CUSTOMER SUCCESS: FROM ‘JUST HERE FOR THE TITLE’ TO ‘SHOW ME THE MONEY!’

Introduction

In the high-stakes world of SaaS, IT services, and B2B tech solutions, Customer Success (CS) has emerged as the “it” factor for revenue growth, retention, and expansion. Yet, much like the term “business casual,” interpretations of Customer Success vary widely. Some companies treat it with all the dedication of a New Year’s resolution, while others invest as though it’s the golden goose of growth. This paper dives into six of the most popular Customer Success models, from those that barely lift a finger to those that roll out the red carpet, examining their impacts on ARR (Annual Recurring Revenue), retention, CLTV (Customer Lifetime Value), and other key metrics.

For those interested in how we’re measuring these metrics, there’s an appendix at the end with all the formulas and an “under-the-hood” view of key Customer Success metrics, explained in delicious detail. It’s the fine print of Customer Success metrics, for those who read manuals for fun.

To kick things off, here’s a high-level overview of each approach, followed by a comparative table for quick reference.

Overview of Customer Success Methodologies

1. No Customer Success Organization: The “Sink or Swim” Method

This approach is as straightforward as it sounds: throw the customer in and see if they can swim. No hand-holding, no check-ins—just the quiet hope they figure it out on their own. Roughly 15% of companies still use this model, likely by accident rather than design. Financially speaking? It’s like thinking leaving your plants untended will somehow make them thrive.

2. Buzzwords-R-Us: The Customer Service/Support Rebrand

Under this method, Customer Service/Support is rebranded as Customer Success without making any real changes. Think of it as calling an instant noodle cup “handcrafted ramen.” Roughly 20% of companies think customers won’t notice the lack of genuine support. (Spoiler: they notice.)

3. Renewals Only: The Subscription-Only Gym Membership Model

Here, CS only checks in when it’s time to renew—just enough to make sure the revenue sticks. Roughly 25% of companies take this “touch-and-go” approach, which stabilizes ARR but misses growth potential. Think of it as a gym that calls you every year to renew but would rather you don’t show up.

4. Onboarding Only: The “Just Enough” Strategy

With this model, CS teams focus solely on onboarding, ensuring customers know the basics, then vanishing. About 10% of companies think this brief moment of support is enough. For customers, it’s like being handed a new gadget without the instructions, but with a thumbs-up.

5. Onboarding and Renewals Only: The Dual-Touch Strategy

This two-step model supports customers during onboarding and renewal. It’s a balanced approach—giving customers a good start and a reminder to stick around without the hassle of constant engagement. About 20% of companies choose this model, managing retention decently but leaving revenue on the table.

6. Customer Success-NG (Next Generation): The Cullum Model

The holy grail of CS: proactive, technically savvy, and focused on customer goals. CS-NG engages at every stage, from onboarding to renewals and beyond, driving continuous value. Roughly 10% of businesses use this model, investing in CS resources that yield outstanding ROI. Think “rocket fuel for ARR.”

Comparative Table of Customer Success Models

Detailed Breakdown of Each Customer Success Methodology

Now, let’s dive into each model with all the riveting details, real-world usage rates, and commentary from industry experts who have lived through the ups and downs of Customer Success. Prepare for insights, impact, and just a touch of sarcasm.

1. No Customer Success Organization: The “Sink or Swim” Method

Overview: Approximately 15% of companies operate without any CS structure, relying on customers’ resilience (or boredom) to keep them around. It’s the business version of a magic 8-ball.

Revenue Impact: ARR reduction of 10-20%, leading to the sort of predictable revenue decline that’s as surprising as gravity. For a $10 million ARR company, this could mean $1-2 million in annual revenue loss.

Industry Expert Insight: “The ‘no-CS’ approach is like not watering your plants and being surprised when they wither,” says Lincoln Murphy, Customer Success advocate. “If you want them to stay, put in the effort.”

Retention & Churn: Retention rates hover at 60-70%, since customers often churn after unsolved issues. Translation: the silent treatment doesn’t work.

CSM Measurements Captured (or Not):

Measured:

• Churn Rate – Tracks departing customers, though it’s more “damage report” than strategy.
• Support Ticket Volume – A high volume typically signals a support deficit.

Not Measured:

• NPS (Net Promoter Score) – Asking customers to recommend you is pointless if they’ve already left.
• Upsell Opportunities – Uncaptured, as proactive engagement doesn’t exist.

