Customer Success: How Innovative Companies Are Reducing Churn and Growing Recurring Revenue

Metadata

• Title: Customer Success: How Innovative Companies Are Reducing Churn and Growing Recurring Revenue
• URL: https://amazon.com/dp/B01BWM41GS?tag=malvaonlin-20
• Last Updated on: 2025-12-17

Highlights & Notes

• In a subscription model, you never stop working to win your customers. When done well, every single day is spent with a relentless focus on their success, not yours. Each and every customer deserves an amazing experience and an unwavering commitment to success from their vendors. But success cannot be standardized, and the companies who understand this are the ones poised to reap the greatest rewards.

• My team of nearly 4,000 experts is dedicated to the mission of helping our customers get full value from our products—and ultimately transform their businesses.

• When optimized, Customer Success is the best sales and marketing engine possible.

• my team is held accountable for customer usage, adoption, and ultimately revenue.

• The bottom line on SaaS renewals is that customers can, and do, choose to not renew their contracts at a much higher rate than for maintenance products.

• You can’t pour enough business into the top of the funnel to sustain real growth if customers are leaking out the bottom at a high rate.

• But the allure and value of a recurring revenue business such as Salesforce is in growing the overall value of the installed base. That takes new customer acquisition plus high retention rates plus positive upsell results (selling more to existing customers). Only when all three of those gears are working do you have the healthy business engine that investors will reward.

• It’s simply a losing battle to try to out-acquire a high churn rate.

• Attitudinal loyalty is much harder to create and sustain because it’s expensive. It’s expensive to build products that customers love instead of products that they simply own. It’s expensive to create an experience that delights instead of one that just tries to not annoy.

• We need attitudinal loyalty not just behavioral loyalty. Customer success is the means to that end.

• “In traditional businesses, the customer relationship ends with the purchase. But in a subscription business, the customer relationship begins with the purchase.”

• If a business is not subscriptionable, it is probably becoming pay-as-you-go, which has all the same characteristics and imperatives.

• Software is eating the world.

• successful recurring revenue customers today do two very important things: They remain your customers. They buy more stuff from you.

• The process of purchasing B2B software has been irrevocably altered in much the same way. The up-front costs are lower, the resource requirements are reduced, the commitment level is diminished, and the switching costs are far less than in the past. Plus, there is no shortage of access to others who have purchased and used the solution, many of whom you may know directly. Once again, the power has shifted in a dramatic way from the seller to the buyer.

• Churn is simply a measure of dollars that used to be part of your ARR that no longer are. Churn is also often used to refer to a customer that is no longer a customer. That becomes a customer who churned. In the broader sense of the reduction in ARR, these are referred to as churned dollars.

• LTV is the total dollars a customer spends (or is expected to spend) with a vendor during their relationship and is another key metric for a SaaS company.

• In most cases, it takes 24 months or more of subscription revenue just to recover the cost of acquisition and onboarding. If customers are on annual subscriptions, as is often the case, they need to renew their contract with a vendor at least twice in order for the vendor to break even and start making a profit. Churn greatly exacerbates this challenge. And the urgency is even higher because most churn happens in the first couple of years because of the complexity of onboarding and adoption.

• Customer success is really three different, but closely related, concepts: An organization A discipline A philosophy At its essence, customer success is the organization that focuses on the customer experience with the goal of maximizing retention and LTV.

• There are three basic benefits that come from executing customer success well: Reduce/manage churn. Drive increased contract value for existing customers. Improve the customer experience and customer satisfaction.

• It’s important to understand that investing in customer success cannot make up for fundamental flaws in other parts of the enterprise. If your product is not good enough or your implementation processes do not meet customer requirements or your sales team is continually setting improper expectations, you will fail regardless of the quality of your customer success efforts.

• John loves your product and leaves Company A to join Company B and buys your product again at Company B. John loves your product and tells three friends about it and some of them end up buying your product, too.

• Someone has to decide what the key metrics are by which success will be determined: Gross renewals Net retention Adoption Customer health Churn Upsell Downsell Net Promoter Score (NPS) And then the activities that will drive those metrics: Health checks Quarterly Business Reviews (QBRs) Proactive outreach Education/training Health scoring Risk assessment Risk mitigation processes

• The description of what customer support does almost always centers on the phrase break/fix.

• There’s also usually an overlap in skills. Customer support people are expected to be product experts, as are Customer Success Managers. Both roles require good customer-facing skills (personality, patience, true desire to help, thick skin, etc.). Problem solving is also a useful talent in both roles.

• Customer Success Customer Support Financial Revenue-driver Cost center Action Proactive Reactive Metrics Success-oriented Efficiency-oriented Model Analytics-focused People-intensive Goal Predictive Responsive

• The renewal is a sales transaction whether it is explicit (signing a contract) or implicit (auto-renewal or non-opt out).

• Upsells—This is the act of buying more product from your vendor.

• 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. But, even if the sales transactions are not executed by customer success, they are enabled by them. To repeat something we’ve said before, successful customers do two things: (1) remain customers (renewing their contract or not opting out) and (2) buy more stuff from you. Because the job of customer success is to make sure customers are deriving success from your product, they are a revenue-driving organization. This means they need to be people who are at least sales-savvy, if not having direct sales experience.

• Customer success teams use data and analytics to determine which customers should be acted on, either because they appear to be at risk or because there appears to be an upsell opportunity or because there’s a regularly scheduled event such as a QBR.

• In the customer success world, the key metrics are often renewal rates, upsell percentages, overall growth of your customer base, and so forth.

• The sales analogy here is to analytics that help you identify the best opportunities in your pipeline upon which to act. Analytics similarly drive customer success by predicting outcomes such as churn or upsell, allowing the optimization of the time spent by the team.

• Being analytics-focused with the right kind of predictive data is critical to driving an effective customer success team.

• Organizational tension, if managed properly, is the engine that drives a company forward. The previous scenario is why you want Bill, the VP of engineering, to be both incented and influenced equally by his conversations with Joe and Sherrie. As the CEO, you need to create this reality. Joe and Sherrie each own a number that’s critical to your business. You want them to have equal authority around the company to make their number so the business will thrive. You also want Bill to be incented to deliver for both of them. Sherrie’s conversation needs to have the same weight with Bill as Joe’s conversation does. This is a power shift at most companies. Sales is king, and has been forever, and rightly so. When top-line growth is the only thing that really matters, the person driving those results has the power. But when you turn your focus as a company toward customer success, especially if you are a recurring revenue business, some of that power will move to the person who owns retention. Over time, as your installed base becomes far more valuable than new business bookings, the power shift will continue accordingly.

• A new focus on marketing and selling only to customers who can be successful long-term with your product Less emphasis on maximizing the initial deal, especially if it’s at the expense of LTV Overall awareness of renewals Improved expectation-setting with prospects Much more attention paid to knowledge-transfer and post-sales prep to ensure onboarding and ongoing success for the customer Incentives around renewals and/or LTV

• At the extreme, you may even end up giving veto power over sales deals to the person who owns retention.

• Over time, and with the accumulation and analysis of lots of data, these decisions should be information-driven, even to the point of refocusing your demand generation team on only those prospects who have a high likelihood of a lifetime of success.

• To put it simply, your product must deliver to customers just as much as it appeals to prospects. In fact, one definition of customer success that I’ve heard is delivering on the sales promise.

• Retention thinking in your product team might look like this: Building return on investment (ROI) measurements into your product Making your product easier to implement Designing for ease of adoption, not just functionality Stickiness is more important than features Performance is more valuable than demo quality Creating modules that can be upsold rather than integrating all features into the base package Making customer self-sufficiency easier to attain

• “In a recurring revenue business, there’s no such thing as post-sales. Every single activity is a pre-sales activity.”

• Across the entire services team, this must be the mentality. The person taking a customer support call needs to think of the resolution of that problem as a pre-sales activity. Sales reps and solution consultants view every interaction with a customer as critical because the clock is ticking on the current month/quarter/year, and they need to get this deal closed. Customer support reps need to take on that same urgency. Resolving this problem for this customer as quickly as possible is mandatory because of the impending deal that could be hanging in the balance. That impending deal, of course, is the renewal or the opportunity to churn if there isn’t a formal renewal or, in the case of a pay-as-you-go business, the opportunity to create a need for more of your product. One of the jobs of a great CSM is to always be asking the question, “Why does this customer need my help right now? What could we do or what should we have done differently upstream so I would not be needed for this task?” This thinking often results in putting pressure on other parts of the services business: Customer support didn’t adequately resolve a problem. A critical case is open for too long in customer support. The customer went through the training for how to build reports but does not understand how to build the reports they need. The configuration that the onboarding team did does not solve the use case the customer needs solved.

