How to increase net revenue retention with Customer Success qualified leads (CSQLs) and strategic operations

Why is it that the need for operations in marketing and sales is never questioned, yet Customer Success isn’t given the same allowance?

Organizations invest in MQL and SQL processes without fail. But they stop short of extending that same support to CS generate high-intent leads. Even though CSQLs have a lower customer acquisition cost, faster rate of return, and high close-rate, says Tony D’Auria, industry principal at Valuize, a customer lifecycle consultancy.

In our webinar, “Champion scalable and sustainable growth through the power of Customer Success,” Valuize shares how top enterprises drive market-leading NRR by consistently discovering new value and expansion opportunities through CSQLs and seamless operations.

The Q&A portion of the webinar dug into CSQLs deeper—covering the ideal time to roll out a CSQL model and the biggest pitfalls of its implementation—while also delving into whether CSMs should close upsells, and how to assign CSM books when they own expansion.

How to harness the power of Customer Success to achieve sustainable growth with Valuize Chief Client Officer Emily Ryan and Industry Principal Tony D’Auria

Q: Is there a difference in CSQL growth with B2B and B2C customers?

Emily Ryan: Something that’s interesting in the ecosystem today is we have a push for Customer Success at the B2B size and scale companies. There’s starting to be this sense of maybe we need Customer Success for B2C. My personal professional opinion is that most B2C companies don’t actually require much in the way of Customer Success unless they’re B2B2C. The reason for that is actually product-led growth. B2C has the benefit of directly engaging end users, those consumers of the product. They tend to have a more streamlined user experience that is clearly defined during the marketing and customer journey. But the product itself is what’s engaging those users and really starting to find opportunities to get them to expand. If you’ve got a freemium engagement in B2C, it helps them to unlock that trapped value in your product. There are obviously likely dozens of folks on those customer operations teams building out those engagements with the product organization. But it’s not technically a CS qualified lead. It’s more of a product qualified lead in B2C.

Q: Should CSM roles close upsell deals?

Tony D’Auria: I have seen it. I have worked it as a CSM. I have led it as a leader, and it can work. It is more challenging, I will say that. It does create some tension internally and it can create that confusion for the customer. If your organization is dead set on staying in that accountability where CSMs close the upsell and sales is responsible for only net new, you have to really define that line. If not, then it’s a mix that is going to be challenging. If you are going to have that mix, consider—and I’m going to go back to compensation, you throw money at the problem and sometimes it works—but think about double spiffing while you go through that change management so that there is not competition while people are figuring out how the wheels work and how the motions work. My recommendation is having CSMs qualify and submit those leads for the salespeople to go ahead and close. Otherwise, you’re also getting your CSMs involved in contracts and all of the mechanics of closing stuff in Salesforce. You’re directing them away from what is the most important which really is value and dollars that might support the customer getting value, and increasing that investment so the customer can have value.

ER: I actually did a webinar with a with a chief revenue officer about this very topic on whether blended sales and CSM accountabilities work, and how and when do you pull in a renewals function. I’m right there with Tony. I acknowledge that there are often transitions that companies need to go through or choose to go through that may muddy the waters there with Customer Success. But at the end of the day, think about what are the crucial jobs that your team members need to be doing and why are they doing those. Customer Success exists because of the B2B subscription economy. We found out that when we don’t just sell you something in a big lump sum, you, the customer, don’t have as much incentive to drive your own value. So, when we switched you to subscription and you can drip feed us your money for our product, now the onus is on us, the vendor, to show you how valuable that product is because switching costs for you, the customer, are super low now.

Customer Success was born to fix that challenge and to create a safe space—a Switzerland—inside of your company that doesn’t have direct allegiances to selling you something and also shouldn’t have direct allegiances to fixing broken things. Your CSM organization should be focused on driving value. If they’re not, what are they really? Are they a very expensive support organization or are they a very cheap sales organization? You’ve got to be honest with yourself about that.

I would recommend evolving the organization to have a renewals team member. Depending on the size of your organization and the number of renewals, you can probably add just one if you’re a relatively lightweight company with very few transactions per quarter. Usually, a great renewal sales rep can get through 100 to 200 transactions per quarter, and that can also help you with your upsell motion. But I do recommend keeping your CSMs pointed at driving value realization with your customers because that’s the thing that they were intended to do.

Q: What are the biggest pitfalls when implementing CSQL?

