Uploaded byBrian David Brannon
Building a Business Case for Customer Success
The document outlines the strategic importance of customer success in businesses, emphasizing organizational alignment and funding conversations necessary for scaling such initiatives. It details the roles and responsibilities within customer success teams, metrics for measuring success, and key practices for optimizing customer engagement to drive revenue growth. Additionally, it provides insights into best practices and tools to support effective customer success management.
More Related Content
Similar to Building a Business Case for Customer Success
![Coded Agents – with UiPath SDK + LangGraph [Virtual Hands-on Workshop]](https://cdn.slidesharecdn.com/ss_thumbnails/codedagentsdeck-251215155422-5497c599-thumbnail.jpg?width=640&height=640&fit=bounds)
Building a Business Case for Customer Success
- 1. www.tsia.com Building the Business Casefor Customer Success at Scale
- 2. www.tsia.com • Serves asGainsight’s top customer officer • Professional trajectory: BCG, Bain Capital, Gainsight • Leads the entire post sales organization including CSM, Services, Support, Operations and other teams. • Allison’s weekly Customer Success blog on Gainsight.com is considered required reading for customer success pros and she was recently named one of the 50 people you should know in sales and business development. Allison Pickens VP Customer Success & Business Operations apickens@gainsight.com
- 3. www.tsia.com • Has heldsenior leadership positions in service sales, service product management, and service operations • Professional trajectory: Accenture, Veritas, Symantec, Infor • Led teams of Customer Success Managers (CSMs) focused on driving customer adoption and retention • Managed and monetized on-premise and cloud customer success portfolios Phil Nanus VP Research, Customer Success phil.nanus@tsia.com
- 4. www.tsia.com Agenda New organizational alignmentfor customer growth The critical funding conversation 7 steps to scale Customer Success
- 5.
- 6. www.tsia.com TSIA is theworld’s biggest vault of… Technology services data insight & best practices. Everything you need to optimize your service organization in one place.
- 7. www.tsia.com Our Unbiased IndependentResearch Model 7 155 Operational Best Practices Audits 9.6K Analyst Inquiries 1,310 Benchmark Analyses 1M Benchmark Data Points 548K Survey Data Points
- 8. www.tsia.com • Improving servicemargins • Increasing product & service revenue growth • Optimizing organizational structures • Improving customer adoption & value realization • Innovating service delivery and experience • Successfully transitioning to the cloud • Designing profitable XaaS offers To solve these problems…
- 9. www.tsia.com A Peer NetworkLike No Other 9
- 10. www.tsia.com Learn From OurThought Leadership 10 Our New Book! 201320112009 Best Sellers – Amazon Tech Category
- 11. 7 Steps toScale Customer Success
- 12. www.tsia.com 7 Steps toScale Customer Success Charter Financial Model Practices Metrics Skills Offers Technology 12
- 13. www.tsia.com 7 Steps toScale Customer Success Charter Financial Model Practices Metrics Skills Offers Technology 13
- 14. www.tsia.com TSIA Customer EngagementModel Land: All of the activities required in selling an offer to the customer and the initial implementation of that offer Adopt: All of the activities involved in making sure the customer is actually adopting the solution that was implemented Expand: All the activities required in helping current customers expand their budget spend with the company Renew: All the activities required to ensure the customer renews their current relationship with the company Land Adopt Expand Renew 14
- 15. www.tsia.com Charter of CustomerSuccess What is your primary charter of customer success? 45% 45% 10%Adoption Renewal Expansion 15 Source: TSIA Customer Success Baseline Survey
- 16. www.tsia.com Charter of CustomerSuccess What is your primary and secondary charters of customer success? 35% 44% 22%Adoption Renewal Expansion 16 Source: TSIA Customer Success Baseline Survey
- 17. www.tsia.com CSM Expand Responsibility PrimaryResponsibility Today Primary Responsibility in the Future Account Executive/ Sales Rep Industry Specialist/ Product Sales Specialist Technical Account Manager/ Project Manager Customer Success Manager Renewal Specialist 61% 3% 12% 24% 0% 37% 9% 18% 30% 6% Expand Expand Source: TSIA Expand Selling Practices and Metrics Survey 2015 17
- 18. www.tsia.com 7 Steps toScale Customer Success Charter Financial Model Practices Metrics Skills Offers Technology 18
- 19. www.tsia.com Funding Model forCustomer Success 19 Cost of Goods Sold These are the costs associated with making, installing, and supporting the specific instance of the product purchased by the customer. Sales and Marketing These are the costs to acquire and retain customers. Research and Development These are the costs of developing new product capabilities. General and Administrative These are the costs left over that don’t fit neatly into one of the previous buckets.
