T&M Billing
Customers know the CAM and the CSM are not billable, but they it seems like the CSMs are being taken out of being proactive and drawn into being reactive to billing complaints. Is T&M billing a good fit for an organization that is serious about driving customer success?
Comments
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Hi Rutledge,
I am sure there can be some benefits to charging for servicing by the hour specially in a slowing economy where clients want to pay only for what they use.
However, in my experience, the impact of client success goes way beyond the number of hours a CSM or CS rep puts in. At times a proactive action which might take only a few minutes can create and showcase impact running into thousands of dollars and other times, mundane work done for hours falls in the "necessary but not sufficient" category to create impact.
In my decade long stint in client success and sales roles, I have advocated for client success/ servicing/ support to be offered as a fixed cost to the client. For the client it is convenient as they know their expenses upfront and for the client success teams, it means that they don't have to worry about proving the work done on the client in terms of hours. This also gives clients the option to consider a self service model.
Another option is to price the product itself in a way that takes servicing cost into consideration. A client subscribing to entry level products and small billings can be offered minimal servicing (low touch with tech tools to cater to their needs) whereas a platinum client with high billings can be offered a full suite of servicing (high touch and dedicated reps) with the costs already covered into the product pricing.
Hope this offers some perspective. If you have further thoughts on this, would love to hear the same and fine tune my perspective as well :)
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@Neha singh has some great points. Allow me to add some thoughts from my experience. You haven't stated why your success team is potentially billing for work ... please add that, as it may adjust my thinking.
1) If you need to charge for "success services," ensure it is part of your sales model. Building in a "setup" line item in the customer's first invoice can address this. It also helps set expectations for how customers will be charged for that time of work.
2) Try to avoid charging "hours"; charge for value at a fixed cost where its easy to define "done" for your delivery
3) If you find your CSMs are consistently being pulled into doing work for customers in order to help them achieve their desired outcomes, you likely have a product/market fit challenge. Ensure you channel feedback to Product so they can use it to improve the customer's experience.
4) Think about setting up a post-sales implementation team if the work your CSMs are doing is some combination of (a) pretty technical e.g. requires coding, (b) uniformly needed across the customer base, (c) is needed across their lifecycle. That would allow your CSMs to focus on their main goal and potentially give your customers better service.
Good luck!
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When a customer is billed for services there will always be invoice questions. The solution to your problem is to get your CS team out of the billing conversation - these conversations should stay with the project/programme managers and Professional Services team.
- T&M hours will always be challenged by the customer. It is in their best interest to ensure they pay for as few hours as possible.
- Fixed price work will always be challenged by the customer. It is in their best interest to challenge the quality and completeness of the work to always get as much as possible for the fixed price.
- Customer Success is not Professional Services, so this team should not be solving the PS problems for your customers.
I have 10+ years of experience in Professional Services and customer onboarding for saas companies and have been responsible for both fixed price and T&M engagements. As I moved to “pure” Customer Success and enabling a small team to engage and grow a high volume of customers I saw that the CS team is often taking on too much. This is always from a good place, we want our customers to be “happy” and we want them to be successful. Are we really achieving these goals by taking on the work of other teams that we cannot make commitments for, stretching ourselves thin, and rarely arriving at the solution the customer wants?
To remove the CS team from conversations that are not their responsibility there needs to be tight collaboration between teams and their leaders. I will stay with the Professional Services interaction since that is the question of this post. PS leadership needs to know and agree where the line between PS and CS lies. Once that is agreed, it is completely acceptable for the CSM to respond to a billing question from a customer with, “billing questions can be resolved by your Project Manager, and I am happy to facilitate that conversation.” The CSM can hand off the conversation and should check back in to ensure the topic was advanced, but it is not their responsibility to research and resolve the billing question.
This same collaboration and messaging applies between CS and all the other teams that are part of the customer journey: Sales, Product, Finance, Marketing… The CSM is the facilitator but not the one resolving those teams’ issues. This will free up your CSM to focus on success plans and success metrics with your customers and put the CSM in a position of customer champion from your customers’ perspective.
The question about T&M billing for services being right or wrong is eternal. When you solve that, I would really like to hear the solution. Luckily, like you said, your CS time is not billable so not a CS problem.
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