollar for dollar retention rate, but it's actually the expansion dollars, it's the cross sell and upsell, so it sounds like that's potentially a compelling argument as well.
Marc: To me, it goes back to the customer. What are your goals with the customer? What are your expectations with the customer? What response times do you want? What level of project management do you want on implementation? What level of service do you want? And there's a collaboration that happens around what that means in terms of head count, internal spend, or prioritizing one customer over another, oftentimes that has to happen.
There's just often too many fires to fight. When do you concede on rate? You know, we try to always go back to the the customer, so how's the customer going to perceive this? And are we investing for the long term with this relationship?
Chris: Yeah, that's compelling Mark. So it's kind of like this level of investment gets us X. This little level investment gets us Y. And we as a company, where will we decide to make our investments in the portfolio? That's, that's a nice way to think about it.
Ed: I couldn't agree more, particularly on having a CS leader be able to play back to me their understanding of the importance of gross and net retention and LTV. That goes back to that sort of fundamental finance knowledge that I would, I would really encourage folks that if you feel any insecurity about anything we're talking about here, reach out to your finance business partner and they're happy to educate you.
I've always appreciated CS leaders who talk about productivity gains on a per rep or per FTE basis versus just raw capacity.
Like, hey, I need more CSMs because our customers are growing 50% year over year. And you know, this is what the CSMs could cover last year—so it's just a ratio. I'm like, well, it's not really just a ratio. Right? We've been investing in systems. We've been investing in customer marketing. Our product has gotten stronger. That should lead to on a per FTE basis, people to perhaps cover more or reach more customers. So I've always appreciated folks that go that extra step to show that, hey, by investing another, you know, 15% in this area, You're going to see a productivity gain on a per unit basis versus, you know, this is just what we need to cover, you know, cover the needs of the business and the same way go.
Like if I was talking to a new business sales leader on a per rep basis, you know, when they talk about attainment against quota, um, with everything else we're investing in the business, I think CFOs are always looking holistically across the business. We're plowing investment dollars in the R&D and, and product and marketing—all those things should be leading to a stronger value proposition for your product, which should make us see us leader's job, hopefully a little bit better in the next year, and be able to enable them to sign up for productivity gains.
Tricia: I think everybody covered kind of my thoughts, but the one thing I would add is that I think the metrics are important, but as a finance leader, that's not the main driver for what budget ends up being for CX it, is it their goalposts or boundary lines, just to give you a sense for where you are, but ultimately like how much you actually invest in the CX organization is determined by exactly what Marc said, like the service level that you need to give your customer base. And that differs widely depending on what type of business you're in and what your customer base is.
So understanding that, and, and also to what Tien-Anh said, if you're in, in a stage where you're going through a huge change in the organization and you're trying to become more efficient, and it requires some initial investments so that you can transform that organization to scale as the business scales, then it makes sense to spend more money now. So those metrics again are really goalposts and it's all those other factors that need to be considered and discussed to determine really what level spend is required.
Chris: Do you have a rule of thumb for what the right level of investment is in customer success as a percentage of the cost to retain customers. Do you have any rules of thumb that you use to determine what the right level of spend should be? And if anyone has an answer besides “it depends” because I think that ends up being the answer, but if anyone has an answer other than it depends, I think the audience would like to hear that from you.
Marc: We try and stratify our customers into various categories. Blend is the application layer between consumers and banks. We sell primarily to lenders that are collecting consumer information. So we think about our biggest customers, the strategics differently than we think about the smaller customers.
We think about banks and credit unions different from independent mortgage banks. We think about depository institutions, different from independent mortgage banks. So I think that for me, it's about working with your finance team to figure out what the right goals are because eventually this all rolls up into some budget.
It's not like, Oh, we want it. Everyone's like, Oh, well we want to have the best customer service ever. And then there's like an unlimited pile of gold to making that happen—no, there are sacrifices and prioritizations that have to happen. There's limited time and there's limited money. So yeah, I think we at least work with our teams to create goals on how we want to treat different piles of customers or different times. And, and if there's a set of challenges, those, you know, if we're rolling out a new feature, that's particularly impactful to this set of customers, we're going to shuffle things around in order to make sure that we're delivering the right value to make our customer successful.
Tricia: If I can just give some practical advice who whomever asks the question, I think the best way to kind of handle it is to understand where you are today. And then start thinking about how you can develop a plan to improve that over time. And that will go a long way regardless of where you are, whether you're at 14% or if you're at 5%.
Just having a plan to start having that discussion with your leader. And then again, as I said, there's so many other factors in there about where it makes sense to spend more money in order to support your clients and maintain a certain retention level, have those conversations. But that's where I would start rather than trying to pinpoint a specific number.
Ed: I think Tricia nailed it. I mean, from my perspective, I think if you're presenting a draft of your investment plan or portfolio to myself, for me to feel like not only do you have a plan but that the plan is in-depth and demonstrates your knowledge of what it takes. And whether it's like not just anecdotal customer quotes, but just data that suggests like customers have a higher propensity to, to renew upsell, cross sell, etcetera.
