Achieving Customer Success Maturity: Focus Areas, Pitfalls, and Warning Signs

When you build a Customer Success organization from the ground up, it’s easy to get caught in the trap of doing the wrong things well. In the early stages of your Customer Success team’s journey, where you have little organizational oversight or guidance and the amount of work outnumbers the people to do it, just figuring out the right things to focus on can be a paralyzing challenge – not to mention doing those things right. Chasing the wrong priorities and investments can quickly snowball and compound over time, resulting in stunted progress and flatline growth.

Even for more tenured Customer Success organizations, it’s an ongoing challenge to maintain consistency and perspective in your strategies and processes – keeping the customer at the center of your bustling and expanding operations.

That’s why it’s essential to invest in the people, processes, and technologies that create the most value for your customers and your organization. But pinpointing and breaking down those investments and opportunity areas requires a level of self-awareness and understanding that you can’t gain unless you take a step back to see the bigger picture.

To figure out where you should begin on your growth and scaling journey, it’s helpful to first orient yourself with where you stand using a Customer Success maturity model. In this article, we’ll review Customer Success maturity through three phases: Build, Operationalize, and Transform and discuss the key focus areas, known pitfalls, and warning signs for each phase.

As a precursor to maturity phases below, let’s start with the Pre-Build Phase.

Pre-build phase

You don’t know why your customers churn

In this preliminary phase, you’re still likely trying to reach product-market fit, you can count your customers on two hands, and you have a good sense of your customers’ satisfaction with your service despite not having any formal surveying.

But over time, as your customer base grows and becomes more complex, you find yourself dealing with increasing customer churn, and you have no idea why.

Build phase

Traits: Product-market fit. $6M to $10M of Annual Recurring Revenue (ARR) or ~10 Customer Success Mangers (CSMs)

Activities: Customer segmentation, defined CSM engagement models, defined customer journey maps, alignment between Sales and Customer Success

Key focus areas:

• Get your foundation in order: data and processes
  
  People assume that Customer Success is all about relationships and no science. But the best Sales and Marketing teams (which also have a relationship component) use well-defined processes and data integrations to drive their operations. Customer Success needs to employ these tactics if they want to rise to the same level within the organization.

  You naturally generate loads of customer data – from usage data and payment data to logged tasks, activities, and calls – that often gets overlooked. Creating data is easier than ever but bringing data together in a practical and purposeful way is the hard part.

  That’s why it’s not surprising that companies of all sizes struggle to bring their data into one place. But it’s essential to getting a comprehensive view of customer activity across the company. You need all the relevant data and context to see the big picture of the customer experience.

  For Customer Success teams, the data they need (in order of importance) includes CRM data (basic account details, closed-won opportunity details), product usage data (login history, time-in app), engagements (responsiveness, product feedback), support history (ticket volume, open bug duration), and payment history (unpaid invoices).

• Investigate technology for your Customer Success team

  Once you’ve organized and cleaned your data, you want to put those customer insights to use and increase your operational efficiencies through automation. A Customer Success platform allows CSMs to manage more accounts at a higher level. Increasing the number of accounts that each CSM can manage can save companies hundreds of thousands of dollars in human capital costs and is a prerequisite to scaling down the road.

Common pitfalls:

• You overthink and overengineer

  Overanalyzing leads to inaction and missed opportunities. You make perfection the enemy of progress. In your enthusiasm to grow your team and business, you can unknowingly lose touch with your customers along the way.

  You get an impulse to define your internal processes. You assume there’s a natural alignment between those internal processes and what your customer wants to achieve or experience. But you end up turning your customer journey into an internal process map.

  When this happens, your customers may appear on-track in their journey; they check-off the desired events and activities you want them to experience. But all this progress really tells you is that your internal team is doing a great job keeping up with their to-dos. Since your map wasn’t built from the customer perspective, you have no idea if your customer is getting value within the ideal timeline.

  Whenever you add a touchpoint to a customer map, you must ask yourself: what value does this bring to the customer? If there isn’t value, then remove the touchpoint or rethink your approach.

• Your Customer Success leader builds a team of heroes, not contributors

  When building a Customer Success function from the ground up, the first two or three CSMs you hire will be the ones who work with you in the trenches. With little structure and lots of opportunity to grow, those attracted to this early-stage role are likely problem-solving overachievers at heart – also known as your heroes.

  Of course, you want every new hire to be a hero, but replicating the star-like quality of your founding team is not only hard, but unrealistic. If you try to build that team of heroes and you find yourself saying, “I need someone just like so-and-so” that’s a problem. You need to start prioritizing scaling, and that’s where repeatable frameworks become pivotal to your success.

Warning sign to level up

• You don’t trust your newer CSMs
  
  When you onboard a new CSM, it might be your tendency or inclination to only assign them low-value, uninteresting accounts. But not trusting your CSMs is a sign that you need to level up because you aren’t operationalizing your team.
  

Operationalize Phase

Traits: Up to $20M in ARR or 24 CSMs

Activities: CSM playbooks, customer health scoring, churn risk prediction

Key focus areas:

• Get proactive with customers

  First things first, time-based outreach doesn’t count as proactivity. Being proactive is about finding the triggers that give you an opportunity to take meaningful action. But we often fall short because we struggle to identify those trigger points. Examine your customer activity and the intention behind it. If a customer skips two meetings in a row, is that a trigger?