• Clearly, the best customer experience is not to have someone who can help when needed but needing that help less and less frequently.

• That’s why the urgency with which services approaches every task and challenge is paramount. They must begin to think of themselves as pre-sales people, not post-sales.

• Remember that the phrase customer success is simply another way of saying loyalty creation and especially attitudinal loyalty creation.

• With every subscription comes the reality that we’ve handed much of the power over to the customer, and that means you must deliver what they need or want in order to get your desired business results. That’s where customer success comes in, whether that’s a team of people intervening directly with your customers or technology helping you deliver relevant and timely messages to them to make their experience better.

• These programs are supremely powerful because they deliver two things that every company craves and loves: predictable revenue and loyalty.

• Much of the daily job of the CSM in a SaaS company has to do with setting and resetting customer expectations, too. The new release that was planned to ship on Thursday is now delayed two weeks. The reporting feature the customer wanted has now slipped into the October release. Or, on the positive side, the premium support program we’ve promised is available starting today, not September 1 as we originally planned. All of these are part of what CSMs do every day and are analogous to what United Airlines is doing when they keep me informed and my expectations realistic. And these outreaches are part of an improved customer experience, which leads to retention in the same way that the perks of the frequent-flyer program do. It’s all part of the customer journey, and the core philosophy of customer success is simply to maximize the value the customer receives from your product(s) to keep them coming back.

• Typical scheduled interactions might include: A defined onboarding process Coordinated handoffs between vendor groups Monthly status meetings Executive business reviews (EBRs; biannually or quarterly) On-site visits (might be very frequent or annually) Regular health checks Upcoming renewal (if subscription based) Unscheduled interactions are usually data driven and proactive from the vendor to the customer and designed to mitigate a perceived risk: Multiple outages Too many customer support/customer service calls Declining usage of the product Invoices overdue by more than X days

• The application of expensive resources in a high-touch model usually has a very simple retention goal—100.00 percent. Anything less is most likely a major failure. The customers who receive this high-touch treatment are also often those with great opportunity for expansion.

• JIT customer success means providing exactly what the customer needs at exactly the right time. Not a minute before or a minute after. These customers are not valuable enough for you to store inventory for them. Inventory in this case would be an abundance of guidance, education, or handholding, all of which also lead to something priceless—goodwill. In other words, JIT also means just enough. In the high-touch model, lots of inventory/goodwill is stored up because of the number of interactions that take place with each of those customers. It’s worth going the extra mile and perhaps doing more than what is necessary because of the importance of these customers. In the low-touch model, you can’t afford to do as many interactions, so you will end up driving toward the bare minimum. But, in this model, the bare minimum still includes a reasonable degree of one-on-one touch. By contrast, the tech-touch model removes one-on-one touch completely.

• A version of the above list updated for low-touch customers might then look like this: A defined packaged onboarding process Coordinated handoffs between vendor groups only from sales to onboarding Monthly status meetings EBRs (bi-annually or quarterly annually) On-site visits (might be very frequent or annually) Regular automated health checks Upcoming Auto-renewal (if subscription based)

• internal meetings or doing non-customer-facing activities, you should be able to estimate the CSM time required each year/month/week with any given customer, which will in turn define how many customers a CSM can manage. Voila! Your headcount model.

• You’ll find that the best way to determine CSM ratios is not by number of customers but by contract value (ARR). All customers are not created equal, so a $2millionperyearcustomerca{n}^{\prime }tbecountedthesameasa$20,000 per year customer. As a counterpoint, it’s much harder to manage one hundred $20,000customersthanone$2 million customer, so keep that in mind, too.

• Tech touch. This model may be the most complex and interesting of all. How do you deliver timely and relevant customer success to your customers without ever talking to them directly? Because the SaaS model lowers the barrier to entry for customers and the cost of sales for the vendor, it also broadens each market, often significantly. Ultimately, this almost always leads to a long tail of low-value customers. Individually, they do not have a lot of strategic or financial value, but, collectively, they often play a major role in the vendor’s financial results. For the long tail, tech-touch customer success is a necessity. For most B2C companies, it’s not just a necessity, it’s the only choice.

• Although e-mail is a powerful tool in the customer success arsenal for tech-touch customers, it’s not the only tool. Other one-to-many channels exist, too, such as Webinars Podcasts Communities (online portals for sharing ideas and talking virtually to other customers) User groups Customer summits Any vehicle that allows you to interact with more than one customer at a time, or moves those interactions to another source (Communities), is an option for executing customer success at scale.

• For existing customers, it’s about creating demand for the product they already own. Remember our euphemism for customer success—building loyalty. The goal of customer e-mail campaigns is not solely to get customers to buy more, although you will occasionally target customers for that purpose. It’s to reinforce the purchase they’ve already made or help them use that product more effectively so that they remain loyal, either by renewing their contracts or choosing to not opt-out.

• Effective e-mails need to be timely, relevant, and include useful information.

• Here’s a partial list of what you probably know about customers across your enterprise: Original contract date Length of time as a customer Industry Geography Contacts Contract value Contract growth rate Number of support calls Severity level of each support case Number of days each support case was open Number of invoices delivered Number of invoices paid Number of invoices overdue when paid Average time to pay invoices Customer Sat scores and trends Customer health score and trends If you are a subscription SaaS company: Renewal date Every single click ever made in your product

• Dear Joe, Thanks again for being such a loyal customer since July 2012. We are pleased that you are part of our extended family. We’ve noticed that you responded to our last NPS survey and scored our reporting functionality only 6 out of 10. Thanks again for that response and feedback, and I’m happy to let you know that we’ve recently shipped a significant enhancement to our reporting, which it looks like you have not yet explored, that allows you to easily combine X and Y into one simple report and very simply create a new dashboard with that information, too. So far, our customers who have used it have given it rave reviews. Acme Manufacturing had this to say about it. In case you missed it, you can find the on-demand training videos for enabling and using this feature here and here. Please check them out and provide feedback through the form that pops up at the end of the second video. We’ll enter you into our customer challenge for a chance to win free tickets to next year’s summit, when you complete the second video. Happy reporting! I think you’ll find this feature especially useful. Regards, Your Customer Success Team

  • Notes: correo de customer success

• It’s definitely the customer’s world today, and we’re just living in it. Customer success is simply the acknowledgment and embracing of that reality.

• The bottom line is simply that customer success can be delivered at scale in an effective and highly relevant way for your customers. Technology has made it possible, and more and more companies are starting to take advantage of that capability.

• Your PMF must drive your complete corporate alignment, from product development to operations and throughout the go-to-market funnel.

• The right customers hone your company’s vision, your content, and your onboarding of employees, partners, and customers. And they help optimize your corporate direction. The wrong customers, even those who may come with great brands, the promise of large up-front or potential revenue, or referenceability, may take your valuable resources, mindshare, and company down a very dangerous rat hole.

• Although the product teams must focus on delivering to the PMF, they still need to be aware of and responsive to customer needs and the reality of the market as it evolves.

• The right customers may help mature and calibrate a company’s PMF and innovation agenda. The wrong customer, who is not aligned with your target market and core PMF, may put constraints on every aspect of your company’s go-to-market motion.

• Marketing, sales, and customer success, fully aligned with the product, provide a strong enabler of the myriad requests and demands that come from an evolving and maturing customer base. It is incumbent on sales and customer success teams to manage growth and drive scale in concert with the feedback loop from the customer base to maintain alignment with your target market and PMF. This requires strong leadership and a commitment to understanding that the right customers will enable us to be more responsive to the target market and help focus resources on the right efforts, making not only your customers but also your own employees more successful.

• Once you have defined the profile of the ideal customer or ideal customer segment, your operational go-to-market engine needs to align with that profile. Operationally, it all starts with selling to the right customer, which means starting at the very top of your revenue funnel. Marketing must target the right kinds of customers, and sales must quickly disqualify those who aren’t a great fit, going beyond typical methodology and key qualification steps such as budget, time frame, and executive sponsorship. The churn itself is only the tip of the iceberg; the cost of signing customers that you can’t make successful could be enormous. First, you incur the customer acquisition cost (CAC) of bringing these customers onboard. But the biggest cost is the opportunity cost of applying resources to the wrong customers and, inevitably, doubling down on those customers when they struggle. These resources could have gone to helping other customers who have a greater opportunity for higher customer LTV.

