Is Customer Success Even Important?

“Just as ripples spread out when a single pebble is dropped into the water, the actions of individuals can have a far-reaching effect.” ~ Dalai Lama

It’s budget season, and you are looking at organizations within the business that are cost centers to consider making some cuts. One area you may consider is the Customer Success team.

This is for many reasons, but it centers around having a tough time proving an ROI on the work that they do. So, in order to understand how important having a strong Customer Success team is, let’s talk about the fallout from losing a  customer.

For this example, let’s assume that they made the decision to move on due to low usage rates, not having the right level of support and to make matters worse they have already signed with a competitor. Their contract is a 2-year contract for $100k that is coming up for renewal at the end of Q2.

Here are the hard numbers associated with losing that contract renewal:

  • Lost $50K of annual recurring revenue
  • Customer success team (if one is in place) spends time working on an account that has already made its decision, thereby wasting valuable capacity that could be spent on other accounts
  • Account rep losses out on working a good account and they are now working a disgruntled and lost customer

Soft cost associated with the contract: 

  • Any chance of upsell or cross-sell is lost
  • The new business team is now responsible to make up the difference in lost revenue
  • Customer who was either impressed or impartial now recommends against your product in the market

This sucks and it really hurts the organization from a revenue perspective and overall momentum. The craziest part is this entire situation most likely could have been avoided without any significant amount of time or resources required.

Let’s walk through what this process should look like:

Develop a health score

Look at past customers who have renewed and past customers who didn’t renew. Segment them using different variables and the actions that customer success, service and account managers took against them. Here is a possible template:

  • Product usage (40%): Frequency of logging in, number of active users, and utilization of key features.
  • Engagement with support resources (20%): Number of support tickets submitted, resolution rate, and satisfaction with support provided.
  • Participation in training sessions (20%): Attendance in webinars, workshops, or online courses to improve product knowledge.
  • Responsiveness to communication (20%): Open rates of email communications, response to surveys, and involvement in product feedback or beta testing.

Ta-da, we have a health score. Once the health score is created, iterate against it. Overall, the health score is not the huge determining factor. It is merely your compass that says –

“You’re going the wrong way, you’re a bit off course, or you’re spot on, keep going.”

Develop prescriptive activity aligned to health score segments

Welcome to the hard part. This is determining not only where each company sits on the health score, but ultimately, what sales play(s) should be run against it.

This is where your Customer Success team provides significant value. Inspecting what you expect out of this process, and the results of it, can not be stressed enough. Nailing the alignment of sales plays for each health score customer segment is the biggest piece of the puzzle.

Here’s what some of those sales plays might end up looking like:

  • High-risk customers: Develop targeted interventions, such as personalized training sessions, product walkthroughs, or check-ins to address their specific pain points and improve their overall experience with your company. Show them you value their business, go above and beyond
  • Moderate-risk customers: Conduct periodic check-ins to understand their needs and challenges, and offer resources or assistance to help them get more value from your product. Show them why you’re the right fit for them and make it impactful
  • Low-risk customers: Establish regular communication checkpoints and share updates, new features, and success stories to keep them engaged and informed. Show them you want to grow your business together and continue offering them value

Do these all look or sound like a foreign language to you?

Don’t know where to start with the most effective sales plays or how to move at-risk customers to satisfied advocates for your business?

Give us a call, this is right in our wheelhouse. Otherwise…

Let’s get to work.