Which Customer Success best practices should you keep or let go in 2023?

The results of the 2022 Customer Success Leadership Study, based on the perspectives and insights of more than 1,000 Customer Success leaders, are in. Here’s a sneak peek at what we learned.

The good news is Customer Success teams are growing both in size and budget.

The bad news is they’re not growing enough. Many teams remain woefully underfunded.

The first step in solving a problem is recognizing it. That’s what we’re here to do: unmask our collective challenges and make progress.

To get the rest of our findings, watch our webinar, 2022 Customer Success Study results revealed, in which our expert panel offers their take on the big trends, triumphs, and gaps across the industry. You’ll also be able to grab the full report in early November 2022.

The Q&A portion of the webinar covered additional acute topics including the one process every Customer Success leader must focus on in 2023, why CSM book size should be based on customer count, and how to move Customer Success out of the sales team’s shadow.

Panelists included:

• Alli Tiscornia, chief customer officer, ChurnZero
• Peter Armaly, vice president of Customer Success, ESG
• Mary Poppen, chief customer officer, inovlve.ai
• Jay Nathan, chief customer officer, Higher Logic Vanilla

Q: Though sales and CS are different functions, they’re often viewed as the same. How do you manage this knowledge gap given that sales is money-motivated and CS is relationship-motivated?

Mary Poppen: I actually experienced being acquired into an organization where CS was part of sales and seen as a sales-supporting function, ultimately protecting revenue, but not adding additional value to the organization. While it was said that CS was really important, all of the decisions and the priorities and the resources were really focused on the sales front. Building the case with data, creating insights to share across the company, and starting to show the organization and leadership the impact that you’re having on new business, on upsell revenue, and on bookings is what allowed us to be able to make the case and separate from sales and be our own separate function reporting into, at this point, the chief business officer. It really does come down to having a voice, being able to get at the data, and being able to measure and show the impact, which I know is really hard.

Q: Should CSM book size be based on ARR or customer count?

Jay Nathan: What you really want to do is build a model from the bottom up that says for every customer I have, here’s what I expect a CSM to actually do on a week-by-week basis. How many of those activities do I need them to do in a month, a quarter, and a year? What does that look like? Physically, I have to take some time out because 20% of your time is administrative, it’s overhead, it’s being part of the team. But then how do I think about the utilization of that person in the work that I need them to do with each customer and build up a model from there?

That is actually the right way to answer this question, is by customer count as opposed to the dollar value. Like we mentioned before, until you get down to that detail level, what does it mean to have $1 million in ARR or $5 million in ARR? What really matters is the work that I need the person to do with the customer.

If you can’t handle enough with one customer, for whatever reason—your CFO or CEO says you can’t spend any more in this area right now—then you start thinking about how do I scale what I have? How do I take the resources that I have and make the best use of them?

Do those activities in the way that scales the best. I can do them one-to-many if I need to or in other ways that help me achieve that higher productivity number. You have to look at it on a count basis, not a dollar basis.

By the way, that’s called being a business leader. Every other team has to do that. Sales, marketing, product, engineering. Every team is responsible for getting the maximum productivity out of the dollars that they have to spend, so you have to do that work.

Related resources: Customer Success capacity planning and budget guide, which details how to perform a bottom-up analysis to determine customer-to-CSM ratio.

Q: What one process should CS leaders focus on in 2023?

Peter Armaly: I’ve been harping on this for a long time now, and it feels like people still put it on the back burner, but the voice of the customer. I don’t know how you can develop a sophisticated Customer Success practice without talking with your customers.

It doesn’t have to be a full-blown, three-dimensional VOC program to start with. Yes, ideally later it should be around the signals and all that kind of stuff. But stop making excuses and actually set up some interviews with your customers and get their reactions to what you’re trying to do. That’s indispensable in terms of evolving your strategy.

Mary Poppen: What I’d love to see people do is take that voice of customer data and all the other data that they have on their customers and unify it and get the insights out of that data so that they can prioritize their actions. You can see the relationship of the work that you’re doing to outcomes like adoption, retention, etc.

Jay Nathan: I was on a call yesterday with a company that, about a year ago, had every one of their CSMs doing five calls per week on the same topic with their long tail of customers—hundreds and hundreds of customers. What they’ve done is pivoted from what they call a pooled model to a scaled model. In the scaled model, we now have a monthly webinar on that topic, and we invite as many people as we can to it. That is what I’m talking about when I say scaled programs. That’s just one example.

You can build those things if you’re listening to your customers. You can understand where people are spending time. How can we go do these things at scale? I’ll just come back to my thesis on this whole thing. We spent a lot of time building up the one-on-one Customer Success model here. We’ve got to do things that scale. We have to think more strategically as an industry so that we can help our businesses scale and maintain those financial metrics like gross margin and EBITDA, that really matter when investors are looking at our companies. That’s the part you can play.

Alli Tiscornia: I cannot reiterate that enough. Our customers want to be heard. There is a way to formalize that process without setting an expectation that everything the customer wants you’re going to deliver. But people need to be heard. They need to be heard in every walk of life, but in particular, customers need to be heard. There are so many different grains of truth that you can get from customers. They can carry so much weight within an organization.

Peter Armaly: Customers, when you have these conversations with them, they appreciate your business. They don’t have an expectation that you’re going to give them everything they want or say.

Alli Tiscornia: Exactly. I think that is one of the fears that a lot of CS leaders have is that if we go out and listen to customers, the expectation is we have to do everything they want. In reality, customers are pretty realistic. They’re running businesses too. They understand the concept of roadmaps, and they understand that not everything is going to be delivered in the time in which they necessarily always want it, but they want to be able to voice their ideas.

Mary Poppen: Then to close loop it, take their feedback and say back to them: “Here’s what we’re doing based on your feedback.”

Jay Nathan: Someone asked a question about how to avoid survey fatigue. That’s how you do it. You tell people what information you gather and what you’re going to do and what you’re not going to do. Most people understand that.

The full 2022 Customer Success Leadership Study will release in November 2022. Until then, you can access our “2021 Customer Success Leadership Study” to take stock of the industry amid the pandemic to see what’s changed and what’s stayed the same.