When these types of things happen and those types of things typically have a cost that come with it, cause it can vary. For some of us, for different places I've been in investment, oftentimes can certainly go to see us department that's whether it's preserved, you know, IAA or CSMs or support, but it can also go into things like R&D to fix bugs. Maybe you have an underserved R&D function where folks are focused too much on innovation and not enough on just fixing what you've got and that's actually leading to your highest churn rates.
So I think coming to us with a a well-balanced cross-functional view on what's it going to take to retain customers and grow your base is really effective for someone like myself. Also just like understanding sort of the elements of gross margin and how you play into that as well as the elements of your organizations that may be hitting sales and marketing costs, because we care a lot about gross margins.
We care a lot about sales and marketing efficiency, both gross and net, and some of your costs land in both. So demonstrating your knowledge of you play a role in that, I think helps us sort of connect us from a language standpoint.
Chris: There’s one last budgeting question. What are some common mistakes that you've seen CS leaders make when they're advocating for budget or basically they killed their chances of getting a better budget outcome?
Tricia, you mentioned coming in with a sales pitch. That sounded like a clear losing approach.
Tricia: Yeah. Sales pitch, or just coming at it from that type of approach. “We're overworked. We got too much work, so I just need to add head count.” And not coming with any sort of analysis or data or connection to the overall goals of the business. Or just feeling like you're trying to build an empire, right. It's the “let me hire as many people so I can.” You know, rule over my fiefdom like that.
Marc: I'll take the positive on this one is that to the extent that CS goals and budgets are connected to the company's mission, vision, values, and principles, um, around how we treat the customer. Then that's a winning budget for me.
Like our goal is to reduce response times to X and to have assigned account managers to, for Y and I to roll out these new features for Z and, and to support that this is what we think we need. And this is the data that supports why. I think my request is a reasonable one.
I really do want people to come back to me, not the renegotiate, cause it seems like it's, there's like two sides of the table, but to the tell me that conditions have changed. I'm doing better and things are happening faster than I expected or things are slower than I expected. I need to add headcount midway through the year. And we're lucky enough to be still be private. So those, those mid-year adjustments are possible, and are reasonable and connected to the company's mission, vision, values, and goals.
Chris: Awesome. So the audience wants to hear about your opinions about the best way to calculate the cost to retain revenue. So specifically, what things should get included in the cost — like CS, services, support—what gets included in the cost, and then what gets included in the revenue. So, gross retention rate, upsell, cross sell. Is there a formula in there that you really liked that you've honed in on that you feel is the most helpful for managing the cost of retain revenue?
Ed: I don't have like a battle-tested formula so to speak. I’ve found in different places I've been, there are different costs related, but what I will say is I think about the costs to retain as truly a cross-functional effort.
I truly believe investments, whether they are across the obvious departments, that some of the folks on this call lead. But also going back to R&D and product and just making sure the product works well, performance is high, your platform is reliable. Those costs, I would allocate a portion of, I look at even customer marketing, what we invest in that area to make sure customers are informed.
I also even think about the backend of departments. Like I want that billing experience to be something that is very consistent with the brand of our service to our customers. So I kind of look across the whole spectrum and I partner closely with all the execs and the thought leaders within my company to make sure I understand the details around those. And then we look at that holistically, and we allocate where appropriate, but really it's kind of across the P&L so to speak.
Tien-Anh: One of the things that I find very important about the metrics is that they have to be pretty simple and straightforward to calculate and easy to agree to across the company, especially to my fellow executives, because I'm going to use that to speak to them in the budgeting conversation.
But I'll be in there also in the performance discussion. So for me, I actually just take it very simple. I just take the cost of the CS organization, whatever rolls up into the CS leader and divide it by the total revenue of the company.
And the rationale for that is that, again, that is a metric that they can measure. They can manage, they can manage their budget, they can manage the organization. So if they need to improve it, they know where to go. And then on the same time, the, the revenue really truly represent the scope of the work that they have to do.
You know, any customer that is a revenue generating customer is the responsibility of the customer success team. Uh, you know, even if they are not renewing this, this quarter, right this month, the CS team is still needs to work on them. I still need to, uh, maintain them and support them in whatever way. So in a way, the CS team is always responsible for all the customer, for all of the revenue of the company on top of whatever the sales team is doing.
So to me, that's the way I tend to think about it. And I find that it's. Easy to use that very simple, um, uh, calculation to stick with, to my, both my CEO, uh, my fellow executive and especially the CS leader.
Marc: I agree. I'll just add that I caution us to be careful about creating a metric that is the lowest common denominator and is therefore relevant to no one. So to the extent that you can, have examples and data points and even anecdotes. And sometimes those have to be in narrative form and not in the form of a metric or a mathematical formula.
Chris: So there's been an explosion and SaaS, we're spending a lot of money on software now. Which software investments do you think have produced a great return for customer success and which haven't?
Tricia: Well, I have to say, so we actually just implemented Zendesk and the experience thus far has been super awesome in that we're finally able to get our hands on some data, because a lot of things that really drive like where we're taking a corner or shifting or going down another road is determined by understanding why our customers are leaving us. When they're calling in for support, what's the most common reason for them calling in to support. We can automate something in some way or fix a bug or having that data is what helps you actually create the operating leverage that you need, which means that, you know, CX is a smaller percentage of your total revenue.
