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24 August 2021

CXOs: Rally Your Organization Around Net Dollar Retention As Your Value Metric

by Kevin Meeks Reading time: 4 mins
value metric

Mobilize Your Team Around Your Most Pressing Value Metric

Net Dollar Retention (NDR) has quickly become the most important value metric in SaaS organizations and for good reason; NDR provides a clear picture of a company’s overall health and valuation. This is also why senior executives and board members are raising the alarm to rally their organization around NDR. 

While your Senior Leadership recognizes the importance of Net Dollar Retention, it’s much harder to communicate its criticality to your entire organization. Many Customer Success Managers (CSMs) are often left wondering; how is my job directly related to the performance of the company? How can I influence our company’s evaluation? The crucial work that CSMs do directly impacts your company’s profitability, growth and valuation. Therefore, ensuring that your entire team understands NDR and their role in growing this metric is pivotal to maintaining and developing a healthy Net Dollar Retention.

Recently, we spoke about the various elements that make up this crucial metric and how to measure your Customer Success (CS) team on the leading indicators of NDR. Here, we outline the 5 steps you need to take to effectively align your entire organization around growing Net Dollar Retention.

5 Steps To Aligning Your Teams Around NDR

1. Know Your Customer’s Journey

Understand what value means to your customers by crafting your customer journey from their perspective. Then, use this resource to determine the tasks and activities that need to be done by your business to ensure that these key  milestones are met and value is cyclically being delivered and realized.

2. Plan For Customer Success

A critical component of driving NDR is defining the success metrics that matter most to your customers. Customer Success plans and Outcome Maps are the first steps to building a clear value management and verification process; they guarantee that you are aligned with your customers on critical value metrics.

3. Focus On Sticky Adoption

Sticky adoption occurs when your product is so ingrained into your customers’ business processes that they couldn’t imagine life without it. Have you ever said, “let’s just Google it”? That’s because Google is so ingrained into our lives that it’s no longer a noun, it’s a verb. Driving that level of product adoption with your end users is the holy grail of NDR.  

4. Celebrate Your Customers

Make every conversation about the value your customers are getting. Do you have a Value scoreboard or wall of fame? Think of innovative and engaging ways to celebrate  the value your customers are getting from your products both internally (Sales Newsletters, CS/Company All Hands, etc.) and externally (Customer QBRs, Newsletters, etc.). Everyone wants to do great things, so guide, support and celebrate your customers on their journey to greatness.

5. Build Your Compensation Model

While there are a lot of differing opinions and conversations around Customer Success compensation, it’s crucial to ensure that you are driving desired behaviours with your CS compensation model.  Think about the ideal motion you want to build around Value Planning, Quantification, Messaging and Sticky Adoption and how that correlates to how you pay your Customer Success teams. 

Showcasing The Value Of Customer Success

While Net Dollar Retention is an important metric for your company as a whole, it’s equally as important in showcasing the value that your Customer Success team delivers to your company and customers. As such, you need to align your organization around a clear customer journey, a robust Customer Success plan, and a shared compensation model that work together to guide and celebrate your customers on their path to success.

The key to maximizing the growth and valuation of your subscription-based software company is to focus on increasing revenue retention. Watch our webinar for 5 innovative and impactful ways to increase Net Revenue Retention. 

Kevin Meeks

Recently serving as CCO at Apptio and VP Customer Success at Splunk, Kevin joins Valuize as Industry Principal with over two decades building and leading enterprise Pre-Sales and Customer Success organizations in the B2B tech industry.