If your customer success team has ever been “Brady Bunch-ed” under your CRO—in an effort to create one big happy go-to-market family—you’re not alone. But what we see a lot less often is companies bringing revenue teams under CS leadership.
So, what gives? Why aren’t these reorgs happening the other way around?
It’s simple: customer success (CS) leaders struggle to show how their teams’ activities tie directly to their revenue impact through net revenue retention (NRR) and gross revenue retention (GRR). Without the data to prove that connection, your C-suite probably still views CS as a cost center when it’s actually their #1 revenue center.
“The world is a tough place right now for SaaS companies, whether you're hitting your numbers or not,” says Jon White, Catalyst’s VP of Product. “We want to help turn the lights on for CS leaders.” We’re on a mission to help you measure your success metrics through product features like Insights—and with articles like this one.
At the end of 2023, Jon sat down with eight CS experts to learn how they navigate the toughest challenges in CS. This roundtable conversation was an invite-only, closed meeting that allowed all eight attendees to share their real, raw thoughts about tracking revenue at their organizations. To respect the folks Jon spoke with, we’re keeping their names anonymous, but you can learn a bit more about them here:
- The roundtable included four VPs of CS, as well as a Head of CS, a Head of CS Ops, a Director of CS, and a Director of CS Ops.
- All of Jon’s roundtable guests work for SaaS organizations.
- The brands represented in the room ranged from small start-ups to huge enterprises.
We’ll get into:
- The most pressing questions CS leaders are asking
- 5 metrics they use to measure their impact
- 5 of their go-to tactics for driving—and showing—growth
What challenges do CS leaders face when trying to measure their impact?
We get it—the fight to prove CS’s impact can feel like an uphill battle. The leaders we spoke to expressed overwhelming insecurity about tracking the right numbers and proving the value of CS to the C-suite.
Here are a few of their biggest challenges:
1. Activity uncertainty: Which ones drive revenue?
Physics class taught us that an action produces an equal and opposite reaction. CS leaders need to paint a similar picture for their execs: X CSM activity leads to Y retention or expansion revenue. But they tend to struggle here.
One VP of CS shared that their team ran experiments to prove the ROI of CS for NRR.
The great news? The tests instilled confidence in CS. They could point to more leads captured, more projects completed, and more efficient project completion as their customers’ most desired outcomes and work backward to see which CS actions contribute to those outcomes.
The not-as-great news? While they could see the dozens of CS actions that contributed to certain outcomes, it was still tough to pinpoint which CS activities truly make money.
In this economy, you want to be able to cut down to the minimal customer journey that generates the most outcomes. So asking questions like, “What are the activities that actually move the needle on NRR?” are important to ask, but hard to answer.
2. Metric ownership: Who’s responsible?
A lot of companies associate the net revenue retention (NRR) metric with the CS function. But although CSM activities drive NRR, execs don’t always attribute that revenue to CS—especially if another team is involved.
A roundtable member shared how their CEO associates metrics like product usage and adoption most closely with CS, rather than revenue-focused metrics like NRR, which is assumed to be solely an account management function.
3. Capturing customer ROI: How do we do this at scale?
The best argument for convincing a customer to renew is proving they’ve gotten their money’s worth to date.
If you know the typical positive outcomes your software drives for your audience, especially your consistently renewing audience, you can double down on what’s working for them and hopefully turn more customers into “consistently renewing” customers.
But here’s the tricky part: Learning each customers’ desired positive outcomes can quickly become a heavy lift as a CS leader. Confirming ROI with every customer just doesn’t scale. It takes a crazy amount of customer buy-in to track and share their ROI-focused metrics. In short, CS leaders (and their teams) need lighter-lift methods for proving and owning customer ROI.
Thankfully, this is possible.
5 tried-and-true measurements of CS impact
Top CS pros are addressing these challenges by re-focusing their teams on the metrics that matter—specifically the five below. Yes, it’s a challenge to connect the dots between activity and revenue impact, but it’s worth trying to figure out.
These are the five metrics our experts recommend tracking if you’re done trying to explain your impact and would rather just show it in numbers:
NRR was a key metric for most of the CS experts we consulted. CSMs build customer relationships, drive product usage and adoption to encourage renewal, spot potential upsell and cross-sell opportunities, and identify churn risks—all of which drive NRR.
This metric comes with an asterisk, though. Like GRR, NRR is a lagging metric that reflects recent revenue more than upcoming growth. Teams need leading or forward-looking ways to measure CS impact, too.
2. Customer engagement
An involved customer is likely to be a lasting customer, as one roundtable member astutely noted.
After some customer analysis, they quickly saw that customers who don’t churn meet with them more frequently than those who do. As a result, they use meeting frequency as a health metric and focus on improving each of those face-to-face interactions.
Customer engagement can be a chicken-or-the-egg dilemma—do the meetings lead to engagement, or do those customers meet with CS because they’re already engaged? Regardless, customer engagement was a leading indicator of customer renewal and retention in this case, and therefore points to real-time results for the organization.
3. Product adoption and usage
CS leaders consistently point to product adoption and usage as a primary metric, especially if their team isn’t ultimately responsible for NRR. Habitual usage by most users strongly predicts retention—and CSMs, of course, drive adoption and usage.
One VP of CS points to adoption as the primary metric to track for their team. The point of contact at the customer’s organization assigns licenses to users and invites them to use the product, but the CS team is part of that workflow too.
“We can’t control how many times the users go in and use our software, but we can set the table for them and make sure that the team is assigning licenses.”
