On Customer Success - Part 2

Measuring Customer Success beyond conventional metrics.

In our first article on Customer Success, we explored how to shift from basic customer health measurement to a holistic approach of customer experience. This shift requires aligning—or nearly integrating—Sales and Customer Success teams, focusing on value from the very first customer touchpoint till value realization.

This approach challenges Customer Success Managers to elevate their role beyond NPS surveys and PowerPoint presentations on product adoption. It also calls for Sales executives with unique skills such as leading without authority and mastering orchestration. ?

In this second part of our series on Customer Success, we demonstrate that once integrated, Sales and Customer Success eventually turn the same gears. We also introduce unconventional ways to measure Customer Success beyond traditional metrics like NPS and Customer Lifetime Value.

1.? Sales & Customer Success: 2 sides of the same coin.

If you are familiar with our workbook on The World of Sales KPIs, ?you know that sales leadership starts with answering simple questions related to:

• Business: what is needed to deliver our revenue plan? Where should we allocate resources? Are our territories balanced and optimized? Who are our most valuable players…
• Deals: are our opportunities real? Are we just seeding or selling big? Does our sales process support our sales effort? Do we know where and why we win or lose…
• Territories: what is our territory potential? What is the split between new business and upsell? How much pipeline can we build…
• Accounts: are we chasing the right accounts? Do we really know our customers? What is our white space by account and how should we factor it in our sales strategy…

Once aligned with Sales, Customer Success becomes part of the revenue cycle. It is no wonder, therefore, that once they acknowledge that they need to go well beyond NPS surveys and beautiful reports on product usage, they address similar concerns:

• Business: what is needed to deliver our retention plan? Where should we allocate resources? Are our territories optimized against sales patches? Who are our most valuable players…
• Deals: are our renewal opportunities secured? Are we ready to support sales in selling big? What should we learn from our sales process that we could implement …
• Territories: what is our territory total churn risk? What is our potential for upsell and cross-sell? Do we know everything about our total pipeline heath…
• Accounts: are we focusing on the right accounts? What can we know from our customer sales don’t already? Is our scoring aligned with sales or are we fighting our own battle…

If alignment were just about removing frictions by clarifying respective roles, it might not be enough to create a Revenue Dream Team. By defining revenue as the ultimate goal and harmonizing missions between Sales and Customer Success, you create a shared purpose and common language. These are the foundations of Winning Teams.

2.? Measure what matters, again?:

Let’s see if you get our point. The following items are symptoms of struggling organizations. Would you say that they characterize Sales or Customer Success?

1. Forecast inaccuracy.
2. Poor or no value selling.
3. Poor alignment on executive strategy and vision.
4. Massive churn.
5. Substantial losses against competitors.
6. Deals that don't close.
7. Customers that don't upgrade or expand.

Although “value selling” might be replaced by value realization and “deals that don’t close” by renewals that don’t close or demand significant commercial efforts, these items -which we leverage in our Sales Performance Audit - can apply to both Sales and Customer Success.

We may have ruffled some feather in our previous article suggesting that Customer Success priorities should be supervised by Sales. While this is true in mature organizations, yours may not be fully ready for it. Start by taking the first steps: raise Customer Success managers’ game and shift the focus from customer health and product adoption to revenue. Just like for sales, that implies monitoring the following dashboards:

• Retention achievement vs goals: This is the actual performance by region, unit, team, CSMs, type of business, type of accounts, products…
• Renewals pipeline and forecast: by region, unit, team, CSMs, stage, type of business, vertical, type of accounts, products, stage duration, average churn or upsell. Even if Sales eventually commit to the numbers, CSMs are still responsible of what is happening within the installed base.
• Renewal Win & Loss analysis: by region, unit, team, CSMs, stage, reason, type of business, industry, type of accounts, products, win rate (Closed Won/Total pipeline), Win ratio (Closed Won/Closed Not Won).
• Activities: by region, unit, team, CSMs, stage, type of business, vertical, type of accounts, products, type of activity, contribution to renewal pipeline, contribution to opportunity advancement by stage. Be cautious with the approach. Activity-based coaching can backfire, especially with senior CSMs. Use it strategically for onboarding, enablement, and crucial performance conversations when necessary.
• Discipline and delinquency: by region, unit, team, CSMs, stage, empty mandatory fields, no activity, no next step, stalled opportunities by stage, close date in the past, untouched stakeholder, opportunities moving backward, amount downsized. This dashboard should be leveraged namely for change management and to coach your CSMs on becoming revenue agents.

?3.? Customer Lifetime Value in Real Life :

If you have implemented the above KPIs, you are already measuring customer success beyond Customer Lifetime Value and NPS. You own your role and understand what it takes to make an impact within a customer success organization. That’s a great start. Now, let’s take it one step further.

Many of the concepts we are going to introduce are closely related to those developed around the sales magic formula and the notions of power, pain value, and shared vision. Customer success, when aligned and mature, is the continuation of the revenue battle through slightly different means.

We are sharing below some of the components that should be monitored to truly measure Customer Lifetime Value in Real life (CLVRL).

• Customer relationship: this includes access to power, executive engagement completion, champion status, NPS score and customer sentiment…
• Engagement: : multi-year commitment, number of reference calls, number of leads generated, participation to marketing evens, business case completion, testimonies…
• Product adoption: advanced version roll out, early adoption of new products, user satisfaction, number of support tickets open and resolved, vision of the future state or solution mutually shared…
• Value realization: project health, on time delivery, value measurement, value alignment with sales promises, achievement of key stakeholders value drivers, agreement on the roadmap to success…

Feel free to be creative: the score of each item within each component can range from 1 to 5, you can caliber your metrics and assign weights to the different items and/or the components. Ultimately, the total score and achievement percentage should indicate how effective you are at delivering CLVRL.

You can rearrange the items, select the most relevant ones based on your business situation, or focus only on specific components. For instance, you may choose to focus on Value realization and Customer relationship but also include the Weighted Account Potential in your analysis. This approach will yield a BCG-like matrix. Now it is not sales shaping the conversation but rather Customer success introducing new ways to tier accounts!

It's time for Customer Success to step up and fully own its role in the revenue cycle. In redefining Customer Success metrics, we move beyond traditional KPIs to focus on value realization and proactive customer engagement, pushing the boundaries of what it means to deliver impactful and measurable success. Thus, Customer Success not only complements but challenges sales in finding new ways to power the revenue engine.

Looking for creative ways to drive your sales and operational performance?

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