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B2B Sales Best Practices

The Seven Pillars of Customer Success (Book Summary)

The Seven Pillars of Customer Success: A Proven Framework to Drive Impactful Client Outcomes for Your Company by Wayne McCulloch

Introduction Cut through the Noise

  • Salesforce has a data science team who focused solely on customer success. They built an algorithm called EWS (early warning system) that factored in over 120 different inputs to calculate a customer health score. At a super-high confidence level, this score predicted customer churn nine months in advance giving their customer success team enough time to change the paradigm and retain their customers. It also predicted potential problems, triggered notifications to the right people, and delivered playbooks of proven best practices in order to solve those problems.
  • Ten tools every customer success professional needs in their arsenal:
    • Moments of Truth
    • Playbooks
    • Customer Health
    • Customer Risk Framework
    • Customer Success Plans
    • Segmentation
    • Voice of the Customer
    • QBRs and EBRs
    • Customer Delight
    • Metrics
  • The seven pillars
    • Pillar # 1: Operationalizing Customer Success
    • Pillar # 2: Onboarding
    • Pillar # 3: Adoption
    • Pillar # 4: Retention
    • Pillar # 5: Expansion Pillar
    • # 6: Advocacy Pillar
    • # 7: Strategic Advisor

Part One: Language and Tools

1. The Language of Customer Success

  • In my experience, the breakeven point for a customer to start generating a profit is typically around the 18-month mark.
  • The number one mistake I’ve seen done (I’ve done it, too) is to create a customer journey map based on the vendor’s own viewpoint of the customer.
  • The journey map should be a living document, not a static, one-and-done activity. Journeys change, and we should, too.
  • Once a customer leaves, you have to go back and map out their entire journey. You have to find out what went wrong and what went right. And you have to do this for as many customers that leave so you can look for journey patterns. The patterns are the key.
  • I highly recommend you hire a third-party vendor to interview the customers who left. If you conduct the exit interview yourself, you’ll probably be told lies because your customer doesn’t want to hurt your feelings or thinks you are trying to find a way “back in.”
  • I had considered adding another pillar called Preboarding to address the CSM’s involvement in the presales cycle
  • 3 Customer Success Waves
    • Wave one was firefighting retention.
    • Wave two — where we are today — a CSM has responsibilities across onboarding, adoption, retention, expansion, and advocacy.
    • Wave three – where CSMs will drive their own revenue streams through strategic success services.
  • You need to be conscious of how often your customers are being surveyed (and how long those surveys are), but more significantly, you need to pay even closer attention to how their feedback is being recognized and utilized.

2. The Customer Success Toolbox

T1: Moments of Truth

  • Anytime the customer comes into contact with any aspect of a company, however remote, he or she has an opportunity to form an impression.
  • “No one owns the customer, but someone always owns the moment.” — Scott Hudgins, Chief Commercial Officer, Walt Disney World Resort
  • Five main triggers that exist for moments of truth:
    • Life-cycle stage triggers: As you move from onboarding to adoption to retention,
    • Customer event triggers happen when there is a decline in usage, a change in a sponsor, or a low NPS (Net Promoter Score) is reported.
    • Scheduled event triggers are regular monthly check-ins (which could be an email or a phone call) or regular product renewals (which could entail internal meetings and external sales calls). These triggers can also be regular QBRs and regular EBRs,
    • CSM-defined triggers are uptelling (more on this term later), cross-telling, and customer webinars.
    • Vendor-driven triggers are things such as: Release readiness,

T2: Playbooks

  • A playbook is not the same as your standard operating procedures (SOPs). SOPs need to be followed step by step and have to be executed. It’s a process. Playbooks are a collection of best practices, examples, successes, and templates that are tailored to specific use cases.
  • You need to create playbooks for each part of the customer journey. Here are some playbooks I would start with out of the gate:

T3: Customer Health

  • Six simple categories to measure customer health:
    • Product Usage
    • Business Outcomes:
    • Customer Sentiment
    • Relationship Strength: Have we identified an executive sponsor?
    • Services Optimization: Is the customer utilizing all the service offerings you have that can help them be successful?
    • Support and Operations: Are your customers using your support team? If they are, what was their experience
  • Customer health should consider your customer’s place along the customer journey.
  • Health scores are also a great way to trigger playbooks.

T4: Customer Risk Framework

  • Eight key risks customers face along with the churn journey map.
    • Readiness risk. This is all about the readiness of the customer to plan, deploy, and gain value from your product. Do they have clear business value and success outcomes defined?
    • Relationship risk is about losing a key champion, advocate, or sponsor.
    • Adoption risk happens when the customer’s employees don’t use your software or service.
    • Launch risk means the deployment of the software is having trouble.
    • Fit risk has to do with using the product the way it was intended.
    • Product experience risk refers to bugs in the software
    • Feature idea risk exists when you ignore customer requests, such as, “Could you just change this one thing?”
    • Noncontrollable risks are those you have little to no control over (such as a global pandemic).