So Zendesk has been really great in just getting us to that point because that's that's where we are in our evolution. We also have Salesforce, which just gets us visibility into the customer from a 360 degree view and is also really helpful, especially as we get usage data in there, it becomes very powerful for analytics.
The jury is still out on Gainsight. We do have Gainsight, but I would say the jury is out.
Ed: I would literally just echo what Tricia said verbatim. So yeah, even down to the Gainsight, like jury's still out.
Marc: Yep. Same with us. Although I layer in Asana for some of the project management piece, the team seems to be happy with that.
Tien-Anh: It might be more specific to my company but a lot of our CSMs find that actually having access to LinkedIn sales navigator is very powerful. And that's because it just allows them to build stronger relationships with their enterprise customer base.
I was skeptical of, of that for a long time because I felt that CSMs are not salespeople. Why do they need sales navigator? But they eventually convinced me.
Chris: Okay. Next question from the audience, and this one's a little bit more tactical. People want to know what the best way is to report their high and low performing CSMs. And I think what's driving this question is how can they advocate for budget increases to pay top performing CSMs more?
Tien-Anh: I will say CSMs are not like salespeople. Um, I think that sometimes the best measure of a CSM success is what the customer feedback is on the, what the customer survey says about them and the best CSM that I have worked with, you know, get that kind of feedback from the customer directly to management.
Sometimes the CEO gets an email from a customer gushing about the CSM. So that it comes in, in the engagement from the customer, it comes in in a long long-term view of performance. And, and it is where I have been thinking a lot about how to measure a CSM performance. You know, a lot of people do what are the performance of their retention rates.
But I, I started to think that you have to look at the whole portfolio of a whole period to really see how well they do with their customers and how well they work on the beginning of the year to see their fruits at the end of the year. So I would say it's hard to just use, you know, a couple of data points, a couple of metrics to run your CSI, because that's not always the, how, how CSMs outcome can be seen.
And you really want to have a pals of how they work with the customer.
Ed: Our CSMs are hybrids, so they both provide support and service to customer questions, but they also upsell and cross sell.
And so it's more of a book of business approach where on a per CSM basis, we'll look at the components of their net retention. We'll look at, in their territory and within their cohort, on any given quarter, you know, how they're performing against renewals and upsells and expansion and cancellation churn.
So it's pretty straightforward. From that regard and we can just, you know, look at the full roster. We're not that big. So we can look at a per, you know, per rep basis, um, per CSM basis and determine sort of who's at least statistically performing the best. And then obviously we would look at that some of the qualitative nuances as well, same, same, we're doing, we're doing the same in resonates with us.
Chris: I just want to take a moment to thank everyone on our panel for joining us today. You've really helped us think, uh, more deeply about how to partner with you in finance, how approach budgeting, how to think about leveling up our finance understanding, and connecting stories to the company goals and to enterprise value.
So thank you all for joining us today, and thanks to everyone who tuned in to the conversation.
When there are too many customers per CSM, the smallest customers suffer from a lack of attention. The solution for many modern Customer Success teams is to create a low-touch engagement model (sometimes referred to as Pooled CSM).
But the low-touch experience—a hybrid engagement model that’s both digitally-led while still offering access to a proactive CSM—requires different technologies, skills, processes, and goals to provide a great experience to customers.
Done well, it’s a powerful and proactive experience. Done poorly, it’s really just Customer Support Plus (or worse, a graveyard where small customers go to slowly wither until they churn).
This post covers the foundational parts of building an effective low-touch model:
Thank you to everyone who contributed to this piece through interviews, feedback, and edits, including Nick Mehta, Kyle Poyar, David Sakamoto, Kristi Faltorusso, Boaz Maor, Brian LaFaille, Emilia D’Anzica, Andrew Marks, Ed Powers, Elisabeth Courland, Selena Papi, David Ginsburg, Emily Garza, Shane Correa, Steve Sanchez, Jeff Breunsbach, Kristina Valkanoff, Jason Noble, Shadavia Jones, and Shannon Dunlap.
To understand where the low-touch model fits, it’s useful to visualize the different types of engagement models on a scale from low-touch to high-touch.
On the far right, we have a human-led experience. And on the far left, a digitally-led experience.
Here’s a quick overview of each experience:
Variables that determine which engagement model to implement
Most businesses don’t need all four engagement models, so one way to think about which model(s) make sense is based on the complexity of your product(s) and the potential ARR of your customers.
Here’s a visual to help explain:
To summarize this graph:
Product Complexity
How easy it is to use the product without help from a human?
Potential ARR
How large can customers in that segment become over time?
When considering what model is right for your business, you may also consider how serving each segment will affect your Customer Lifetime Value (CLV), Cost to Serve (CTS), and ROI. For that exercise, Ed Powers (Principal Consultant at Service Excellence Partners) has shared this calculator (with dummy data) to help you think through different scenarios.
Moving forward, this piece will solely focus on the low-touch engagement model.
Building out the team and technology to drive an effective digitally-led experience requires a significant investment. Most teams tend to incrementally mature their model over time:
Level 1: Dedicated CSMs
Most Customer Success teams start with a model where every customer gets a dedicated CSM.
“Level 1” has the following characteristics:
Benefits:
Drawbacks:
Level 2: Technology-assisted CSMs who actively drive engagement
Level 2 is possible when support systems, content, and technology have been implemented to enable a small group of CSMs to manage a large portfolio of customers.
