Why Customer Success Is a Revenue Driver—and How to Drive More of It
Alli Tiscornia, Chief Customer Officer, ChurnZero
Once a cost center; now a revenue driving powerhouse. For Customer Success, it’s been quite the journey—and all in 10 years or less. Today, recurring revenue is top-of-mind for every B2B technology CEO, making Customer Success (CS) a star team within every SaaS organization.
In 2023’s economy, where retention matters even more, Customer Success teams are making an outsized contribution to company balance sheets, with their evolving toolkit of best practices, operations and technology taking the best teams from strength to strength.
Is your Customer Success team hitting their stride when it comes to revenue?
In my 20-year career of leading customer-facing, revenue-building teams at companies like ChurnZero, I’ve learned what enables CS teams to hit their full potential—and seen some recurring mistakes that prevent them from doing so.
It all starts with the domains that a Customer Success team should own—customer data, customer relationships, and customer lifecycle—and the three revenue-driving responsibilities that flow from them: adoption, optimization, and expansion.
Episode 150: The Future of Customer Success with Allison Tiscornia, Chief Customer Officer at ChurnZero
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Adoption: the foundation of recurring revenue
Once a customer is up and running thanks to your implementation team, the work of Customer Success begins.
The whole premise of SaaS was to get rid of shelfware that people bought but never used. Yet, customers also buy SaaS products and don’t get heavy adoption out of them—and if your customer isn’t using your product, they’re not renewing, especially in times like these.
Customer Success teams turn these situations around. They’re in the business of understanding your customers and their needs, mapping them to your product usage data, and figuring out what’s going on. They’ll remind customers why they bought your product and what success looks like to them and match their goals to the right product features to use. The best CS teams are expanding to own customer education and partnering with marketing to create high-quality content that drives adoption.
The result: more adoption, more value for customers, higher retention rates, and more recurring revenue.
Optimization: leveling customers up to build value
Once customers are adopting your product, your CS team should be optimizing the way they use it to achieve their current and future goals. Which additional features could they turn on? Are there other teams within their company who could benefit?
Optimization is where consulting—an essential CS skillset—comes into play. A good Customer Success manager (CSM) is adept at uncovering your customer’s business drivers and goals to introduce the strategy conversations that lead to deeper product usage and customer loyalty.
Expansion: building recurring revenue beyond retention
If your Customer Success team doesn’t own expansion, you’re missing out on revenue. Unlike account managers or salespeople who have limited touchpoints with customers, CSMs have the relationships to know where each customers’ company is going, and the product knowledge to know how you can help them get there.
CS can point salespeople and account managers to opportunities in accounts, but why should they need to? They’re already your customers’ trusted consultants and coaches, which makes it easy to suggest the right additional products, features, or licenses. If you’re concerned about CSMs handling enterprise accounts with multimillion-dollar deals, you should hire sophisticated CSMs who can handle conversations in commercial terms.
Not a revenue goal? It’s not for Customer Success
If there’s still a lingering view of CS as a cost center within your organization, take a look at what they’re doing outside of adoption, optimization, and expansion. If it’s a significant workload, it’s likely detrimental to their revenue potential and to your customer experience too.
Onboarding, for example, should reside with implementation specialists. Transactional support requests need to be handled by your support team, not by CSMs.
Failure to specialize is a critical issue for CS and revenue leadership. It tends to happen in younger companies who don’t think they need to hire for specialized roles yet. Rather than hire one implementation person, one support person, and one CSM, they hire three CSMs as generalists. It may work for a short amount of time, but it will hold you back as your product develops and matures.
What your Customer Success team needs to build more revenue
Adopting a purpose-built Customer Success platform like ChurnZero, which helps CS teams build revenue efficiently and at scale, is a high priority—but it’s not your first priority. Having your CSMs understand your product deeply is also a critical need, as is having a CS operations role to direct their focus to the work that matters most.
The top spot, however, belongs to accountability, in the form of revenue numbers. If your CS team doesn’t own the numbers associated with adoption, optimization, and expansion, it’s difficult to optimize their performance, build the cross-functional links they need, or bring your CS leader into the C-suite. Accountability for revenue numbers is what truly sets your CS team up for success.
The top three metrics for your CS team should be net revenue retention (NRR), gross revenue retention (GRR), and the health of your book of business, or how many accounts are red, yellow, or green. Every CSM should have a GRR number associated with retaining their accounts. For expansion, they should have an upsell number—not necessarily a quota, but a goal or KPI. For adoption, the right number varies widely from business to business depending on your product and how customers use it.
Don’t get left behind on Customer Success
In 2023, we can all agree that it’s cheaper to keep and retain your existing customer base than to continually fill the leaky sieve of churn with new customers. But let’s think bigger in terms of what Customer Success can do—particularly around expansion. If you still haven’t convinced your VP of sales that CS should own more revenue, a downturn economy is the perfect time to do it—and the earlier you get started, the better.
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