- 20. www.tsia.com 7 Steps toScale Customer Success Charter Financial Model Practices Metrics Skills Offers Technology 20
- 21. www.tsia.com 21 Segmentation forCSM Coverage 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Account Size Geography Customer Line of Business Growth Potential Product Touch Other Source: 2016 TSIA Customer Success Baseline Survey
- 22. www.tsia.com CSM Activities 22 0% 10%20% 30% 40% 50% 60% 70% 80% 90% Cross Sell/Upsell Lead Generation Oversight for initial Implementation Customer Training Value Visioning Success Plans Conduct Quarterly Business Reviews Renewal Provide Customer Best Practice Material Monitoring Adoption Onboarding Execute Individual Get Well Plans Source: TSIA Customer Success Baseline Survey
- 23. www.tsia.com 7 Steps toScale Customer Success Charter Financial Model Practices Metrics Skills Offers Technology 23
- 24. www.tsia.com 27% Customer Success Metrics ChurnRate Renewal Rate Expansion Rate Source: TSIA Customer Success Baseline Survey 9% 89% 24
- 25. www.tsia.com 25 What isthe impact of Customer Expansion and Retention Costs? Customer Acquisition Costs These are sales and marketing costs associated with acquiring new XaaS customers. Customer Expansion Costs These are the sales and marketing costs associated with expanding revenues with existing customers. Customer Retention Costs These are the sales and marketing costs associated with renewing existing customers.
- 26. www.tsia.com Median Ratio CSM Ratio 13:1 ARR $2.5M Source:TSIA Customer Success Baseline Survey 24
- 27. www.tsia.com What is yourAccount to CSM ratio? Adopters 15:1 Retainers 66:1 Expanders 8:1 Source: TSIA Customer Success Baseline Survey 25
- 28. www.tsia.com Revenue Attributable toCustomer Success 1. CSM-qualified leads (CSQL) for Sales 1. CSM “Save” • Red to Yellow 2. CSM “Win” • Yellow to Green 1. CSM Qualified Advocacy (CSQA) 1. Sales References 2. Testimonials 3. Events 4. Referrals 5. Repeat Purchaser 2. CSM in sales cycle ExpandRetain Land+ +
- 29. www.tsia.com 7 Steps toScale Customer Success Charter Financial Model Practices Metrics Skills Offers Technology 29
- 30. www.tsia.com The Trinity ofCSM Skills Customer Success Manager Functional Technology Customer Service 30
- 31. www.tsia.com Where do CSMscome from? 40% 32% 3% 41% 31% 27% 9% 17% 30% 10% 20% 40% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% Adopters Retainers Expanders Customer Support Professional Services Sales and Marketing Other 31 Source: TSIA Customer Success Baseline Survey
- 32. www.tsia.com Higher Subscription Renewal Rateswith a CSM 10% Source: TSIA Customer Success Baseline Survey
- 33. www.tsia.com 33 Expand SellingLandSelling Adoption Renewal Customer Success Sales Sales1 Sales 2 3 4 Sales/Customer Success (shared) Renewal SpecialistSales Customer Success Renewal Specialist Customer Success SalesSalesSales Sales Sales Customer Success Sources: TSIA 2014 Customer Success Baseline Benchmark; SRG Pulse Webinar Sept 2014; SRG Executive Forum Sept 2014 What Customer Success Engagement Model are you using?
