Planning for Customer Success - Goals

Last week I wrote about how to define a clear set of metrics for your Customer Success team.  Now that you know the metrics you own, you’ll need to translate those into goals for your team.  Metrics are the key numbers you’ll be reporting to your leadership team and board (like churn, expansion revenue, renewals).  Goals are what you’ll use to manage your team to those metrics (like signing up 10 customers for training, closing 5 upgrades per month).  Here is the framework I use to translate metrics into goals.

SMART Goals

A post about goals just isn’t complete without a little note about SMART goals - they are goals that are Specific, Measurable, Achievable, Relevant and Time-bound. So, what does this mean in terms of customer success goals?

• Specific – A goal to “reduce churn” is not specific enough. A goal to reduce churn by 2% this quarter is. Statements like “reduce churn” or “improve revenue” make great company initiatives but terrible goals.

• Measurable – I’m going to tackle this one in it’s own section below, but basically if you can’t measure something, it shouldn’t be a goal. For example, “improve customer engagement”, without a series of surveys and tools, is not a measurable goal.

• Achievable – If your company has only ever had a 50% renewal rate, increasing to a 95% renewal rate in one quarter is probably not an achievable goal. A goal to increase to 60% may be more realistic.

• Relevant – This is where history sometimes gets in the way. If you’ve always given your CSM team a goal of 40 calls a day, that’s great, but if that goal doesn’t help you achieve your metrics, maybe it isn’t relevant any more. All goals should tie to metrics in some tangible way.

• Time-bound – Goals should reflect the timeframe for the changes you expect to see in your metrics. For example, you might want to have monthly goals related to expansion revenue (if revenue for your company is evaluated monthly) and quarterly goals related to customer satisfaction (perhaps because that is how long it takes to gather statistically valid information).

 Goal What You Control

This is a tough area for many customer success teams because they are often responsible for metrics that are pretty broad.  Churn is a great example.  One of my clients, Jazz.co, has the customer success team accountable for the churn metric.  Like many technology companies, churn is impacted by a variety of different things – month-to-month customers who can leave at any time, customers who aren't using the product anymore, customers who dislike aspects of the system, customers who are acquired.  Some of this the team can control (getting people moved to agreements, providing amazing customer service) and some of it the team can only influence (changes to the product). 

Giving a team a goal based on something that they only influence leads to frustration.  It is important to break down metrics into manageable chunks that can be turned into goals.  At Jazz.co, we decided that the 2 biggest things the success team could do to reduce churn were to move customers to annual agreements and to provide solid churn data to the product team.  While the success team still pays close attention to the overall churn metric, goals are based on the things the team can control.

What is Measurable?

Measurable is the M in SMART, and this is one of the areas where I’ve seen companies really mess up when creating goals.  There are some awesome articles floating around about the metrics you "should" be paying attention to (think "10 Important Metrics for SaaS Companies"). Those articles are great to reference, but if you’re working for a start-up, there is a very good chance that you don’t actually have the tools, processes or systems in place yet to translate those metrics into goals.  Alternately, if you’re working for a more established company you may have such an overwhelming set of data that you aren’t sure which most accurately reflects the metrics you’re responsible for.  In either situation, you need to consider a few things:

• Tools – If you aren’t capturing customer information it’s going to be difficult to build goals. If you’re still getting your CS tool set in place or your CRM system set up think about having your initial goals be getting those systems and processes working, then transitioning to metrics-driven goals down the road.

• Methodology – There are lots of different ways to measure things. Make sure you understand what is typical for your industry and consistent with the metrics you’re trying to drive. Your aim should be measures that most accurately reflect the status of your client base.

• Alignment – Make sure that everyone who will be seeing your metrics understands and agrees with how you plan to measure results. It’s no fun to be in a leadership meeting where your results are being questioned because of how you measured them. Get agreement ahead of time.