• 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. It’s also important to analyze your incentive processes across the company and determine how to align them to reinforce the need to focus on the right customer segments. Clearly, your customer success leadership is incented to reduce churn and partner with sales to accelerate expansions. Are your sales leaders incented to reduce churn, thus incenting them to not sell to the wrong customers? How about your product leadership and an incentive on customer retention? If we’ve established the point that customer LTV and minimizing churn are some of the critical key performance indicators (KPIs) for any SaaS company’s success and valuation, doesn’t it make sense for all functional leaders to share those variables in their incentives? Another factor to consider is organizational structure and how it does or does not align to focus the organization on selling to the right customers. Do your sales and customer success organizations report to a chief revenue officer who holds a holistic view of both new business and retained business to help drive the right decisions about which customers to target and which ones to walk away from? If sales and customer success are independent silos, do you provide your customer success leadership veto power over deals that are not a fit?

• Dave Kellogg, CEO at Host Analytics, recently said this to me: “Ninety percent of all churn happens at the time of sale.” In other words, at least in his business, almost all churn happens because they’ve sold to the wrong customer. This is probably true to varying degrees across all businesses. And the actual cost of selling to the wrong customer is enormous. The wrong customer is always harder to onboard, taxing your team’s time and abilities. This often leads to greater demands on your product team as well. The burden then gets passed on to the customer success and support teams when the onboarding project is complete, and the struggle exacerbates when your customer success team has to scramble to configure and execute an outside-the-box use case on behalf of the customer and then train the customer on how to use it. Then, the bell rings 90 days pre-renewal and, with the customer at risk, a SWAT team is assembled to “save” the customer, often including an executive or two.

• This can be just as costly as with your high-touch tier. It may be even more costly in one way. Because there are more of these kinds of customers, they will, in aggregate, know more people, so the negative word-of-mouth might even be greater than for high touch, even if the brand value of each individual customer is lower.

• So, how do you mitigate the chances of selling to the wrong customer since it’s so important to not do that? Use data, not just anecdotes.

• Give your vice president of customer success veto power over deals in the pipeline.

• Put your customer success team under your sales VP.

• if your sales leader, who is probably also compensated on overall company performance, is incented on retention just as he is on new business, you’ll find this will definitely have an impact.

• Customers and vendors start off their relationship like two boats side by side in the middle of a lake. But if both boats are unoccupied, they will soon begin to drift apart. Over a longer period of time, it’s highly likely that the two boats will end up very far apart. What would change that natural tendency? Simple. Put someone in one of the boats with a pair of oars. Better yet, put someone in each boat with oars.

• Only willful, proactive interaction on the part of one or both companies will overcome the natural drift caused by constant change. This is why customer success organizations have come into existence. Customer success organizations and practices intervene to push the customer and the vendor back together.

• In fact, in many SaaS companies, the expected lifetime value of a customer is 10 times the value of the initial sale.

• In a recurring revenue business the concept of partial churn is also valuable to understand. That is simply the loss of contract dollars in a situation in which the customer does not leave you. Partial churn can come from a product churning, unused licenses being returned, or customers negotiating a deeper discount because of challenges they encountered working with you or a perception of receiving lower value than they originally expected.

• The definition of successful customers varies widely and depends on many factors. Most companies believe that successful customers are a direct result of product adoption, engagement, and product usage. It’s also critical to make sure they are getting the business benefits they set out to achieve when they selected you as their vendor of choice. One thing to consider is that sometimes the most successful customers appear to be unhappy. This tends to happen when customers are pushing the boundaries of your product or your organization. Do not mistake demanding for unsuccessful. Oftentimes, the opposite is true. The traits that make a customer demanding are also likely to ensure that they are getting maximum value from your product and are simply asking for more.

• The real trick is putting measures in place to look for the warning signs and acting on the data when you see the signals. Financial Return or Business Value Not Realized

• Stalled or Prolonged Implementation

• Loss of Project Sponsor or Power User

• Low Rate of Product Adoption

• Acquisition by a Company That Uses Another Solution

• Lack of Product Features

• New Leadership Driving Shift in Direction or Strategy

• Customer Affected by Poor Product Quality or Performance Issues

• Your Product Is Not the Right Solution

• The Human Factor

• few great ways to maintain contact include: Proactive outreach from the CSM or an executive Timely, relevant e-mail content High-quality customer webinars that provide ideas about how to extend use of the product Updates and involvement from a robust customer community Regular user group meetings Customer advisory boards User conferences

• But the end user’s perception of value often goes down as the novelty wears off or the value begins to be taken for granted or your competition erodes the differentiation that your customers see in your product versus theirs. The battle to retain and increase the value of your existing customers is never-ending. Your only choice is to deal with it.

• Another aspect of this truth that is important to understand is that your retention/churn targets for your low-touch tier of customers versus your high-touch customers should be different. With very few exceptions, the retention rate as you go down your pyramid of tiers will be lower. Understanding and accepting that can allow you to not hyperfocus on one or two of these customers at the expense of improving the overall aspects of your business that are more scalable, such as processes and product.

• it’s often more valuable to understand why a customer churned than to understand why they stayed because the churn is often a more discrete event with considered rationale.

• High-touch customers may be your lever to financial success, but low-touch and tech-touch customers may provide equally valuable levers with regard to scaling and efficiency.

• Customers don’t buy your solution to use its features and functions. They buy your solution (and buy into the relationship with you) because they want to achieve a business objective.

• Allowing your customers to go down the wrong path will bring potentially disastrous results, so challenging customers to do it the right way is mandatory.

• Wild success doesn’t happen by chance. It happens because both you and your customer have a real stake in mutual success. You both share and understand those objectives, you measure and monitor progress against those objectives, you ask hard questions, and you continuously strive to raise the bar when setting new objectives.

• The main reason that your customer bought your product in the first place isn’t because your features are cool. It’s because your customer has a job to do and expects your solution (and your company) to help them do it better. For example, if your company provides a digital marketing solution, you need to provide the tools, technology, training, and supporting content to make your customers better digital marketers, not just a way for them to send e-mails.

• 1. How are they measuring success? Specifically, what is the key metric, or “unit of currency,” that they’re using to measure success, and how many units will the customer need to add/save/remove/reduce to claim that they’ve gotten value from your solution? You should also know how the customers as a team (irrespective of your solution) are being measured for performance.

• According to that metric (or metrics), are they achieving success? Or, if it’s a work in progress, is the customer on track to succeed within the expected time frame?

• What is their experience along the way?

• Regular strategic business reviews (SBRs), quarterly or otherwise, focusing on these objectives, give you and your customers a reason to engage on a regular basis.

• Candid customer conversations are a valuable source of information—sometimes epiphanies—for your company.

• If customers aren’t following through on their side of a commitment, then you’ll need to escalate, strategize with your sales team or other business functions, and figure out how to have the necessary difficult conversation with the right person or people. Customer success is everyone’s responsibility. Use all the resources available to you. Your customer is expecting you to.

• Remember, your customers aren’t buying a technology. They’re buying a solution to a problem, a path to a better way. It’s your responsibility to understand the customer’s goals and objectives and to steer the customer along that path (in both high-touch and low-touch ways). Once you’re able to understand how customers are measuring success, confirm that they’re achieving it, and confirm that they’re having a positive experience along the way, you’ll have the most valuable thing possible: an advocate.

• Wild success doesn’t happen by chance. It happens because someone asks hard questions, objectives are measured and monitored, and once those objectives are achieved, someone raises the bar and repeats. Welcome to (wild) customer success.

• One of those expectations is that the burden is on us (you), not on them, to make them successful. In a subscription-based world, this is a truth whether we like it or not. Because, if we don’t do it, one of our competitors will, even if it’s bad business policy and too expensive to sustain. We’re stuck with this reality, so we need to learn to deal with it. Again, our only option is to embrace it. Fighting it will only waste our energy and passion.

• Everyone accepts that an application that helps you consolidate your financials and close your books every quarter is going to be a bit more complicated and challenging to use than Yelp or Words With Friends. But the gap is definitely narrowing. The most successful business software is definitely borrowing UI tips from consumer apps, and everyone is benefiting from it. But the higher bar is always harder to leap over. Whether we’re selling products that require a four-month onboarding process or a product that we download from the App Store and want to use 30 seconds later, the expectation that we will make the lives of our customers much easier every single day is not going to go away.