Some of the defining characteristics of Level 2 include:
Benefits:
Drawbacks:
One of the best examples of this model is from Brian Lafaille, Head of Customer Success Strategic Programs at Google (Looker). In creating his model:
Level 3: Fully technology-driven engagement and intervention
The third and most advanced iteration of the low-touch model is to build a digitally-led experience that proactively helps customers adopt the product. There are no 1:1 engagements between the CS team and customers. Team members behind this model are responsible for routing additional educational resources to customers when they identify signs of churn risk or growth opportunity.
Level 3 is the highest level of maturity within the low-touch model, but only companies with low product complexity are likely to pull this off. Most companies with high product complexity will go no further than Level 2, as some level of human touch is required in onboarding or adopting their product.
Here’s what Level 3 looks like in practice:
The principal benefit of this approach is scalability. Level 3 enables companies with low product complexity to support an ever-growing customer base to achieve their desired outcomes.
Drawbacks:
Since the 1:many model is primarily digitally-led, Customer Success leaders need to build teams with different skills than in 1:1 models.
Key skills to have in a low-touch team
Ignoring titles, there are six skill areas you must add to your team to build an effective low-touch team. These skills can be hired, nurtured, or borrowed from other teams.
Career paths for CSMs in a low-touch model
CSMs in a low-touch model have a unique opportunity to grow their careers in many directions. In many teams, they can move “up” within the low-touch model (from a more junior CSM to a senior CSM), they can move horizontally into serving a dedicated CSM segment, or into a more customer marketing or marketing-focused role.
For example:
Many companies implement a low-touch model that requires CSMs to perform the role of Customer Support Representative + Renewal Manager. But that strategy ultimately leads to high churn rates and ignored customers. As companies become more sophisticated, they scale from Level 1 to Level 3 in their low-touch model, creating engaging experiences and dramatically reducing churn rates.
This article is part of our Perspectives in Customer Success series where top Success leaders share how they’re building, coaching, and scaling world-class teams.
Marketing departments have recently focused some marketing programs on engaging existing customers. These programs were quickly renamed “Customer Marketing,” and that’s about as far as we’ve come defining this important function. The result: different implementations at every company, unclear success metrics, failed programs.
My degree is in Journalism and Marketing. I’ve worked on the Marketing side in PR and social and also on the Customer Success side of things. So while I’ve always been customer-facing, I also have a marketing background that’s helped me identify this major gap that so many companies experience. They pour energy into marketing to potential customers but then neglect their existing ones.
Now, as the Head of Customer Engagement at Typeform, I’ve helped build a Customer Marketing team within our Customer Success function from scratch. We’ve improved how this team works over time and with each new hire; so here, I’ll share how this team is structured, how they work in general and with Marketing, and how we measure the team’s success.
Note: The team is formally called Customer Lifecycle Marketing, so I’ll call it that from here on.
Typeform’s Customer Success group includes four teams: Support, Education, Lifecycle Marketing, and Customer Outcomes. I lead the two proactive teams: Customer Lifecycle Marketing and Customer Outcomes.
“Customer Outcomes” is our name for the Customer Success Management team. Since the whole Customer department is called Customer Success, we had to come up with a different name for the CSM team, and we took inspiration from Gainsight that also calls their CSM team Customer Outcomes. I think that's an even better fit. CSMs exist to help customers reach their desired outcomes, and the name “Customer Outcomes” reflects that.
Now, compared to other functions in a company, Success can often have the deepest understanding of the customer from their 1:1 interactions (the group that can have a more thorough understanding of the customer is the Data and Strategy team, like the one we have at Typeform.) Still, Success is the group solely focused on the customer. They have rich insights about the attributes, behaviors, and processes of the most successful customers. That’s why it makes sense to have a customer-focused marketing team embedded in Customer Success.
Customer Lifecycle Marketing and Lifecycle Marketing work closely but have different objectives
At a high level, Lifecycle Marketing is focused on new business and Customer Lifecycle Marketing is focused on retention and expansion. When a user or company becomes a customer, the Customer team is responsible for everything from onboarding through the rest of the customer lifecycle.
What Customer Lifecycle Marketing is responsible for
Customer Lifecycle Marketing is focused on retaining and growing the customer base. They own sustained usage, expansion, and advocacy programs—programs that use channels including email and in-app messaging.
One of the core competencies in this role is the ability to identify the key drivers of engagement and the moments that matter for each customer segment, so they can continuously improve customer retention and expansion efforts. I’ll cover more on how they’re able to do this later.
How Customer Lifecycle Marketing and Lifecycle Marketing work together
In practice, the Customer Lifecycle Marketing and Lifecycle Marketing teams function as a single team. They align regularly on a daily and weekly basis. But they own their own programs to make sure they have clear, separate metrics they’re working towards.
Customer Lifecycle Marketing teams help eliminate internal friction around customers
Beyond serving as a way of building prospects’ confidence and helping customers achieve their jobs-to-be-done (with onboarding, inspirational content, best practices, and more), having a well-functioning Customer Lifecycle Marketing team has bettered the organization as a whole. It can help even solve common internal problems.
