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4 May 2022

The Blueprint To Building An Iron-Clad Business Case For Your Customer Success Scale Strategy

by Ross Fulton Reading time: 10 mins
customer engagement

Rally Your Organization Around A Strong CS Scale Strategy

In the vast majority of B2B technology enterprises today, a Customer Success (CS) strategy is firmly in place. However, this strategy often begins and remains as a program that is focused on the minority high ARR customers. As revenue and customers grow, leaders quickly, and sometimes painfully, learn that they need to adopt a proactive approach to their customer engagement and lifecycle that enables their long tail customers through a powerful Scale strategy. 

While the benefits of a Scale strategy may be immediately clear to your CS organization, it’s another matter entirely to convey the importance and urgency of this strategy to Senior Leadership and obtain their enthusiastic support. Without buy-in from your C-Suite and cooperation from your entire organizational ecosystem, your organization’s ability to scale customer engagement, maximize customer value across your customer segments and drive best-in-class Net Dollar Retention (NDR) is on the line. 

To help you champion maximum customer value realization, here are 6 tried-and-tested steps to building a compelling business case for your Scale strategy that will garner enthusiastic buy-in from your Senior Leadership and rally your organization around a powerful Scale model for customer success.

1. Identify Your North Star Metric

Before you begin to build out the business case for your Scale strategy, you need to identify and align on a North Star metric. Many CS leaders make the common mistake of focusing on their own operational metrics. While basing your business case on customer health scores or CSAT may seem like a good approach, these metrics do not directly address what Senior Leadership is concerned about and accountable for: growth and profitability.

Instead, you must directly tie the value of your Scale strategy to a business outcome that proves its economic value. At a foundational level, the core mission of any B2B technology company is to create measurable value for customers in support of best-in-class Net Dollar Retention. Therefore, this metric is ideal to serve as the North Star metric for your Scale strategy. If weighting towards profitability would be more effective in your company, then focus on the margin gains you can drive by ‘doing more with less’ through your Scale strategy. For example, increasing your CSM coverage ratios without lessening the creation of success and therefore retention and expansion within your customer base.  

Without a tangible and verifiable metric that anchors your Scale strategy to revenue generation and/or profitability, it may be difficult to convince Senior Leadership to approve your business case.

2. Evaluate Your Current Coverage Model

In order to build a strong business case for your ideal Scale strategy, you need to first understand your current Customer Success coverage model. Analyze the present state of your customer segments and the extent to which customers are effectively covered by your current CS strategy by answering the following questions:

  • Which of our customer segments have less coverage than others?
  • Does coverage for any customers drop off at a certain level of ARR?
  • Where do we currently apply coverage and what are some of the reasons we might make exceptions to that rule?
  • How much logo coverage vs. ARR coverage do we have?
  • Do we have stronger coverage for some product lines compared to other product lines?

We recommend compiling your current state report by segment, product and region. This will help you evaluate the broader impact of your Scale strategy across multiple dimensions if you are a multi-vertical, multi-product line or global organization. 

Creating a thorough picture of your current approach, and its impact and limitations, will help you spot gaps and opportunities within your model so that you can design a more impactful Scale strategy. It will also serve as a baseline to showcase the possible benefits of expanding your Scale strategy on your North Star metric, thereby strengthening your business case.

3. Quantify The Impact Of Your Current Coverage Model

A careful analysis of your current state coverage, and where it’s falling short for your customers, is crucial information to bake into your business case. Identify the impact of your current lack of coverage and determine the tangible benefits your proposed Scale strategy would have. Answer the following questions for your uncovered customer cohorts:

  • What does churn and contraction look like for our uncovered segments/products/regions?
  • What are the main reasons for the lost ARR in these areas?
  • Can we definitively link these churn and contraction reasons to the lack of coverage in these areas?

To address these questions accurately, you need to pull customer data from across your ecosystem. While a mix of qualitative and quantitative data is ideal, don’t be deterred if you have a lack of quantitative data – qualitative data can also be highly valuable. In the best case scenario, you have enough data to sufficiently determine reasons for churn and why you’re losing customers in a particular segment. If there are gaps in your data, you can select a customer segment and build out a detailed qualitative view based on direct engagements, such as 1:1 conversations and surveys. Ideally, you can then directly link this churn to a lack of coverage and showcase how your proposed Scale strategy will alleviate the problem. For instance, if you find that customers are churning due to poor onboarding, you can leverage this data to strengthen your business case by showing Senior Leadership how your Scale strategy will scale onboarding through the addition of digital product walkthroughs, positively impacting your North Star metric.

