This paper examines how the Customer Success (CS) function represents an untapped area of opportunity for B2B companies. It explains how to update the Customer Success model to avoid lost revenue and profits, and how to achieve exponential growth by delivering greater customer impact.
Download the paper for the complete view of the the mathematics and frameworks that prove these concepts, and for the suggested actions for Revenue leaders.
- Customer Success should be thought of and modeled as a profit center, not a cost center
- When managed properly, the Customer Success team delivers exponential growth, not just additive growth
- Lower churn and higher upsell leads to greater customer lifetime value without additional acquisition costs
- By focusing on higher frequency upsell opportunities, companies can increase their revenue from existing accounts by more than 40%
- By basing the number of accounts per CSM on the time required for each account to be successful, rather than on revenue ratios, companies can double revenue from existing accounts
- CS and company leadership should focus on maximizing profitability rather than productivity, in order to achieve exponential growth.
This paper demonstrates how Customer Success can be a crucial value driver for company growth, particularly in B2B SaaS companies and other recurring revenue models. We also explain why most companies leave this opportunity for exponential revenue growth on the table. By focusing only on the operational metrics of Customer Success, they treat CS as a cost center, rather than the growth driver that it has the potential to be. By understanding the mathematical principles delineated above, leadership at companies looking for sustainable growth will quickly see how the CS function has the potential to drive far more revenue than the Sales function over time.
Once that realization occurs, business leaders will see why it makes far more sense to optimize CS by measuring on revenue metrics such as CLV, upsell rate, and new revenue growth through cross-sell and advocacy influence. This is in contrast to traditional measures such as loyalty scores (e.g., NPS, C-SAT), CS headcount costs, and churn rate, which do not focus on the impact and growth potential that CS can deliver.
CS leaders have the responsibility for reframing their own thinking beyond the traditional use of the function, and showing their executive teams that CS has immense, untapped value ready to be contributed to the business. Those companies with CS leadership that understand these principles, and implement them with proper staffing, skill training, and strategic direction, will ultimately be able to drive significantly more value than their competitors and drive greater value for their customers.
The findings below illustrate the required shift in mindset and how to apply it for growth.
Finding 1. CS is exponential, not additive.
Finding 2. Small improvements have a large impact.
Finding 3. Managers as coaches will improve performance and results.
Finding 4. CS has a significant impact on net revenue.
Finding 5. A well defined, proactive process is the best approach to driving retention and expansion.
Finding 6. Cutting costs in CS by cutting headcount can have a massively negative impact on revenue.