It’s early 2023, the economic outlook is dim, and everyone is laying people off. If you lead a SaaS company, you need to focus on retention of your base. But you haven’t invested in Customer Success as you should have. How will you meet your metrics and objectives?
This is not a problem of one company, unfortunately it’s a problem of many. And even if you have invested in a CS team, what have you measured them on? Are you including CS metrics on your scorecard? If you don’t have an answer, you have some quick growing up to do; and here is how you (and your CS team) can grow up fast.
Let’s touch on some of the key considerations to assess:
- Is your CS team focused on A. relationships or B. financials?
- Is Customer Success A. a soft or a B. a hard skill?
- How do you handle renewals and upsells? A. CS does not touch them or 2. CS owns them (even partially).
If you chose mostly A’s, you are honing in on the biggest issue present in Customer Success as a function today. Not focusing on metrics and goals or tangible targets, and not driving financial value. Well, “it's too early in the journey”, or “our sales people don't want to lose their comp”, or “CS can’t handle sales” - I have heard it all. And I will say, it’s this type of regressive thinking which also is keeping many CS teams away from the C-suite.
Let’s discuss how to change this thinking, by setting 3 key goals for the CS function (yes that’s correct, not the business- I am putting the work to CS).
Case Study - An early CSM I worked with was getting frustrated because sellers were calling her to join their calls, she was seen as an expert and got called so often she was overwhelmed. Meanwhile, she should have been ecstatic. She was a driver of growth due to her expertise and delivery, and instead of realizing this potential and working on improving her own incentives, she was stifled (by herself). This is due to the design of the definition of Customer Success itself.
“Customer success is anticipating customer challenges or questions and proactively providing solutions and answers.”- Hubspot Blog
“Customer success is a method for ensuring customers reach their desired outcomes when using an organization's product or service.” - Gartner
“Customer Success is a scientifically designed and professionally directed long term strategy for maximizing customer and company sustainable proven value.” - Customer Success Association
While the definitions get more focused, they are abstract still, vary and are not well defined. Meanwhile, if you look up Marketing you get pretty much the same definition - the activity or business of promoting and selling products or services…(thanks Oxford English Dictionary).
So the first round of business for the CS function, GOAL #1: Let's settle on a definition which makes sense, and one which an organization can drive strategy around. Who is CS? In my opinion, delivering Customer Success is the activity of creating value exchange in a SaaS or similar business, bringing internal value to their company (i.e. revenue from retention and upsell) and external value to their customer (i.e. ROI, key outcomes, etc).
There was no mention of Relationships here - because I believe the goal of CS to be financial (for both the company and customer) but that doesn't speak to the how- relationship building, engaging and providing strategic direction are the “how” to deliver value exchange. CS has to stop referring to themselves as a “soft” function, and get down to brass tacks.
GOAL #2: Let’s settle on some metrics we can measure, incentivize and grow CS with, everywhere. CS has to be metrics focused, even when no one is listening. Metrics can be simple - activity focused, or advanced like NRR. But they should achieve the target of financial growth. Are you building a health score? If so, then maybe apply that ratio to your metrics - health should be a combination of everything that matters.
Case Study #2 - A young CS manager (me) tried delivering renewals with her new CS team. It was not great, and the team did not love it. So, they passed it back to sales. Meaning another customer handoff and less recognition. Dial forward a year, when she learns how “casual” renewal conversations can be, and how CSMs can introduce renewals as part of the journey, and achieve growth as well. A year later, she applied this learning to a CS team who owns renewals and minor upsells, and is measured on retention. You don’t have to stick to the old way, just because.
The final and most important Goal, #3 - Customer Success is a data-driven function, which means hiring and training teams who learn, analyze and love data. Data is king, we say it all the time. Who has the most data about customers - Customer Success. Train CS teams on how to measure ROI at your company and with your product, and if you don’t have access to usage and other metrics - get it now. Invest in the data to invest in your and your customer’s success. And better yet, teach it in more college programs.
Customer Success. Such a simple concept, and yet so many models to apply. With so much variation, how can any leader invest in and trust the function is going to deliver. It’s time for CS to grow up, get a seat at the table, and deliver financial value - in 2023, and beyond.
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Parul is the outgoing Director of Customer Success at Aclaimant soon to be joining a new org in late February. She launched her first CS team from scratch in 2016, reorganized a few teams since then, and has been passionate about Customer Success and growing in and with the field ever since. She lives in Chicago with her husband and two young children.
Linked in- https://www.linkedin.com/in/parul-bhandari-1294488/