Real-World Example: A mid-sized SaaS firm avoided CS entirely, relying on “just in time” support. The result? A churn rate of 25%, losing $2.5 million in ARR. They learned the hard way that ignoring CS is like hoping a bad haircut will fix itself.

2. Buzzwords-R-Us: The Customer Service/Support Rebrand

Overview: Some 20% of companies fall into this category, thinking a name change can cover up the lack of CS. It’s like calling a garden gnome a “decorative advisor.” Customers can see through it.

Revenue Impact: ARR growth of 5-10% from habitual renewals, but about 15-20% of upsell potential remains untapped. The company might as well say, “Good enough.”

Industry Expert Insight: Jason Lemkin, SaaS expert and VC, observes, “Calling it Customer Success when it’s just support doesn’t fool anyone. Customers will see through it, and they’ll vote with their dollars.”

Retention & Churn: Retention rates sit at 65-75%, as customers catch on to the rebrand. Churn rates hover at 20-25%.

CSM Measurements Captured (or Not):

Measured:

• Ticket Resolution Time – Tracks support speed, but not loyalty.
• CSAT (Customer Satisfaction Score) – Interaction-focused, yet no measure for lasting value.

Not Measured:

• Health Scores and Product Adoption – Missed, as there’s no real engagement.

Real-World Example: A CRM firm tried the “support rebrand” but missed $1.5 million in upsell revenue annually as customers remained uninspired. The fake-it-‘til-you-make-it approach, predictably, didn’t work.

3. Renewals Only: The Subscription-Only Gym Membership Model

Overview: Used by about 25% of companies, this model centers around renewals with little regard for continuous engagement. Think of it as the gym that calls you every year to renew, praying you don’t actually show up.

Revenue Impact: ARR grows by 10-12%, with 30% in upsell opportunities lost. Stability? Sure. But it’s coasting, not thriving.

Industry Expert Insight: Nick Mehta, CEO of Gainsight, quips, “A renewal-only strategy is like playing defense when you’re already winning. Sure, you won’t lose ground, but you’re not exactly winning either.”

Retention & Churn: Retention rates are decent (70-80%), while churn sits at a so-so 15-20%, signaling that customers stay without much enthusiasm.

CSM Measurements Captured (or Not):

Measured:

• Renewal Rate – Good for tracking retention at the renewal stage.
• Net Revenue Retention (NRR – Measures ARR from renewals, not engagement.

Not Measured:

• Customer Health Score – Interim engagement data is MIA.
• Upsell Metrics – Proactive outreach is absent.

Real-World Example: An automation company relying on renewals grew ARR by 10%, but missed $5 million in upsell potential over three years. It’s proof that, while steady, the strategy leaves serious money on the table.

4. Onboarding Only: The “Just Enough” Strategy

Overview: Approximately 10% of companies focus on onboarding, handing customers the basics, then disappearing. Imagine getting a new car, and they only show you the “on” button.

Revenue Impact: ARR grows 8-10% from reduced early-stage churn, but with $1 million in upsell revenue missed. Customers end up feeling like they’ve been left in an empty room.

Industry Expert Insight: “This strategy is the bare minimum,” says Dan Steinman, Chief Evangelist at Gainsight. “It might get them started, but it’s not enough to keep them happy.”

Retention & Churn: First-year retention hits 70%, but churn rises to 30-35% after that, as customers inevitably encounter unaddressed issues.

CSM Measurements Captured (or Not):

Measured:

• Time to First Value (TTV) – Tracks how quickly customers find initial value.
• Initial Product Adoption Rate – Shows early engagement but lacks long-term tracking.

Not Measured:

• Long-Term Retention Metrics – Without engagement, sustained usage is anyone’s guess.
• Upsell Potential – Missed completely.

Real-World Example: A learning platform focusing on onboarding saw a 70% first-year retention rate but lost $1 million in annual upsell revenue as customers encountered challenges alone. Short-sighted? Just a bit.

5. Onboarding and Renewals Only: The Dual-Touch Strategy

Overview: A balanced approach used by 20% of companies, supporting customers at onboarding and renewal. It’s a decent start, but without continuous engagement, it leaves revenue on the table.

Revenue Impact: ARR grows by 12-15%, with a small upsell boost, but an estimated $2 million in potential upsell revenue remains untapped.

