Customer success managers: How to measure and manage your CSMs

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How should you measure customer success manager performance? Who should customer success managers report to? And what other factors must be considered when implementing a team of CSMs?

No matter where in the world you look, the role of customer success manager (CSM) is being implemented. It is now the fourth fastest growing job in the US, the number one emerging role in Australia, and the sixth fastest growing job in India. Little wonder, that LinkedIn recently ranked ‘customer success manager’ at #6 in its 2019 Most Promising Jobs Report.

Of course, despite the proliferation of the discipline, customer success managers aren’t an ideal fit for every organisation. As we have covered previously, you need to seriously consider whether a customer success manager would work at your company before hiring.

But even if you decide that a CSM would be an ideal addition, that isn’t the only important consideration to bear in mind before you start canvassing for candidates. In the following article, we’re going to examine what needs to be considered before appointments are made in terms of the management and measurement of customer success managers.

Measuring KPIs

One of the most important questions to answer is how performance will be monitored and measured – after all, “what gets measured, gets managed”, so if you’re intending to properly manage your team of CSMs, you’ll need to be using the appropriate metrics.

“It’s a good idea to think about what you want CSMs to achieve early, so that you know what you should be measuring them on,” recommends Kat Fisher, head of customer success at Disciple. “They should also decide on the relevant KPIs for the CS function. Is the company seeing an increasing customer churn that customer success would help tackle? Or is it a question of low Net Promoter Score (NPS) or falling levels of recurring revenue?

“Once you identify the gap and the purpose of the customer success function in your company then set KPIs that contribute or affect the overall KPIs of the business, you will be in a good position to create an effective and integrated customer success function within the organisation.“

She adds: “There are a wide variety of metrics out there for customer success and SaaS as a whole. Each company needs to define what’s right for them.”

By monitoring customer satisfaction levels (via Net Promoter Scores), we are able to monitor how customers are feeling and gauge how likely they are to renew their facilities with us.

With that in mind, MyCustomer spoke with a number of experts and customer success pracitioners to find out what metrics (or blend of metrics) they are using to monitor their performance. It became clear that a customer success manager is often measured against a combination of team and individual KPIs, with several metrics being commonly used, including Net Promoter Score (NPS) and customer retention/churn.

“For my team, customer satisfaction and customer retention are our top priorities,” says Rebecca Roberts, customer success manager at MarketInvoice. “By monitoring customer satisfaction levels (via Net Promoter Scores), we are able to monitor how customers are feeling and gauge how likely they are to renew their facilities with us. This regular feedback provides us with opportunities to address any issues and/or we can use this data to identify customers who are likely to refer us to new businesses; another trackable KPI. A successful CSM leads an engaged, effective and efficient team, delivering high customer satisfaction and retention.”

Fisher adds: “We focus on three core metrics; Net Promoter Scores, retention and speed-to-launch.

“The Net Promoter Score is our guide and temperature check for customer satisfaction. NPS tells us how happy customers are using the product and whether they would recommend this to their friends / colleagues. Word of mouth is critical to growing a brand, especially in a networked company such as ours. At Disciple we’re proud to have an NPS of 50 and our target is to maintain and ultimately aim for higher 80/90s as we grow.”

“Another traditional metric is churn, or customer retention. A key part of the customer success role is spotting at-risk customers early and working to solve their problems early. As we’re working directly with customers we pick up common issues that we can feed back to the product and tech teams to help them develop solutions to improve our platform and help minimise churn.”

“Finally, focusing on efficient processes is key for us so we use speed-to-launch as a metric - the time between a completed sale to having a customer live on the platform. Having moved to a SaaS model in the last year, we’ve reduced this time from months down to days and by the end of the year we’re aiming to get this down to minutes, which will allow us to put more emphasis on post-launch support and helping our customers focus on the core aim of engaging their community.”

Elsewhere, it is common for CSMs to also be measured on more commercial metrics, such as cross-sell and up-sell revenue and product usage.

Reporting structure

One of the key misunderstandings about customer success managers is that the team effectively replaces the service department in the existing company structure.

“This is not a replacement for customer service or customer support ,this is a complementary department with different goals,” emphasises James Scott, general partner at Success Hacker, a consultancy and trainer for organisations seeking to accelerate their growth through customer success. “That is a misconception that some people have – they just relabel a service organisation as customer success. Customer service is a reactive and more transactional apprapoch to dealing with customer questions and challenges and it is immensely important because you need to remove those barriers so that the customer can continue to make progress on their journey to getting long-term value. So it is definitely complementary.”

This then raises the question of where the customer success team should sit within the organisation and who it should report to – whether that be sales, operations, marketing or another.

There needs to be a clear line of accountability up to the c-suite; whether that’s the chief commercial officer, chief product officer or chief marketing officer depends on the structure of the company.

“It really depends on the size and nature of the company,” says Fisher. “Some use customer success as an elevated customer support function where all customer queries go to the CS team in the first instance. In some, Typeform for example, the CS team looks after the highest tier of the paying customers and the rest go to Tech Support. In others, like Slack, CS is part of the wider sales team.

“There is some debate in the industry about where sales ends and customer success begins. I’m personally of the view that sales should close deals and pass them onto CS - as long as both teams work and communicate well with each other, this can work really well.”

She continues: “My team supports the sales team to help navigate some technical questions they get asked but generally the guys close the deal and then it’s over to us. If I hit a blocker somewhere in the onboarding process, we then go to our Tech & Product teams.”

“There needs to be a clear line of accountability up to the c-suite; whether that’s the chief commercial officer, chief product officer or chief marketing officer depends on the structure of the company. Really it depends on whomever is accountable to the board for the delivery of the KPIs and has influence over the sales process and product roadmap.”

Roberts reveals that her company moved the reporting structure for its customer success team after finding a more appropriate fit.

“At MarketInvoice, this role originally reported into the head of operations, as it would in many other organisations. However, recognising how heavily relationship-based the role became, reporting lines changed and the team now reports into the head of sales, working alongside teams responsible for account management and direct sales.

“It’s important that the two teams collaborate to ensure the customer has a positive experience when using our products. A smooth and seamless transition from one team to another is a key requirement for any business that hopes to build a loyal customer base and increase their life-long value to the business.”

Wherever, the team is situated, James Scott recommends that organisations think how the customer success managers can be most influential to the wider business.

“Most commonly they report to service, or directly to the CEO,” he says. “But I often describe the customer success team as ‘the conductor of the orchestra’. They are trying to help everyone in the company think in a more customer-centric way. They are trying to communicate what the company is doing to the customer and communicate what the customer needs are back to those in the business so that the product or service can be improved, or so marketing can do a better job of marketing, and so on.

“So you want them to have a role where they are influencing and interacting with as many different people within the organisation as possible. Their job is to help everyone in the organisation align around driving customer outcomes.”

Other considerations

Other issues that bear consideration before customer success managers are rolled out should include:

  • What do they want that team to achieve; what is the brief; how will this team contribute toward the business’ overall goals?
  • How are you going to train and develop personnel?
  • How are you going to engage and motivate them?

“Once you know the answers to these questions you are closer to establishing the scale of the task (headcount required) and the specific skill-set that you require from the customer success manager/team,” says Roberts.

“Customer success is the key to creating lifelong, loyal customers. Therefore, it is important to take the time to get the right processes in place and hire the people you can trust to manage these important relationships.”

About Neil Davey

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Neil Davey is the managing editor of MyCustomer. An experienced business journalist and editor, Neil has worked on a variety of newspapers, magazines and websites over the past 15 years, including Internet Works, CXO magazine and Business Management. He joined Sift Media in 2007.

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