Ensuring CS Success – decisions to make, org structures to consider, who to hire and comps plans that produce results

Fighting Churn Newsletter

What does it take to build and sustain a customer-centric culture in your organization? What are the key decisions to accelerate your progress? What would you do differently if you could build your Customer Success program from scratch?

Path to Customer Success

According to Kristen Engelhardt, Vice President, Voice of the Customer at Salesforce, there are seven key decisions that put your organization on the right path for customer success:

  1. Start small, invest over time – Focus on one topic with one team. Get feedback from customers to establish a baseline. Then, set a single improvement goal. Taking on too much scope too quickly makes it difficult to take action and to make progress.
  2. Create a neutral reporting structure – A neutral reporting structure also enables your CS team to serve the business as a whole, rather than needing to prioritize the organization that provides budget, annual performance reviews, and promotions. We’re going to talk more about potential reporting structures next (keep reading!).
  3. Embrace agile development – Customer feedback changes. Development needs change. Match your development cycle to your feedback cycle to account for continuous changes. And also enable the business to move more quickly.
  4. Create measurement that drives accountability – Make the measurement and supporting data generally available. And then assign an accountable owner to each metric or measurement. We’re going to talk about compensation plans that can help increase accountability and drive results later in this post (so we mean it, keep reading!).
  5. Recognize and reward success – Sometimes the team sharing customer feedback is cast as the “bad news” team. Motivate your team and your stakeholders to stay engaged. To keep driving improvements. Recognize results and the behavior that drives the results.
  6. Don’t fear the feedback – Complaints can drive innovation. Sometimes we try to explain away negative feedback but all feedback is valid because it comes from your customers.
  7. Automate everything – Automating analysis and reporting saves valuable cycles for your team. Free them up from volume work, and focus them on value work through the power of automation. Interested in learning more about intelligent automation for CS Teams? It’s our passion and we’d love to share our experience and advice.

BONUS DECISION: Place a big bet. Set a stretch goal. A goal that scares you. Takes you past a path you can reasonably see. That will force you to change your thinking.

Where does Customer Success belong in the org chart?

Many companies haven’t figured out where customers success fits. Some CS divisions report to the CEO, some to sales, and others to the head of product. Still others to newer executive roles such as Chief Revenue Officer and Chief Customer Officer.

So which is right for your organization? As you can imagine, there are pros and cons to each approach and this great article presents the good and the bad of four possible scenarios:

  • Reporting to the Chief Executive Officer
    • Pros: CS has equal weight within organization, as well as a direct avenue to the CEO and the ability to affect change from the top down. Additionally, CS has the autonomy of a standalone division with its own budget and its own creative strategy.
    • Cons: Siloing CS from marketing and sales can crimp communication and make it harder to get user feedback to the right places. And because CS has its own incentive structure and agenda, it may have a harder time getting other parts of the company that have different goals — such as sales — to align with its own agenda.
  • Reporting to the Chief Revenue Officer
    • Pros: Aligning CS, marketing, and sales under one manager means those parts of your organization are more likely to work together, resulting in more cohesive, thoughtful management of the customer lifecycle.
    • Cons: Sticking CS alongside other parts of the organization that have different incentive structures you risk contaminating the goals of your customer success team and damaging customer relationships.
  • Reporting to the Chief Customer Officer
    • Pros: CS is under an executive charged with improving the company’s relationship with customers. In most cases, the CCO will be one of the few executives with customer relationships at top of mind, which means he or she is incentivized to improve the customer relationship by facilitating communication between their teams.
    • Cons: Again, it’s important to make sure the CS incentive structure is pure, or in other words, not marred by the incentives of sales or marketing. And because CCO is a new position, it’s still ill-defined at most companies. It’s critical to make sure there is a clear directive of fostering the customer relationship in specific ways.
  • Reporting to the Chief Product Officer
    • Pros: CS can immediately feed customer complaints and suggestions to the product team. And while these two teams are typically working to keep the customer happy in separate ways, their goals can often become misaligned and disassociated. Putting them on the same team makes that less likely.
    • Cons: This is the rarest team structure of those listed because while customer success and product are co-dependant in many ways, they go about their goals very differently. Aligning the two teams’ incentive structures and strategies often won’t make a lot of sense in larger companies. But when it does, it’s powerful.

Who makes the best Custom Success Managers?

Hiring the right customer success manager can significantly impact your business. The right customer success managers gracefully balance their own goals and customer relationships. It’s in their nature to be proactive and sensitive, but also to develop deep understanding for products and methods. Eventually, they become a customer’s most trusted advisor.

So how do you make sure you pick the right one?

There are 3 common backgrounds for someone interested in customer success as a career – Sales, Support and Project Management. Each background offers a unique benefit for customer success, and the ideal customer success manager combines the best of each role. Here are the top benefits to look for – and pitfalls to avoid! – when finding the right customer success manager:

  • Background in Sales
    • Benefits: Strong relationship management, comfortable with revenue targets
    • Pitfalls: Managing customers as a pipeline, might reach out to accounts too often
  • Background in Support
    • Benefits: Excellent problem solvers, strong teachers and advocates for their customers
    • Pitfalls: Focusing on customer issues instead of goals, might be more reactive than proactive
  • Background in Project Management
    • Benefit: Deep technical knowledge, solid organization skills
    • Pitfalls: Lack strong relationship skills, might not think long-term

Above all else, find the right candidate for the specific role at your company. With the right customer success manager, both executives and customers will be happy with your business outcomes.

How should you comp your Customer Success team?

There’s wide debate in the customer success discipline regarding the best structure for a CSM compensation plan. And every leader in customer success wants to be sure to use the structure that will produce the best results.

There are three common CSM compensation models: Base Only (pure base salary with no bonus or variable component), Base + Bonus (bare salary with a small bonus structure, usually in the form of a Management by Objective bonus) and Base + Variable (base salary with a variable component to not only reward for performance but also to provide more upside for over-achievement against targets).

Customer Success Comp Models

This super interesting read offers a lot of insights and advice about the shortcomings of the first two models. But today, we suggest you focus on the third model – Base + Variable – as we agree that it provides the best alignment with the core objectives of the CSM team, drives clear accountability for performance (or lack thereof) and generously rewards CSMs for achieving or over-achieving their targets. Dive into this full read for lots of thoughtful guidance on how to build out your variable compensation model.

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