• As we who live in this world know, the success of a customer is often much more up to them than it is up to us. But we bear the responsibility of making it happen regardless because the results if we don’t are bad, regardless of blame.

• What customers often fail to understand is that the people resources are not unlimited. It’s just a truth we have to deal with that limited resources, in this case people, is a much harder expectation to set and maintain than no resources.

• Don’t take lightly the need to handhold your users through your product or process because that’s what they expect and that’s what your competition is working on.

• Generally speaking, the subscription economy puts the customer in charge much more than was previously true. This law speaks to that truth very specifically. If you are going to be great in building a customer success–centric business, you will need to own the burden of making your customers wildly successful.

• Customer health is at the heart of customer success. It not only informs but also drives appropriate action when used properly. It is to customer success what the sales pipeline is to a sales VP—the predictor of future customer behavior. Good customer health equates to a high chance of renewal and upsell. Poor customer health means a lower chance of renewal and upsell. So just as sales VPs manage through their pipeline, customer success teams must manage through customer health. Given that retention is life or death for a recurring revenue business, monitoring and managing customer health is a core activity for customer success teams: it must be done and done well—and relentlessly.

• We have no choice but to pay attention to our customers and for one very simple reason—it’s life or death. Recurring revenue businesses just can’t survive unless they drive success for their customers, because successful customers do two things: (1) they renew their contracts at a high rate and (2) they buy more stuff from you. It’s really is as simple as that. And subscription, or pay-as-you-go, businesses will not survive without those things happening.

• And most companies and CEOs truly want customers to be successful for nonfinancial reasons. It just feels good to have customers deriving real business value from the products we’ve worked so hard to deliver to them.

• Customer health for a VP of customer success provides the same value. It’s a daily predictor of future customer behavior (renewal, upsell, churn, at risk) and offers a more timely way to manage your team (no need to wait 12 months to find out a CSM’s churn/retention rate).

• Product adoption:

• Customer support:

• Survey scores:

• Marketing engagement:

• Community involvement:

• Marketing participation:

• Contract growth:

• Self-sufficiency:

• Invoice history:

• Executive relationship:

• Technology can play a huge role in all the areas we’ve discussed, but it’s essential for helping you monitor. If you don’t have some kind of system for monitoring your customer’s health, you’ll be stuck analyzing lots of spreadsheets and reports and trying to draw actionable conclusions from them.

• It’s also useful to create processes that are initially not systematized as you work the kinks out and then automate them. No sense in automating if the process isn’t reasonably refined. You’ll end up just making mistakes faster.

• “If it’s worth doing, it’s worth doing really well.”

• Relentlessly. Monitor. And Manage. Customer Health.

• Customer health is your key predictor of future customer behavior. Be relentless in pursuing it and using it effectively across all customers.

• Once outlined, that customer experience needs to be captured, driven, and continually refined by your customer success team and practices. However, customer experience must be a top company priority; it can’t be delivered by individual relationships with your customers or even by a single department. The customer experience that builds the strongest relationship between you and your customer needs to start during the initial sales cycle (which could be interacting with your website or an actual human), and then moves to onboarding, product quality, support, and solution adoption, while having a strong focus on communication between the two entities and your community of customers.

• By having a customer experience blueprint that maps across the entire organization, and a customer success organization that drives the process, a company will now have data points to drive change and help develop stronger relationship across all customers. The data-driven decisions can allow companies to institute change that includes website design and flow, more intuitive product design, and new customer success programs customized to particular sizes of customer organizations, while allowing you to redirect expensive one-to-one human interaction to your highest-value customers. Businesses scale only when customers scale.

• You have to figure out how to deliver love and value to these customers without much one-to-one interaction. This will bring out both the best and the worst in your product and your company as you learn whether customers will be loyal because of the value they get from your product, not the relationship they have with an individual.

• Their early success resulted from the tremendous growth of their top-line revenues; however, for sustained long-term growth, all companies must focus on new business as well as customer retention.

• Segment your customers by a particular metric that works for your business. Define a customer coverage model based on your segmentation. Create customer interaction categories based on your coverage model. Establish a cadence for interacting with customers. Help connect your customers by building a strong and loyal community. Create a customer feedback loop. Segment Your Customers Using a Particular Metric That Works for Your Business

• You might identify that your larger customers tend to renew more after they reach a certain milestone, while your smaller customers churn at a higher rate; however, if you can get them successful early, they have a higher propensity to buy more solutions or licenses. Segmenting properly and analyzing trends will allow you to adjust your relationship strategy accordingly.

• The first step in the process is to define how many accounts fall into the following categories of interaction: high touch, low touch, and tech touch (see guidelines under the following section, “Create Customer Interaction Categories Based on Your Coverage Model”). One approach to help understand your segmentation (if you use ARR as the benchmark) is to see where your Pareto principle kicks in, by analyzing where 80 percent of your revenue is coming from. Based on your findings, you can start making judgments about how many accounts you want managed by high-touch versus low-touch CSMs and programs.

• Depending on the complexity of your solution and the customer’s willingness to spend, the range for the number of high-touch accounts managed by an individual CSM can vary from 5 to 15 accounts, whereas your low-touch CSMs might be able to manage from 20 to 50 accounts or even many more.

• Create Customer Interaction Categories Based on Your Coverage Model

• High Touch Multiple in-person meetings during a quarter (depending on each customer’s initiatives) QBR meetings Creation of a blueprint success plan One-to-one meeting(s) with your executive staff Low Touch One in-person meeting per quarter (or as needed) Focus on at least one high-value meeting per month via online or video conferencing One-to-one meeting with your executive staff Tech Touch Webinar-style one-to-many customers meetings on product adoption Monthly to quarterly newsletter Data-triggered e-mail campaigns On-demand training and guidance Community portal

• Your goal should be to interact with your customers on at least a monthly basis via your macro-communication strategy (company and product newsletters, regional user groups, annual customer user conference, etc.).

• you need to provide forums for customers to interact with one another. This is going to happen with or without you, so you are better off making it easy for your customers to meet, to collaborate, and to share their experiences.

• To build and foster strong customer relationships and loyalty, you need to create a feedback loop. This strategy can be delivered through surveys, an electronic suggestion box, customer focus groups, one-to-one meetings, or a customer advisory board.

• your customers need ways to voice their opinions on your product strategy, quality, customer support, enablement programs, company vision—or just to provide general feedback.

• Companies that listen to their customers get more great product ideas that assist with adoption and allow for stronger loyalty.

• At the end of the day, your customers are the ones fueling your growth and generating your revenues—it seems fair to provide them with a seat at the table—and the most successful SaaS companies provide them an opportunity to sit at the head of the table more often than not.

• To strengthen your customer relationships and to build loyalty in this new era of recurring revenue businesses, follow three basic principles with your communication efforts: (1) communicate often, (2) set clear expectations, and (3) be as transparent as possible. As a vendor, you have now taken on the responsibility of providing a quality product that delivers business value. At the same time, you’ve taken on the responsibility for deliverables that an internal IT team used to handle, including application availability and uptime, performance monitoring, and delivering easy-to-use products with relevant and timely new features and bug fixes.

• be fair, no vendor survives for long if its product doesn’t actually do what it promised. But it was the personal relationship established by the sales rep and/or account manager that often kept the customer loyal. Relationships led to referenceability and to additional purchases. Sales skills and product functionality were important, too, but the people part was critical.

• When you get to the point as a vendor in which certain customers do not pay you enough to profitably get any kind of one-to-one touches, then loyalty has to obviously come in some other way. One way is to deliver customer success practices through all of your one-to-many vehicles. Fortunately, there are many at your disposal as outlined above: E-mail Webinars Community User groups Events

• Ultimately, you must learn to win by building value, not relationships.

• The key to customer retention, client satisfaction, and scaling the support and service organizations is a well-designed product that’s combined with a best-in-class customer experience.

• A product that is easy to use and that becomes essential to the way people do business will create happy and loyal customers.

• A CSM’s priorities typically focus on: Driving adoption and value of your products Fixing root causes of dissatisfaction, such as addressing problems across the client life cycle and support functions Making sure your product is best in its class Ultimately, the key to customer retention, client satisfaction, and scaling the support and service organizations is a well-designed product or solution married with a best-in-class customer experience.

