Companies with strategic customer success (CS) teams with proactive focus on expanding customer value grow much faster than companies with more traditional, reactive CS teams.
Consider these studies on the revenue impact of strategic customer success:
- A study by Price Intelligently shows that net new revenue is 4x as expensive as upsell revenue, $1.13 vs. $.27 per $1/year of revenue.
- Forrester’s research shows that customer-obsessed firms grew 2.5 times faster than non-obsessed ones and retain customers at twice the average rate per year.
- A Harvard Business Review article shows that increasing customer retention rates by 5% increases profits by 25% to an astounding 95%.
Despite the potential, many Customer Success teams are not set up to be strategic or proactive in supporting revenue growth. Many CS teams act more like Customer Service teams. They are tactical and reactive, focusing on training, account setup, and troubleshooting questions and inquiries.
Value-based Customer Success teams, by contrast, focus on continuous consultation with customers to develop a full understanding of their business challenges, needs, and goals. They use this understanding to proactively manage customer relationships, continually exploring new goals, sharing new use cases, and align product or feature discussion to the client’s goal achievement. The focus on value, in turn, can make CS teams a natural revenue partner to sales when it comes to account expansion.
To become a strategic, value-based Customer Success team, there are four specific shifts that need to happen in Customer Success processes and playbooks. These include:
- Bringing a strategic mindset to each call,
- Managing accounts with a Mutual Success Plan,
- Tracking account health with qualitative and quantitative measures, and
- Segmenting for time on strategic expansion.
Shift #1 — A Strategic Mindset in Each Call
All Customer Success leaders understand their team’s first responsibility is customer care, satisfaction, engagement, and utilization to create renewals. The responsibility for customer care and satisfaction can create a high volume of customer calls and communications that are very tactical.
This is why most Customer Success teams have moved to doing regular Business Review calls. The Business Reviews focus on rolling out the day-to-day activities to re-anchor on the customer’s goals and objectives. Getting senior leaders who make decisions, hold budgets, and can articulate value is always a key objective for those Business Reviews.
While many CS teams distinguish Business Reviews from more routine onboarding, implementation, training, and troubleshooting calls, Marci Trares, VP of Customer Success at Activator Dealer Solutions thinks about it differently. She wants her team to bring a more strategic mindset to every call.
Marci understands that every customer interaction is an opportunity to establish or revisit their goals as well as understand key barriers keeping customers from achieving their goals:
- Why did they buy from us?
- Why do they continue to buy from us?
- What are we helping them accomplish they cannot accomplish on their own?
- What are we helping them accomplish they cannot accomplish with another vendor?
“We know that our customer goals are always changing, their market is always shifting,” Marci says. “Staying on top of what our customers need and being ready and able to pivot and respond based on what’s needed, that is our role.”
Marci has two keys to a more strategic mindset. The first is continuous discovery on customer value. Every conversation needs to begin and end with reconfirming what the customer is trying to achieve and where they see the most value.
Marci’s second key to a strategic mindset is acting as trusted advisor and proactively sharing suggestions that could be valuable to the customer. She asks her team to bring three suggestions to each call. These proactive suggestions could include: Industry trends in the broader market; new approaches to utilize the Activator product; a best practice from work with a peer; or an expansion that could unlock greater customer value.
Shift #2 — Managing with a Mutual Success Plan
Once a Customer Success team has the right mindset, the single most important tool in strategically managing accounts is a Mutual Success Plan. The Mutual Success Plan becomes the anchor for keeping the relationship focused on customer value in each interaction and specifically in Business Review calls.
The purpose of a Mutual Success Plan is to capture and then prioritize all of the customers’ goals and reasons for working with a vendor — what is most important, next most important, and so on. It should live on a shared drive or as an attachment at the account level in the CRM, so everyone on the Sales and the Customer Success teams have the same information.
