The ultimate goal of Customer Success is driving high lifetime value (LTV) via retention with up-sell which is earned by proactively accelerating customers’ time-to-value in a way that creates attitudinal (emotional) loyalty.
- Key metrics:
- Lifetime value (LTV) net of customer acquisition cost (CAC)
- Product & account wallet retention – you need both since account wallet retention can mask problems with specific products
- Risk detection:
- Net Promoter Score (NPS) and other survey scores
- Product/feature adoption
- Product/feature usage
- Service outages
- Customer service calls (x number over y days)
- Overdue invoices
- Marketing engagement (esp. bounce & opt-out)
- Key person change (esp. power user; project sponsor; senior executive)
- Mergers and acquisitions
- Willingness to provide referral or serve as case study
- Willingness to build executive relationships
- Key activities:
- Onboarding & training
- Quarterly business reviews (QBRs) & executive business reviews (EBRs)
- Proactive outreach for risk mitigation
- Proactive outreach to add value
- Communication mechanisms:
- On-site visits
- Phone/web conference calls
- Email (personal or automated)
- Webinars
- Podcasts
- Online communities
- Online best-practice/how-to knowledge bases
- Customer advisory boards
- User group summits/events
- Customer segmentation
- High touch
- ARR >= $500K
- CSM can carry 5 to 15 high touch accounts
- Low touch
- CSM can carry 20 to 50 low touch accounts
- Tech touch
- Automation only; no-CSMs
- High touch
- Possible organizational structures:
- (best) Head of Customer Success (with responsibility for proactive customer success, reactive customer service, and possibly professional services delivery) as a peer to Head of Sales; longer term, the CCO may also subsume Marketing
- (alternative) Customer Success & Sales report to Chief Revenue Officer; customer success may or may not have renewal/upsell transaction responsibility
- Other critical best practices & notes
- Sell to the right customers
- Know/document how your customer defines success in a shared blueprint success plan that is regularly reviewed and updated. Consider presenting a list of measures (including baseline values) that the client can select to measure success.
- Create a customer health score
- Obsessively Improve Time-to-Value
- At the end of each QBR, you should be setting measurable objectives for the next one.
- In most cases, it takes 24 months or more of subscription revenue just to recover the cost of acquisition and onboarding.
- CSMs are expected to be product & product roadmap experts
- In many cases, the customer success team may not actually execute on the sales transaction, whether it’s a renewal or an upsell. There are often specific sales teams for contract negotiations and for final signatures.
- CSMs and their entire chain of command, up to and including the CEO, should have retention goals as part of their incentives
- The best way to determine CSM ratios is not by number of customers but by contract value (ARR)
- Prioritize a scalable system to capture churn reasons and to analyze these data on a regular basis, with product and customer teams to slice and dice the data across various customer segments. Understand what percent of churns were driven by poor adoption, what percent were driven by product fit issues or product gaps versus customer needs, and what percent were driven by factors that were hard to affect, such as merger, acquisition, restructuring, and bankruptcy.
- Give your vice president of customer success veto power over deals in the pipeline.
- Offer training for new users to make sure that more than one person in the organization knows how to use your product.
- Strive to maintain or create high-level relationships to keep management on board and to fall back on when one of your key champions leaves or takes on a new role.
- Educate the sales team on the use cases and customer parameters that create the ideal customer experience.
- Follow up with a select few churned customers to truly understand what broke down and how it could have been avoided, if at all.
- Just like clients, employees who are on the front line, especially if they are real-life users of your product, need a way to deliver feedback on all aspects of the product. A great way to obtain a fresh perspective is to collect feedback from new employees on the product and the processes that surround the product. Make this a key part of onboarding.
- Know the details: What percentage of customers increased their contract size? Which industry had the highest churn rate? What are our retention and growth rates by product? By what average amount did we reduce discounts at first renewal? What is the average contract size versus original contract size of all customers who have been customers more than three years?