  • Notes: importante

• The focus of the PACs should be To help you define the vision and strategy for your products, understanding the actual business problems your clients face now and into the future To discuss how your clients view your products’ approach to those problems To take into consideration the market and technology trends that your clients see and what their effects might be To help you with functional prioritization at a strategic level

• For example, customer responsibilities might include: Actively engaging in PAC meetings and discussions, focusing on strategic business drivers Engaging and acting on behalf of peers and the broader client base Maintaining a high level of knowledge about current and future product road maps Engaging in project-specific design discovery and previews Participating in a reference program and speaking positively with clients or prospects on request

• Every person in the company has a job because of two things: the product and the customers. The company culture must strive to make each of those a priority. You must turn your customers into raving fans.

• Every department in the company should then have goals aligned with customers. The company should define a customer success framework that clearly outlines the customer journey and what that journey looks like. Employees need the forums to funnel feedback to all departments, especially product management

• Customer success focuses on helping people deliver results and ROI through products; good design enables that focus to be on value-added activities and not on functionality. Products that become onerous to manage, administer, and use will risk abandonment because customers will not value them. Customer success teams interact with customers every day and are intimate with how your product is being used. A feedback loop between them and your product team is essential. Switching costs now are much lower than they used to be. As a vendor, all you have is the quality and function of your product combined with the value of the services and support offerings you put around your product. And that support manifests from having a great product that’s easy to use. Many vendors get hung up on building in “nice to have,” forward-looking features, but often the customer’s internal processes are not mature enough to take advantage of such features. The product itself must offer a runway that enables processes to change to accommodate advanced functionality. An easy-to-use product is the basis for getting customers ready for advanced functionality. Bridging that disconnect is critical. If you’ve got a product that becomes essential to the way people are doing business and it’s easy to use, your customers will be happy and loyal; they’ll get the value. If not, they will look elsewhere. A well-designed product that enables self-sufficiency and delivers value is crucial to customer success. It will not only build loyalty but also enable your team to have more meaningful discussions with your customers and drive further growth.

• The only really scalable part of your entire company is your product. To be sure, every part of every company can get more efficient and more scalable, but, for every product you create, you have the chance to make it once and have it used millions of times by millions of users. “Make once, ship many” is a recipe for profit if you can get there. Think about it this way. If you made a perfect product (and I mean truly perfect in every way), how many people in your company would be unnecessary? In a typical company, you’d be able to eliminate all of the teams that do any of the following: Provisioning Implementation Training Customer support Customer success Operations Professional services (most of, at least) Renewals

• Apple’s identity is in building beautiful and elegant products. Zappos’s identity is in providing the ultimate customer support/customer experience. Walmart’s identity is value and convenience. But each of these company’s success is tied to creating the best product in their market. One could argue that this is a chicken-and-egg debate. Is Zappos the dominant vendor in the online shoe market because of their customer support? Or is their customer support actually part of their product? Ultimately, for the purpose of this discussion, that doesn’t really matter. The bottom line is this: the dominant vendor in virtually every market is the vendor who builds the best product. If a vendor convinces the world (or their market) that the best product isn’t just what you touch and use but also the services and support that surround it, more power to them. Great companies do this really well. But, without exception, great companies, above all else, build great products. Any attempt to join the customer success movement without making your product your top priority will be fruitless in the long run.

• Because of the volumes involved here, the most useful feedback probably comes directly from your product. The parts used most often are telling. The places where more time is spent could be important, either positively or negatively. You can build some limited feedback mechanisms into your product to collect data as the customer is experiencing it. It’s no stretch to think that the best direction on where to go with your product lies in how it’s being used today. Volumes of users also make experimentation pretty easy and very valuable. You can add a feature for a day and see what the results are. This is certainly happening every day on sites like Amazon, eBay, and Match.com.

• Why do people or companies buy? They think they’ll get value from their purchase. If you’re a consumer, this might mean spending a lot of money at a fine restaurant because you hope to get an above average meal. And you find out pretty much right away: it’s either delicious or so-so. Based on that, you can decide whether you’ll ever return. But when you are selling business products and services, it’s often tough to show value that close to the transaction. Although buyers know this, they do expect to see value in a reasonable time frame. For SaaS or subscription-based vendors, that time frame is the length of the subscription. If the customer hasn’t seen real value by the time renewal discussions begin, they’re far less likely to renew. Working against the vendor is how long it might take to get the customer up and running with the solution. Obsessively improving time-to-value is the way to address this challenge.

• What’s the secret to ensuring that the customer sees value as quickly as possible after buying your solution? Work with the customer to establish concrete success measures. Implement iteratively for early value, achieving the simplest measure first and focusing on the others later. Adjust in real time, springing into action the very moment you realize expected value is at risk. Let’s look at each of these points in a bit more detail.

• Work with the business sponsor to define measures early. It is critical to leverage business sponsors while you have their attention during the sales process, because they will likely be less involved in the tactics of the implementation itself. Trying to get the business sponsor’s attention later in the customer life cycle is difficult, after they have moved on to other things. Taking advantage of the opportunity to have the business sponsor’s focus earlier on is the best way to capture success measures that resonate at the business level of the organization.

• present a list of the measures our customers typically use to gauge success: Decreased time to reach quota. Increased number of representatives meeting quota. Increased number of converted marketing leads. Increased deal size or revenue. Increased percentage of representatives actively using Salesforce. Increased amount of time representatives spend selling versus searching for content. Decreased time to onboard representatives. Decreased time to close first deal. Decreased time managers spend coaching representatives. Increased representative competency with material. Increased number of representatives who fully complete onboarding curriculum. Increased viewership (number of views).

• One process that works well is to have the success measures documented by the pre-sales team and then pass those on to the onboarding team at the beginning of the implementation process. Then, during the onboarding kickoff call, the pre-sales engineer validates those measures with the customer: “During the sales cycle, you indicated that decreased employee onboarding time was a key driver. Is that still true? If so, how long does onboarding take today?” It is only after these success measures are clearly defined that we start the onboarding clock. Otherwise, you may find yourself months into an onboarding program—or, worse, fully implemented—without the customer knowing whether they’ve gotten any value from your solution.

• you do QBRs or some kind of regular reviews with your customers, you can revisit these metrics frequently (1) to determine whether they are still the right metrics for the business and (2) to validate your success against those metrics. Many customers seem to shy away from measuring hard ROI, despite having often been adamant about it during the sales process. But you know it will come back to bite you if you don’t help the customer measure it.

• Also, confirm constantly. Don’t make the mistake of assuming that just because the business sponsor defined metrics during the sales cycle and the customer’s project team validated those metrics, they will remain the ones that matter: List the measures at the top of every status report and call attention to them during every check-in call: “Just checking in—these are still the measures that we care about for this phase, right?” At multiple points during the onboarding, connect directly with the business sponsor to validate the measures.

• The CSM’s highest priority in the weeks and months after onboarding is to be obsessive about ensuring that the customer achieves the stated value. All other traditional customer success activities (introducing new features, doing quarterly business reviews, etc.) take a back seat to this critical item. Why is this so important? Well, we find that once customers finish onboarding, their project team may lose focus as its members turn their attention back to their day jobs. When that happens, we assume that the customer just isn’t going to be as laser focused on getting to value as we will be. The CSM is responsible for reporting on progress to both the customer and to the larger account management team and, then, reengaging resources as quickly as possible if the value timeline is hitting snags.

• In a subscription-based world, it’s key to grow the customer’s overall contract value over time. The process of doing that can only begin once the customer has reached the point at which she is getting real value from your product. No customers will buy more licenses or add-on modules of your product(s) if they aren’t yet deriving business value. To assess the magnitude of this, simply multiply 30 days by the number of customers you have. The result is the number of additional selling days you will have available to you because you improved time-to-value by 30 days for the next set of customers. If that’s not reasonable, use 5 days as your multiplier. Just calculate a number and ask yourself what a good sales team (yours) could do with that number of additional selling days.

• In the world of enterprise software, time-to-value is often measured in months because of the complexity of implementing the solutions. If you are selling e-commerce solutions or B2C, time-to-value is still relevant and important, but it may be measured in hours or even minutes.

• If you aren’t obsessing about time-to-value, no matter what business you are in, your competitors likely are and that will differentiate them. This is especially true in markets as they become commoditized.

• It’s not time-to-implementation, it’s time-to-value. For vendors dealing with high-touch clients, your implementation team and your customer success team usually share this responsibility. It’s almost never the case that project complete = value received. It’s a huge step in the process, but there’s always more work to do. This is where a CSM starts to earn his keep. Once he has a fully functional solution with which to work, he can engage the customer in starting to use it to solve the business problems for which it was purchased to solve.

• But the term value is not as concrete, which is why you probably need to create a proxy for it. This usually means determining which parts of your product have the highest value and measuring whether, or how much, each customer is using those features.