TD: For me, it’s been that role clarity and the change management. It is a big shift for everybody. Making sure that there is that clarity that people are engaged and understand exactly why and what and the benefits and all of that. If you really are aligned organizationally on the mission of high NDR and really rally around that, this is how you get there. Those are the two things that I would say if you’re going to do this, is the accountabilities need to be there, the ownership and the responsibility need to be there, and the change management needs to be there.

ER: The incentivization model, and Tony gave several very good ones. One of my favorites, especially in smaller organizations where you need to make sure that anything that’s renewing within the quarter, renews, like that’s stable takes. Honestly that should be your product team’s metric if we’re really getting into it. The product should renew the customer. The CSM should ensure that the customer is seeing so much value that they expand. Finding the right model to incentivize that without steering your CSMs off the course of driving value, that’s the biggest opportunity to stumble and fall if you shape the wrong behavior.

Q: Have you seen successful models where an account executive owns the client relationship while a CSM offers training and manages product integrations and configuration?

ER: The word owner is always a funky one, for me anyway. It’s so funny, our language matters so much. The owner of the customer is your company. No one on your team owns the customer. The company owns that revenue, owns that customer, owns that relationship, and as a whole ecosystem is accountable for that customer’s success. That’s just an asterisk pet peeve of mine, but I hear you and what you’re trying to say here.

If your CS team is only doing training and doing integration and configuration, they are a professional services team that may or may not be paid accordingly. Professional services is a crucial and valuable team, but if your CS team is not relationship managing and is not unlocking trapped value for your customers, then they’re not a CSM. You didn’t mention CSM, you said CSS. So, it’s possible that this is a services team, in which case the sales and services model, that’s an age-old model, that’s the model that we’ve all grown up with, quite frankly. Sales and account executives managing the relationship ongoing while there is a services and support branch is a perfectly fine functional model, but it is crucially not Customer Success. You can call it Customer Success because everything should be wrapped around the success of a customer, but it’s not CSM specifically, technically.

Q: Do you have any credible sources or source data to help develop compensation plans?

TD: We all come from and have years of experience across our organization ourselves running these programs. We also work with customers, and we learn from them and develop positions based off that. But we also work very closely and are partnered with the TSIA. We get a lot of best practice information, knowledge, and statistics from there. That’s really where we base a lot of this. If I was going to refer, I would say that TSIA would likely be a good source to get some additional research.

ER: That’s exactly where I would point folks to. We do use TSIA as a resource for gathering a lot of information. Their whole job in life is to poll the world and see what the trends are, so that’s a good resource.

Q: How can you emphasize product value and ease adoption for a robust SaaS company?

ER: First of all, let’s make sure that we have a unified understanding of the word “adoption.” A lot of the time, companies synonymize product usage with adoption. Product usage is a very important component of adoption, but it is not equal to adoption. I tell my team and my clients fairly regularly that the word adoption is a great word for what we are doing in Customer Success management—driving adoption. Because the word “adopt” in the definition has the word choice in it. If you think about it, adoption is not just usage. I can tell you, “You have to use Salesforce. You have to use that product.” Well, OK, I’m going to go in and I’m going to use it because I was told I have to, because I have to check these boxes and what not. But if I say I’m going to take away Slack in your ecosystem, now you’re going to say no, no, no, I use Slack. I get so much value out of it. I engage with my team, my friends, my colleagues, that’s where all of my stuff is. That emotional response is the difference between just logging in to use this product because you were told to or because it’s part of your job and adoption, which means I personally, as the user, am getting value directly from this product.

When we try to measure adoption, we should be considering not just the usage, which is an indicator—and low usage is often correlated with low adoption—but figuring out what else is in your ecosystem. Again, going back to that digital engagement. Are your users tuning into your webinars? ChurnZero has a great understanding of adoption based on all of you showing up today. That is a marker of your value that you get from this ecosystem. How do you engage with support? Are you a regular engager? Do you have high will to learn the product or high skill to learn the product? Do you engage with education resources? If I’m suggesting how to emphasize value in your product, it’s really all of these components.

It’s making sure that you have ready-access to a thoughtful support ecosystem, including a knowledge base that’s driven from customer inquiries. That technical documentation, that’s critical. How do I actually use the product? The marketing and thought leadership are part of your adoption of your product. The external engagement, so your CSMs engaging with your customer, your professional services engaging with your customer, your sales organization engaging with your customer, education—all of that, and that digital adoption guidance, so speaking to your customers in use cases in human language that anybody at their company can understand and helping them learn how to unlock value. Doing that stuff and integrating it into your product is another great way to drive adoption through product-led methods of doing that.

