Don't Ditch CS - leverage it to build "The Flywheel"

Jason M. Lemkin , head of SaaStr , founder, investor, and the kind of gadfly that many in the Customer Success community don’t seem to appreciate is exactly what they need at this moment, wrote a provocative piece about a month ago with this title we wish we’d come up with, The End of Customer Success As We Knew It.

He joins another notable personality who earlier went on record saying something even more drastic about Customer Success. And he said it in a very public way through his book, Amp It Up: Leading for Hypergrowth by Raising Expectations, Increasing Urgency, and Elevating Intensity . The author, Frank Slootman , CEO of Snowflake , isn’t the only person, but he’s certainly the most famous, to boldly state that companies shouldn’t have a separate customer success function. Instead, they should “declare and constantly reinforce that customer success is the business of the entire company, not merely one department.”

If you’re in Customer Success, and in response to those provocations, you’d be wise to drop the swords and shields and take a moment to contemplate what motivated those individuals to speak up on the topic. A major element of your contemplation should be a healthy dose of honest self-reflection.?

To make it easy, we can simply point to what Jason points to in his article as three core changes that took place in 2023 pertaining to Customer Success.

1. There was a “Massive Push to Efficiency”

2. There was a “Massive Push of CS into a Sales Function”

3. There was a “Lack of Positive CS Outcomes in 2023”

First off, when you look at number one on that list, it should not come as a surprise. After what happened with the world economies in 2022 and 2023, how can anyone imagine that the Customer Success organization would or should escape the push to efficiency that has made all organizations eligible targets? Since the push has roots in macro events that are global in scope, and if one factors in the ever-shifting tastes of customers, the follow-on effects from these events and behaviors logically apply to everyone in business, and are therefore so much larger than one organization.

Second, number two is a bit of an exaggeration (while it has indeed happened, we haven’t observed it as being massive) but the thrust of it is accurate. Customer Success has inevitably turned in the direction of needing to be seen as a revenue-generating business function. It’s inevitable because being able to finesse their way through the gauntlet of financial scrutiny and to be able to demonstrably prove a positive impact on revenue are now how the most skilled players play the game. There is little argument about that. And, almost universally, senior executives expect the Customer Success organization to play at that level. Translation: Customer Success needs to lean into owning revenue.

Of course, physics being physics, Lemkin’s observation of a massive push of CS into a Sales Function has been met with considerable resistance from people offering all kinds of excuses for why it won’t work, reasons as persistent and aged as the CSM role. Mainly, they argue, that customers would be turned off by knowing their CSM has revenue attainment goals. We fundamentally challenge that assertion, if only because we believe it’s an assumption about a perception that customers themselves would dispute.?

Many folks within the CS world incorrectly associate sales quotas with ethical standards. We believe these are two unrelated concepts that are often lazily conflated. And that’s without factoring in the oblique insult to sales professionals that’s buried in that association. Our perspective is that the core function of Customer Success is to help customers continue to derive value from their technology investments. That capability is at the heart of what it means in the customer’s mind when they might refer to a CSM, or any other individual they consult with, as a trusted advisor. For Customer Success to be viewed as a trusted advisor by customers, it is a foundational skill for it to understand the customer’s business objectives and to proactively look for opportunities to drive increased customer value. This often includes demonstrating how continued investments in more advanced use cases (e.g. add-ons, professional services) will drive more ROI for their beloved customers.

Who else within your company is better positioned for this? In that context, who else is better positioned to help customers be more successful with their existing investment and any future one?

Back to Lemkin’s list, in number three he cites the backsliding that occurred across the board in achieving their targets for net revenue retention (NRR) and, with less certainty, customer satisfaction (CSAT) as proof that Customer Success failed to produce positive outcomes. If these are the metrics used to rationalize the investment in CS, you have to admit that Jason makes a compelling argument.?

Maybe, though, we need to look at this through a Slootman lens.

This is not meant to excuse them or to suggest they should be let off easy but what if the real problem is that Customer Success is chasing too narrow of a range of business metrics??