• It’s virtually impossible to deliver value quickly enough exclusively through technology, if your product requires more than (1) download, (2) configure, (3) use. But even if it is that simple, you’ll need to take advantage of every possible technology trick to make that experience the best one possible for your customers.

• Obsess about time-to-value. You’ll never be sorry you did, regardless of the type of product you deliver or the kind of customers who use it. It’s on your critical path to success for your customers.

• you are at a $25 million run rate and are trying to maintain a 50 percent or more growth rate, a 1 percent increase in churn means your sales team will have to close an extra 20 percent in new business sales to maintain your growth rate.

• CMRR is defined as the combined value of all of the recognized recurring subscription revenue on a monthly basis, plus signed contracts currently committed and going into production, minus churn. Churn is the monthly recurring revenue that is no longer committed from customers that have turned off the service or are anticipated to do so in the future.

• To sustain a subscription-based company for the long term, your company must have a deep understanding of both churn and retention: churn from the standpoint of understanding why and how often customers leave and retention from the standpoint of why and how often customers stay and continue using your product or service. The earlier in your company’s lifecycle churn and retention are addressed, the easier the problem is to solve. Companies can follow five steps to capture, measure, and understand churn and retention: Define what you are measuring, and components of CMRR. Define the period of measurement and frequency. Determine the expected CMRR and categories of churn. Determine how to identify suspected/at-risk churn. Align with your executive leadership to develop a set of standard definitions and reports for churn/retention.

• The necessary operational changes include the ability to capture churn and retention both from a CMRR dollar perspective and from a count perspective.

• Best practice in your CRM system is to have both a picklist of reasons for ease of standardized reporting, as well as a freeform comment field to capture additional color commentary. Ideally, your company’s order process is set up to capture the difference between a quantity downgrade versus a price downgrade, for these are very different churn problems to address.

• For reference, unavoidable churn is often referred to as death and marriage. In other words, churn caused when a customer goes out of business or gets acquired is generally accepted as unavoidable.

• Depending on your company’s business model, it may make sense to measure churn and retention weekly, monthly, quarterly, or annually. This should be determined by the length of commitment customers are required to make and align with how the company plans CMRR and churn to facilitate comparisons versus plan. Often companies measure churn and retention on a more granular basis—say, monthly—but report these metrics as an annualized rate for key stakeholders. This approach makes it easier for key stakeholders to have a clearer picture of the annualized effects of churn and retention. In addition, it’s important to define how you will handle both early and late renewals relative to the period of measurement. In terms of booking renewals early, this is a very good thing for your company. However, you need to make sure the renewal is booked in the period in which it is due; booking in an earlier period will significantly throw off churn and retention metrics. When handling late renewals, the best practice for keeping your company’s churn and retention metrics accurate is to move the expected CMRR and expected customer count to the next period while maintaining the same subscription start and end dates. This approach enables the company to accurately measure churn and retention while also being able to report on late renewals. This is a key metric that the company should measure. Ideally, all renewals are completed 30 to 60 days in advance of their subscription end date.

• The best practice for determining expected CMRR is to add the CMRR of the prior-period renewal to the annualized value of any add-ons during the period. This becomes the basis for calculating your company’s churn and retention. This approach also means the churn plan you set at the beginning of your fiscal year will change over the course of the year as customers add on incremental subscriptions.

• For example, calculating expected CMRR at the beginning of your fiscal year as the basis for your company plan might look like this: Prior-year renewals = $25millionAssumed10percentchurn(duetodeath,marriage,etc.)=($2.5 million) Planned expected CMRR = $22.5 million

• For example, you want to calculate updated expected CMRR at the beginning of your second fiscal quarter along these lines: Original planned expected CMRR = $22.5millionAddedannualizedvalueofmidtermadd-onsfromfiscalQ1=$1.76 million Updated planned expected CMRR = $24.26millionThemostconservativeapproachtoaccountingfortheannualizedvalueofmidtermadd-onsisupdatingexpectedCMRRatthecloseofeachfiscalperiod(generallymonthlyifyouaredoingmonthlycloses).Forexample:OriginalplannedexpectedCMRRforSeptember=$1.5 million Added annualized value of midterm add-ons for September renewals = $225,000UpdatedplannedexpectedCMRR=$1.725 million If you have multiple customer segments in your business, you should calculate expected CMRR for each customer segment as part of your planning process, since each segment will usually have a different projected churn rate.

• An emerging area of focus for many companies is to take a much more forward-looking view of the company by measuring suspected or at-risk churn. There are two ways to forecast suspected churn or at-risk customers: (1) through human interaction and (2) by leveraging signals or data points.

• Customer success management applications not only help automate the process of capturing and scoring customer health but also provide a centralized repository that all key customer-facing personnel across the company can access in real time when engaging with customers. In addition, they can provide you with the capability for doing tech touch for some deliverables or some set of customers; that is, driving relevant and timely touching of your customers through automated one-to-many channels instead of the expensive one-to-one processes.

• For example, product development and engineering need to understand prioritization of enhancements that will have the biggest impact on customer success. Perhaps a segment of your customer base is consistently unsuccessful, and the sales team needs to be advised not to close more customers matching that profile. Or customers are consistently not getting the training they need to achieve long-term success. Understanding churn and retention at a very granular level can help guide every facet of the company with regard to focus, priority, and investment to accelerate performance and growth.

• the best practice is to also leverage an unbiased third party to conduct interviews with customers who churn so your company can better understand what happened and why. (Many excellent firms offer just such a service.)

• It’s one thing to know that your installed base ARR went up by 8 percent (net retention of 108%) last year. It’s a whole ‘nother thing to 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? Knowing the details, not just at the high-level, but within each and every transaction, is a critical component of properly managing your business.

• life, we learn much more from our failures than from our successes, so we should take advantage of these failures and learn everything we can in order to avoid them in the future.

• Repeatability, process definition, measurement, and optimization are the hallmarks of that maturation.

• Putting it all together, if we can measure and optimize the processes relevant to our customer success organizations, we are significantly more likely to reach our likely business objectives (high customer satisfaction, low churn, revenue expansion, etc.). At Level 1 (initial), work gets done through the heroic actions of committed people without much regard for process or repeatability. Sound familiar? If you manage a handful of CSMs (or fewer), this is probably your daily reality. The objective your CSMs are focused on is along the lines of “Do whatever it takes to make your customers successful and make sure they renew!”

• Progressing to Level 2 (repeatable) occurs when the necessary process discipline is in place to repeat earlier successes. From there, achieving Level 3 maturity (defined) occurs when the process is documented, standardized, and integrated into a standard process for the organization. At this point, the fundamentals of a repeatable process methodology are in place, and what remains is measurement (Level 4: managed) and consistent improvement (Level 5: optimizing).

• Broadly speaking, you can think of three categories of metrics to explore: (1) customer behavior, (2) CSM activity, and (3) business outcomes.

• One of the biggest advantages of the SaaS delivery model for software, as compared to on-premise software, is that we can instrument and measure every aspect of how customers use our products.

• In properly instrumented SaaS applications, we are aware of every login, click, upload, download, error generated, and so forth. We know the frequency with which users perform specified activities. And depending on the nature of the product, we may also know the business value of these activities (e.g., a SaaS provider of an e-commerce platform will know the value of the transactions it has processed). The trick, of course, is correlating usage metrics to derived business value (for the customer) and how that will ultimately affect retention/expansion. Examples of user-based metrics may include (but aren’t limited to): NPS Logins and logouts Usage of specific product features/platforms (online, mobile, API)

• no one buys your software so they can log into it. Your customer has subscribed to your solution to fulfill one or more business objectives: find more leads, generate more revenue, make manufacturing more efficient, or enhance collaboration with suppliers. The key is to understand what those objectives are and how your product relates to them.

• Spend time with your customers at the beginning of the relationship to understand their business objectives and agree on how you will jointly measure the results.

• For example, are your QBRs as effective as you think they are in driving great adoption of your product? Do face-to-face visits outperform e-mail and phone calls when it comes to customer satisfaction? Examples of CSM activity metrics may include: Frequency of various types of interactions with customers (QBRs, e-mail updates, phone calls) Support ticket volume handled by CSMs (rather than your support team) Timeliness of risk identification Effectiveness of risk mitigation efforts

• An added benefit of maturation toward measurement and optimization is greater predictability of outcomes. Want to know how many customers a CSM can effectively manage (ideal account ratio)? Measure the relevant business outcomes for cohorts of CSMs with varied account loads. Interested in understanding how effective formal quarterly business reviews are vis-à-vis more frequent, informal check-ins? Measure customer engagement and satisfaction for cohorts that vary on this dimension.