- 34. www.tsia.com 7 Steps toScale Customer Success Charter Financial Model Practices Metrics Skills Offers Technology 34
- 35. TSIA Emerging OffersStudy ADOPTION PLANNING CONSUMPTION MONITORING CONSUMPTION OPTIMIZATION PROCESS CONSULTING • Vision & strategy alignment • Onboarding • Governance / Decision making authority • Adoption/usage monitoring • Adoption scoring • Adoption benchmarking vs. peers • Business KPI monitoring • Business KPI scoring • Business KPI benchmarking vs. peers • Industry-specific business metric dashboards • Customer success manager • Account reviews • Feature deployment & utilization assistance • Industry-specific feature utilization training • Assessment/audit of current state/goals/gaps • Best practice playbooks • Success story webinars • Web-based workshops • Super user programs • User group meetings • Performance optimization based on best practice insight • Capacity analysis & optimization based on best practice insight • Business or workflow process improvement • Best practice consulting / advise • Co-develop new capabilities with customers to deliver innovation to the market 35
- 36. www.tsia.com 42 A CloserLook at…
- 37. www.tsia.com Monetized Customer SuccessOfferings Source: Workday, SAP – SuccessFactors, Symantec 37
- 38. www.tsia.com Customer Success Monetized Offers- Observations 38
- 39. www.tsia.com Monetized Offers -Observations Support Services 39
- 40. www.tsia.com Monetized Offers -Observations Education Services 40
- 41. www.tsia.com Monetized Offers -Observations Professional Services 41
- 42. www.tsia.com Monetized Offers -Observations 42
- 43.
- 44.
- 45. www.tsia.com 7 Steps toScale Customer Success Charter Financial Model Practices Metrics Skills Offers Technology 45
- 46. www.tsia.com 46 Intelligent Search Knowledge Management Proactive Support/Intelligent Diagnostics CRM/Incident Management Recurring Revenue Management Reporting/Analytics Consumption Monitoring Contract/Entitle ment Management Upsell/ Cross-sell Voiceof the customer Customer Facing Layer Productivity Layer Infrastructure Layer What Technology Solutions Are Necessary for Customer Success? Technology is incredibly important to customer success organizations. Various platforms and applications are required. TSIA has identified 10 separate application categories recommended for highly productive, scalable Customer Success teams.
- 47. www.tsia.com CommunityExpertisePlatform Gainsight: Powering theCustomer Success Movement Leaders & Innovators Proven Results 5 Points Growth 4 Points Churn 45
- 48. www.tsia.com 5 Pillars ofCustomer Success 46
- 49. www.tsia.com PROSSEGMENT High Touch Mid Touch Tech Touch ENTERPRISE MID-MARKET SMB HIGHPROFILE QUICK LIFT LIMITED CHANGE MGMT. PARTNER DIRECT Customer Success Strategies 47
- 50. www.tsia.com Gainsight Customer SuccessPlatform Support Marketing PSA Web Finance DB API Surveys SFA Strategic Customer Management Proactive Customer Management Scaled Customer Management Early Warning System 48
- 51. The Critical FundingConversation
- 52. www.tsia.com Monetize Customer Success49% Source:TSIA Customer Success Baseline Survey
- 53. www.tsia.com Key Questions • Whatis the target financial model your company is attempting to achieve? – COGS, COS, Sales and Marketing, R&D, G&A • What responsibility does Customer Success have? – Traditional Support – Adoption – Renewing the customer’s subscription – Cross Sell and Upsell or lead generation • What are the economic drivers per resource? – ARR coverage for renewing and expansion of existing customers and new customers – On Target Earnings – Ratios 53
- 54.
- 55.
