Customer Success Management: Distinguishing Fact From Fiction
91% of businesses have said that their Customer Success organization has grown significantly in the last year alone (Totango, 2021). As Customer Success as a discipline has grown, it has also developed an accompaniment of misconceptions and myths, generating a lot of confusion about how to do it right and scale successfully. At best, following these myths may lead to an ineffective organization that’s wasting time on obsolete tasks that don’t drive any value for your business or your customers. At worst, they can steer you off course by implementing poorly designed strategies that threaten the very existence of your customer base.
In this article, we debunk 10 of the most pervasive Customer Success management myths to help you cut through the noise and fully harness the power of Customer Success as a key profit driver for your organization.
Myth #1: You can create a powerful digital engagement model and scale your Customer Success organization without investing in Operations
Reality: It’s one thing to consider set-up costs: many organizations understand that investing in the initial creation and launch of a new motion will add additional expenses in the short term. However, a common misconception about digital engagement programs is that you can simply “set it and forget it”; in reality, a program of this significance should be a “set it and iterate upon it”. Some organizations either can’t afford the time and energy that it takes to maintain and support the ongoing ecosystem or they assume that generic emails will suffice for every step of the customer journey. This can be a very costly mistake to make, as under-investing in operations can impede your ability to drive scalable and sustainable growth.
Reframe: Investing in Customer Success Operations early is critical to scaling your organization effectively
Customer Success Operations is one of the most under-invested and misunderstood segments of Customer Success management. As your organization expands, you need to invest in a strong operations team to help you successfully execute and serve your customer base, while maintaining a reasonable Cost-To-Serve. A robust CS Operations team, headed by a skilled and savvy Operations lead, will improve your processes to help you make the most of your technology investment and optimize data-driven insights. With the right team in place, you can maximize the efficiency and scalability of your entire Customer Success organization, including the creation and care of a digital engagement motion.
Myth #2: A high Net Promoter Score (NPS) = high customer retention
Reality: NPS is one of the most widely-used metrics in Customer Success. While it can be a useful metric in certain instances, such as determining how satisfied your customer is with your product, it should not be used as the sole leading indicator of retention.
First, consider that not all customers respond to NPS surveys, and those that do are often extremely satisfied or extremely dissatisfied; if you determine a customer’s likelihood to renew solely on NPS, you’re basing your prediction on outliers alone. Another issue is that your NPS scores may be inaccurate or incomplete. In general, the customer’s response to your NPS survey is determined by their current state of mind and mood; if you schedule an NPS survey immediately after your customer has a positive and valuable experience with your product, this may boost your NPS score, but it won’t be an accurate reflection of your customer’s overall health and satisfaction.
Reframe: Net Promoter Score (NPS) can help identify low value realization and, in conjunction with other data, can guide action to mitigate risk.
We recommend implementing NPS surveys throughout your customer journey at various touchpoints and with many different user personas. You can also consider collecting and combining NPS with other measures of customer health and feedback, such as engagement health, to get an accurate picture of your customer’s overall health.
Myth #3: Customer Success is not profitable
Reality: While the function of a Customer Success Manager (CSM) originated from the Account Management realm, a key differentiator for most CSMs is that they do not hold a quota. Due to this quota-less engagement model, many internal organizations view Customer Success as akin to “expensive customer support.” But, done well and right, Customer Success Management (in collaboration with your Services, Support, Education and Sales teams) drives bottom-line value for your customers and, by extension, value for your business. A 5% increase in customer retention rates leads to anywhere between 25 and 95% increase in corporate profitability (Harvard Business Review, 2000).
Reframe: By focusing on value-driving activities and coordinating teams around customer outcomes, Customer Success drives major profit through retention and expansion
By measuring and tracking your performance through indicators like Net Dollar Retention (NDR) and Net Revenue Retention (NRR), you can showcase the impact your CS team has on the overall business through your ownership of expansion and retention activities in addition to the more traditional adoption motion.
Myth #4: Operationalizing Customer Success technology will mitigate Organizational & Strategy issues
Reality: While selecting the right Customer Success technology is crucial to driving scale and implementing a powerful automation program, it should not be used as the sole solution for organizational issues. Before implementing technology, it’s essential to get to the root cause of any process or organizational issues because what your data may be surfacing could be the symptoms of a deeper, and much larger, problem that might be exacerbated by the unstructured addition of technology.
Reframe: The critical aspects of a Customer Success motion can work well with or without technology at the start, but technology rarely works well without a clear Customer Success strategy to back it up.
It’s important to recognize that you will get greater value from your technology solution by segmenting your customer base, building a thorough customer journey map that incorporates major milestones and optimizing your customer data management. The more you can do before operationalizing your technology, the more value your technology will drive in the long run.
Myth #5: The only person accountable for the customer’s success is the CCO
Reality: The success of your customer starts in Marketing and Sales, where expectations are set, problems are identified and value is defined. Although a large part of the customer’s success relies on a well-orchestrated customer team led by the CCO, every organization in the company has a part to play in ensuring value achievement at every stage in the customer journey.
Reframe: All departments in an organization are accountable to ensuring the success of each customer.
In today’s hyper-connected digital ecosystem, a customer interacts with multiple different departments throughout their journey and each one of these departments is responsible and accountable for the customer’s success. Customer value realization must form the steel thread that connects your business with your customers and unites your entire customer lifecycle strategy and all your organizational functions within it. The steel thread of customer value realization must run through the use-cases that Marketing promotes to attract buyers, the user stories Product Engineering are developing for the next release, the Statement of Works that Professional Services are delivering, and the headcount budgets that Finance are approving. Delivering and ensuring value should be the goal of every team.
