Customer Success Revenue Poll results!
Daniel Hoesing
Mentoring new and experienced Customer Success leaders to show tangible value of Customer Success using the Predictive Customer Behavior Index?
705 voters and over 24,000 impressions!? Nice work everyone!?
Highlights:
It is difficult to segment the respondents to determine demographic data like company size, employer vertical, title, etc.? A manual sample revealed a mix of titles from CSM to VP of Customer Success. Most were in Customer Success roles, although some were consultants or vendors offering a perspective.??
With a 700 sample size, the poll should be representative of the group, however, these data conflict with my own anecdotal conversations with CS leaders. Many CS leaders I speak with are opposed to revenue generation in CS.
Why revenue is important.??
Many CS leaders I speak with seem to think that sales (revenue generation) conflicts with Customer Success. As if the sales process would somehow compromise the CSM into not delivering what’s best for the customer. This comes from a fundamental misunderstanding of sales. (1 min LinkedIn video on Revenue)
Ultimately sales (especially value-based selling) are driven by meeting customers' needs. The most successful salespeople are those that understand the customer's business and problems well enough to propose effective solutions. This (in theory) is supposed to provide the specific value customers want. When the perceived value of a solution exceeds the perceived costs and other alternatives, customers are retained. But as we all know, this doesn’t happen by accident! Enter Customer Success.
The most successful CSMs know how to use their solution to produce value for customers.???
Most products don’t deliver value on their own.? The customer has to implement it and use it in a certain way. It’s up to Customer Success to take what was sold, and help the customer generate the expected value. In most cases, the CSM is in the best position to drive value AND identify additional customer needs. Value Article
If CSMs are not responsible for revenue, you may want to validate how your product is providing value to the customer and how your CSMs are influencing customers to drive more of it.? In some cases, they may already be doing the sales motion and not even know it!??
领英推荐
The strategic value of revenue:
As employees, we are all measured by what we produce for an organization compared to our costs. In a sense, we are all on commission, we just don’t realize it. It really boils down to two categories: Revenue and Expenses?
Expenses:? It costs X to do Y.? If Y (the thing you pay for) does not generate measurable revenue, it means there is a hard upper limit and incremental gains cost more and more.? Example:? It is much easier (cheaper) to move a CSAT or CES from 60% to 70% than from 90% to 100% (and you can’t go past 100%). This means when you get to the optimal service level, all you are left with is lowering the expenses (Payroll) to maintain that level. This is the same for service levels, emails answered, customers served, etc. The cost center approach always looks at the reduction of cost once you get to a given level of performance.?
Revenue: With revenue, it costs $X (payroll) to get $Y, but you don’t have an upper limit on Y. You may have pressure to reduce $X, but only after all other cost centers have been squeezed. No one wants to risk a reduction in revenue ($Y). This means you can grow yourself into a new X. Yes, there is more pressure when you have revenue goals, but without revenue, you are likely at risk and just don’t know it.??
Recommendations:
I advocate that CSMs should be responsible for revenue. They should have a separate opportunity funnel and be responsible for building a pipeline. IF this is too much work for the CSM, I’d recommend evaluating the value of the non-revenue work or hiring more CSMs to generate more revenue. (If hiring more CSM is completely out of the question, please talk to me about a formal hiring plan tied to sales!)?
If CSMs are not responsible for expanding revenue, they should be responsible for generating formal opportunities for the revenue team. Absent this, at the very least, CSMs should be responsible for NRR (Net recurring revenue) or NDR (Net Dollar Retention) of their customers.? If none of this is possible, I recommend finding some help to create a better CS strategy!? Your department may be at risk of devolving into customer service and you may lose your seat at the table.????
About the author:
Daniel Hoesing is the creator of the Predictive Customer Behavior Index? a comprehensive set of 175 standards, indexed to the size and growth trajectory of the company,? used to create and implement Customer Success capabilities, policies, and best practices for SaaS B2B Customer Success. Daniel also specializes in leadership development.??