Feb 4, 2022

Read Time 10 min

How Customer Success can use metrics to better engage investors and boards


Have you ever wondered what your investors are looking for in board meetings? Are you facing a project like a merger or acquisition that requires you to work with new investors or existing investors in a new capacity?

Engaging your investors starts by understanding what they care about. Good investors care about the results of your organization. They care that you’re staffed appropriately to serve the needs of your customers, because ultimately that results in revenue.

But despite these shared goals, many Customer Success leaders struggle with feeling confident in their investor relationships, or even establishing relationships at all. Given this backdrop, it’s easy to ascribe this insecurity with and disconnection from investors to personal flaws and incompetence or inherent incompatibility – when what these differences really come down to is communication styles.

Because how you share information with investors matters.

If perceptual or stylistic barriers are holding you back from engaging with investors, reframe your story. This is a skill that every influential, self-aware leader knows how to do.

Reframing is especially important for Customer Success who serves as the customer’s advocate and voice within the organization and boardroom. A huge part of how Customer Success collects intel and feedback from customers is by talking with them. By nature of that, Customer Success tends to share customer information the same way in which they receive it – via anecdotes inlayed with emotional language. And while these stories contain new and valuable points of view, investors end up missing the message because it hasn’t been adapted for them.

Kristen Hayer, Founder and CEO of The Success League, has witnessed this communication friction from both sides through her past experience as a Customer Success leader and through her current work running a Customer Success consultancy.

In this article, we share Kristen’s best advice on how you can use metrics to reframe your customer stories, so they’re primed for investor engagement. We cover:

  • How does Customer Success work with investors?
  • What metrics do investors care about?
  • How to visualize the financial value of customer satisfaction
  • Best practices to better engage your investors and board

*This article is adapted from a session presented by Kristen Hayer, Founder and CEO of The Success League, at BIG RYG, ChurnZero’s annual Customer Success leadership summit.

How does Customer Success work with investors and boards?

Customer Success helps investors and boards make strategic decisions that affect customers by acting as the voice of the customer – raising customer wants, likes, dislikes, and struggles – and maintaining a good pulse on customer metrics. The most common scenarios in which Customer Success and investors work together include board meetings, mergers and acquisitions, and performance issues.

Board meetings

Senior- or executive-level Customer Success leaders may often be asked to attend board meetings. At these meetings, Customer Success leaders share the high-level performance of team initiatives that relate to the company’s business plan. This might include metrics and programs linked to customer churn, retention, expansion, and satisfaction.

Learn more about what Customer Success reports boards want to see with our webinar on the topic.

Mergers and acquisitions

When an organization undergoes an acquisition or merger, Customer Success leaders may be pulled into parts of the process that concern customer data. The first being due diligence. As part of this appraisal process, Customer Success leaders are often asked to provide large amounts of customer information to the other company. This data often includes customer lists and contract details such as the number of deals and their duration, which can be surprisingly hard to dig up, especially for legacy customers.

Once the merger is complete, the organizations will focus on integration. If both organizations have a Customer Success team, its leaders will need to figure out how to blend the functions together and identify synergies. “What synergy really means is additional money from cross-sells and upsells as a result of integrating two companies,” says Kristen. “Even if your Customer Success team is not responsible for selling, you’re still responsible for uncovering opportunities for that to occur so those are areas where you may get involved.”

Performance issues

If organizations experience performance issues, Customer Success leaders may be asked to report the current or forecasted impact of those issues on customers to the board. Performance issues might include ongoing problems with customer churn, product fit, or new competitors – all of which also affect new sales.

While the intent of your investor interactions will dictate what data is most important and relevant to share, there are a few central metrics that all investors care about.

What metrics do your investors and board care about?

Investors focus on your organization’s bottom line and only care about metrics that directly relate to your organization’s business model. There are many metrics that you pay attention to as a manager that your investors don’t care about. “Investors don’t care about support volumes, response times, customer ratios, or any of those secondary-level number,” says Kristen. “Leave those out of the presentations unless they directly relate to a problem you’re trying to solve, or your board has asked for them.”

It can be tempting to share that data because sometimes it’s incredibly positive and you’re proud of your work in those areas. But being concise is a priority when presenting to your investors and board. You want to stick to the high-level metrics they care about most: retention, expansion, and satisfaction.