Hilary Riley, VP of Customer Success at Mainstay, is a CS leader who shares with Marci Trares the desire to guide her team toward a more strategic posture. She describes the role of a mutual success plan in this way:
“We use a Success Plan to have common ground starting from the initial onboarding, so we start with a clear focus on what they are trying to solve for,” says Hilary. “And, then the success plan needs to be a living document throughout the entire relationship.”
Mutual Success Plan: Sales to Service
Hilary points out that it is important for Sales and Success to begin to build the Success Plan together even before a contract closes. At Mainstay, the CS steam member builds a relationship with the economic buyer pre-contract so there is a clear understanding of customer goals. The original sales team members also participate in strategic program reviews to foster collaboration.
At Mainstay, the Customer Success team does Business Review calls on average three times a year, some even meet on a monthly basis. These calls are used to stay aligned on the partner’s ojectives and goals. Hilary explains: “We bring that success plan back to life each time to revisit with them to ensure we are still aligned and to determine if there are some updates or changes that need to be made.”
Shift #3 — Tracking Health with Balanced Measures
The other key tool for a strategic Customer Success team is an account health scorecard that takes into account both quantitative and qualitative measures of health. Quantitative measures of customer health have become more common with the growing popularity of Customer Success software platforms such as ChurnZero, PlanHat, Pendo, and others.
Leslie Ortego, VP of Customer Success at SchoolStatus, is another strategic Customer Success leader. She believes strongly in having a Health Scorecard that helps her team listen constantly and have tools to understand and respond to customers based on their level of engagement.
But, for Leslie the common quantitative measures in a Customer Success software are too one-dimensional. Leslie’s team has a health score includes both quantitative and qualitative measures:
- Quantitative measures include things like customer utilization, frequency of use, number of tech support tickets, and ticket resolution.
- Qualitative measures around business impacts: specifically alignment with customers’ current and future goals and the CS’s assessment of customer satisfaction temperature – negative, tepid, happy, or fantastic.
“At the end of each customer check-in,” Leslie explains, “we ask our CSMs to complete a survey to confirm whether they used the meeting to cover the customer’s previous goals, identify their future goals, and if there are opportunities for expansion into other departments.”
It is the qualitative check-in on the customer temperature as well as current and future goals that has the most value in Leslie’s view.
Account Health Scorecard: Quantitative & Qualitative
Shift #4 — Segmenting for Strategic Expansion
The most precious commodity any Customer Success team has is their time and how they spend it. Business review calls, a mutual success plan, and an account health scorecard all create the opportunity to manage more strategically, but only if Customer Success team members spend the right time on the right customers.
Account potential matters and most team’s use a tiered approach based on the customers’ current spend and their total addressable market of cross-sell or upsell opportunities. Leslie’s team at SchoolStatus uses a similar approach.
But the SchoolStatus CS Team is also committed to lower tier accounts with a high level of value as well. Leslie’s team has gotten creative with how they deliver that service including group webinars and online training courses, 24/7 customer support, in addition to various levels of one-on-one training.
And with bigger, higher potential accounts, Leslie explains that her team “is always looking for expansion opportunities. But we’re not looking for sales that aren’t the right fit.”
Account Segmentation Value: Current Value & Account Potential
Instead, Leslie’s team follows the REAP model, where prospecting is at the end, not the beginning, of the customer engagement: [R]elationship building, [E]mapthy, [A]ctive listening, [P]rospecting continually.
“You can’t come out of the gate prospecting,” Leslie says. “You’ve got to build that relationship. Relationships have to be built on Empathy. And you cannot possibly deliver value for a customer unless you are actively listening.”
There are many benefits to more strategic, value-based Customer Success. It leads to higher renewals as well as faster and more profitable growth. The value-based Customer Success team starts with a different mindset, one that focuses each interaction on looking for ways to understand and deepen customer value. The value-based CS team builds sustainability and bench strength with new playbooks, including a Mutual Success Plan, Balanced Health Scorecard, and Account Segmentation. It is the combination of a different mindset and more strategic processes that helps CS teams re-anchor each customer interaction on value rather than product, and in the process support revenue growth.