—VP of Customer Success at an 8-figure revenue SaaS org
4. Customer advocacy
A customer’s willingness to recommend or endorse your product goes a long way toward measuring CS impact in B2B SaaS. A different VP of CS noted how their company’s target audience relies heavily on word-of-mouth for recommendations.
This individual’s CS team tracks two things related to advocacy: whether customers are willing to serve as a reference for prospects, and also if they’ve recommended the product to someone else. Customer advocacy can take other forms as well, like when a customer is featured in their company newsletter or presents a case study with the company at a conference—this VP tracks those metrics, too.
5. Customer outcomes achieved
At its core, “customer success” stems from whether customers achieve certain business outcomes because they bought your product. If they meet their goals, they’re more likely to stay a customer.
To track customer outcomes thoughtfully, one Director developed a framework so all CSMs work with their customers to answer questions like:
- Which outcomes matter to your customer?
- How is your customer tracking progress toward desired outcomes?
- Is your product meeting the customer’s expectations?
“Customer outcomes are golden measurements that we can quantify and track that will have an impact on the net result of NRR.”
— Director of CS at a $110M+ revenue SaaS org
5 tactics to achieve CS impact and excellence
When the CS function is laser-focused on driving customer value and growth, chances are they also have the receipts to prove their impact.
That impact usually comes in the form of amazing customer relationships, processes that keep customers healthy, and in the best scenarios, both. Our CS experts offer these five customer growth tactics—some people-powered and some platform-powered—to help you excel and show your work along the way.
1. Protect revenue through positive relationships
The eight people at our roundtable all agreed that tracking public customer advocacy should play an important role in renewal conversations. In preparation for conferences and other events, here’s what one VP of CS does:
“We coach customers on the value that they're receiving from our product. It tends to be the thing that we then hear back from them at renewal, and it tends to lead to higher GRR, which is what we're ultimately measured on.”
—VP of CS at a multi-million dollar revenue SaaS org
Another leader says their team measures the flip side of CS relationships—they figure out how to turn at-risk accounts into retained ones. The CS team reviews each contract monthly for potential churn indicators, then CSM creates a customized churn prevention plan, often in partnership with professional services, support, research and development, or even execs.
2. Refine the handoff
Customer relationships don’t exist in a CS silo—they start with the first discovery call. That’s why it’s vital for salespeople to share key details about customers’ desired outcomes during the handoff to CS.
From there, a CSM can quickly validate their customer’s desired business outcomes and hit the ground running. Too often that information gets lost, and CSMs have to do discovery all over again, which is not the best for the client experience.
Instead, document repeatable processes for the sales-CS handoff. Ensure that everyone is on the same page about the customer’s goals, to later report on those outcomes and drive retention.
3. Build success plans to drive verifiable outcomes
In addition to mastering handoffs, that same VP as above emphasized verifying outcomes. For them, their customer base typically wants to reach one of three primary goals, and each one has three “pathways” or sub-goals that correspond to product features. By guiding customers to use those features, the CS team drives desired outcomes, and then shares progress back during quarterly business reviews.
A documented success plan gives CSMs the tools to routinely review customers’ progress toward their goals. Get clear on what your customers want to accomplish, and map out the product features that help them reach those goals. Then, equip your CS team with the tools to help customers gain value from your product.
4. Track CSM involvement in new opportunities
Most CS teams aren’t responsible for closing expansion or renewal deals with current customers, but they often uncover opportunities. Our experts universally encourage leaning into these prime opportunities for CSMs to drive revenue, even if there’s a sales or account management handoff.
The Head of CS Operations at our roundtable explained how their team has honed a process for this. CS passes information about an opportunity to sales, and the sales team records it in Salesforce. From there, the Ops team tracks the opportunity and records that it came from the CSM.
“This is how we know the impact that the CSM has on growth.”
— Head of CS Operations at a $550M+ SaaS org
5. Invest in what moves the needle on retention
To show the connection between activity and account health, look for patterns in the data. Evaluate your different types of customer meetings, like QBRs, escalations, and check-ins, to see which ones move the needle (and lead to renewal) and which ones are a waste of resources.
One roundtable member gave this a go, and their CS Ops leaders then reviewed CSM activity to see how often an account’s health changed.
“If the health score changed from red to green in a quarter, we looked at which activities took place in that account during that quarter that are similar to another account that also went green.”
— Director of CS Operations at a $90M+ SaaS org
This Ops leader’s team also ran statistical correlations to see which of their seven health sub-scores, like product value and strategy, were leading health indicators. From there, they focused enablement efforts on those key dimensions by giving them tools and training to support key conversations.
The future of CS is data—and the tools that capture it
Too many organizations treat CS like a drain on resources rather than the revenue liferaft it can be. But the tools CS teams use every day also often fail to support the growth potential that customer success brings to the table.
CS software historically hasn’t helped leaders implement the kinds of data-driven strategies other GTM teams have at their disposal.
“The marketing and product teams get to run experiments all day long, and they come up with statistically significant outcomes,” Jon explains. “At Catalyst, we want to bring that to the CS world by allowing you to segment your customers, try certain processes on some—not on others—and see the outcome.”
It’s time for tools that put data front and center for not just GTM’s golden children, but for customer success, too.
To kickstart real customer-led growth, you need a platform that connects the dots between your CS team’s activities and the resulting revenue. If you’re ready to see your customer’s data and prove your CS efforts pack a punch, then you need Catalyst. Schedule time with our team today.