• example, customer success and product are jointly responsible for ensuring that users of your product adopt it. The more clarity you can drive around ownership of these metrics, the more you can refine the processes and behaviors your team will execute. Examples of business outcome metrics may include: Gross retention Net retention Expansion Logo retention Customer satisfaction NPS Clearly defining what success means, both to you and your customers, ensures greater clarity of your customer success team’s mission and responsibility. Once you’ve achieved alignment on this definition, it’s critical to articulate the things you will measure to demonstrate how the team is performing. These metrics enable customer success leaders to prove the value of the customer success organization and improve your contribution to the company’s overall performance over time. Finally, your CSMs will thank you for the clarity of purpose this brings them, as well as the enhanced ability to truly understand their own performance and contributions.

• At some point, headcount needs to be justified by metrics, not by begging.

• How are your customers doing overall? Are there any customers at risk of churn? You’ve been working with customer X on some challenges for the past 60 days, are we making progress? Customer Y churned. What could we have done differently? How can I help?

• They have the ability to change your one-on-ones so they sound more like this: Your average health score across all your customers is six points lower than the rest of the team. It looks like the component that is dragging you down is the executive relationship. Let’s put together a plan to change that, starting with the lowest-scoring customer. You have three at-risk customers up for renewal in the next 90 days. Let’s review your action plan for each of those customers. Your upsell rates are 10 percent higher than the next-best CSM. That’s awesome, and I’d like you to put together three slides we can review and you can share at our next team meeting to help everyone else step up their game to your level.

• I’ll argue that the key metric to determine the quality of an individual CSM or the whole team is net retention. This takes into account both retention and upsell. I’ve said this before and I’ll say it again. Successful customers do two things: (1) They stay with you as a customer (renew their contracts if on a subscription). (2) They buy more stuff from you.

• You can also track many of these manually if you don’t have a CSM solution: Health score across book of business Health score trends Level of direct CSM engagement Number of triggered actions (low survey score, no product usage) Number of triggered actions completed Number of upsell opportunities identified Number of positive relationship activities (references, case studies, etc.)

• The list below is an extension of the list we started earlier in the high-touch section: Survey scores (this is often incorporated into the health score but can be tracked separately, especially if you haven’t developed a health score yet) E-mail engagement (what do customers do with e-mails that come directly from you or from your marketing team?) Number of support tickets opened (this may not be a good measurement of a customer success individual or team as it’s probably out of their control, but it can shine the light on troubled customers) Invoices—happy customers tend to pay their bills on time

• Much like marketing, your tech-touch customer success team should be measured on the effectiveness of their touches. That means measuring things such as: E-mail engagement Webinar attendance Community engagement User group participation For marketing teams, the ultimate measure of their success is leads created (i.e., pipeline).

• For most of business history, only two things have really mattered: (1) building the product and (2) selling the product. We believe that the time has come for a third core process to emerge—customer success.

• Literally, customer success involves shifting the orientation of your company from your product or your sales to your customers’ success.

• In the customer success movement, all business questions are reframed around the customer’s success: Product: Which feature will truly help our clients achieve their goals using our solution (versus being demoware)? Sales: Which clients are likely to be good fits for our solution (versus ones that will leave us quickly)? Marketing: What messages authentically align with the success and value we deliver (versus being buzzwords)? Finance: Which metrics reflect real success and value for our clients (versus just new sales)? Why Customer Success Is Inevitable

• How Customer Success Drives Value

• “Dollar renewal rate (DRR) is the most important metric for valuing subscription businesses.” In short, Wall Street notices customer success.

• “What does wild success with our company mean to you?” what would they say? Without defining the goal, it’s hard to get the company rallied around it.

• Reviewing customer success feedback each month with the product team Defining and refining sales qualification criteria Reviewing messaging regularly with the marketing and customer success teams

• Establish a regular review of customer success issues. Include a customer success executive in every executive meeting, every board meeting, and every key strategic decision. And take his or her opinions as seriously as you take those of your sales leader.

• Every business has limited resources and must make trade-offs. Is the feature to delight clients always getting deprioritized for the feature to drive demos? Is the project to implement self-service getting pushed behind the channel partner rollout? Is the training for CSMs being postponed for the sales training? If you want to drive customer success, prioritize it.

• Make sure the title for the customer success executive is on par with the sales leader. Keep your CSM in the loop when a customer escalates to the management team. Let the CSM be the hero with customers if possible (e.g., ideally the CSM will tell the customer that you agreed to their contract change or road map request). Make it clear to the rest of the organization that the CSM represents the client’s views.

• Spend as much time on customer success in your board meetings as you do on sales. Create a killer customer success section of your board packet to show your board that you take it seriously.

• Because great companies will have customer success in their DNA, it needs to become part of your culture. And, as you all know, culture may be managed and nurtured by your human resources team, but it’s established, reinforced, and modeled primarily by the boss.

• Quarterly executive bonuses were paid based on only two criteria: (1) new business bookings and (2) renewal rate. To fund the plan above $0 required a minimum threshold to be reached on both metrics. The message this sent is clear: retention rates are just as important to our business as new customer acquisition.

• the impact of customer success needs to be felt in sales and marketing, product management and development, and services.

• Think through these five questions as a CEO (if you are one) or about your CEO (if you’re not). Ask whether your CEO is truly focused on customer success: Is he willing to say “no” to an above-ASP deal in your pipeline because the chances of making the customer truly successful are too small? Is he willing to delay a vital product release in order to address current customer challenges? Is the head of customer success in his circle of trust? Does your road map include things that won’t help you sell more but only address existing customer needs? Does he get personally involved in critical customer situations as often as he does in key sales deals?

• A focus and long-term commitment to customer success will show itself over the course of the hundreds of decisions a company has to make every month.

• The night before the first Dreamforce customer conference in 2003, the executive team gathered with Marc Benioff to review the agenda and run through all the presentations. As with most conferences held by software vendors, the agenda was filled with product presentations designed to highlight the features and value of the Salesforce platform. About halfway through the review, Benioff made an executive decision that set the tone for the entire company for years to come. He decided to throw out all of the product presentations in favor of creating an open microphone opportunity for customers to share direct feedback. Instead of telling their customers how great they were, Benioff opted for having the customers speak their mind while Salesforce listened. Not only that, but when each customer took his or her turn at the microphone, he specifically requested feedback on what was wrong with the Salesforce product, with their processes, or with their people. No customer got away with simply singing their praises.

• Putting customers first sounds good but isn’t always an easy decision. That’s why it needs to become part of the culture and the corporate DNA so that each situation is not so much a decision as just the way we do things.

• “A chief customer officer (CCO) is the executive responsible in customer-centric companies for the total relationship with an organization’s customers.”

• Today’s customers, empowered by their access to information, can’t simply be seen as buyers. They want to be listened to, engaged with, and basically treated as partners.

• However, because we’re on the subject, one of the many nuances in a subscription economy is that there’s really no such thing as post-sales. Once the initial sale is complete, all effort is then applied to ensure the next sale, whether that’s a renewal, a non-opt-out, or an upsell. It’s fair to say that, in the subscription or pay-as-you-go economy, every single activity is a pre-sales activity.

• The post-sales organization tends to be pretty mature because the primary parts of it have been a necessary staple of the enterprise for a long time: Professional services Training Customer support Implementation/onboarding

• Professional Services Primary Measurement—Utilization

• The primary measurement for success in this business is called utilization. That basically means this: out of all of the hours available to be billed, how many hours were billed?

• Training Primary Measurement—Number of Products Delivered

• Customer support is the break/fix organization. It’s the team of people who take the calls or e-mails from customers who feel like something in the product is broken and who have come to expect some reasonable level of responsiveness, depending on the severity of the problem. In the software world customer support is the team of people who reactively assist customers with problems.