4. Complete A CSM Attribution Analysis

Once you’ve identified a coverage opportunity within your organization and tied it to an economic outcome, you need to determine how you’re going to fill that coverage gap through a combination of human-led, i.e. CSM, and digital strategies. This should take into account your various processes and scale capabilities like playbooks and success plans. Conduct an analysis of the value-driving activities and customer engagement your CSMs are delivering today that can be attributed to customer retention and value realization. While a CSM attribution analysis seems straightforward, many organizations often overlook this step when designing their Scale strategy. This crucial work of identifying which parts of your Customer Success strategy and organization are actually creating value will help you clearly determine which initiatives you should be leveraging in order to maximize the impact of your Scale strategy. 

With your Customer Success organization, go through the exercise of mapping out the key activities and engagement points that drive tangible and measurable value for your customers. The goal of this exercise is to determine where your CSM-led customers are benefitting the most and which activities specifically are driving the most value to your customers. Gather this data based on segments, products, regions, and by different time periods to make sure that you’re getting an accurate picture of your CSMs’ value-added activities. Based on this analysis, decide how much of the Net Dollar Retention difference for covered accounts is directly attributable to your CSMs versus your other account teams. This will be essential to understanding the impact of improved coverage over time and the direct economic impact of your CS team.

5. Give Your Stakeholders Options

Ultimately, building a business case is comparable to making a sale. When it comes to making a successful sale, the best practice is to always present a few possible choices for your buyers to consider. 

Consider presenting 3 versions of your Scale strategy: a ‘best case’, a ‘partial coverage model’ and a ‘do nothing’ option. The third should present a stark reality of the perils of inaction for your business and your customers. Outline the key business benefits and costs of each scenario so that all stakeholders are fully aware of the implications and consequences of each option. When you present these scenarios, make it clear what you believe is the best option – don’t offer to let them have their pick. Clearly state which one is the best solution for your business and your customers, supported by all the data you have gathered and analyzed, to present a strong business case.

6. Determine Coverage & Forecast Growth For Your Scale Strategy

Once you’ve selected your Scale strategy, finalize the headcount, technology and other investments you require to meet your coverage model and forecast your projected growth. Apply a proposed coverage strategy to the forecast to understand how coverage will improve in both logo and ARR coverage over the coming quarters – it’s crucial to look at your model through both lenses to get an accurate picture of your projected growth. Quantify the new coverage in terms of impact on your North Star metric based on your findings from your attribution analysis.

A critical element of this forecast is aligning with your Finance team. You need to ensure that your segments and projection align with your Finance team’s segments and projection. Without this alignment, it will be very difficult to communicate the impact and investment profile of your Scale strategy in a way that your Senior Leadership can understand and support. This requires a close partnership with your Finance team based on a common and agreed language of metrics with which you can communicate and collaborate. Having a unified economic view of your customer lifecycle is crucial, which is why it is a vital component of the ValueXperience framework in the form of the Customer Value Economics discipline. By creating a common dialect through a shared framework of metrics, you can strengthen your ability to conduct effective conversations with your CFO, enable the successful modeling of your investment and garner executive buy-in.

If your organization is in the process of transitioning its business model from perpetual licensing to recurring revenue, then this tight-knit partnership with Finance may not be feasible in the current state. Your Finance team may not even be thinking about Net Dollar Retention or be able to create their own forecasts and modeling based on ARR. In this case, determine coverage and forecast growth on a logo basis and go in with the assumption that increasing logo coverage is going to have a revenue benefit to your business. As you begin to increase your coverage with these customers, they will grow and you will be able to positively impact your North Star metric.

Are You Using The Right Language To Obtain Executive Buy-In?

Failure to obtain executive buy-in and operationalize your Scale strategy could leave your company on life support. To prevent this and set your company on the fast-track to growth, you need to build a thorough business case for your Scale strategy that begins with an analysis of your existing coverage and customer engagement, leverages the most relevant data and translates it all in a language that Senior Leadership understands – through the economic benefits and opportunities, as well as the business costs, of scaling your coverage model. 

Building a business case for your Scale strategy requires an organization-wide commitment to collecting, maintaining and analyzing customer data. Follow these 5 steps to unlock the power of cutting-edge Customer Intelligence across your organization.

Ross Fulton

Prior to founding Valuize, Ross spent over 16 years growing software companies and their partners in go-to-market strategy, sales engineering and customer success leadership roles on both sides of the Atlantic. An Englishman by birth but not by nature…he’ll take an espresso over tea every time!