Here’s an example of how this might look in practice: it’s hard to know who to go to for finding customer references in many companies. A Customer Lifecycle Marketing team can eliminate the painful back-and-forth between Marketing and Customer Success to identify good candidates. So, whether it be sales references, webinars, or case studies, assigning ownership of that task to a single group can eliminate the risk of tension caused by asking too much of customers.
Lifecycle Marketing is also great for managing communication fatigue. It can get out of control when different teams are contacting customers for different reasons without a sense of alignment from within the company. We manage this by requiring all teams to submit a request when they need to contact a customer or prospective customer (our primary reason for doing this is to ensure we’re GDPR compliant, but the byproduct of this practice is that we reduce disjointed communication with customers). When a request is submitted, both Marketing teams are automatically notified—Marketing handles the requests to contact prospective customers, Customer Success handles existing customers.
It’s a perfect time to share the metrics we pay attention to in Customer Lifecycle Marketing since we’re just finalizing our OKRs.
As a high-level overview, here’s how we identify the metrics we care most about each quarter:
For Customer Success, we used to focus on metrics like Customer Retention—but, being a lagging metric, it was frustrating for a lot of team members. It was hard for them to see a direct correlation between their efforts and retention. This was especially true for the Customer Lifecycle Marketing team since there are so many customer actions and marketing activities that happen between launching a new workflow and the customers’ decision to renew or cancel their subscription.
But we also didn’t want to focus on vanity metrics such as open and click rates. So we sat down with our Strategy and Data teams to brainstorm which leading metrics would be best for our team to rally around.
In that conversation, we knew we had two non-negotiables:
After a few discussions, we circled in on using product usage metrics. For example, with usage metrics, we knew we’d be able to see if a user that never used an integration before activates a new one after opening one of our emails. But because we run true AB tests (50% of customers enter the workflow and 50% are left out), we can also see if customers that were exposed to the experiment perform better at other metrics. Because, in the end, customers can use integrations (referring to the previous example), but still churn nonetheless. That’s why it’s important to pair leading with lagging metrics.
To identify which product usage metrics to track, we again worked with our Data and Strategy teams. (We have one member of each Data and Strategy team dedicated to Customer Success so they can not only help us define OKRs with the highest opportunities but also help us analyze the results of our projects.) In this case, we leveraged existing analyses on which features were more correlated with higher retention rates. Then we set goals around improving the percentage of customers using each of those features.
When Customer Lifecycle Marketing teams are responsible for identifying the key drivers of engagement and the moments that matter for each segment, it’s essential they have access to customer usage data and customer calls.
Currently, our Data team helps with this by analyzing customer usage data and combining that with customer interviews to create reports that the Customer Lifecycle Marketing team can leverage.
But for companies without a Data team focused on customer research and retention, I’d recommend putting into place a VOC program. Here’s how I’ve done this in the past:
A Voice of Customer Program is a process for collecting, organizing, and relaying data from customer feedback. It can be used to help the Customer Lifecycle Marketing team develop a deep understanding of our customers and identify their business objectives, challenges, and the value they get out of the product so they can create strategies for new feature adoption, expansion, and more.
When I implemented a VOC program in the past, we started by identifying the three different types of customer feedback we wanted to gather. We came up with Given, Requested, and Observed feedback:
To organize all this feedback, we created a three-level tagging scheme that we used across all those feedback sources. The levels were: type of feedback, product area, and feature name.
Collecting this feedback in a single source (if you don’t have a Data team helping do this with you) can help the Lifecycle Marketing team analyze the customer experience and create targeted strategies that will have the greatest impact on retention and expansion efforts.
I believe that building a customer-focused Marketing department, and a Customer team with Marketing capabilities built into it, will allow companies to significantly provide more value from the minute someone becomes aware of a product all the way through their experience as a customer. Ultimately, companies will see the results in their ability to retain and expand customers.
This article is part of our Perspectives in Customer Success series where top Success leaders share how they’re building, coaching, and scaling world-class teams.
The skills top CSMs wield—the ability to think strategically, map customer outcomes to product solutions, share relevant best practices, and leave customers with a positive feeling about the company—are all learned skills.
But too often, CSMs are left to learn those skills on their own through years of experience working with customers, and not necessarily years of coaching and development experience from their managers, or from working in environments with the right tools and processes to accelerate their career growth.
If Directors of Customer Success are in a situation where they need to hire more junior CSMs and level them up, or are otherwise looking for ways to develop their team, they should begin by looking at the foundation they’ve set for the team. And that foundation is something I call the role profile.
A role profile is essentially a rubric for understanding what the CSM role is, what it’s responsible for, and what it looks like for someone in that role to be performing well or not. It establishes expectations around goals and standards and is used as a way to evaluate how we’re doing against those expectations.
It’s an exercise that, when done well, will help build a culture of clear expectations and high performance.
Here’s how to create a role profile for CSMs in your company, and then (in Part 2) how to put the rubric to work.
It’s clear that Customer Success is having an identity crisis. One company thinks of Customer Success as a support function, the next considers them a catchall bucket, “the team that does everything post-sale”. But when the responsibilities of CSMs aren’t clearly defined, and when they’re busy juggling all post-sale activities, they’re less likely to be consistently focusing on the right tasks with the right customers.