• Implementation or Onboarding Primary Measurement—Time-to-Value

• It’s not uncommon for the onboarding team to sit in the same group as your professional services team because the skills can be almost interchangeable. But, over time, most companies break these two groups apart for two reasons: Measuring and improving timeliness of project completion in onboarding is so critical. Packaging onboarding services is much more likely than professional services in which most work will be done on an hourly basis (time and materials). Because onboarding services are almost always part of the initial sales deal, they are often packaged with fixed prices to make them easier to sell and to not slow down the sales cycle. Time-to-project-completion or time-to-value are the key metrics to drive improvement (and profitability) of your onboarding packages. Breaking this team out as a separate group allows you to start tracking the improvement of those metrics as the key determination of the effectiveness of this team. Ultimately, you could argue it’s just another way to say utilization or efficiency but most would agree that timely and high-quality onboarding is so critical to the success and retention of customers that it requires its own group and measurement. Customer Success Primary Measurement—Retention

• The goal and measurement is retention, net retention, renewal rate, or something along those lines. You could lump it all under the word loyalty.

• So that’s five different organizations doing five very different things and being measured in five very different ways. That breadth of responsibility takes enormous intelligence, skill, and experience to manage and lead. I would argue that the skills and responsibilities of this role make it at least equivalent to that of a chief revenue officer who manages both marketing and sales.

• there’s a logical argument for adding a sales function into the customer success organization for a number of reasons: So CSMs can maintain their trusted adviser status uncompromised by negotiating sales deals of any kind. So the CEO has one throat to choke when it comes to maintaining and growing the value of the customer base. Because the CSM will have her finger on the pulse of any customer coming up for renewal and can help prep the sales rep with the history and background necessary for the renewal conversation. Because the CSMs will be the best source of upsell leads for the sales rep and will help prep him for the opportunity.

• The same philosophy can be applied to customer success and the CCO. If you ask your CCO to be responsible for the entire customer journey and the sales results expected to come from the customer base, then owning all of the customer touch points, including the ones listed previously that are typically part of customer marketing, is a legitimate ask.

• And if you are a SaaS company, this, too: Every action ever taken in your product (pages viewed, clicks, reports run, etc.)

• The value that technology can bring to customer success can be encapsulated in a few key areas: Optimize CSM time Increase the intelligence of every customer touch Drive scalability Improve collaboration, communication, and visibility Better team management Let’s look at each one of these in depth.

• the absence of any activity-based information, the prioritization of customer interactions is often driven, in a subscription company, by two typically well-known data points: (1) renewal date and (2) ARR (or total contract value). Number 2, as a proxy for customer value, is the one that drives prioritization for companies that don’t have a specific renewal, such as those with month-to-month contracts or pay-as-you-go companies.

• (1) attempt to get product usage data or (2) get other data about other customer interactions. Product usage data: Everyone agrees that, if you could only tap into one source of data, this would be it. The best indicator of customer health and predictor of future buying behavior definitely lies with how each customer uses your product. But it can be challenging to get and even harder to trend. Other customer interactions: Customers call support, pay (or don’t pay) invoices, respond (or not) to surveys, engage with your marketing messages, and so forth. These are almost always in a variety of systems that are separate and distinct. The perfect account manager would have to log into, and decipher data from, multiple other systems in order to prioritize their outreaches and maximize the value of each.

• Hey John, it’s Dan, your account manager. I just wanted to thank you for attending our webinar last week and personally follow up to see if you needed any more information or guidance on that topic. I also noticed that you’ve opened up three support tickets in the past two weeks regarding reporting. Let me know if you want me to review any of the reports you are working on.

• Not charging is usually the case for standard customer support and customer success. Both are necessary for high rates of retention and customer satisfaction, so the baseline delivery of each is typically bundled with the SaaS contract or provided to every customer in a traditional business or the on-premise software community.

• Customer success solutions should enable a 25 percent to 30 percent improvement in productivity at a minimum.

• I’m a high-touch CSM and have access to a great CSM solution, I should be able to increase the number of customers I can manage with the same quality, from 25 to 30 or maybe even 35. If I’m a tech-touch CSM managing 1,000 customers, the right technology could literally double that number or much more. If it’s all about tech, the number of customers almost doesn’t matter.

• The aspects of a technology solution that allow for the productivity increase are pretty obvious, and we’ve talked about several of them already: Prioritization—not touching customers who don’t need to be touched, which is a huge plus Effectiveness—information-driven insights make each call more effective Collaboration—we’ll talk more about this shortly but making the sharing of information easier is a big plus Accessibility—key information is no longer hidden in e-mail but available to all Proactivity—the amount of effort required to be proactive is exponentially smaller than firefighting

• The results don’t come without some level of pain. Ask a sales rep whose company religiously uses a CRM system. They probably spend more time than they’d like putting data into the system and then managing all of their processes there, too. But it’s a necessary part of the process for the greater good of the company. Plus, if they don’t do it, their VP might threaten to not pay their commissions.

• How do these apply in the post-sales world? Predictability: A system that has all the data and tracks the workflow of the tasks associated with CSM role creates the ability for future results to become predictable. Forecastability: As with sales, customer success must forecast renewals, upsell, and churn. Only a system using the right information and applying historical results appropriately can help codify and refine accurate forecasts. Repeatability: Only if the workflow of the individuals is tracked (think pipeline management) can a system then be used to determine what worked and what didn’t so you can repeat what worked and throw away what didn’t. Visibility: CRM systems are especially good at providing management visibility into individual deals or company-wide pipeline and forecasts. A great CSM solution will provide the same insights for customers.

• Collaboration, though similar, is distinct from communication. Collaboration is not just commentary but also a way to share, to distribute, and to cooperate on specific tasks and activities.

• CSMs are constantly in need of assistance to drive success for their customers. That could mean involving a product manager to talk about the intricacies of how a part of the product works or to talk about a future feature. It might mean involving a support rep to troubleshoot a particular issue. It could mean delegating an executive outreach up to their VP or CEO. And, of course, it will often involve temporary involvement on the part of engineering. In any case, the CSM solution must allow for the necessary sharing, delegating, and general collaboration around any given task or activity.

• All of the activities and results that can tell the VP if an individual sales rep is on the right track, aside from just closing deals, will be found in the CRM system: Calls made Meetings completed Pipeline growth Proposals created Pipeline movement Stuck deals Deals/dollars closed Days-to-close Average selling price (ASP)

• The ability to track the important activities is the same as with a CRM—the activities themselves are the only variable: Calls made Meetings completed Actions triggered Actions closed (by category) QBRs completed Other milestones completed Renewals/upsell results Customer health score Customer satisfaction score E-mails sent/opened/clicked-on Account plans created/updated

• The bottom line is that major organizations require empowered leaders, and empowered leaders need technology assistance.

• Overall churn rates will not decline because the friction to switch vendors will continue to decrease as fast as the practice of customer success improves.

• The primary wave is the move to recurring revenue business models, which places customers on the throne. At the same time, customers (businesses and consumers) continue to gain power in the market dynamic because of social media and the easy availability of all information. No vendor can hide from its failures, and its success stories will spread quickly, with or without a public relations team. It is, without question, the Age of the Customer.

• So if every business is going to get disrupted in favor of the customer, then every business is going to have to turn more focus and energy and investment on caring for their customers. That’s the nature of customer success.

• The customer is becoming more important, and more empowered, in every business in the world, including yours. It’s time to start thinking seriously about customer success.

• His total team is 110 people 21, of whom are on the classic customer success team. They break down into these functions: Thirteen are midmarket CSMs with two of them focused on the top 25 customers, while the other 11 manage about 50 each. Four are SMB CSMs who manage 600 customers in a pooled model. One CSM has responsibility for creating the one-to-many programs used by all the CSMs and manages the remaining customers in a pure tech-touch model. Two are directors, one over midmarket and one over SMB/tech touch. One is a customer success operations person, soon to be two.

• September 23 and following–Every user, when they’ve reached the thresholds of both 50 logins and 500 pageviews, receives an electronic $10 Starbucks card in their e-mail, automatically triggered from Wingtip’s customer success system.

• Remember also that the biggest risk of churn is at the time of first renewal or early on in the customer’s life cycle if there isn’t a renewal event. Managing the customer experience really well from day one is critical.

• first year with this customer will include: Automated surveys sent after every closed support case. Automated EBR PowerPoints sent every 90 days. Another NPS survey sent 90 days before renewal. Automated notification of coming renewal along with the renewal quote. Automated e-mails due to triggers on additional risks or opportunities. Occasional one-on-one outreaches with Mary, or, because it’s past the first 90 days, another CSM in the pool. The need for a one-on-one is determined by the nature of the risk or opportunity. Annual outreaches from the Wingtip executive sponsor for Financiality. Another gift automatically triggered when the renewal transaction takes place.

• Committing to customer success is hard and executing on it is expensive. But it’s a necessity in many businesses already and soon will be in yours. You can resist it or embrace it. Your choice.