T5: Customer Success Plans

  • A Customer Success Plan is a clear statement of how you will deliver value at every stage of the customer’s journey with you.
  • It provides an agreed-upon set of business and technical success criteria to provide value
  • Seven key elements that should be included in every high-quality Customer Success Plan.
    • Joint Ownership Most significantly, a Customer Success Plan should be mutually created (and agreed upon) by the customer and the CSM.
    • Transparency
    • Measurable Goals
    • Business Outcome and Value: The business outcome is the sum of the business objectives the customer is trying to achieve.
    • Skills and Capabilities
    • Dynamic
    • Technology: List the technology used to support the customer in the Customer Success Plan so it’s all in one place and can be easily referenced.
  • Customer Success Plans should be used across five of the pillars (the customer journey pillars) — onboarding, adoption, retention, expansion, and advocacy
  • Example Customer Success Plan Template

T6: Segmentation

(important topic but intuitive so no key highlights)

T7: Customer Delight

There are nine elements to modern customer delight.

  1. Deliver Value
  2. Make It Easy Doing business with you needs to be easy.
  3. Be Proactive
  4. Help the Customer Network, Collaborate, and Succeed
  5. Be Responsive
  6. Give Constructive Feedback inside Your Company
  7. Analyze and Act on Customer Feedback
  8. Be Transparent: It means being transparent with the customer whenever a change is made, including changes to personnel.
  9. Send a Personalized Gift (the traditional thinking of customer delight)

T8: Voice of the Customer

  • Companies now use their user experiences (rather than their products) to compete for business.
  • Don’t survey a customer if you’re not prepared to immediately respond.
  • I recommend gathering feedback after onboarding and adoptionand anytime you introduce a new feature.
  • If you can’t respond to your customers’ negative feedback on the same day, don’t bother.

T9: QBRs and EBRs

  • A quarterly business review (QBR) is pretty straightforward. It’s a regular meeting with your customer to discuss project impact (metrics, value one, SLAs, current initiatives, etc.) and how you can continue to support them and help them be successful.
  • Eight items every CSM should consider when preparing for a QBR.
  • Planning First, you need to generate interest in the QBR so your stakeholders attend. “Hello, customer. We recently benchmarked you against your peers and discovered you are 10 % below average when it comes to feature adoption. We’ll go over it in more detail in our next meeting.”
  • Agenda Review: As soon as you’re done crafting the meeting’s agenda, send it to your stakeholders so they’re able to review it in advance. Then encourage them to add anything else they’d like to discuss.
  • Current Situation: Before the meeting even starts, you first need to determine if there are any changes to the process, product, org structure, goals, or metrics.
  • Previous Quarter
  • Challenges Ahead
  • Upcoming Priorities
  • Uptelling Solutions: When you create your presentation for the QBR, throw in a slide or two about a case study highlighting a new feature or product you believe would help the customer achieve additional success.
  • Meeting Summary
  • An executive business review (EBR) should present information at a much higher level, with a focus on executive leadership. It’s a high-level review of the value your product is providing the customer.
  • When you draft an EBR, you should be thinking along the lines of, Who is my stakeholder’s boss?
  • EBRs should be scheduled twice a year.
  • 11 Suggestions for Kick-Butt EBR Planning
    • Keep It Short: Your EBR should be 30 minutes long at the most.
    • Plan Ahead
    • Confirm Meeting Attendees
    • Make It Interactive
    • Focus on ROI
    • Roadmap
    • Track Goals
    • Rely on Data
    • Listen Actively
    • Don’t Be Defensive
    • Follow Up
  • To invoke an outcomes discussion with customers, a CSM may also leverage customer benchmark data, survey results, or a maturity scoring model.

T10: Metrics

  • Start with these five metrics first.
  • Customer Logo Churn
  • Gross Revenue Retention
  • Net Retention Rate Net retention rate (NRR) measures what the existing customers spend with us today. This will include increased consumption, price increases, additional licenses, or products they’ve added. If you’re a private company and want an IPO and to go public, you should aim to have a minimum 115 % NRR.
  • Expansion Annual Recurring Revenue Expansion annual recurring revenue (EARR) or expansion ARR is the percentage of new revenue that comes from existing customers.
  • Customer Effort Score: For example, if a customer accesses your company’s support system, a CES would measure how easy it was for the customer to interact with that system.
  • There are metrics you may want to report on but not share with the outside world — for example, financially driven metrics such as CLV and customer retention cost (CRC). There’s also average revenue per account, customer health score, product usage, engagement, and more.