Customer retention

Customer retention affects your company’s value. So much so that for every 1% increase in revenue retention, a SaaS company’s valuation increases by 12% after five years. Small, consistent improvements to retention generate long-term gains, exponential growth, and high exit multiples.

“If you have any details on how the financials have changed as your retention increases, share those,” says Kristen. “Retention is what investors really deeply care about and it’s likely the metric they most associate with Customer Success.”

Customer expansion

Along with retention, expansion is another metric that deserves to be top of mind when investors think of Customer Success. Because expansion has an even greater impact on the business since it increases revenue while reducing costs. That’s in part because it’s estimated to be five times more expensive to acquire a new customer than it is to sell to an existing customer. “It’s so much less expensive to expand your current customer base.” says Kristen. “That’s why this word ‘success’ is so rapidly growing and increasing in importance.”

Even if your Customer Success team is not responsible for selling to customers, they still affect whether customers are primed for expansion opportunities.

But a word of caution when reporting expansion to your board. Many organizations track Net Revenue Retention (NRR), which combines retention and expansion. Using this metric is fine if you understand and analyze its components – retention and expansion – as standalone measurements. But failing to look at the numbers driving your NRR can cause serious issues. “You could have really bad churn and if your growth in customers who renew is high enough, you can disguise that with NRR,” says Kristen. “Don’t do that. Your board will eventually realize what’s been happening and that churn problem will surface.”

Customer satisfaction

When you think about how to project your performance – and projections are a huge part of how you engage investors – customer satisfaction and health must be part of the equation. Because whether a customer renews or expands ties back to their satisfaction with your product and service.

Customer satisfaction can be measured using both quantitative data – such as formal surveys including NPS®, CSAT, and CES – and qualitative data – such as CSM sentiment. Because of its subjective inputs, customer satisfaction can be seen as a soft metric. As such, many Customer Success leaders struggle with how to convey this measurement to investors in a revenue-oriented way.

“Everything for an investor comes back to dollars,” says Kristen. “If you’re trying to tell the story, you need to bring it back to dollars, either revenue dollars or cost dollars, because that’s what matters.”

In the next section, we share Kristen’s model for how to communicate the financial value of customer satisfaction to your investors and board.

How to visualize the financial value of customer satisfaction

Using a customer health scorecard is a simple yet effective way to convey the financial and strategic impact of customer satisfaction on the business.

To build your scorecard, you’ll need to the following data:

  • Customer segments (whichever you’d like to analyze)
    • Health scores by Account*
    • Revenue retention by Account
    • Logo retention by Account

*Your customer health score should have both quantitative factors (such as product usage, support history, and license utilization) and qualitative factors (such as relationship quality, CSM sentiment, satisfaction) to be an effective KPI. Using Customer Success software like ChurnZero, you can automate the tracking and calculation of customer health scores based on multiple weighted factors and custom criteria, and even integrate scores with other features such as alerts, plays, and journeys.

Prior to creating your scorecard, you’ll want to check when the last time was that you measured the effectiveness of your customer health scores. You should be evaluating your health scores on at least a quarterly basis. During that time, health score factors that are based on features, use cases, processes, leadership, and KPIs have likely changed which can affect associated metrics. Plus, as you accumulate more customer data, and tweak your scoring based off that data, the better your health score will be at predicting churn.

Lastly, before we dive into our example, let’s talk about scoring. You may know that companies score health in many ways including assigning points, implementing rankings (A, B, C, D), or using a color-coding system (green, yellow, or red) to indicate good, average, or poor health. For the health scorecard example shared in this article, we use a color-coding system for scoring that ranges from zero to ten. Note that you can make your grading scale as narrow or wide as needed based on the nuances of your scoring.

Now, let’s look at how a health scorecard like the one shown below can help your investors recognize the relation between customer health and revenue.


Image source: “Metrics that Matter: How Customer Success leaders can better engage their investors” presented by Kristen Hayer, Founder and CEO of The Success League 

Looking at our example, you see that the “Strategic” segment, which comprises 8% of customers who represent $8 million in revenue, hardly has any customers or revenue in the red. A few customers are in the yellow, but it’s not significant.

On the other end, you have your “Digital” segment, which comprises 68% of customers who only constitute $2 million in revenue. This cohort has the most customers and revenue in the red.

“This slide for board members and investors is incredible because it gives them a strong visual for where problems exist,” says Kristen. With this insight, investors can have strategic discussions about what to do about problems – or what to intentionally not do about them.

