Will your customer success team see further cuts this year? How can CS leaders prove the viability of CS as a business function? And just how much more efficient are AI-equipped CSMs expected to be?
Take a mid-2024 dive into these hot CS topics with ChurnZero CEO You Mon Tsang, who recently joined ESG’s Michael Harnum, and Melissa Langworthy for an in-depth discussion on how to retain and grow customers this year and beyond. We’ve distilled their conversation into five essential truths for customer success leaders to understand.
Truth 1: Customer success is here to stay.
Recently, the SaaS industry has heard many objections about the viability of customer success as a business function. However, while CS is still maturing out of its “teenage phase”, it’s here to stay, says You Mon.
CS is also experiencing its first official downturn, making it more important than ever for organizations to evaluate which phases of the customer lifecycle CSMs fully own. If renewal and expansion aren’t among them, it’s time for CS leaders to start thinking about owning these core responsibilities, which will make or break a CS team’s ability to stay afloat in 2024 and in future downturns.
Watch the full conversation between You Mon Tsang and Michael Harnum here.
Truth 2: For consistency of process, CSMs should own renewals.
While there are many ways to do CS (because there are so many ways that a customer journey can go once an account is closed-won) your CSMs should own the renewal process, recommends You Mon. This core strategy brings consistency to customer success processes. While other teams may need to be involved, CSMs should own the process for each customer, steer the ship, and ensure that renewal is completed.
Further, the mandate to proactively engage and manage customers in an informed way is the very essence of great CS. While different industries will have different ways to achieve this, this mindset can bring an incredible customer-first culture to any organization.
Truth 3: You should spend more time with your CRO.
With budget-conscious CROs looking to cut costs, how can CS leaders protect their teams and their work the most effectively? The good news is that chief revenue officers are starting to focus more on CS, which means that CS-related layoffs and budget cuts are likely to become more strategic in the near future. As a CS leader, it’s in your interest to work collaboratively with your CRO to get them up to speed on:
- The benchmarks for your CS team.
- That means book of business size, ARR/NRR goals, and more.
- Structural issues within your CS team.
- Do you have the right amount of individual contributors?
- Are you “fat” in any capacity – for example, are there too many managers or leaders where they aren’t necessary?
- The math.
- Let’s say you have a CSM that makes $100k annually and manages a book of business with an ARR of $1.5 million. Will they achieve net revenue retention (NRR) of 6.7% or higher, and will this increase over time? Bear in mind that it might actually be less than 6.7%, because they might need fewer resources.
Truth 4: Your CSMs will require AI to meet new efficiency expectations.
Within the next 18-36 months, predicts You Mon, boards will ask CS leaders to be 30%-50% more efficient, which means that CSMs will need the ability to manage larger books of business more efficiently. AI tools will play a key role (as they will in other departments too; this trend is not exclusive to CS).
AI is going to have a much more prominent role in the business world than the personal world. For example, gathering accurate customer data will become much easier. As AI learns about your customers and what CSMs need, its outputs will improve and the data gathered will improve in a continuous process. AI will play a role in just about everything, and help nearly every task CSMs are involved in.
Truth 5: Operational excellence is the next mountain to climb.
Now that CS leaders are confident in their growth excellence, operational excellence is waiting in the wings as the next big challenge. One opportunity: effective workforce management. 71% of CSMs currently work remotely, and management strategies have some catching up to do with this significant shift in workforce configurations.
Another top priority for 2024 and beyond: consistently showing your CEO the value of customer success through ROI and customer value. As a leader, you need to show your team’s contribution not just to current business health, but to driving sustainable growth and customer satisfaction.