Part Two: The Seven Pillars

3. Pillar #1: Operationalizing Customer Success

  • One of the very first hires you make for your customer success organization should be in CS Ops.
  • if you deploy only three tools to begin your operationalizing of customer success journey, you should go with:
    • Moments of Truth (Customer Journey Map)
    • Playbooks
    • Customer Success Plans
  • The only true way to scale to every single user of your solution is to deliver the service through the solution — not by sending mass emails or directing people to the community

4. Pillar #2: Onboarding

  • Onboarding is the moment on the customer’s journey when we can sit with the customer and confirm what we’ve learned from the sales handoff (or prior), ensure alignment around goals and milestones, reset expectations where there is confusion, and ultimately map out the Customer Success Plan with the customer.
  • Agree on a win your customer can share with their management that will help them (and your company) look good.
  • Different Types of Value One
    • Use Case: This is a specific way the solution can potentially be used.
    • Desired State: It doesn’t hit a specific metric but creates an environment that helps the customer move forward.
    • Defined Value: This one is straightforward. It’s about hitting a specific and defined metric.
  • During onboarding, we are mainly responsible for three things: guiding the customer (through a Customer Success Plan), achieving value one, and doing it quickly.
  • Adoption is the process of getting your customers to adopt the new features that just came out for your product.
  • When it comes to implementation, we need to begin the work we’re doing with our customers as soon as possible.
  • Launch risk happens when a project gets stalled or has a red or yellow risk assessment
  • Adoption risk takes place during the Adoption Pillar but is set in motion during onboarding. Poor onboarding leads to poor adoption.

5. Pillar #3: Adoption

  • Most people think adoption is license utilization, but it’s more about the depth of features and functionality utilization.
  • A “ride along” can provide the best information about how your customer is using the product.
  • A good CSM would take it a step further and hold “ffice hours” regularly.
  • When a new feature or product is released, the CSM needs to be ready to sit down with the customer and explain it.
  • KPIs measure how good you’re doing at any given time, whereas milestones are parts of the customer success journey broken into key sections.
  • Let’s say that value one is to get a department of 50 people to use your new software platform within 90 days.
    • Milestone 1: Create awareness
    • Milestone 2: Establish some internal champions
    • Milestone 3: Formal training program rolled out to users
    • Milestone 4: Review daily active users or monthly active users
    • Milestone 5: How deep are the users on the features
  • You should build a playbook for these three main scenarios and deploy each during the adoption phase:
    • The customer has no usage.
    • The customer has low usage.
    • The customer isn’t getting business value.
  • Each customer success plan should have a section on adoption. Make sure you know who the
  • If there is one thing to take away from this chapter about adoption, it’s to go and find your company champions

6. Pillar #4: Retention

  • The customer doesn’t choose to stay with you because of the historical value you’ve driven for them — they stay because of the vision and promise of the future you have painted with them.
  • Accurate retention forecasting is paramount for every customer success organization.
  • $100 million signifies when it’s time to mature your customer success function and create a specialized renewal team. And due to the interconnectivity of both the CSM and renewal manager role, I recommend these two functions live under the same leader (head of customer success or chief customer officer).
  • There are two retention playbooks I think every customer success organization should have: one for renewals and one for identifying renewal risks.
  • When it comes to the renewal, there are three questions you have to answer.
    • 1. Are we on track to achieving our defined goals?
    • 2. What does consumption look like?
    • 3. Have they adopted the sticky features of our product?
  • Segment renewals based on risk.
  • Customer retention means being continuously focused on the customers’ desired outcomes.

7. Pillar #5: Expansion

  • When a customer is trialing your software and then becomes a paid customer (from a freemium or paid proof-of-concept model), that’s expansion.
  • Expansion also includes:
    • price increases
    • multiyear conversions
    • upselling and cross-selling.
  • Upselling is buying more of the same thing you already have.
  • Cross-selling happens when you offer your customer other products and services. Cross-selling doesn’t typically fall in the list of CSM responsibilities.
  • CSM can impact expansion in two different ways.
    • The first is passive expansion. You’ve created an environment where the customer will buy more licenses as the company grows.
    • The second way a CSM can impact expansion is through active expansion via something called a customer success qualified lead, otherwise known as a CSQL.
  • CSQLs convert between 60% and 70%.
  • While at Looker, we paid our CSMs a sales performance incentive fund (SPIFF) on every CSQL that sales closed.
  • When you don’t use a sales tool or a sales process for CSQLs, they get lost.
  • Playbooks I recommend for the Expansion Pillar:
    • How CSMs and Renewal Managers (if they are separate people) Work Together for Customer Renewals
    • How to Uptell
    • How to Cross-Sell from the Perspective of Uptelling
    • How to Connect Your Company’s Capabilities to Your Customer’s Problems
  • There are two expansion metrics you should track in your Customer Success Plan
    • The first is time to expansion (TTE).
    • The second metric you want to track is average expansion size (AES).
  • Tips and Tricks for Expansion
    • Product marketing is your best friend.
    • Understand the customer’s vision.
    • Create an “expansion” ideal customer profile (ICP) based on a look-alike model of customers that had previously purchased,
    • Create new customer segmentation, allowing us to fund a dedicated sales team to prioritize high-value opportunities.
    • Apply a value-based selling methodology focused on providing prescriptive advice based on our customer’s business objectives, including current adoption level and value realized,