As Kristen explains, “An investor might look at this scorecard and think ‘Are we really still servicing these small clients or are we going to move our sales efforts away from this group and let them churn at a higher rate and not worry about it?’”

There are varied reasons as to why a Customer Success team may choose to “fire a customer.” Based off this example, investors may make the strategic decision to deliberately allow churn to increase to what would normally be an unacceptable level because the cost to retain those customers outweighs their value. They could then redirect that investment towards retaining larger customers who are a better fit.

By using this scorecard to raise investor awareness of the financial effects of customer satisfaction and health, you can improve their perception of your initiatives’ worth by demonstrating how they reduce churn risks over time.

Best practices to better engage your investors and board

In addition to using the metrics and model shared in this article, here’s Kristen’s top pieces of advice on how to strengthen your dialogue with your investors and board.

Make a game plan.

Knowing how to make a persuasive business case is a highly versatile and valuable skill that’ll get you far in life. Whether you need to convince investors to support your idea or fund more resources, make the focus about them. Your argument isn’t about why you’re right or what you need. It’s about answering your investors’ foremost questions: “Why should I care in the first place?” and “What’s in it for me?” The key is to work backwards from your investor’s main objectives to match your business case. If you have never built a business case before, Kristen highly recommends checking out the “HBR Guide to Building Your Business Case.” There is a cost but it’s well worth the investment.

Tell customer stories through numbers.

Customer Success is a relationship-focused function. As such, they tend to speak in anecdotes. Whereas investors speak in data and statistics. To reconcile these different communication styles, Customer Success leaders need to learn how to tell customer stories with data. You can have an argument (story) of great substance. But if you deliver it in a way that doesn’t match the communication style of your audience, you weaken the argument’s perceived validity and your credibility. Many organizations’ most enlightening and strategic ideas come from customer stories. Make sure your customers get heard by adapting your storytelling approach to lead with data.

Radiate proactivity.

Elevate the esteem of Customer Success by showing your investors and board that you’re not a reactive organization. Don’t wait to be asked for information. Bring data to the table. Get yourself added to meetings and decisions that you deserve to take part in. Being your own advocate is your responsibility. But that doesn’t mean you can’t reach out to other departments for support. Spend time investing in your cross-functional relationships. Network with peers to learn how others are tackling similar challenges.

Be transparent.

Don’t try to hide negative results. Be prepared to discuss results and mitigation plans. “Make ‘no surprises’ your mantra as you work with investors,” says Kristen. “They can handle it. Most of what they spend their time doing in board meetings is planning for the future.” But without accurate projections, investors can’t effectively plan.

Churn projections are especially important for high-value customers as their unexpected loss can hurt your organization’s cashflow in substantial ways. “The further in advance you can tell your board that a high-value customer is leaving, the better,” says Kristen. “It’s better to give bad news earlier and allow investors to plan for it than it is to hold out hope that your customer stays only to have them churn at the eleventh hour when you haven’t given your board any warning.”

Own your metrics to earn your spot

Taking ownership of your metrics, your performance, and your narrative makes all the difference in how your investors and board perceive you. As a Customer Success leader, it’s up to you to build positive and productive relationships with your investors and board. It’s up to you to use metrics that give you a proactive edge. It’s up to you to make sure your customers’ stories get heard.

As the radio personality and producer behind “This American Life,” Ira Glass, said, “Great stories happen to those who can tell them.”

Make your story great by telling it with metrics.

And if you’ve ever wondered what investors look for in Customer Success organizations when evaluating companies for investment, check out our blog, “Q&A: Role of Customer Success According to Three Leading Investors,” where we ask ChurnZero’s lead investors from our seed, Series A, and Series B funding rounds their top criteria for consideration.

Presenter Bio:

Kristen believes that Customer Success is the key to driving renewal and expansion revenue, and delivering exceptional customer experiences that produce referrals. Over the past 20 years Kristen has been a Success, Sales, and Marketing executive, primarily working with growth-stage tech companies, and leading several award-winning Customer Success teams. Kristen founded The Success League in 2015. She has written over 100 articles on Customer Success, and is the host of two podcasts about the field: Transforming Experiences and Reading for Success. Kristen serves on the board of the Customer Success Leadership Network and the board of the Customer Success program at the University of San Francisco.

The Success League is a consulting and training firm focused on Customer Success. Their modular consulting approach helps companies transform their Customer Success programs to create experiences that drive loyalty and maximize revenue.

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