The Customer Success Professional’s Handbook (Book Summary)

The Customer Success Professional’s Handbook by Ashvin Vaidyanathan and Ruben Rabago

PART I What Is Customer Success and Why Is It a Great Career?

1 Customer Success Management: The Birth of a New Profession

• CSMs assume primary responsibility for customer relationships after the sale by monitoring product use, examining performance data, and tracking customer value.
• Four stages of Customer Success Maturity:
  • Reactive
  • Insights & Actions
  • Outcomes
  • Transformation.

2 Defining the Customer Success Manager Role

• Customer Success Management is the process of proactively orchestrating and managing toward your customer’s achievement of their desired outcomes.
• In SaaS companies, the CSM’s primary charter is to ensure the renewal event is essentially a non-event. CSMs are also responsible for building customer loyalty, improving satisfaction, raising customer advocacy, increasing product adoption, and driving growth and revenue expansion.
• To serve your customers properly, you must know your product extremely well.
• Customer Success is the combination of the customer’s experience as they attain their desired outcomes.
• Customer Success Management is not Customer Support or Account Management/Sales

PART II The Core Skills of a Great CSM

3 A Day in the Life of a Customer Success Manager

• Important date-triggered events include customer renewals and business reviews.
• The more you are informed about various happenings with your customers, the better you will be able to advise them.
• Update all of the known contacts, specifically email addresses, phone numbers, and current titles, in your Customer Relationship Management (CRM) system. Denote them based on their persona and level of influence or decision-making capacities.
• Draft an org-chart of your customer’s reporting structure of known contacts.
• Every engagement should be a value discussion that helps your customer move closer to their desired outcome. The engagements may involve sharing best practices, advising on change-management tactics, educating the customer on existing or new product features, or diving deep on a specific business challenge that can be solved with your product.
• Success planning is a mechanism to capture and track objectives and timelines that have been mutually agreed between you and your customer to ensure progress toward your customer’s desired outcomes.
• The categories of risk include:
  • Implementation
  • Sentiment
  • Support: Take ownership of rallying resources and keeping all involved through regular communication but be careful not to perform the support activity yourself. It’s a trap many great CSMs fall into because of their intimate knowledge of the product and their customers.
  • Product
  • Company: Company risk includes events mostly out of your control, such as the departure of any of your primary customer contacts, like a customer decision-maker or adoption-champion.
  • Renewal.
• CSMs ultimately help customers solve their business problems, using the product.
• You own your calendar, so make it a priority also to own your learning paths to greater product expertise.
• A big part of the role is interacting with your customers through cadence calls, EBRs, strategic best practice sessions, training, product roadmap reviews, and more.
• CSMs should spend their time preparing for executive reviews, understanding the Customer Lifecycle and Journey Map, building and using Health Scores, mitigating customer risks, and managing renewals and driving advocacy.
• The best CSMs attain a high degree of product expertise and proficiency.
• 3 key skills:
  • Knowledge Mastery of your industry, category, and product.
  • Problem-Solving Ability
  • Building Relationships with Your Customers

4 The CSM Skills Required in an Ever-Evolving Business World

• If you plan to serve as a CSM in well-defined category, you should seriously consider earning a relevant certification. For instance, if your company sells project management software, earn a PMP.
• Customer domain expertise is an essential competency for our Customer Success Managers.
• Being ‘product savvy’ means understanding the use-cases and the implications to the business, not just “the points and clicks.”
• Today we have a healthy mix of high-level relationship CSMs, deep domain experts, and product-expert CSMs.
• Rock Star CSMs Are Voracious Content Consumers.
• Your job as a CSM is to maximize the use of the product in its current state! Enhancement requests should be a last-resort option.

5 Learn How to Empathize and Build Relationships with Customers

• ALL STATUS AND CHECK-IN CALLS MUST DIE.
• You want to be the CSM that always follows up immediately after a call or meeting and the one with a reputation of remarkable consistency.

PART III Operationalizing Customer Success

6 Preparing for Your Engagements and Asking Questions Like a Problem-Solving Consultant

• A key to any initial meeting is asking what makes the customer’s product unique or different from similar products on the market?
• Find out which of their competitors they most respect.
• What the top three reasons are that they believe their most valued or best customers conduct business with them?
• What are the three most common customer complaints about them?

7 Defining the Journey to Customer Outcomes

• These are the most commonly named phases within the Lifecycle:
  • Consider or Evaluation
  • Purchase
  • Onboarding
  • Adoption
  • Renewal, and/or Expansion or Churn.
• It should be your company’s aim to make the offboarding process as simple as possible, for you and your departing customer.
• Every customer buys your product or service for a specific use that can be distilled into three questions.
  • How can they make more money?
  • How can they save money?
  • Are they attempting to become efficient and save time?
  • (JD: I’d add a 4^th – How can they lower risk?)
• The most preferred method of segmenting customers relates to potential expansion opportunities, which includes growth and company size.
• Use the same segment definitions across all functions or teams (e.g. Sales, Marketing, Customer Success, Support).