  We also tend to only correlate proactiveness with negative events. But being proactive should have positive use cases as well. Where do you have an opportunity to celebrate a customer, cross-sell a customer, or introduce a customer to a new resource?

• Successful scaling requires refining and redefining

  As you scale your Customer Success organization, you’ll refine and redefine your operations and practices again and again and again. Customer Success operates as an agile function, but sometimes it’s easy to forget the downstream effects.

  As your strategies and processes change, make sure to involve your team. Trial internal processes. Ask CSMs for feedback as new procedures and content is rolled out. When your team starts to see results from those operational refinements, celebrate them across the organization. If you let people know what to expect, they can survive a lot more uncertainty.

Common pitfalls

• Customer Success isn’t in line with margin goals

  If you’re a CEO, make sure your Customer Success leader knows what your margin goals are for the company. If you’re a Customer Success leader and you don’t know your company’s margin goals, ask.

  You should know what percentage of revenue your company spends on Customer Success. If you don’t, then your budget requests may be viewed arbitrary and one-off. Everyone involved in the process will likely end up frustrated by the budget ambiguity.

  The revenue allocation for Customer Success can be wide-ranging, which makes it difficult to find an average baseline. For example, a complex product or a land-and-expand model that requires heavy adoption will need more Customer Success resources. You need an investment structure, so you know what parameters you can work within, and when justified, stretch.

• Investment in Customer Success operations arrives late

  Customer Success operations becomes financially beneficial when adding a resource focused on process, procedures, and automation more than pays back your investment in that resource. This payback could be through increased revenue retention or the number of accounts each of your existing CSMs manage. If you have a five-person Customer Success team and adding a Customer Success Operations role makes each CSM 20% more efficient, then do it.

• You will struggle to find Customer Success leaders

  If you need to hire a Director, VP, or Chief Customer Officer, get started early. Because Customer Success is a newer department, the executive talent pool with direct experience in both the field and role is small. Focus on creating a bench for yourself by making sure your CSMs see a career path to a leadership position.

Warning sign to level up

• You top out on both logo retention and net revenue retention

  You might be set to cruise control and maintaining your performance but over time, you’ll eventually pick all the low-hanging fruit. The optimizations you make start to have a smaller and smaller impact. You rehash the same ideas. You pull the same tricks. Whatever you’re working on now will have diminishing effects.

Transform phase

Traits: $15M to $20M ARR and up

Activities: Customer expansion focus, customer community engagement, customer advocacy

Key focus areas:

• Corral all your scattered customer resources

  At this phase, you probably have accumulated a great deal of customer resources – such as an LMS, a knowledge base, training materials, support chats, certifications, and so on – that are dispersed across departments and applications. It’s likely intuitive and second nature for you to locate a specific resource, for your customers, it’s a painful and frustrating memory exercise. You put the hard work into creating your resources, so make sure your customers don’t miss out on taking advantage of them simply because it’s too much of a hassle to find them or they don’t know they exist.

• Formally support the voice/need of the customer base

  As your organization grows, its departments will become more siloed. You get wrapped up in managing the day-to-day business and you start to drift away from your customers. To keep your customers at the center, you need to formalize your customers’ voice and needs. Traditionally, this structuring was done through internal webinars, such as lunch and learns or win-lose deep dives. Now, you can use Slack to share a continuous stream of NPS notes, product feedback, and reviews. But it can get noisy tracking of all your various customer responses and outlets. Find a way to distill your customer voice to make sure it gets heard.

Common pitfalls

• You default to a company view instead of a customer view

  As you become busier running the business and more embedded in internal operations, you start to view all challenges from the point of view of the company instead of the customer. You’ll want to maximize CSM capacity. You’ll map customer journeys that prioritize company optimization. You’ll pursue short-term expansion that has side effects of long-term problems. You’ll want to eke out more growth at the customers’ cost. Watch out for these self-centered actions that prioritize efficiency and profit over the customer experience and value.

• You didn’t set yourself up to scale

  You have a team of CSMs who do it all – onboarding, training, renewal, expansion; they are your unicorns. When you think about hiring dozens or even hundreds of people, how will you scale these skills? You can’t, but the good news is that you can introduce role specialization. Think about your team structure. Is a reorganization required?

  As companies start to specialize, a customer might have four or seven different touchpoints. A myriad of POCs creates customer confusion and friction, often marked by miscommunication and the dreaded back-and-forth phone/email transfers.

  This is a reminder that as you specialize, you need to heavily invest in how your teams work together, share information, and hand-off customers. Don’t lose the customer along the way.

Warning sign to level up

• New sales slow and all eyes shift to Customer Success.

  The growth challenge in SaaS is no longer a new sales issue, but a Customer Success issue. Be ready for this. You’ll be responsible for the vast majority of incoming revenue, you’ll have the biggest book of business, and you’ll be responsible for the growth.

Know where you stand

Investing in the maturity of your Customer Success organization isn’t just for the good of your customer, but for the good of your company as well. Knowing that a 1% improvement in retention increases company valuation by 12%, your decision to mature and scale your Customer Success team has real economic impacts for your business.

As you advance through your maturity stages, remember these focus areas, pitfalls, and warning signs to make sure you continue to do the right things and do things right.

Check out our Customer Success Maturity Model to assess your own Customer Success organization’s maturity and find out where you stand relative to your peers.