What if, instead of embracing a reductive view that says that NRR and CSAT are the best arbiters for gauging the efficacy of CS, we widen the aperture to include the following??

What if we looked through a lens that reflects, not the letter, but the spirit of Slootman and casts a wider net that brings into view the interests and the work typically associated with other organizations, and one meant to capture metrics that are more clearly influenced by CS’ brothers and sisters on the go-to-market team.

Maybe, inclusive of NRR and CSAT, CS should be focusing on metrics associated with quantifying and measuring product-market fit (PMF) - which is another way of saying Ideal Customer Profile (ICP) - across the customer base. In that way, CS would be doing itself a huge favor (helping to refine the scope of what constitutes an ideal customer for the company and therefore reducing its own downstream remediation work for ill-fit customers later). It would also be doing a tremendous favor for its other peer organizations like sales, marketing, and product. How??

Well, let’s face it, when most people talk about go-to-market, they’re conjuring up an image in their mind of an orchestration of sales, marketing, and product. But that strikes us as odd, given that that is how our parents narrowly thought of it way back in the last century when companies routinely fell quickly out of love with customers after signing them up and just as quickly turned their attention towards the exciting unknown. Have we not evolved? By now, and especially in a subscription economy that has elevated existing customers to exalted status, go-to-market means the motion needs to capture revenue from all sources in a company’s purview, be it new logo or existing. That’s the kind of full spectrum world that reflects the reality of a customer journey today and it’s one that too many companies are failing to see. It’s also the kind of world that needs to involve an organization like Customer Success more directly. But only if CS steps up and demonstrates the ability to add value to GTM. It can do that by doing more than flawlessly running the final delivery leg of the GTM race. It can be a more direct peer of the other GTM organizations by acting bi-directionally and helping the others through the sharing of intimate intelligence that only it knows about existing customers and their relationship with products, services, and the company itself.

So, returning to PMF, let’s look at some metrics that are commonly used to measure it in SaaS.

• product adoption by cohort/use case
• logo retention show intent
• have reached a certain engagement threshold as agreed upon by sales and marketing
• match a business problem profile
• % reference-ability
• NPS
• LTV
• ICP/Non ICP Customer Ratio
• Propensity to expand

Some of these should jump out at you if you’re a Customer Success professional as being metrics that your practice already tracks. Things like product adoption, engagement threshold, reference-ability, and NPS are typical metrics found as inputs into a customer health score for the majority of companies that have a Customer Success practice. Other metrics on the list above will be more obvious to individuals in sales and marketing, such as logo retention, business problem profile, and LTV.

What we’re talking about here is not trivial. Imagine if the entire company operated off the same broad set of PMF metrics shown above. To be clear, the intention would not be to apply a rigid code that everyone must follow. The intention would be to widely spread an understanding and an appreciation for a simple fact. The more the company closes in on a definition for the ideal customer, one that informs it that its market strategy makes good sense and produces validating revenue proof, the more potential it has for satisfying the expectations of that cohort while at the same time enjoying a side benefit of driving greater efficiencies in the Customer Success practice. It’s a flywheel by any other name. Imagine how much faster the company could execute its mission, if all organizations looked at the same information and then operated their respective business functions accordingly. It would be a manifestation of the kind of collaboration that august journals like MIT Sloan Business Review and Stanford Business School research and publish articles about.

By operating in this manner, Customer Success could do two things. One, it could more assertively evolve from being viewed as a cost center to one that monitors the pulse of the market, vis à vis customers, and helps the entire GTM cross-organizational process to focus on improving metrics associated with efficient growth. And, two, fueled by more comprehensive knowledge and fuller partnerships, it could gain the confidence it needs to evolve along a second dimension, one that positioned it as being more responsible - i.e. accountable - for revenue retention and growth. By aligning with the other orgs around PMF metrics, CS would possess the breadth of information it needed to craft compelling arguments to persuade customers why investing in growth is worth it. Any lingering misgivings held by CS professionals should disappear when they realize that the broader set of metrics provide them with everything they’ve ever needed, ironically, for their pursuit of improvement in NRR. Which is access to far richer information about the customer, the market, and their own company and the license to leverage it.