Measuring customer success beyond conventional metrics.

In our first article on customer success, we discussed how to move from a basic measure of customer health to a holistic approach to the customer experience. This shift requires aligning, even integrating, sales and customer success teams, focusing on value from first customer contact to value realization.

This approach challenges Customer Success Managers (CSMs) to elevate their role beyond NPS surveys and PowerPoint presentations on product adoption. It also calls for sales people with specific skills such as leading without authority and orchestration.

In this second article in our series dedicated to customer success, we demonstrate that, once integrated, sales and customer success teams eventually turn the same gears. We also introduce advanced methods for measuring customer success that go far beyond traditional measures such as NPS and customer lifetime value.

Sales and customer success: 2 sides of the same coin.

If you’ve read our publication on The World of Sales KPIs, you know that sales leadership starts with answering simple questions related to:

• Business : what is needed to deliver our revenue plan? Where should we allocate resources? Are our territories balanced and optimized? Who are our most valuable players?…
• Deals: are our opportunities real? Are we just seeding or selling big? Does our sales process support our sales effort? Do we know where and why we win or lose?…
• Territories : · what is our territory potential? What is the split between new business and up-sell? How much pipeline can we build?…
• Accounts : are we chasing the right accounts? Do we really know our customers? What is our white space by account and how should we factor it in our sales strategy?…

Once aligned with Sales, Customer Success becomes part of the revenue cycle. It is no wonder, therefore, that once they acknowledge that they need to go well beyond NPS surveys and beautiful reports on product usage, they address similar concerns:

• Business : what do we absolutely have to do to reach our retention target? Where should we allocate our resources? Are our territories optimized against sales patches? Who are our top performers…
• Deals: are our renewal opportunities secured? Are we ready to support sales in selling big? What should we learn from our sales process that we could implement? …
• Territories : what is our territory total churn risk? What is our potential for up-sell and cross-sell? Do we know everything about our total pipeline health?…
• Accounts : are we focusing on the right accounts? What can we know about our customers that sales doesn’t already know? Is our scoring aligned with sales, or are we fighting our own battles…

If alignment were just about removing frictions by clarifying respective roles, it might not be enough to create a Revenue Dream Team. By defining revenue as the ultimate goal and harmonizing missions between Sales and Customer Success, you create a shared purpose and common language. These are the foundations of Winning Teams.

Measure what matters, once again.

Let’s see if you get our point. The following items are symptoms of struggling organizations. Would you say that they characterize Sales or Customer Success?

1. Forecast inaccuracy.
2. Poor or no value selling.
3. Poor field alignment on executive strategy and vision.
4. Massive churn.
5. Substantial losses to competition.
6. Deals that drag on or don’t close.
7. Customer that don’t upgrade or expand.

Although “value selling” can be replaced by value realization, and “deals that don’t close” by renewals that don’t go through or require significant commercial effort, these elements – which feature in our Sales and Marketing Performance Audit – apply to both Sales and Customer Success.

We may have ruffled some feathers in our previous article by suggesting that Customer Success priorities should be overseen by Sales. While this is true in mature organizations, yours may not be quite ready. Start by beefing up the CSMs’ game and focusing on revenue rather than customer health and product adoption. As with sales, this means tracking the following dashboards:

• Retention achievement vs. goals: actual performance by region, unit, team, CSM, account type, products…
• Renewal Pipeline and Forecasts: by region, unit, team, CSM, stage, vertical, account type, products, duration per stage of the sales cycle, average attrition rate. Although sales commit to the numbers, CSMs remain responsible for the health of the installed base.
• Renewal win loss analysis : by region, unit, team, CSM, stage, reason, business sector, account type, products, success rate (pipeline closed won/total pipeline), success ratio (opportunities closed/opportunities lost).
• Activities : by region, unit, team, CSM, stage, business type, vertical, account type, product, activity type, contribution to renewal pipeline, contribution to advancement of opportunities by stage. Caution: activity-based coaching can be counter-productive. Use sparingly for onboarding, development and critical performance conversations.
• Discipline and delinquency : by region, unit, team, CSM, stage, mandatory fields empty, no activity, no next step opportunities stuck in stage, close date in the past, decision-maker untouched, probability or amount reduced. This is the reference dashboard for change management and transforming your CSMs into revenue agents.

Customer Lifetime Value in Real Life.

If you have implemented the above KPIs, you are already measuring customer success beyond Customer Lifetime Value and NPS. You own your role and understand what it takes to make an impact within a customer success organization. That’s a great start. Now, let’s take it one step further.

Some of the following concepts are closely related to those developed around the magic sales formula and the notions of Power, Value, Pain and Shared Vision. After all, customer success is nothing other than the continuation of the revenue war, albeit by slightly different means.

Below, we share some of the components designed to truly measure Customer Lifetime Value in Real Life (CLVRL).

• Customer relationship : this includes access to power, executive engagement completion, champion status, NPS score and customer sentiment, …
• Engagement: multi-year commitment, number of reference calls accepted, leads generated, testimonials, participation in marketing events, completion and publication of a business case, …
• Product adoption : advanced version roll out, early adoption of new products, user satisfaction, number of support tickets open and resolved, vision of the future state or solution mutually shared, …
• Value realization :· project health, on time delivery, value measurement, value alignment with sales promises, achievement of key stakeholders value drivers, agreement on the roadmap to success, …

It’s up to you to be creative: the score for each element within each component can range from 1 to 5, and you can calibrate your metrics and assign weights to different elements and/or components. At the end of the day, the total score and the percentage of achievement indicate your level of CLVRL excellence . You can rearrange the elements, selecting those most relevant to your business situation, or focus only on specific components.

For example, you may choose to focus on value realization and customer relationship, but also include weighted account potential in your analysis. This approach will produce a BCG-type matrix. From now on, it’s no longer sales that shape the conversation, but rather Customer Success introducing new ways of prioritizing accounts!

By fully assuming its role in revenue cycle management and redefining metrics around impact, value realization and proactive engagement with customers, Customer Success does much more than support the sales department in revenue cycle management: it forces it to raise its game too.

Looking for creative ways to boost your operational and sales performance?

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