Customer Success Evolution
In case you missed the live webinar with Rahul Parikh, let’s explore some of the elements of the ideal Customer Success structure at various stages of growth.
For purposes of this blog post, let’s focus on an ideal CS Strategy and Leader at three key growth milestones: $1 million ARR, $5 million ARR, and $50+ million ARR. But before diving into the specifics, what are some common elements to consider across all three stages?
Four Pillars of Customer Success
Growth: this encompasses customer insights, adoption, pre-sales experience, and orchestration of renewals and expansions. A critical growth metric is Net Usage Retention, which measures adoption and is an early indicator of Net Revenue Retention (we’ll take a closer look at this later).
Professional Services: PS involves onboarding, ongoing managed services, program management, and operational parts of the partner ecosystem.
Support: a fundamental feature most of us are familiar with.
Community: perhaps a new concept for some, its purpose is to guide your customer through their journey to becoming a hero. This includes best practices, training, customer reference programs, advisory boards, and customer marketing.
Hero Customer Journey — Making the Champion a Hero
Effective customer success is based on customer empathy, which is defined by the Hero Customer Journey. It is called the “Hero Customer Journey,” because it culminates with the champion becoming a hero through promotion or industry recognition. As a CS Leader it’s important to develop an understanding of your customer’s perspective so you can become a trusted advisor. For a closer look at the Hero Customer Journey, head over to Unlock.SurvivalToThrival.com.
Strategy
Leadership
$1 million ARR: At this stage, there may not be a designated leader. The analogy here is the Property Brothers. There is no leader between them. They each have their specialities, but they help each other out as needed. They have a hero mentality that helps them overcome obstacles and delight their customers.
$5 million ARR: Your first CS leader should embody the characteristics of Captain Miller from Saving Private Ryan. His mission is to ensure everyone else fulfills their duties. He’s laser-focused on establishing a beachhead and creating a system resilient to individual failures. This leader will do anything to achieve the goal, even when encountering setbacks. Using Taylor Swift’s words, he is the original anti-hero!
$50 million+ ARR: The role model would be Maestro Leonard Bernstein. His charisma, inspiration, musical genius, strong communication skills, versatility, adaptability, and collaborative approach made him an effective and revered leader in the classical music world. That’s the type of leadership to aspire to at this juncture.
Advice for fellow CCOs — What do CEO’s Care About?
In interactions with CCOs, the CEO is focused on two high level metrics: Gross Churn Rate and Net Revenue Retention. While these metrics are relatively easy to track, they are lagging indicators.
In the meantime, the CCO is tracking all the dials, knobs, and switches that keep customers humming along. These are all the metrics related to the 4 pillars: PS, Growth, Support, and Community.
Good CCOs can bridge the information gap by converting these detailed CCO metrics into the high level metrics that the CEO monitors.
Net Usage Retention — an Early Indicator of Net Revenue Retention
NUR is a new metric that is a leading indicator and predictor of customer outcomes. Most current metrics such as GRR and NRR used to measure performance are lagging indicators that tell the story after the fact. Founders and GTM executives need something actionable today and that is NUR.
Track this metric and experiment with it. It works in consumption based revenue models and non-consumption revenue models. You just have to pick the right consumption variable in the latter model.
For a deeper dive into the evolution of customer success, check out the entire presentation below:
You can also download a PDF version of the deck here.
Contributed by Storm Ventures Team Members: Rahul Parikh, EIR, Tae Hea Nahm, Managing Director and Sam Westmore, Marketing & Operations Manager.
Storm Ventures is a venture capital firm focusing on early-stage investments in B2B enterprise companies. With a wealth of firsthand experience over more than 23 years, they have successfully worked with many founders in navigating the journey from inception to more than $100 million in ARR. Storm focuses on innovative B2B startups in areas such as enterprise infrastructure, cybersecurity, and artificial intelligence with a track record including companies such as Airespace, Marketo, Splashtop, Talkdesk, and Workato.
