The Why Of Scaling Customer Success

by Feb 7, 2019Foundations

The fundamental scaling challenge facing a customer success function is relatively simple to state. “How do we provide the most effective guidance and support to all of the appropriate stakeholders across our customer base using the most cost efficient engagement models to ensure the maximum overall improvement in customer outcomes thereby delivering optimum levels of renewal, expansion and advocacy?”

Although simple, this is a comprehensive statement and directly describes the scaling problem faced by a customer success function: specifically how to develop, deploy and maintain an operating model that effectively addresses this challenge.

Before I get to the “how” which I’ll do in my next article I want to cover the ”why” here and look at each of the elements of this statement to make clear why I believe they are the key considerations when developing a strategy to scale your customer success function. In the third part of this series I’ll cover automation and how it can be used to support a scaling strategy.

Effective Guidance And Support

Effective guidance is the success content a vendor provides to its customers to help them realise value from their investment in their solutions and can include pro-active delivery of information such as:

  • Collected best practices from across the customer base;
  • How-to information for each of the use-cases/outcomes supported by the solution;
  • Access to new product information to help with future planning.

Effective support is the essential re-active work a company does via its customer success function and can include:

  • Working with the product team to surface feature requests and/or to advocate for changes benefiting the customer base or the CSM’s ability to serve that base;
  • Acting as a customer advocate, for example by escalating serious client issues internally;
  • Responding to requests for information, for example how to address a specific reporting need;

Over-arching this is the need, often CS led, to ensure the appropriate internal focus and alignment on customer success as an organisational objective as well as a distinct function.


Stakeholders are simply the people with whom a company needs to engage and to influence in order to deliver successful outcomes. This includes key figures and groups such as executive sponsors, business champions, system administrators and of course end users. Each of these has specific needs and the CSM team will need to interact with them, directly or indirectly, appropriate to those needs to ensure good levels of customer satisfaction and an effective customer success engagement.

Cost Efficient Engagement Models

I’ve previously discussed segmentation suggesting that the underlying requirement for it is the need or desire to treat different groups of customers in different ways. Segmentation should lead to engagement models specific to each segment, for example using 1:many programmes such as webinars to deliver success content instead of using CSM led workshops. This comes from a need to use resources more efficiently, typically by ensuring that the cost to serve a segment is proportional to its overall importance to the company.

An engagement model is cost efficient when it delivers an appropriate balance between input costs (CSM salaries, webinar production and distribution costs and so on) and the returns received (1% reduction in churn, improved rates of account expansion and so on). Note that an ‘appropriate balance’ is something that may change over time. A small SaaS company with VC funding may ‘over-invest’ in customer success to ensure the best possible outcomes for its early customers whereas a mature organisation will want to show, as concretely as possible, that their CSM function has a net positive impact on their financial results.

Improvement In Customer Outcomes

For a CSM function a key question is: how do we most effectively measure the overall return of the function such that we can continue to justify the cost to maintain, adjust and over time grow our investment in customer success? Many of the obvious measures (renewal, expansion, advocacy) present difficulties as direct CSM measures. I’ll cover this shortly.

Fortunately there is a fundamental set of metrics that can be measured (relatively easily by a SaaS business / cloud provider and with more difficulty by other technology providers) that are directly and substantially influenced by the customer success team. These are of course the metrics that measure the value generated by a vendor’s solution for its customers. For example, a company that buys a CRM system may target as an outcome increased average opportunity value (perhaps by deploying a better price configuration tool). Once an appropriate baseline is recorded the improvement over time in this metric can be shown and it should be expected that a CSM team, leveraging their knowledge of how best to drive this outcome, can have a significant positive impact on the way and speed with which this is achieved. Aggregating this metric across the customer base and across all of the measurable value producing outcomes for a solution provides a clear way to demonstrate overall improvements in customer outcomes. Other factors are of course at play but as a solid and valuable proxy for the value add of the customer success team this is highly appropriate.

In addition we have well established (although perhaps open to improvement) mechanisms to measure customer satisfaction. The classic tool is NPS which is straightforward to measure and easy to collect. Over time this metric (or similar) can be used to provide a second important validation of the return delivered by the customer success function.

Renewal, Expansion & Advocacy

Companies invest in CSM for entirely selfish reasons. They believe a CSM function will reduce churn, increase expansion revenues and improve advocacy levels. The smart ones understand that this happens because their CSM team focusses relentlessly on customer outcomes and satisfaction and not directly on these internal outcomes.

An effective CSM function is a churn reducing machine but since it’s more or less impossible to measure something that didn’t happen, in this case customers who didn’t churn, it’s very hard to point to number and say with complete confidence – that’s the value of the CSM function in terms of retained revenues. We can guess but it’s not a figure that shows up anywhere in the P&L or on the balance sheet (unlike new business sales or consulting fees). However, we can say with good confidence that improving the value realised from delivering customer outcomes and deep levels of customer satisfaction will in turn minimise churn.

Expansion revenues can be calculated, so if a company’s model provides good expansion potential then this can be measured and at least in part attributed to the fact that the CSM team has delivered satisfied customers that are ready to expand. In most companies though sales will get the lion’s share of the credit for this number as typically they are having the conversations and closing the deals. However, we can again say with confidence that improving the value realised from delivering customer outcomes will at a minimum lead to an environment conducive to an improvement in expansion revenues.

Advocacy is another positive result from good CSM that can be measured in a variety of ways although it’s a tricky one to tie to the numbers that matter such as new business sales as a case study or reference call is only ever one step in a sales process. However, we can again say with confidence that improving the value realised from delivering customer outcomes will lead to an increase in the number of customers willing to be advocates which will ultimately have an impact on new business sales.

A focus on outcomes and customer satisfaction will drive renewals, expansion and advocacy. This is the fundamental proposition behind customer success and fortunately these can all be measured. Effectively scaling your success team to deliver customer outcomes and satisfaction is therefore a critical skill for a company to master.

What’s Next

 A solid foundation of high levels of value being delivered from well understood customer outcomes is the basis of an effective scaling strategy. Now imagine if you could link these outcomes directly to your engagement model, build a strategy around this approach and use this as a basis of segmenting your customers and sizing your team. I’ll look this in my next article and suggest an approach you can use as you develop your own strategy for scaling.

Share This