- 56. www.tsia.com Key Questions • Whatis the target financial model your company is attempting to achieve? – COGS, COS, Sales and Marketing, R&D, G&A • What responsibility does Customer Success have? – Traditional Support – Adoption – Renewing the customer’s subscription – Cross Sell and Upsell or lead generation • What are the economic drivers per resource? – ARR coverage for renewing and expansion of existing customers and new customers – On Target Earnings – Ratios 56
- 57. www.tsia.com Funding Customer Success 57 FiveQuestions 2 3 4 5 Support Adoption Own Renewal Expansion Y Y Y Y Subscription Revenue 100% COGS 25% Datacenter, Etc. 15% Support 10% 10% GROSS MARGIN 75% Sales and Marketing 30% CAC (65% of S&M) 19.5% CEC (15% of S&M) 4.5% 4.5% CRC (20% of S&M) 6.0% 3% 3% R&D 15% G&A 10% OI 20% 20.5% Total % of Revenue Allocated to Customer Success 1 YOUR TARGET FINANCIAL MODEL Source: Framework for Funding Customer Success
- 58. www.tsia.com Sales and MarketingEffectiveness -70% -60% -50% -40% -30% -20% -10% 0% 10% 20% 30% 40% 50% 60% Sales & Marketing as % of Rev Rev Growth 58
- 59. www.tsia.com Key Questions • Whatis the target financial model your company is attempting to achieve? – COGS, COS, Sales and Marketing, R&D, G&A • What responsibility does Customer Success have? – Traditional Support – Adoption – Renewing the customer’s subscription – Cross Sell and Upsell or lead generation • What are the economic drivers per resource? – ARR coverage for renewing and expansion of existing customers and new customers – On Target Earnings – Ratios 59
- 60. www.tsia.com Sales Rep vs.Customer Success 60
- 61. www.tsia.com End Game Coverage UNLIKELYTO EXPAND LIKELY TO EXPAND LAND SALES ACCOUNT MANAGER CUSTOMER SUCCESS MANAGER LAND ADOPT EXPANDRENEW RENEWAL SPECIALIST SMALL EXPAND SPECIALIST LARGE EXPAND SALES ACCOUNT MANAGER 61
- 62. www.tsia.com Renewal Responsibility 36% 2% 36% 24% 2% Sales Responsibility forRenewal Sales/Account Exec Outsourced Renewals Renewal Specialist CSM Channel Partner 40% 20% 13% 25% 2% Admin Responsibility for Renewal Sales/Account Exec Renewal Operations Renewal Specialist CSM Channel Partner Source: TSIA Customer Success Baseline Survey 62
- 63. www.tsia.com LowAverageHigh % of TotalSales & Marketing <100M Annual Revenue 10% 20% 30% 40% 50% 60% 70% 0% Customer Acquisition Costs (CAC) Customer Retention Costs (CRC) Customer Expansion Costs (CEC) Source: Pacific Crest, TSIA 63
- 64. www.tsia.com The Accounting ofCustomer Success Sales and Marketing – CS Delivery Costs/PM/Other COGS/Cost of Services – CS Delivery Costs General and Administrative 8% Source: TSIA Customer Success Baseline Survey 36% 56% 64
- 65.
- 66. www.tsia.com 66 Scenario • ARRGrowth Is the Goal • Two Teams: Land Team and Growth Team • Services and Success Part of Growth Team
- 67. www.tsia.com 67 Why WeThink It Will Optimize Profitable ARR • Expand and Renewal will be maximized • Sales will focus more on Land • Revenues will be diversified • Processes can be more easily automated
- 68. www.tsia.com 68 The ProcessOwns the Customer! TSIA Believes…
- 69. www.tsia.com TSIA’s 1st StepOrganization Structure – 3 “Teams” 69 SUCCESS SCIENCE CUSTOMER SUCCESS FINANCE/ ADMIN CEO LEAD GEN CUSTOMER ANALYTICS SERVICE REVENUE GENERATION EDUCATION SERVICES SERVICE DELIVERY MARKETING PORTFOLIO MANAGER CUSTOMER GROWTH OFFER DEVELOPMENT INFRASTRUCTURE MEDIUM RENEWAL SPECIALISTS LAND SALES VERTICAL 2VERTICAL 1 SALES RESOURCES SALES RESOURCES LARGE SUCCESS MANAGERS SMALL SMALL EXPAND SPECIALISTS INDIRECT SUPPORT SERVICES EfficiencyEffectiveness Tight Alignment 1: Land Team Tight Alignment 2: Customer Growth Team Tight Alignment 3: Infrastructure Team
- 70. www.tsia.com Two XaaS PlaybookAssertions The act of selling will undergo radical change. Delivering and measuring customer success will become a defining characteristic of market leaders.
