5 Data Points to Get Your Customer Success Budget Approved

Sruti Satish

It’s “Budget and Planning” time of the year, again! As a CS leader, you reviewed your past year’s performance thoroughly. New areas of investment have been identified and you are ready to speak with the CEO/CFO about additional budget requirements. 

The dreaded part: How will you show value and get your budget approved? Well, it’s not easy to prove a case for CS. However, if you do your homework and show quantitative data demonstrating CS contribution it will become easy. 

Irrespective of your designation, this blog is going to help you with exactly that. If you’re any one of the following, this piece is going to be of great help. 

• Head of CS,
• Director of CS, or
• Senior CS leader

You may find yourself protecting your headcount, rooting for investments you want in tech, and giving suggestions for new product features. These require great planning and probably an increased budget. Having that conversation can be expected to be a tough one. The only thing that you need to do is to ‘convince’ your CFO or anyone holding the purse strings. The CFO has to understand the value that a customer brings to the organization is great. Investment in CS will ensure more customers and increased revenue. 

Areas for CS investment

Before you talk to your CFO, you must consider doing your homework. Identify the areas where you’d need an additional budget. Some of them could be:

• Key hires, performance awards, and promotions. 
• Customer conferences, conference travel (if applicable), leadership meetings (both internal to CS and broader)
• As leaders, you should be thinking about how productivity and quality can be improved in a way that contributes to the growth and, at the appropriate time in the growth cycle, profitability.
• The biggest cost areas are typically staff-related (salaries, tax, travel, training, recognition), systems (software subscriptions), and facilities.   
• Professional Development- Certification is important to keep your CS professionals upskilled in their field of expertise. 
• Investment in the latest CS tech should be of utmost importance. 

5 Data points to get your Capacity Planning and CS Budget approved.

Reducing costs to retain revenue doesn’t have to mean cutting costs. Increasing budget can improve growth. Take a look at the following points that you can highlight in your conversations. 

 

Revenue growth

Demonstrate how previous investments have improved the topline growth. NRR growth, improved customer satisfaction can be shown as proof for the same. These directly impact the overall business growth rate. CS is not a cost center. Rather it is a function that drives business performance. 

As a CS leader, you must quantitatively show the CFO an expense and revenue forecast. It helps them to understand how you plan to drive revenue with an increased budget. This way you’ll be able to flip the conversation from “reducing costs” to “investing heavily” in the customer success department. 

CS as a profit center

Present a plan that shows how additional investment in CS improves revenue. Example-

• Collaborating with marketing to drive customer marketing campaigns,
• Focusing on CS Ops’ role for expansion opportunities, etc.

A balance of cost and growth campaigns to retain revenue is a great way to present CS as a profit center. Another example could be the new product enhancements that can help increase Time-To-Value for customers. 

Bring up ideas you, your customers, and your team, have for product feature enhancements. Prove how that would reduce the gap between the platform being sold and the actual platform. The addition of highly requested features would make customers feel appreciated. They’d want to do more on their own. That would translate into less burden on the CS team.

CSM headcount and performance

“How are you measuring your CSMs?” this is one of those questions that you must expect. Measuring CSMs on renewal rates, activity levels, etc. Be prepared to answer such questions related to why such standards are set up. 

Also, the CFO might be worried about the ‘increase in headcount’ investment. S/he would want to know “why 1000 CSMs for 25 accounts”? The purse-string holders in your firm may have a vague idea of the customer journey. They won’t know about the gaps that your CS team bridges to help the customer traverse them. So that they can be successful on your platform.

Make them aware of what does a CSM does at each step to help your customer. Your CFO will see the major milestones—and how the CS team helps customers reach them. 

Investment in technology

Make a case for investment in the right CS software, tools, training, processes, etc that will make your CSMs more efficient. Proving the ROI of a tool versus the ROI of bringing a human on board for the same price will do the job. Because, a human could do the job, but it would be 2x, 3x, maybe even 4x more expensive than a tool. “This is how much I need to handle 1,000 customers, or we can hire 10 more CSMs at this cost.” Making it really crystal clear and breaking down those two costs will make sense to any CFO. A CFO wants to save money. Figure out a cheaper option of how you can scale, and they’ll allow you the budget.

Moreover, these investments will allow the CSMs to manage more accounts effectively. Even as the business scales, it won’t be difficult for them to manage a large number of relationships. 

Show quantitative data

It’s often easier said than done. Choose metrics that allow you to demonstrate the value that your customer success team achieved, in a crystal clear manner. Some of them that can be included are as follows:

• The number of accounts
• The MRR /ARR achieved
• Net Retention Rate or Gross Retention Rate
• Total CS expenses
• Expected improvements in NRR
• Desired increase in CS budget
• ROI of CS investment.
• NPS or customer satisfaction scores (for brand value)
• Specific programs launched 

Improvements in the above metrics will impact the company’s growth rate or profits—which are all that the CFO is concerned about. Showing these will make the CFO advocate for customer success. 

Key takeaways 

The only business function that grows almost at par with the topline growth is the CS. Your CFO might not necessarily understand this. 

• To get the budget approved, you must be able to show the quantitative value a customer brings to the firm. It is easy when you tie the company goals with the CS metrics. This helps you demonstrate the real value. It’s crucial to show the quantitative data before you can ask for an additional budget. 
• You should be able to show how you plan to drive revenue with an increased budget. Key hires, specific programs, etc can be some of them.
• Be prepared to tackle some tough questions from the CFO. Use data to make case for you. 
• Present CS as a profit center, not as a cost center. 
• Your CFO is concerned about reducing costs to drive revenue. So, show him/her how increased investment in CS drives revenue.  
• Prove how investment in CS technology will help improve revenue. 

The conversation usually starts with cutting expenses in the CS department. However, as a CS leader, it’s on you to flip the conversation and point why investment needs to be increased.