This guest post is by Kristen Hayer, CEO and founder of The Success League.
As a discipline that’s shifting from new to established, customer success is facing some interesting headwinds right now.
Economic uncertainty is affecting purchasing decisions. This is pretty universal, but the new Customer Success Leadership Study found that two-thirds of CS teams’ purchasing is delayed by three months or longer.
Staffing models and team structures are strained, at best. Again, the study found nearly half of CS teams didn’t grow, and 8% actually shrank.
Lack of staffing discipline has led to budget constraints. This makes it harder for CS leaders to advocate for more customer success budget for their teams, and harder for finance teams to assess and provide what we need.
Two-thirds of CS leaders say they’re delaying purchases by three months or longer in 2024.
So how can we shift these trends in a positive direction? What can CS leaders do to influence their own leadership towards shorter purchasing timelines, more customer success budget, and better staff support?
We need a framework that promotes operational excellence in CS, so we have the resources in place to prove value quickly, while still delivering on that value-driven journey for our customers. Here are my top recommended fixes for a CS team in flux.
1: Get crystal clear on all the levers your program has to pull.
Let’s start with your customer ratio. Do you have a model in place that explicitly states exactly when and by how much the team grows? For example: When customers reach X amount, we add 1 more team member.
There is no perfect ratio here, and it’s important to remember that. But to find yours, start working with metrics from the top down. Assess the revenue you’re responsible for, then review from the bottom up (such as time it takes to onboard, manage, renew, etc.). Once you’ve gathered those metrics, blend them to find the balance that works best for your team.
Another important point: this ratio will also vary from segment to segment in your customer base. So quick PSA: you must segment your customer base! And for it to be truly functional, try to keep it condensed to 1-3 segments. Each should have a different customer journey that matches the revenue coming in from those same customers. Of course we want the customer experience to be consistent, but it’s not sustainable to provide the same journey for every customer, no matter their revenue band.
2024’s Customer Success Leadership Study asked CS leaders to size their average CSM book of business by number of
customers. Typically, as ACV grows, CSM load decreases.
2: Be a great salesperson.
Most CS teams are modest, and we need to brag more!
Existing customers bring in between 75-90% of a software company’s revenue on average, and CS is involved in most of that journey. Whether renewals, expansion, or the overall customer journey, CS has a massive impact on whether a deal closes or a customer moves on.
Not everyone comes from a sales background, but it’s less about constantly pitching and more about sharing stories persuasively. If you’re trying to position your team or a new tool, telling a good story (backed by relevant data) tied to the vision and goals for the broader company will hook your executives, board, and investors much faster.
Pull together your numbers, conduct some testing if you have time, and craft a story that is future-focused and aspirational, rather than getting bogged down with what you’ve already accomplished. Past work is important and foundational, but it doesn’t paint a picture of what’s next.
An interesting trend from 2024’s study is that organizations with the highest NRR were also the most likely to have increased their customer success budgets in 2024.
3: Have real numbers to back up your story.
We’re digging more into building this data-backed story for your investors during my session at ZERO-IN this year. To get started, here’s what I recommend:
The one-page business case.
Keep your story data-oriented and succinct, and include four big categories: problem, potential solutions, implementation plan, cost.
The sky isn’t falling, so don’t warn them.
Scare tactics don’t work long-term, especially in an economic downturn. Fall back on your numbers, because the company’s other departments all have needs and business cases as well. It’s about standing out from the budget crowd.
Tie everything back to revenue.
Most sales teams get what they ask for because they know the magic word: revenue. Lucky for you, CS teams are producing a ton of revenue. Tie your needs back to money coming in, and your story is that much more compelling.
Over-prepare for the Q&A.
What would your stakeholders ask if the roles were reversed? Make a list, make it very specific, and practice (Example: Why do you need more headcount? Because each additional CSM will produce X revenue based on our current model, which gets us closer to Y annual goal).
Put on your CFO hat.
Let’s say your company is medium sized with 8-10 executives across your departments. Your head of finance is constantly fielding budget requests, but they’ve only got X amount of money to dole out. How can your story fit into the broader company narrative, so they put you at the top of the list?
Disciplined leadership for CS teams
While companies take a closer look at staffing and budgets (and make arguably tough choices), we should take solace in the fact that customer success is a required department now. We have a seat at the table, but we have to be accountable for our numbers, measure it, and bring data-backed storytelling with us when we’re pitching for our team and resources.
Operational excellence will prepare us in building a business case that highlights the strengths of our CS team.
Kristen Hayer founded The Success League in 2015 and currently serves as the company’s CEO. Over the past 25 years Kristen has been a success, sales, and marketing executive, primarily working with scaling tech companies, and leading several award-winning customer success teams. She has written over 100 articles on customer success, and is the host of 3 podcasts about the field. Kristen has served as a judge for the Customer Success Excellence awards, and is on the board of several early-stage tech companies.