Industry Expert Insight: Shep Hyken, customer service expert, notes, “Dual-touch is a nice compromise but leaves a lot on the table. Imagine checking in with a friend twice a year. How close are you really?”

Retention & Churn: Retention is solid at 80-85%, and churn drops to around 10-15%, though customers lack a continuous support feeling.

CSM Measurements Captured (or Not):

Measured:

• Renewal Rate and Churn – Good for long-term loyalty.
• NPS – Tracks satisfaction with service as a whole.

Not Measured:

• Proactive Health Scores – Misses engagement data.
• Expansion Revenue Metrics – Lacks regular touchpoints to capture upsell.

Real-World Example: A fintech company saw a 20% churn reduction but left $2 million in upsell potential untapped. Proving, once again, that “dual touch” isn’t a full solution.

6. Customer Success-NG: The Cullum Model

Overview: The rare yet powerful “Next Gen” model, employing technically savvy CSMs to offer continuous support. About 10% of companies engage this model, investing in CS that yields ROI on steroids.

Revenue Impact: ARR grows 30-35%, with upsell opportunities galore—adding $5-10 million ARR over three years. It’s the rocket fuel of Customer Success.

Industry Expert Insight: Guy Nirpaz, Totango CEO, says, “True Customer Success means never letting your customer feel alone. Next Gen takes them through the entire journey, and the ROI speaks for itself.”

Retention & Churn: Retention rates soar to 90-95%, with churn rates falling below 5%, delivering a pipeline of satisfied, long-term customers.

CSM Measurements Captured:

• Comprehensive Metrics – Health scores, NPS, product usage, and expansion revenue are all tracked to ensure continuous value.

Real-World Example: A cybersecurity SaaS company saw a 35% ARR growth and churn below 5% using this model. They added $10 million to ARR over three years, with a CLTV increase of 20%. Talk about success!

Customer Success Metrics—Detailed Calculations and Explanations

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1. Customer Lifetime Value (CLTV) and CLTV 2.0

Purpose: Estimates the total revenue a business can expect from a single customer over the customer’s entire lifecycle.

Formula:

?2. Net Promoter Score (NPS)

Purpose: Measures customer satisfaction and loyalty by asking customers how likely they are to recommend a product or service.

Formula:

?3. Customer Health Score

Purpose: Combines several indicators of engagement, product usage, support interactions, and satisfaction to assess renewal likelihood.

Formula:

?4. Customer Effort Score (CES)

Purpose: Measures the ease with which customers accomplish tasks, such as finding information or resolving issues.

Formula:

5. Time to First Value (TTV)

Purpose: Measures the time between customer onboarding and the moment they experience the first meaningful benefit from the product.

Formula:

?6. Gross Renewal Rate (GRR)

Purpose: Calculates the percentage of ARR retained from existing customers, excluding any upsells or expansions.

Formula:

7. Net Renewal Rate (NRR)

Purpose: Reflects the total ARR retained, including upsells and expansions, offering insight into both retention and growth.

Formula:

8. Monthly Recurring Revenue (MRR) Churn Rate

Purpose: Calculates the percentage of revenue lost from existing customers in a given period, indicating revenue stability.

Formula:

9. Product Adoption Rate

Purpose: Measures how many customers are actively using a product feature, reflecting engagement and feature value.

Formula:

10. Expansion Revenue Rate

Purpose: Measures revenue growth from existing customers due to upsells, cross-sells, or additional licenses.

Formula:

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Why Metrics Alone Don’t Tell the Whole Story

While metrics like CLTV, NPS, and Health Scores provide valuable insights, they don’t fully capture the nuances of Customer Success. Metrics can quantify trends, but they often miss the qualitative aspects that define true success. In my view, real Customer Success requires empathy, context, and proactive engagement that data alone can’t provide. Metrics serve as essential tools, guiding the strategy and offering a snapshot of customer trends, but they’re just one part of the Customer Success equation. The art lies in blending quantitative insights with a qualitative understanding of customers, creating a balance that drives not just numbers, but lasting, meaningful relationships. Ultimately, Customer Success isn’t just about data; it’s about understanding the customer experience at a deeper level. Metrics can tell you how often a customer uses your product, but they can’t tell you why they chose your product in the first place or what personal frustrations they may face in their daily interactions. Real Customer Success means going beyond the numbers, investing in relationships that foster loyalty, advocacy, and, ultimately, sustainable growth.

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