Further, research shows that role clarity impacts performance. In situations where employees understand their responsibilities and how their role fits into the broader organization's strategy, they’re more likely to remain engaged and motivated.
Directors and VPs can clarify the role and create a rubric for CSMs by answering the following five questions.
1. Why does the CSM role exist?
This isn’t a philosophical question about why CSMs exist in general. It’s a question about why CSMs exist here, at your company.
The answer to this question can be positioned as a Purpose Statement. It’s like your company’s mission statement but for the CSM team; it should be simple, easy to remember, and focused on the customer. It should be tied to the company’s mission, too.
Here’s an example—the purpose statement of CSMs at Degreed:
“Degreed CSMs exist to cultivate in our Customers a curiosity, capability and commitment to building expertise in their people.”
The words in bold—to build expertise in their people—are a core part of the company’s manifesto and mission.
It takes time and plenty of iterations to articulate what your team is all about, partly because every word included in the statement matters. But it's worth it because the answer to this question sets up the foundation for everything else.
2. What are CSMs responsible for?
After understanding the purpose of the CSM role, get clear on the responsibilities that CSMs have to fulfill to achieve that purpose. In short, this answers the question, “What am I going to be measured on?” by identifying the core responsibilities of the CSM role in your company.
There are two high-level groups of responsibilities you should consider - i.e., what CSMs are responsible for: customer outcomes and company outcomes.
The way to create clarity and focus around how they should spend their time to create the above outcomes is to list the outcome drivers the team should focus on.
Your team’s outcome drivers will depend on your company’s product and growth stage. Here are a few common outcome drivers CSMs are responsible for that you can pick and choose from:
3. How do CSMs do their job well?
What does “wildly successful” look like in the CSM role? Beyond communicating what CSMs are responsible for, the Head of Success should also communicate the behaviors expected of CSMs.
This is a place to highlight the behaviors you want to see in the team, and clarify the skill sets you expect them to grow or have in each role. In short, you’re deciding on the mindsets and the skill sets required to do each job really well.
We use a version of this as a guide for hiring and development and reinforce them through recognition and rewards and managing performance.
4. What do CSMs need to do their job well?
When we enable CSMs to give their best and focus on the Customers, they deliver indisputable value and exceptional experiences to Customers.
To do that, I regularly assess how we’re doing across this operating framework: there are four operational dimensions that CSMs need to prosper.
If these organizational dimensions sound familiar, it’s because they’re inspired by Gallup’s 12-question framework for measuring employee engagement. If you haven’t already, go read 12: The Elements of Great Managing. It’s worth it.
There are different ways to gather this data, like surveys, in 1:1s, in skip-level 1:1s, and through anonymous feedback forums. The mechanism for getting this information is negotiable and it may change as the company evolves, but the cadence at which you review the data shouldn’t. Don’t skip these reviews.
5. How do CSMs know they're doing their job well?
The final question comes down to metrics. You’ve clarified the responsibilities and expectations of CSMs—now, how do they know if they’re doing a good job?
In short, the metrics you choose should be aligned with the Outcome Drivers you established in step #2 (above). If you expect CSMs to drive adoption, engagement, and advocacy, then establish leading and lagging indicators to tell the team whether expectations are being met. The biggest challenge I’ve experienced in this critical step is collecting accurate and reliable data easily. If you don’t have the systems in place to build dashboards and reports to monitor these success metrics regularly, relentlessly pursue it inside your organization. It is essential in building a culture of accountability and excellence.
Once you’ve answered the 5-question rubric above, you have a foundation that will direct how to structure everything else for CSMs. Hiring, training, culture, compensation and incentives—all of this stems from the definition of the role.
Part 1 was the framework, part 2 is you acting on it. Here’s how you can use the rubric to create systems that grow CSM talent.
Foster a learning culture
To build a team that’s eager to learn and grow, we have to intentionally promote those behaviors when they happen. When a CSM provides guidance on best practices with a customer, when they effectively manage their time in order of important customers and allowing for unexpected topics to arise, or when they consistently demonstrate a clear understanding of a customer’s goals and adjust their plan accordingly— these behaviors need to be propped up and celebrated in public and in private.
The behaviors you recognize and promote are those that you defined in #3. Once you’ve mapped the mindsets and skill sets required to do the CSM job extremely well, you can incorporate those into career ladders, performance cycles, awards, informal public recognition, and more.
Note: Who you hire is a major part of the culture you build—in hiring Directors and Managers of CS, for example, you’ll want to hire people who have the skills to build a learning culture and grow their teams. Look at question #4 above, “what do CSMs need to succeed?” (see the four operational dimensions that CSMs need from their leaders: organizational alignment, operational infrastructure, etc.). The skills you hire for should be related to those four operational dimensions.
Practice coaching and development
To coach CSMs, refer to the mindsets and skill sets you defined in question #3. At Degreed, we’ve created a role profile (answering the 5 question rubric) for each role and title within Customer Success. Then we map each person’s skills and mindsets according to that rubric so we can identify gaps. The “gaps” are either coaching opportunities or they’ll point you towards the skills you need to hire for. We then use our own Degreed technology to build learning and skill development plans to close those gaps.