8 Operationalize Your Customer Journey with Moments of Truth

• For the sake of the Journey Map, you need to identify the most critical interactions and experiences called “Moments of Truth”
• There are eight MoTs that are critical and advantageous for long-term customer success (see Figure 8.1).
  • Sales-to-Onboarding Handoff: You want the customer to leave the initial interaction believing the process you have given them will achieve their desired business outcomes. You also want them to understand the next steps in their journey and who will be a part of it. Lastly, the customer wants to know that all new persons they encounter from your company have taken the time to learn about them beforehand, so they don’t have to repeat themselves.
  • Welcome the Customer
  • Onboarding Kickoff
  • Launch
  • New Executive or Champion (if needed)
  • Executive Business Review
  • Confirm Value for Renewal
  • Post-Renewal
• EBRs:
  • Includes multiple functions from your own company attending – Customer Success, Sales, and Services.
  • The Agenda:
    • Begin with introductions
    • Give a short background or update about your company.
    • If there are new product releases, consider giving a demonstration of your product or service, especially if there are new stakeholders.
    • Remind your customer of the progress and value delivered thus far with any ROI studies or assessments you have conducted.
    • The next item to discuss is the product roadmap.
    • Explore their adoption progress and talk about customer case studies.
    • Let the customer know all the implementation or Services Project Updates that are scheduled or happening at the present moment.
    • Take the executive’s strategic objectives and convert them into actions.
    • Always send an email with a meeting follow-up report and a “thank you” note during the same day, if possible.
    • One last step is to create a “Success Plan.”
• Renewals:
  • Don’t wait until the renewal date to communicate on the commercial terms with the customer. At least 120 days before the renewal, reach out to the customer. One opportunity is to make it a part of an EBR and discuss the value delivered to date, as well as how the partnership can continue to flourish. If there are any concerns or red flags raised, you have some time before the actual renewal to course-correct.
  • After the renewal paperwork is completed, close the loop with the customer. You should send a short note to the customer’s executive, and the Working Team, thanking them for their continued partnership.

9 Using Customer Health Scores to Manage Your Customers

• You need the two Health Score measures, Outcomes and Experience, as indicators of overall customer health:
  • In Outcomes Health, the customer must be achieving their outcomes and deriving value for them to be considered healthy.
  • In Experience Health, you must ask, does the customer like the experience of working with our company and product?
• There are four categories measured by Outcome Health.
  • Deployment: When tracking a deployment, you measure if the customer has activated the product or service they purchased. A typical deployment in a Software as a Service (SaaS) business is measured by the number of licenses activated, features enabled, and initial training completed, to name a few.
  • Engagement: An engagement can be any employee communicating with a customer.
  • Adoption: The first classification is called the depth of adoption. This measurement answers the question “Are users logging in an ‘ active’ way?” The most common approach is to measure Daily Active Users, Weekly Active Users, or Monthly Active Users. The second classification is the breadth of adoption. When you break down the usage, you will also see if the right set of features are actively leveraged.
  • Return on Investment (ROI): Business outcomes or ROI can be of three illustrative types: economic, ease of doing business, and inspirational.
• Your Experience Health Score involves at least three types of measurements as follows.
  • Overall Experience: Net Promoter Scores (NPS) are a great way to capture this measure.
  • Support Experience: On a 1-5 scale, ask the question, “How would you rate your overall satisfaction with the service you received?”
  • Sentiment Score: The Sentiment Score is, at its core, an entirely subjective judgment.
• For the Outcomes Health Scores, it is recommended to use a minimum of three scores (Red, Yellow, Green) and a maximum of 5 (Red, Orange, Yellow, Light Green, Dark Green) from bad to good.
• Nick Mehta (Gainsight CEO) stated that “One of the biggest mistakes companies make when implementing Customer Health Scoring is thinking everything can be distilled down to one number.”
• A Vendor Outcomes Scorecard could have top-level dimensions of Retention, Expansion, and Advocacy.
  • For Retention, ask: “Are they likely to stay with us?”
  • For Expansion, ask: “Are they likely to expand in spending or consumption with us?”
  • For Advocacy, ask: “Are they likely to be an advocate for us?”
• Customer Maturity Health Score: A Client Maturity Scorecard could include:
  • Business processes: Does the client have business processes implemented around the vendor’s product or service?
  • Sophistication: How sophisticated is the client’s usage of the vendor’s product or service?
  • Tenure: How long has the client been using the vendor’s product or service? Training: How many people at the client have been trained on the vendor’s product or service? Advocacy: Is the client an active advocate for the vendor?
• These are the five dimensions we’ve used to measure customer health at my current company, and they should be transferable to any organization.
  • Financial health: Is your customer’s spend with you increasing or decreasing? Do they have a contract? Are you regularly issuing discounts? Are they paying their bills timely?
  • Product utilization: Are you embedded with their strategic functions, or does their organization view you as a commodity/transactional provider?
  • Client engagement: Is your customer engaging with you in an advisory capacity to inform your product roadmaps? Do they attend any client events that you host? Are they bothering to provide feedback through your surveys or other means? Are they providing references for your products? Are their executives participating in your partnership meetings?
  • Service delivery: Is your customer having a positive experience with your Support teams? Is your support organization delivering to its SLAs and addressing requests in a timely fashion? Is your customer engaging with Support through the right channels? Are they generating an appropriate volume of support requests?
  • Churn risk: Has your customer recently had a change in leadership? Are they engaging with competitors? Are they positioning for acquisition?
• Overlooking a customer’s unique needs is the fundamental flaw of current health scoring and segmentation models.