- 71. Contact Information Phil Nanus VPResearch & Advisory Services, Customer Success, TSIA phil.nanus@tsia.com +1 407 547 3150 @philnanus
- 72.
- 73. www.tsia.com 73 Get therefaster. Advisory Sprints Leverage TSIA research executives to assess, identify operational gaps, apply proven frameworks, overcome specific business challenges, and accelerate transformation. Workshops Align leadership with discipline specific and cross functional engagements. Get board ready insight, thought leadership, and best practices from TSIA industry experts. Speaking The latest insights for state of industry and market trends right from the executive research source. Hours Days Months
- 74.
- 75.
Editor's Notes
- #5 ------------TALK TRACK--------- The reason why 80% of the Fortune 100 tech and companies worldwide from SMB to Enterprise, bank on TSIA insight, is because we higher the brightest, most experienced minds to drive performance benchmarks, uncover powerful correlations between data and best practices, craft proprietary frameworks, and connect them to something they have never had before...
- #7 Over the last decade we have created the world’s largest vault of technology services data insight and best practices. The idea here is that you have one place where you can go to find what you need to design, optimize, scale, and innovate your technology services. And because this data is fueled by the greatest community in the industry, you don’t have to do it alone.
- #8 ------------TALK TRACK--------- Since TSIA’s inception, we have… Published 8 books on Technology Services, including the recent release of the popular Technology-as-a-Service Playbook and bestsellers, B4B, Consumption Economics, and Complexity Avalanch. Conducted in-depth, on-site assessments of 1555 enterprise service organizations include several Fortune 100. Provided expert responses to research inquires by over 9,600 service executives Benchmarked the operational and financial performance of over 1,350 service organizatoins inside the world’s leading product companies Overeen the industry’s largest library of 1 Million service industry benchmark data points Published trend and best practice insights from 548,000 survey data points
- #9 Why all this effort? We want to solve problems. I have been there and our entire team of research executives have been there—sitting where you are right now, facing serious challenges. It never gets old for us to experience the power of data insight and it’s role as a great equalizer and forcing function for positive change. We want to help you wield that data to improve your service margins, optimize your organizational structures, increase adoption and value realization, make a successful transition from on premise to the cloud, and design profitable XaaS offers when you get there. But the data will only get you so far. That’s why we’ve worked so hard to connect you to…
- #10 Here are examples of the companies we work with. Updated 10/2016 Our legacy is in the IT industry, and we have hundreds of members in this sector. We also have focused communities in several industry sectors that we are actively growing, including Industrial equipment, Healthcare, and Cloud/SaaS.
- #11 Thought Leadership: We take a very forward-looking view on the technology services industry and publish our perspectives and predictive guidance in books which have each achieved best seller status on Amazon in the technology category.
- #59 TSIA’s Executive Director, Thomas Law, hosts the Technology & Services 50 webinar on a quarterly basis. It takes a look at public data of 50 of the top names in technology to help our members look at overall trends. In April the Q1 2016 version was launched and we shared the slide below around ‘Sales Effectiveness’. The data on this slide tells us that there is no correlation between the cost of Sales as a percentage of overall revenue (blue line) and topline revenue growth of the company (orange line). There are only a small number breaking 10% growth. It is fair to assume that shareholders, boards of directors, and executive teams will not allow the inefficiencies in the sales model to persist. Also, it wasn’t just Q1 of this year, you can look back at this data in previous quarters and continue to see the non-correlation.
- #74 TSIA Strategic Service is a deeper level of membership that can dramatically increase the effectiveness of your organization in a short period of time. We offer three distinct services beyond your standard membership with virtual and onsite delivery by our research executives. As a member you’ll have access to engage beyond standard services with TSIA industry experts and thought leaders that deliver compelling Speaking Engagements and powerful Workshops, aligning leadership with board ready industry insight, addressing the urgent issues of today, and helping to craft a winning strategy for tomorrow. You can also run Sprints to identify gaps and current adoption levels of company practices with Assessment that will help you define and prioritized the initiatives necessary to close those gaps. Run Outcome Sprints with TSIA research executives that apply proven frameworks to overcome specific business challenges and accelerate transformation.