By Chad Horenfeldt
Customer Success Manager: “I’m really hitting my limit on how many clients I can handle”
Customer Success Leader: “It’s all good. We’re just about to hire another CSM this week and then we’ll offload some of your clients”.
Does this exchange sound familiar? This is what I call Customer Success 1.0 which was primarily geared around account coverage. It emerged from traditional account management which centered on having a single point of contact (the account manager) for every client. Each Customer Success Manager (CSM) would have a set of clients and their job was to do whatever they could to ensure that the client renewed. There wasn’t a lot of standardization of process and CSMs would borrow whatever technology the rest of the organization was using.
How Customer Success Broke Away From Customer Success Management
As SaaS continued to grow it was evident that some of the more successful companies such as Salesforce.com had started to operationalize their approach to Customer Success. They had developed an early warning system that would notify their teams of potential customer usage issues and they also sent emails to clients that provided a summarized scorecard of their product usage. We also saw the emergence of the early Customer Success platforms such as Jbara (now Gainsight) and Totango. They promised a new approach to Customer Success. They allowed CS teams to have full visibility into product usage and to create a task-based alert system on potential issues and opportunities.
Customer Success was no longer just about Customer Success Managers and the heroic work that they do. Customer Success grew in prominence as the impact of client churn emerged and the significance of revenue growth from existing customers became more apparent. It became about leveraging technology. It became about standardizing best practices. It became about leveraging data. Customer Success was transforming from an art form where CSMs were given free reign to manage customers as they wanted to a more scientific discipline. We went from a strictly one-CSM-to-customer approach to one that is radically different today. For example, some organizations created specialized roles in Customer Success by splitting out the renewal component from the business outcome attainment. Others split out the more technical aspects and created technical account managers. One of the drastic and controversial changes was creating a pooled model of Customer Success Managers. Customer Success is no longer defined just by Customer Success Managers. With all of the changes that we’ve seen over the years, Customer Success has become much more complex and the need for a very different role emerged. One that would become the driving engine in the top-performing Customer Success organizations: Customer Success Operations (CS ops).
What is Customer Success Operations And Why is it so Critical
Customer Success Operations is the main driver behind helping CS teams scale. It usually consists of owning the technology, process definition and execution, data analysis, compensation administration, campaign creation, and team enablement. The definition of CS Operations is very broad and you have a lot of variation from company to company. This is part of the evolution of Customer Success and Customer Success Operations.
As companies started to see the impact of operationalizing aspects of Customer Success using standard approaches that were based on data and not on the gut feeling of a CS leader, companies started to invest more in this area. It wasn’t like this was a groundbreaking idea. Other go-to-market functions such as Sales and Marketing had these roles for years. Similar to B2B marketing, it was the complexity of the technology that became available that sped up the need for these operational roles. I happened to live through this as I was an early employee at Eloqua which witnessed the birth of Marketing Operations. I quickly realized that CS Operations would be critical to help us grow and scale. No longer could the CS leader crunch all of the usage data in spreadsheets manually and hope that their teams would leverage it. CS leaders couldn’t wait weeks for a manual export of usage data that was months old. Automated processes that made it easy for CSMs to get access to data they needed and that directed them as to which customer they should focus on was what was required. CSMs were still heroes but now they had someone like Q from James Bond arming them to the teeth.
The Evolution of Customer Success Operations
Once CS Operations started to have an impact and organizations such as Gainsight and others created communities, thought leadership materials, and events around the area, it started to really take off. This role was no longer a red-headed stepchild as compared to Sales Operations. In fact, we saw Sales Operations morph to this new reality by becoming Revenue Operations (Rev Ops). One of the biggest debates these days is not if there should be CS Operations but if it should sit directly in the Customer Success organization or be part of Rev Ops. That’s a debate for another time.
The other major evolution we’ve seen is the timing for adding Customer Success operational resources. It seems that organizations are adding CS Ops earlier and earlier on to support Customer Success teams. Gainsight recently reported that the average number of CSMs to CS Ops is 12:1 with the expectation that this may decrease to 10:1 in the near future. This coincides with the perception of Customer Success Operations. It’s changed from a service organization that essentially took orders and executed strategy for CS leaders to one that helps form that strategy and plays a major factor in the overall decision making.
If you haven’t embraced this evolution or are still new to Customer Success it’s time to wake up and get up to speed on Customer Success Operations. Your CS strategy can no longer just be to hire more CSMs. CSMs are just one part of your overall strategy with Customer Success Operations being a central component of what will determine if you are successful in the long run. What are you waiting for?
Need help developing a scalable customer success team structure? The Success League is a customer success consulting firm for executives who want to build and scale a top performing team. As a part of our Leadership Training Program we offer a class in Planning a Team Structure that includes tools, group discussions and best practices. For information on this and other programs for CS leaders, please visit TheSuccessLeague.io
Chad Horenfeldt - Chad is a customer success executive with 15+ years of experience building and developing high performing teams. Currently, he is the Head of Customer Success at Kustomer. Prior to Kustomer, Chad held CS leadership positions at Updater, Bluecore, Influitive, and Oracle (Eloqua). In addition to writing for The Success League, he also writes regularly on the topic of customer success on his blog The Enlightened Customer.