Myth #6: Enterprise customers want high-touch engagement; small companies want low-touch engagement
Reality: When segmenting your customer base, it’s common practice to assign more CSM-led initiatives to high-touch accounts and more digital-led initiatives to low-touch accounts. Truth is, digital customer engagement can be applied to any customer, no matter the size and scale of the account. In many cases, high value customers don’t want to talk to a CSM – they’d rather their issue be solved effortlessly, without having to email or call a person. On the other hand, low-value accounts may be desperately seeking more direct input from a CSM with pleas that go unanswered. In both cases, your standard approach to high-touch and low-touch accounts may be hindering your relationship with the customer and their ability to derive value from your product.
Reframe: By defining value and using actionable insights, a Customer Success motion can adjust to customer needs, whether through digital engagement, directly from the product or from a CSM.
Taking a step back, you may need to change your organization’s level of engagement based on the specific phases of the customer journey. For example, you might implement high-touch engagement during onboarding, depending on the complexity of your product. Whichever approach you take, remember that any contact with the customer should be meaningful and purposeful. Make sure you are adding value with each interaction and be sure to clearly set and reset expectations with your team and customers along the way.
Myth #7: Sales and Customer Success are distinct and separate organizations
Reality: In today’s highly complex ecosystem, Sales and CS need to be joined at the hip. True alignment and synergy between your Pre-Sales and Post-Sales organizations is the only way to ensure a seamless customer journey and enable recurring value realization. To deliver on this promise, focus on ensuring consistent value definition and agreement in your Sales cycle that can be seamlessly transitioned into outcome and value management by your Customer Success team.
Reframe: Defining and aligning value in the Pre-Sales motion can reduce friction between the Sales and Customer Success teams, ensuring a positive employee experience and exceptional customer experience.
In order to build a strong cross-functional partnership between Sales and Customer Success, you must strengthen the engagement between the two organizations. In this new engagement model with a deeply integrated Sales and Customer Success motion, the traditional selling motion is a thing of the past. Now, Customer Success engages with the customer immediately after the Technical Win, once the Proof of Value is complete. This is a critical stage in the engagement cycle as it allows the Customer Success team to continue to build on the momentum and excitement that the Sales teams have created, form relationships with key stakeholders early on and showcase the investment being made in the customer’s success. In our experience, connecting Pre- and Post-Sales teams on expansion sales drives clear results for the business; 156% greater average order size, 39% faster time to next deal, and 15% increase in NRR. If you’re looking for a detailed plan to unify your Sales and CS teams, check out the ‘Ultimate Guide To Uniting Pre- and Post-Sales Team Around Outcome Selling And Success.’
Myth #8: Customer Success and Support are one and the same
Reality: While Customer Success management is growing in popularity and scope, there are still some doubts and questions about what the discipline should be accountable for. The most common misconception is that Customer Success and Support are one and the same. The truth is that Support is focused on receiving and addressing customer needs and is often more reactive; on the other hand, Customer Success is designed to proactively drive desired outcomes and understand customer behavior to ensure value for both the business and the customer.
Reframe: A robust post-sales team has differentiated and specialized roles to ensure customer success: Services, Support, Education and Customer Success, among others, should feel like a seamless experience to the customer, but perform distinct and critical roles.
The value-based approach requires the involvement of all of your customer-facing teams. A smooth handoff process, with clearly articulated roles & responsibilities, ensures an effortless transition for your customer as they move through the customer journey.
Myth #9: Product usage = product adoption
Reality: Product usage is an important metric to consider when determining the overall health of a customer, but it doesn’t necessarily guarantee adoption. Customer Success Managers may assume that if a customer frequently logs in and uses the product that things are going well. While frequent product usage can be an indicator of customer satisfaction, it can also be the result of a lack of alternatives or simply indicate a prescription from the business.
Reframe: Product usage is critical to adoption, but it is not synonymous with adoption. True adoption ties to a user’s interpretation of the value they receive, which can only be interpreted by how they engage across your company’s ecosystem.
Look at product usage in conjunction with the customer’s breadth and depth of use across features and incorporate data from the customer’s engagement with your company’s ecosystem. How do they engage with Support? Do they access your community? Do they use documentation or leverage adoption guidance? Do they open email? By combining data across the customer’s engagement at the user level with your company AND product, you gain a more accurate understanding of a customer’s overall adoption of your product.
Myth #10: There is a perfect CSM to Customer ratio that is applicable to every organization
Reality: Every recurring revenue organization is searching for the golden ratio; the ideal CSM to customer ratio that they can apply across their organization. The truth is, the answer isn’t so clear cut. The ratio of CSMs to customers depends on a number of factors, including the complexity of your product, the complexity of your customer, your customer segments and your digital engagement strategy. Some CSMs may be able to handle multiple accounts, while a very high value account may require input from multiple CSMs.
Reframe: Finding a CSM to Customer ratio that works for your business should be a data-driven effort and you should plan your capacity accordingly.
Your goal should be to assign CSMs based on how your customer needs to be engaged. Make sure you size your Customer Success organization properly by finding the right level of investment to adequately drive value without overwhelming your team.
Blaze Your Trail To Customer Success
While there isn’t one right way to do Customer Success management, there are certain misconceptions that are throwing even the most seasoned CS leaders off their game. To stay on your A-game, it’s vital to cut through the noise and focus on the initiatives that truly drive value for your customers and your business.
Customer Success Management starts with a dedicated focus on your organization’s most important asset: the customer. Learn how you can align your teams, tools and processes around value-centricity to maximize customer value creation.