A final thought - don’t go too crazy with the goals.  People can only deal with about 3-5 goals at a time.  Choose the most important, the most impactful.  Those are the goals that will create exponential growth and change for your team.   

Are you struggling to build or refine your goals?  The Success League can help!

Planning for Customer Success - Metrics

One of the first questions that always comes up at a gathering of customer success leaders is “What are YOUR metrics?” I think this question surfaces because there often aren’t clear metrics for success.  They are too detailed, too few, too poorly defined, or nonexistent.  Newer organizations are trying to get their arms around which metrics their fledgling success team should be responsible for.  In this post I’m going to discuss how to get to a clear set of metrics for your team.  My next post will cover how to translate those metrics into goals.

What Does Success Mean To Your Company?

Before you can really plan out success metrics, you need to have a few meetings to get to the heart of what your company means when they say “Customer Success”.  Schedule time with your CEO, CFO and other key leaders in your organization and tackle the following questions:

What is the experience you want customers to have? Automated and simple?  High touch and exclusive? Drill down until you have a clear understanding of the desired customer experience.

What functions should the success team be tackling?  This varies wildly, so it’s worth asking.  Customer success teams can include account managers, implementation specialists, support engineers and operations people. CSM means different things to different people, so get clarity.

What tells you the success team is doing a good job?  Other leaders in your company may have something specific in mind like regular feature request reports or a certain customer satisfaction score.  Uncover the expectations.

Which Finance Metrics Are You Responsible For?

As a customer success leader, you need to make friends with the head of your finance team! It is important to have a conversation about the metrics you own vs. the metrics you influence.  Typically metrics that fall into the realm of success include:

• Churn or Retention

• Expansion Revenue

• Professional Services

• Referral Revenue

When you find out what you own, that’s the basis for planning your goals.  Get a month-by-month breakdown from finance and ask them to let you know if things change.  Also, make sure you’re involved in building the business plan going forward.

Build A Metrics Plan

Here’s where you get really friendly with Excel. Take all the great things you just learned, and pop them into a spreadsheet. Not a fan of spreadsheets? Customer success is the most metrics-oriented department, aside from finance, in any given company. Learn to love spreadsheets (Lynda.com has great tutorials).  Two things to think about:

Structure – if the result of your conversations with the finance team was a spreadsheet, don’t fix what isn’t broken.  Cut out the stuff that isn’t yours, but otherwise use the structure they gave you.  Otherwise, list months across the top and success metrics line items in the first column (plan over actual). 

Level of Detail – think about metrics (numbers you need to report on) vs. goals (what you to manage your team to).  Build your plan around metrics (churn rate, expansion revenue); goals will come out of metrics (call customers 2x per month, sell 10 upgrades per quarter). Your plan should be at the metrics level.

Once you have your thoughts in spreadsheet format, make sure you review it with everyone you met with.  Does this capture their expectations?  Do they see any issues? Does your plan mesh with the overall business plan? Make sure everyone is aligned.

What If Metrics Don’t Match Reality?

If you’re inheriting a metrics plan you didn’t help to build, this is almost guaranteed to be the case.  Here’s your game plan:

Build a Realistic Plan – take the current plan and create a version that reflects reality.  Don’t just point out the problem; offer a solution by creating an alternative plan.  This needs to be based on recent history and real data because your next step is to…

Review with Finance – take your realistic plan to the finance team and show them where your plan differs from theirs. If your approach is “we all want this to be accurate” they should be supportive of you taking this to…

Review with Leadership – the entire leadership team needs to be made aware of potential issues with the business plan.  With the support of finance, you should be able to guide the leadership team toward an understanding of your company’s customer success reality. And then…

Get Involved in Planning – next year’s success metrics should be built by you.  By bringing to light metrics that weren’t properly planned out, but offering a better alternative, you’ve positioned yourself as a metrics-oriented leader in your company.

Have a customer success metrics challenge?  Share it with The League!