There are a number of readily available products that will help you engage your customers directly in app and really just the adoption process needs to be a well-understood thing. We have another competency about organizational change management. How hard is your product to adopt for your clients? The harder it is, the more robust your change management focus should be from either your services team, your onboarding team, and or your CSM organization.

Q: How should you assign CSM books when they own expansion?

TD: Lining up with what your sales org is doing certainly makes sense, but also think about how are you scaling your team. How are you making that fairness and opportunity and workload consistent across the board, and aligning that with the skills of the people on your team based on perhaps seniority or areas of expertise? You could think about that by breaking it by customer segment. I’m not going to use segment names—but small, medium, large—and whether that’s based on the size of the business or the size of the white space or the revenue or whatever it might be, but you could break it down that way.

I have seen it done by region. I’ve seen it done with a bit of a blend, but more of a blend at the enterprise level where you are breaking down enterprise by region so that you are lining up certain enterprise sales teams with certain enterprise CS teams. You can also go by vertical as well if you have certain CSMs that might have a specialty, might be able to speak to a certain audience because of their background or their work experience and even just having the commonality between their customers can really help as well, so that’s a tough one to answer. It’s such a non-answer to say, “whatever makes the most sense for your business,” because any of it can really work.

Bring that lens to it of what is going to create consistency, what is going to enable your team best, and what is going to support and create value for the customer in the best way. All of that can change as you grow and scale. If you start one way, you certainly can adjust over time and say, you know what, it’s consistent across the country or across the globe—which it probably won’t ever be—so we feel comfortable going with that model. I’ve worked at a lot of B2B tech and it’s like the West is huge growth because of Silicon Valley and all high tech. Then the east is high because you’ve got all our finance and pharma and all of that coming out of there. Then it’s the people in the middle that can sometimes get a fewer slicing of clients, so make sure that it is there is consistency there and you support them.

ER: As a startup looking to organize, you will revisit this as you grow, multiple times, so just embrace that. The most important thing that we do at Valuize, is we look at what does it look like to your customer. What does your customer need to get value? Then back into the jobs to be done to achieve that value for your customers, and then slicing that up based on your CSM ratios, which should be based on how much of an effort it is to do all of those things for those companies.

A lot of the time, we see smaller earlier stage startups start with that small, medium, large as it pertains to active revenue coming in the door. But another method is potential revenue to come in the door. If you have a small account with a very big name with a lot of potential, you might give them a higher touch. But really starting with what drives value for customers, backing into jobs to be done, doing a model to understand how much time and energy it’s going to take for CSMs, and then assigning accordingly.

One CSM group that all customers go to can be fine to start. It does depend on how many customers you have and what they actually need. Once you start to get above, I’d say 20 customers per CSM—and this all depends on your product—you’re going to end up eroding that CSM’s ability to directly impact value, so you’re going to want to get digital real quick.

Q: When do you recommend rolling out a CSQL model?

TD: I definitely don’t think that it requires waiting until there is value in what the CS team is doing. I mean certainly the quickest you can get to understanding that across the organization, that’s something you should be championing. Having the support of an organization that understands and values Customer Success really is critical. Start that from infancy, for sure. But as far as pulling in the CSQL framework, think about where the skills are needed most and where your customers are, and where the size of your business is. Because from a scale perspective, you want to keep things fairly clear.

Think about not just where the CS team is in the journey, but where the sales team is in the journey as well. I was at an organization where the CS team was really responsible for CSQL and really bringing that far down the line. Then the pandemic hit, and the sales team was like, well, we’re not getting net new deals, so we want to sell into your accounts. That was great, but it was really disruptive for a little bit.

Thinking about that when you are early in your growth as a company and your scale as a company is, what is the sales team really prepared for? What are they best suited to be doing? What is the complexity of what you’re selling as well? It might make sense to keep that relationship with the salesperson for a little bit longer of an overlap.

It’s never too early to start CSQL if it makes sense for the business based off role, accountability, and making sure that you’re not over-indexing or flooding people with too many responsibilities.

ER: I agree, there’s no wrong time to implement that. But ensure it’s not a distraction from the things that are crucial to your CSMs. You can be pretty lightweight about CSQL. You can even implement just bonus targets against—I think it was the final model that Tony recommended—you are accountable for this much revenue this quarter, and that can be either you retain all of your customers plus a small amount or if you churn somebody you have to make up that amount. That type of bonus structure could be a gentle gateway into CSQL without it being too taxing.