8. Pillar #6: Advocacy

  • Every CSM is responsible for producing one case study,
  • There are five main assets each customer success organization needs.
    • 1. Value Assessments and Maturity Assessments
    • 2. User-Generated Content. These are usually testimonials, online reviews, and case studies. The CSM is the best person to identify the case study opportunity and capture information to include with it. Five components to build an effective case study: (i) Describe the state of the industry / market before your solution came along. (ii) Explain the implementation experience as well as the valuable capabilities of the product. (iii) Discuss improvements in numbers and metrics that quantify the desired outcome and value being attained. (iv) Celebrate the success and focus on what’s happening next. (v) Partner with marketing to appropriately package and deploy the case study.
    • 3. Customer Referrals: I recommend creating a customer reference library to ensure your team is tracking how often references are being used. Once you’ve amassed a bunch of referrals, you can start to group them by industry, geography, company size, use case, outcomes, metrics, and so forth, and your library becomes a long-term strategic asset.
    • 4. Referring as Opposed to a Referral: Referring is when an advocate leaves the company you’re currently servicing, goes to a different company, and refers you in.
    • 5. Focused Events: You can do this through speaking engagements and trade shows, and even prospect, industry, and customer appreciation events (in person or online).
  • At a minimum, we need those five assets. In conjunction, we also need the three Cs:
    • customer advisory boards (CABs)
    • champions
    • communities (specifically, online customer communities).
  • Have no post go unanswered with a committed SLA.
  • Marketing is the face of the brand to prospects, and customer success is the face of the brand to customers. However, both teams should be actively involved in each other’s work in this area.
  • You should have playbooks on
    • how to identify an advocate
    • how to nurture them and then get them to engage.
    • how to build case studies
    • how to capture references.
    • How to get a customer to write a blog article or attend an event
  • QBRs and EBRs are two of the primary tools you can use to get your customers to agree to testimonials and referrals because they can act as a springboard.
  • Reward your customers for being advocates

9. Pillar #7: Strategic Advisor

  • Strategic advisors are proactive and look at the future, which differentiates them from the typical CSM of today. They possess deep industry knowledge and domain expertise. They also need to be educated on the internal products they support and services their organization sells.
  • The knowledge, skills, and experience model
  • Knowledge is broken down into three elements:
    • Industry Knowledge
    • Customer Knowledge
    • Product Knowledge
  • Skills
    • People Skills: (i) Assertiveness, (ii) Empathy, (iii) Relational Intelligence
    • Analytical Skills: Strategic advisors also must be able to find meaning in the data and  present data-driven solutions
    • Prioritization Skills
    • Deep Work
  • Experience
    • Prescribe: how to accomplish something.
    • Protect: When a customer makes a choice that a strategic advisor doesn’t agree with, it is the strategic advisor’s responsibility to have a difficult conversation and explain the consequence.
    • Proact: Lead their customers to success, proactively
  • At a minimum, every strategic advisor should have a 3 × 3 model when building relationships. They need to have relationships on three different levels within the organization and with at least three of the customer’s employees, on each of those three different levels.

10. Crystal Ball Time

  • Customer success (or more specifically, the owner of the customer journey) should report directly to the CEO.
  • When you build compensation plans and operational models correctly, customer success will flip major expansions over to sales, and sales will flip incidents and insights back to customer success.
  • Success services are outcome based, time bound, business value oriented, and plug gaps that exist in your current customer journey models.
  • More forward-thinking companies are building out their proactive success capabilities.
  • The most critical metrics:
    • Team size and coverage model
    • Customer base health (GRR)
    • Customer sentiment (CSAT, NPS [ugh], customer effort score, etc.)
    • Adoption / usage / growth (license consumption, D/MAUs, feature usage, etc.)
    • Time to value (speed to achieve value one, for example)
    • Advocacy impact (referrals, referred customers)
  • Customer success engineering focuses on customer outcomes, scalable solutions, and knowledge transmission.
  • A CSE’s time is split nearly evenly across the three pillars: working with customers to achieve their business goals, taking note of common hurdles and frequent requests, and then constructing solutions that sit beside the product for any of your customers to use and resolve their needs.

Conclusion Customer Success through Employee Success

(no highlights in this chapter)

Bonus Track Pillar # 1.5: Preboarding

  • At Looker, the award-winning Department of Customer Love (customer support) treats prospects and trial companies no different from paying customers.

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