Crafting an XaaS customer success strategy that drives growth

Any job search platform these days will show there are thousands of customer success (CS) positions waiting to be filled. According to research by Gainsight, a customer success software platform, “companies that invest 10% or more of their revenue into the CS function have the highest net recurring revenue (NRR).”

This supports the argument that there is a need for not only having CS jobs but deploying more of them. Simply put, these jobs serve a critical role in tech companies today.

Like most functions, CS continues to evolve and is not a “one-size-fits-all” model. Deploying the right archetype requires careful consideration to ensure CS teams are focused on the right activities, offer a seamless experience across the customer engagement model and bring value to the end users. Successful companies realize CS is not just a job or even an organization; it is an organizational mindset that includes actions, investments and coordination across multiple departments, including product development, management, marketing, sales, and technical and customer support.

The customer success job archetypes

In an XaaS model, net recurring revenue (NRR) is a key metric for success. It measures the overall impact your existing customers have on revenue generation — more simply, it measures expansion net of churn.

NRR is dependent on retaining and expanding your footprint. If a customer does not adopt and realize value from your solution, they will not renew or expand their contract. This was why technology companies created customer success to drive adoption, usage and value realization about 20 years ago. Since then, many companies have implemented one or more types of customer success roles.

Initially most customer success roles were oriented around adoption or service and were fulfilled by talent from the services organization. However, the adoption sales motion naturally results in retaining customers and expanding sales. Today, many companies are designing more commercially oriented customer success roles that focus on renewals and upselling, and a few even focus on expansion.

Companies mostly deploy two or more customer success archetypes. They usually vary by customer segment, business versus technical focus and sales motion focus: adopt, renew, upsell and cross-sell.

While these jobs may vary from company to company, three primary customer success role archetypes exist:

Adopt CSM

This role predominantly focuses on adoption. It usually also provides insights to help the core seller or renewal role drive expansion or maintain renewals.

This model is common in the enterprise XaaS space and at companies that use consumption-based pricing models that require continuous involvement across the end-to-end customer lifecycle. A pooled programmatic version of this archetype is prevalent in small- and midmarket companies, which use at-risk triggers (business intelligence that indicates non- or underusage, or other risk factors) to deploy CSMs to proactively help solve issues.

Adopt and renewal CSM

This role focuses on adoption and owns or co-owns the renewals motion. This archetype is most common when renewals are reorders (i.e., do not require renegotiation, usually due to fewer competitive threats) and renewal rates are highly linked to customer value realization.

Adopt, renew and expand CSM

Serving as a hybrid seller, this role owns or co-owns renewals and expansion motions in addition to adoption. Some organizations delineate upsell and cross-sell, with the latter often excluded from the customer success remit. In these scenarios, customer success partners with the core seller.

The level of technical or business acumen required for this role will depend on the solution. These jobs can be quite technical for complex infrastructure solutions, or they can be focused on business for more application-oriented solutions.

Customer success archetypes and their deployment will vary across the customer hierarchy. A common deployment includes using an account-assigned adopt customer success role in the upper segments and a pooled, programmatic role in the lower segments.

Customer success job design methodology

The right job design is highly dependent on a company’s land and expand strategy, its deal velocity and volume, and its customers’ needs across the end-to-end engagement model. Companies should not design their customer success roles in a vacuum. Specifically, do not design a role without considering the other sales, renewals, professional service and support jobs.

Consider using the following design methodology:

• Outline ILAER (identify, land, adopt, expand and renew) sales motions and submotions.
• Split expansion into upsell, cross-sell and new department/buyer sales.
• Potentially separate adoption into usage and features.
• Restate renewals as optimization (if selling a consumption offering) or churn reduction (if selling auto-renew contracts).
• Determine customer needs by segment for each submotion.
• Design the appropriate job to fill each customer need, with special emphasis on the core seller.
• Articulate the rules of engagement across all sales and customer success roles.

How a company designs customer success will impact the core seller’s responsibility. For instance, when paired with a renewal CSM, the seller can focus on landing and expanding new business.

In any scenario, customer success becomes another role that the seller needs to work with, so defining responsibilities for all customer-facing jobs, as well as the various rules of engagement are extremely important, particularly when multiple jobs co-own one of the sales motions.

Ultimately, companies must consider the various customer success options to align coverage models with their customers’ needs at the right cost.

The value of customer success plans

In effective enterprise organizations, customer success partners with core sellers to develop and orchestrate a customer success plan toward the end of the sales process or right after the close.

These plans include two key main elements:

1. A launch plan that articulates how to implement, onboard and/or activate a new solution.
2. Customer goals that articulate the customers’ business outcomes, KPIs and measurement from both the customer and company’s perspectives.

Customer success then executes the customer success plan and tracks performance. The customer success manager will also provide the core seller with issues or challenges, knowledge and opportunity feedback that subsequently is incorporated into the account plan. While the account plan is created at the account level, customer success plans should be created for each individual solution being sold.

Leverage an organization-wide customer success strategy

Successful companies realize that customer success is a mindset that places the customer at the organization’s center. The entire organization must prioritize the customer, understand their issues and how its solutions provide value. The organization must unite departments around the singular vision of value-based solutions and demonstrated results.

To properly execute that vision, companies must have coordinated processes, procedures and actions that continually prove value to the customer. Companies that embrace a CS mindset see higher customer satisfaction, loyalty, and ultimately, net recurring revenue.