Why Customer Success Leaders Aren’t Getting a Seat at the Table

Product usage as the main indicator of renewal rate is dead. Like NPS, it’s a vanity metric that isn’t actionable.

But customer success (CS) leaders often drive all departmental improvement off those two numbers. Because they’re stuck with these limited metrics, CS leaders will continue to be second-tier leaders on the exec team (if they’re invited at all).

I realize that’s a bold claim. Hear me out.

Let’s imagine SaaSCorp, a company I just made up for this example, isn’t hitting its net retention targets. The head of customer success examines the data and summarizes the main churn reasons as:

• Low adoption or usage of the product
• The champion left the company
• Budget cuts

The proposed solution includes:

• A disciplined QBR process
• Better onboarding
• Support services or technology
• A search for the “magic usage number” (7 friends in 24 hours)

Most of these initiatives will take at least 12 months to start impacting the renewal rate.  So in the meantime, SaaSCorp investigates how to make their customer health score a more predictive measure of churn.

Since low adoption is one of the top reasons for churn, SaaSCorp spends a ton of time feeding usage data into their customer health software. Inevitably what they learn is that usage is a binary indicator of renewal: If the customer is not using the product, they have a high risk of churn. If the customer is using the product, their churn risk is unpredictable.

SaasCorp’s renewal rates either stay flat or slightly increase over time. They certainly aren’t exceeding expectations. And who knows if anything the customer success leader did actually impacted the results…

Sound familiar?

The issue is that product usage, customer advocacy and renewal rates are lagging metrics—and CS leaders don’t have the tools in their arsenal to predict risk and take appropriate action. To move the renewal rate needle, CS leaders must answer questions that will provide immediate actionable information.

So, here are some better questions success leaders can ask customers that would help them understand the underlying behaviors that drive product usage. The answers to these questions will point toward specific action items:

1. Does my champion have the right level of authority, and has that changed?

One of the top three reasons for churn in every enterprise software company is “my main champion left.” Companies assume they can’t predict this outcome, so they’re blindsided when they receive the news.

But companies can significantly reduce their churn risk by tracking:

• The authority of their champion (individual contributor, manager, director, executive)
• The role of their champion (user, influencer, budget holder)
• The strength of influence of the champion’s workgroup or department, and regular probing about the customer’s expected org structure in the foreseeable future

The customer success leader then develops a playbook for each example of a low-quality champion: low-quality title, weak role coverage, minimal org influence or pessimistic outlook on the future.

An example playbook when selling into the enterprise is to follow the 1, 2, 3 Rule. For each account, the CS leader should have one executive sponsor, two champions and three power users. This way, if any of these people leave, the success leader will have enough of a spread to buy time to recoup that lost relationship before it has an impact.

2. Has my product been embedded into existing company processes?

The underlying theme of this question is the customer’s ability to adopt the product in a sustainable way over time. Some companies refer to this as customer maturity, or maturity score.

The CS leader must first define the titles of contacts that are ideal for implementing the product. Often, products will have more success when a specific person or workgroup guides the initial product training, onboarding and implementation.

However, titles don’t always capture the true skills of customer contacts. For example, if a contact has the title of product marketing manager but they’ve done brand design work for the past five years, they may not have the skills or experience to implement and adopt the product. That means each CSM must provide a qualitative score of their contact’s functional skills based on their interactions during onboarding.

Next, the company must understand how their product fits into existing customer workflows. There are generally three workflow scenarios:

1. The customer does not have a healthy workflow in which to insert the product
2. The customer has a rigid workflow that’s difficult to insert the product
3. The customer has a flexible, healthy workflow to insert the product (rare, but hooray!)

Scenario #1 requires the company to invest heavily in professional services that teach best practice workflows. Scenario #2 requires an executive champion to change and enforce a new workflow.

Finally, the company must define and record the minimum dependent technologies required to ensure success. This could be adoption of project management tools, importing code repositories, integrations with key databases, etc. Each of these technology dependencies generally have a poor, good and excellent state which can often be recorded and stored automatically for the purposes of tracking risk.

3. How severe is the ongoing problem that’s solved by the product?

There will be times when your customer feels the pain that your solution solves more intensely, and times when the pain isn’t as strong.

A simple example: Someone in Denver probably feels a strong need for a snowblower in the winter, but they could easily live without one in the summer.

Similarly, a product that aggregates data into executive-level reports will have customers who understand the product’s value more clearly at the end of every quarter, or when they’re advocating for additional resources.

Customer success leaders must document what problem the customer is trying to solve with the product as part of the onboarding process. In other words, why did the customer make a purchase? Each problem-to-be-solved should also include a severity rating on a scale of “This isn’t an important problem” to “I’m on fire—please put out the fire.”

Responses to these questions indicate how likely that customer is to expand or renew in the upcoming quarters. The company will also identify high-risk customers during the onboarding period.

The result? A deep understanding of product-market fit that enables the customer success team to have an authoritative voice when proposing changes to customer personas or product features.

4. How would customers score the service quality from their support team?

A customer’s support team includes their CSM, sales contact, customer support and professional services, and the main interaction points to measure include onboarding, training, QBRs, technical support questions and bug requests.

Asking customers to complete a satisfaction survey after each interaction will just lead to survey fatigue and diminished response rates.

Forward-thinking customer success leaders are leveraging communication analytics tools like natural language processing, sentiment analysis and tone analysis to automatically scan and score the quality of interaction with each point of contact at the company.

Scores are aggregated by person and by customer, which allows companies to:

• Detect problematic interactions early
• Move a customer account to a new CSM or service person
• Give immediate feedback to CSMs or service people

This real-time data helps companies resolve service problems quickly, rather than waiting for the quarterly (or annual) NPS survey.

5. Which features need to be added to make the product ‘complete’?

When customer success leaders can answer the following questions, they become the most credible source of feature requests. For the key champions in each account:

• Is the product feature complete?
• If not, which key features are missing?

Additionally, each account must include:

• Health score
• Renewal date

The result is a dollar-weighted feature and bug request report that allows the CS leader to advocate for the features that’ll have the biggest impact on this quarter’s net renewal rates.

In the past, managers asked CSMs which features customers are asking for—and then they’re inevitably biased towards the “loudest” customers with the strongest personalities. In the future, customer communication (email, chat, SMS) will detect feature and bug requests automatically, then aggregate it for customer success leaders.

Driving strategic discussions with qualitative data

By more deeply understanding customers during their engagement, and by aggregating qualitative data, the customer success leader could have metrics that look like this:

Armed with the insightful data above, customer success leaders can drive actionable strategy discussions with other exec team members:

• CPO: Which features need to be built this quarter to maximize renewal rate?
• CRO: Which customer profiles should we prospect to next quarter to maximize product adoption?
• CMO: What content would address customer’s current biggest challenges, to drive a world-class customer marketing program?
• CFO: What’s the overall risk profile of the portfolio and how has it changed in the last quarter?

Insights like these will help customer success leaders build their reputations as strategic and critical to the company’s performance. Gathering better usage data, implementing a more disciplined CS process and holding more QBRs won’t get to the root cause of customer retention or attrition.

If leaders can instead identify leading indicators to understand the underlying behaviors that drive product usage and the customer’s experience with the product, they can leverage those insights to drive strategic discussions with the CEO and exec team that will actually move the net retention needle.