The big picture is clear. Customer success teams are critical to the health of SaaS organizations. Their top metrics are almost all revenue-driven. Companies with higher NRR are also more likely to invest in CS. But are CS teams’ goals, budgets, and tech stacks keeping up? Three of the 2024 Customer Success Leadership Study’s key findings suggest not.
2024 marks ChurnZero’s fifth annual report on the top trends in customer success; the largest and most definitive in the industry, with more than 1,000 CS leaders surveyed this year. While the overall picture may be upbeat, CS leaders should pay attention to three broad observations that emerged from the data.
1: Customer success holds primary responsibility for recurring revenue.
As in previous years, CS metrics are still focused on revenue, with the top metric being churn rate. And, while most CS teams are solid in their ownership of renewals, ownership of the expansion process tells a more complicated story.
About 40% of CS teams have owned expansion over the last five years. Account management teams increased their ownership from 20% to 29% since 2022 (while sales ownership of expansions decreased from 33% to 24% in the same time period). Yet, only 44% of CS teams reported being compensated for expansions in 2024—down from 57% in 2023.
Concurrently, less than 35% of respondents from the highest NRR band reported that their CS teams owns expansion. In the lowest reported NRR band, meanwhile, 56% of CS teams claimed ownership. Factor in flat budgets for those companies in the lower NRR bands, and it seems that companies are reticent to spend money to make money, leaving CS teams attempting to do more with less (note: companies with a higher NRR were more likely to invest in CS overall).
Potential solutions: invest in training CSMs (top skill sets: analytics, strategy, and sales) and consider complementary support such as dedicated customer marketing roles.
2: Customer success team charters don’t reflect revenue priorities.
Is it time for customer success team charters to evolve? According to this year’s data, more of the same is no longer quite enough.
CS charters have remained largely untouched over the last four years, with the top two primary objectives being onboarding and adoption. Meanwhile, renewals sit in third place, and expansions stay toward the bottom in fifth place (beating only enablement, which was a new option for the 2024 survey).
However, when CS leaders were asked their top priorities for the next 12 months, retention and expansion were the top two by a significant margin.
Given that CS teams now own renewals and expansions almost half of the time, how will CS keep healthy budgets and compensation for team members when their own charters deprioritize those efforts?
3: Tech stacks are maturing, but are some teams going backwards?
Gaps in revenue ownership, expansion training, and CS charter priorities all beg the question: what’s happening to customer success enablement as a result?
The customer success tech stack is robust and on par with that of sales and marketing. Despite the tech’s efficacy, however, certain trends that de-prioritize CS enablement may have led to changes in adoption.
Nearly 64% of smaller companies surveyed ($5 million to $49 million) reported their CS teams adopting support software, suggesting a lack of role definition between CS and support. Meanwhile, close to 69% of larger companies ($500 million and greater) reported using customer success platforms while over 95% reported using CRMs. Anecdotally, this shift back to sales tools may correlate with general budget cuts.
Is this discrepancy indicative of challenges ahead for CS leaders to get the tools, training, and processes in place for high-performing CS teams?
This year, 87% of survey respondents indicated they are using or plan to use AI. How many have officially adopted it as part of their CS tech stack? Just 21% so far.
What’s next for the state of CS and revenue?
We’ve seen the entire SaaS industry weather the storm of market dynamics and the subsequent drive for financial stability over the past two years. While NRR still remains above 90%, a downward trend suggests that the industry’s steadfast focus on retention and recurring revenue is set to continue.
Where does your team stand in the current CS industry landscape? Download the 2024 Customer Success Leadership Study and find out.
