Why is CS so neglected? Customers are the easiest prospects And yet we don’t have a process for growth Why is that? When funding was flooding in, the focus in so many companies was all on new business. This funding flowed into SDR hires, sequencing tools, marketing budgets and lead generation programs. As this happened, we saw CAC reach often unsustainable levels and it left little budget for Customer Success. More importantly, it wasn’t a top priority for leadership. The process to identify unhealthy accounts and get them healthy and to retain and grow healthy accounts was often missing. Customer Success still rarely falls under the CRO, as if to say that retaining and growing existing customers isn’t part of the revenue engine. I’m seeing it more and more but we still have a long way to go. We’re in desperate need of a reset. There is no better opportunity than to retain and grow an existing customer and it deserves the same investment, resources, strategy, process, data and tools that new customer acquisition has been getting the last 10-20 years. Why do you think so many companies are still dragging their feet here? 🤔
My take is laziness and bad comp plans. Laziness in terms that organizations truly don't take the time to understand why their customer purchase and what value they are getting out of it, and what continued value they want to see in the future. This leads to conversations about usage metrics during the QBRs with customers. Laziness in terms of expansion strategy and bad future contract terms. Reps will use reducing the overall per licenses cost to get future add-ons until the point that it isn't worth the time and effort, because comp plans only comp 2-3% for upsells. This is a huge opportunity for organizations to explore the true reasons why customers purchase and the value they are experiencing and work that into their retention/expansion motions as well as new customer acquisition motions.
Eddie, absolutely spot-on observation. It's interesting to note that some sectors, like SaaS, are now increasingly recognizing the economic impact of Customer Success beyond mere retention. For instance, integrating CS within business models can reduce churn by aligning product features with user needs more precisely. Moreover, incorporating customer feedback into product development can act as a real differentiator in competitive markets. Why do you think some industries are quicker to adopt this mindset than others?
Culture - I think most see CS as a support function
I was always baffled by this.... why isnt more emphasis put on growing a CS/ AM team when this is literally how: 0/ You can give you customers the best experience, turning tghem into you champion/ marketing voice/ walking-talking testimonial to land new clients 1/ Sustainable businesses are built 2/ You get endless referalls! 3/ You can reduce your CAC!
I appreciate what you're saying about CS falling under a CRO—usually it's a revenue generating/stewarding function with commercial responsibilities so it should be treated as such. In practice though, this often makes a CS team less effective. That's because 90% of what makes a CS team successful from a revenue perspective is about the execution of a shared technical, operational, and change mgmt project with a customer. Actually doing the thing you promised the customer is going to be your best predictor of renewal and expansion. Many CROs just don't have that muscle and more importantly, aren't compensated in a way to care about it that much. Setting a viable vision and getting to yes is one skill and it is distinct from the skillset of making that vision a reality. I've also seen CROs raid CS teams for "free" services with zero scoping or boundaries to win new business or approve contract terms so detrimental they're like little ticking time bombs come renewal time. Part of the answer may be to demand that CROs have a broader skill set and not just assume they know how to run post sales. The other may be to more clearly define post-sales roles so that some roll up to a CRO and others roll up to an operational leader.
👏🏾👏🏾👏🏾👏🏾 I think a lot of companies are leaving money on the table.because of culture. Companies are far more interested in the metric of more clients instead of stretching the customer LTV of their current clients. This goes back to the same issue you presented the other day about the demise of the SDR. It's actually the demise of the decision makers and how they see their business. This why the role of the CRO is so important so that data should not only keep everything ticking, but also support a new direction
Eddie Reynolds I don't understand why so many SaaS organizations neglect their CS team. In my experience, I've experienced so many organizations that have prioritized new customer acquisition over retention and expansion, leading to neglect of customer success initiatives. Leadership must recognize the strategic importance of customer success and invest in necessary resources, processes, and tools. Aligning customer success with the revenue engine and placing it under the CRO's purview can help organizations better understand its impact on financial performance. It's time for a reset in how we approach customer success to unlock the full potential of existing customers and drive sustainable growth.
Good callout. Somewhat baffling to me as well. I think that in many cases, CSM playbooks & accountabilities are ill-defined, so it is hard to understand where the value is coming from in a CSM org. Sure, they're responsible for adoption & renewals, but what are CSMs actually doing to make that happen? Because the answer is varied across companies and often unclear within companies, organizations default to perceiving the CSM org as "lower value"
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11moIt's a great question - working in analytics, we often hear the sales and marketing team are prioritized, and the CS team is somewhere on the list - in "another year...or two". And yet, recurring revenue is critical to the saas model!