Adjust your compensation model
A compensation model for CSMs should incentivize the team to drive key business and client outcomes related to their role. Look at the outcome drivers identified in question #2—they may include adoption, customer engagement, or customer advocacy—and set up a system that reinforces those outcome drivers, which in turn will deliver on customer outcomes and company outcomes.
In our CSM compensation model, we look at variables like revenue retention, client advocacy, and client experience (and within the latter two, we have designated outcome drivers that we measure). To incentivize expansion-related activities, we also do performance incentive fund programs based on revenue growth.
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This article is part of our Perspectives in Customer Success series where top Success leaders share how they’re building, coaching, and scaling world-class teams.
It’s no secret: the Sales and Customer Success partnership is easy to botch.
Just look at the incentives—one team is held accountable for closing deals and making promises that can be backed up, and the other has to deliver on those promises. Problems between the two teams arise when Sales oversells the product or sets the wrong expectations with the customer, and Customer Success can’t deliver on it.
And while it’s easy to blame the Sales team, the fault isn’t all theirs. These problems tend to be symptoms of an underlying lack of communication and alignment between Sales and CS. And the onus is on the Customer Success team to repair and build a stronger partnership.
In theory, the Customer Success leader should only need to identify the main points of friction between Sales and Success and then work with their peers in Sales to resolve them. But in practice, it’s difficult to know where to start. So here are some of the most common “points” of friction I’ve seen or learned about, and my advice on how to fix them.
You’ve heard this one before: Sales is either overselling the product or pitching use cases that don’t exist (at least not yet). The customer comes in with the wrong expectations.
The cause for this often comes down to differences in training. If Sales and CS have very different training programs, you’ll end up with two teams talking about the product in different ways. It ultimately creates a disjointed customer experience.
Fix this problem by first getting alignment at the top around what the product delivers for customers. Then you can ensure the training programs are hitting on the same points, and you can regularly reiterate those benefits and use cases in meetings and team channels.
To take this a step further, the CS leader can help get the two teams talking about the product in the same way by asking their own team members to attend the weekly Sales meetings, and vice versa. CSMs will get a better understanding of how Sales reps are selling the product; Sales reps will learn more about everything involved in delivering the product.
At different points in my career, I’ve made it a requirement that someone from CS go to Sales meetings. It’s a seemingly small move but it makes a difference. It builds trust from Sales reps by simply having someone from Success in the room, and it also helps CSMs understand how the product is sold so they know what matters to customers earlier in the process.
Recommendation summary:
If Sales tells a customer it’ll take 30 days to get set up and it actually takes 60, you can imagine what the customer experience is like. Success needs to clearly share what is involved in implementing the product and onboarding the customer.
Here’s what to get clear on:
Success should also prepare Sales to answer questions around Time to First Value, key milestones, and the types of roles the point of contact needs to bring in to have successful adoption of the product.
You can create a presentation slide or one-pager for Sales that includes this information, you can bring these points up in meetings, and you can listen to sales calls to make sure the Sales team is clear on what goes into onboarding a customer. Whatever you do, it’s important the CS leader does regular check-ins on this (it’s not one-and-done).
Recommendation summary:
In almost every company I’ve worked for I’ve put together a one-pager that defines what the CSM is responsible for and what the client is responsible for. It’s important to provide this doc to Sales so they’re able to set clear expectations around how long it takes to implement the product, what type of help the customer can expect from your company, and what activities the customer needs to do on their own to be successful with the product.
Here are some other questions to answer in that doc that’ll help everyone get clear on what’s involved in getting set up and being successful with the product:
Recommendation summary:
Some customers are more time-consuming than others. Of course, Customer Success is responsible for segmenting the different experiences customers get which helps create some boundaries to help the team stay efficient. But they’re also responsible for making sure Sales is able to 1. understand how their deals map into the appropriate segments, and 2. communicate to the customer what type of support they will receive.
Like the other PoF’s I’ve named, this one takes regular communication to make sure Sales is in-tune with Customer Success’s engagement models. But one tactic I’d note that I’ve seen work is this: Do a session on this in the Sales team kick-off if your company has one. Map out the engagement models and explain the levels of support provided for each, and share that in a presentation to the entire Sales org—and do it again at every Sales summit.
Recommendation summary:
By the time Success is introduced to a customer, Sales has probably built relationships with a handful of people within the organization that have helped them move the deal forward. Sales and Success need to communicate about who the executive sponsor is, and whether Sales has built relationships with the buyer, champions, or potential power users.
I’ve seen examples where Sales sold to an executive sponsor, and the CSM never speaks to that sponsor or invites them to important kickoff or milestone meetings. Beyond posing risk to that account by not engaging with important contacts, you can also end up with a product delivery that wasn’t what the executive sponsor wanted when the product was purchased.
It’s critical for the Sales leader and Success leader to collaborate on creating a customer journey that requires the sponsor to be part of the experience after they sign the dotted line. It’s also critical that Sales and Customer Success have a way of tracking and keeping tabs on important contacts within accounts.
Recommendation summary:
The industry is starting to normalize the practice of introducing Customer Success to the customer before the deal is closed. While there are different moments in the customer journey where it makes sense to bring on CS, there’s a range of benefits from bringing on CS earlier:
It helps the customer understand what the experience will be like post-sale, which can boost their confidence in buying the product.