10 Voice of the Customer and Your Tech-Touch Strategy

• NPS surveys should be sent out every six months to every customer.
• If you’re responding to a Promoter NPS feedback, send a thank you email with a request for them to participate in your customer reference program.
• Tech touch means you are starting with automation and digital engagement to get more scale and involving a human being only when required.
• You should reach out About 90 – 120 days before any customer’s renewal
• Periodically ask: “At this point in time, how likely are you to renew the subscription with Company X?” with the options being Not Likely, Unsure, Likely to Renew,
• If the customer doesn’t open the email or doesn’t respond to the question, you should consider the customer a “risk” and have a human being reach out.
• Some companies also send small gift cards or other tokens of appreciation for completing the survey and agreeing to be an advocate.

11 Help Customers Achieve Their Business Goals

• You will need to make sure customers are educated accordingly on proper and best-practice use.
• Measure adoption by the total number of people using it, the frequency, and the degree of available features being utilized.
• Essential areas you need to consider in order to be successful at improving the customer’s adoption of your product:
  • Establish a standard method of what healthy versus unhealthy adoption looks like across all your customers, by segment.
  • Design standard scripts, or what is commonly referred to as a “ playbook, ” that details the steps you should take under various adoption circumstances.
  • Deployment review: investigate opportunities to get your customers to start activating licenses, enabling features, completing initial training, downloading the software, completing the first field or services visit.
  • Chairsides: shadow end users to determine knowledge and usage gaps.
  • Instance optimization: evaluate your customer’s product configuration and recommend changes to better match their needs
  • Office hours with end-users
  • Feature rollouts: promote new releases, especially if they solve long-standing issues or challenges your customer may be having.
  • Training refresh: provide a training refresher, especially if adoption stalled during the original implementation and it has been several months since.
  • Share with your customer stakeholders what other customers are doing to promote better use of your product and the business impact it is having.
  • Introduce your customer to other customers who are healthier in their adoption of your product or service.
• Success planning is the process of the vendor and the customer mutually agreeing to common goals of the partnership, including the tactical steps required to achieve the goals, key milestones to measure success along the way, and timelines associated with achieving the goals.
• Customer Success Plans are dynamic and require constant iterations.
• Be sure to establish both qualitative and quantitative measures of success. For each goal, baseline the current value and indicate if it is quantitative or qualitative. If qualitative, make sure also to capture the subjective criteria by which success for that goal will be measured.
• During EBRs and regular meetings, be sure to record any updates to each Objective and illustrate positive or trailing trends towards their goals.
• In the end, the only thing that will guarantee the renewal is whether or not the customer is getting value from your product. This is why improving your product must be your number one priority.
• Establish a monthly forum in which your Product team discusses new product features with the CS team.
• Define and monitor a success metric that both Product and Customer Success can share.
• Identify a leading indicator that captures the essence of whether customers are attaining value from the product, like Daily Active Users,
• Product improvements are ultimately the most effective levers you can pull in terms of driving long-term value for your customers, at scale.

12 Drive Revenue Growth Through Engagement, Proactive Risk Management, Churn Analysis, Expansion, and Advocacy

• Escalation paths define how and when risks should be escalated, and to whom, to ensure the right people are engaged.

• Customer Success Qualified Leads (CSQL) are sourced directly CSMs.
• At Gainsight, our Customer Success Team establishes quarterly targets for CSQAs and CSQLs because we know all of the listed activities are leading indicators of portfolio growth and overall good health.

PART IV Retaining and Developing the Best CSMs

13 Managing a Customer Success Team

• Three main concepts for managing a customer success team:
  • How to manage the CSM workload and coverage ratios depending on your segmentation strategy.
  • How to design incentive structures to drive the right behaviors.
  • How to use reports and dashboards to drive operational rigor.
• Three types of plays:
  • Activation plays – supporting the Customer Journey with onboarding, adoption enablement, performance tracking, and other similar activities.
  • Growth plays – retaining and growing account value through upsells and cross-sells.
  • Advocacy plays – evangelizing the benefit of engagement, both internally and externally.
• In the Enterprise segment, which has your highest revenue customers, the median amount of Annual Recurring Revenue (ARR) that an Enterprise CSM manages is $2M to $5M with a median number of customers between 11-50
• The median amount of Annual Recurring Revenue (ARR) that a Mid-Market Customer Success Manager manages is also between $ 2M to $ 5M. A Mid-Market Customer Success Manager manages roughly 100 – 250 customers as the median.
• In the Small Business segment, which has your smallest revenue customers, a CSM manages roughly $ 1 – 2M as the median and roughly 100-250 accounts as the median,
• The most common model is 70-80% of the compensation tied to the fixed base and the remaining 20-30 % tied to variable compensation.

14 Creating Career Paths for Your Customer Success Managers

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