It helps the CS team member better understand the customer’s existing processes and technology, and their goals with the product, so the customer isn’t repeating themselves post-sale and can get value out of the product faster.
It also reduces the level of communication required between Sales and CS about an account. That’s especially helpful for teams experiencing PoF #5.
With all of that said, here’s a note of caution for CS leaders: the practice of bringing in CSMs or sales engineers before the deal is done should be supplemental to the work Sales is doing to close the account. Your team should not be spending their time selling the product. So if you run into that issue, you’ll want to clearly define what Sales and CS are each responsible for and make sure Sales has the messaging they need to introduce the CS person and explain why they’re on the call.
Recommendation summary:
One of the justifications for having the Customer Success organization live within the Sales organization is to help reduce all the points of friction I’ve mentioned. But I have a problem with the head of CS reporting to the head of Sales. Here’s why: if you are a sales leader, where will you put the majority of your efforts each month?
My bet is it will be on landing new logos. Not retaining them, not making sure customers are successful with the product—ultimately the average Sales leader’s attention is going to go towards what they know how to do best, which is to acquire new business. It makes Customer Success a second-class citizen, and it signals that the CEO is not fully invested in protecting and growing its customer base.
What’s worse is that simply having the CS organization report in Sales doesn’t fix these problems by itself. These problems still exist, but without a CS leader advocating for their organization at the executive level, there’s a chance the problems will go unaddressed.
So, here’s a summary of my advice for strengthening the relationship between Sales and Customer Success:
Emilia D’Anzica is the Founder and CEO at GrowthMolecules, a consulting firm that helps companies build scalable customer success and customer marketing programs. Learn more about her consulting services here.
Prior to founding Growth Molecules, Emilia was the Chief Customer Officer at Copper and the VP - Customer Engagement at WalkMe.
Remember the “good old days” when software came on a disk, and waiting for dial-up was exciting?
Ah, simpler times.
Back then, post-sale activities were managed by Account Management, “renewals” were new versions of the software, and buying roles were much simpler and easier to understand:
But as software transitioned to the cloud and as product-led growth became en vogue, these definitions fell short. They failed to capture new factors in buying processes like levels of authority, influence in decision making, and product usage.
What emerged were 3 new roles:
These new names captured factors in modern buying processes, but for those of us that didn’t grow our careers through Account Management, they made it harder to understand what each role means.
This piece is written to re-capture some of the simplicity of earlier models, and to provide a framework for determining the right amount of relationship coverage for each segment in your business. Here are three things you can do today to start building stronger relationships with customers.
To get a better understanding of what these terms mean, it’s helpful to compare them to each other. The graphic below helps visualize how the Champion, Buyer, and Power User roles are different by looking at their Influence or Authority, and their Product Importance.
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Influence defined (x-axis)
Influence is the weight of a person’s opinion in the mind of the decision maker. Influence often comes from a small number of high ranking people, or a large number of low ranking people.
Authority defined
Authority is the power to make final decisions without approval from someone else.
Product Importance defined (y-axis)
This measures how critical the product is to accomplish the user’s job. If the product is of low importance, the user can replace or work around the product. If the product is of high importance, the user requires the product to perform their core job.
This quadrant does not include...:
We don’t use common attributes like Advocacy, Budget, and Volume of Usage as factors for this quadrant because they don’t help determine the difference between user types.
Next we must determine which contacts are most engaged with us and focus on those relationships. For example, Champions who respond to emails regularly, ask questions, and make feature requests are more engaged (and valuable!) than Champions who frequently ghost you.
Many Success teams start by visualizing their engagement model in a single slide, and defining when they expect CSM and Customer engagement to increase or decrease.
Shout out to Ziv Peled for the graphic and inspiration on this topic.
The highest performing Success teams then develop a scoring model to determine which relationships are the most influential. One of the best ways to score relationship strength comes from Jay Nathan and Jeff Breunsbach of Customer Imperative. Here’s the scorecard they use:
Now that we’ve defined 1) relationship roles and 2) relationship depth, we can move onto the final step of determining how many of each relationship we need to reduce churn risk.
When we spoke to companies about their champion coverage strategy, we heard consistent problem trends:
Here, we’ll review a model for relationship coverage that addresses these problems and will enable any company to adopt a coverage plan that will significantly reduce churn risk. Here’s how to read the model below:
Then in each of the 9 cross-sections, we show how many buyers, champions, and power users you need to reduce customer churn risk. As you'll see, buyers are further broken out into three types:
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If a company-wide product (Slack, Gmail, Zoom, Box) is trying to sell into SMBs, they’ll likely focus on a large number of influential Power Users to reduce churn risk. But if a Workgroup product (Tableau, UserTesting, Qualtrics, Google Analytics) is trying to sell into the Enterprise, they’ll instead develop strong champions in other departments who are consumers of the Workgroup’s output.
A framework for building the right relationships within each account helps CSMs in their daily work, and it can help Directors and VPs of Success detect when certain accounts are at risk from not having the right amount of relationships with power users, champions, and buyers.
Here’s a quick summary on how to create a relationship coverage framework:
Thanks to Ziv Peled, Kristina Valkanoff, Jeff Breunsbach, Jay Nathan, Emilia D'Anzica, Kristi Faltorusso, and David Ginsburg for your feedback and contributions to this piece.
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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