What if Customer Success Writes Other Teams’ Goals?
By Russell Bourne
Customer Success is the job of the whole company. We hear it all the time. Sometimes we hear it from frustrated CS Leaders and CSMs who take on all the responsibility of revenue retention but have limited power to control it. Other times we (gasp) hear it from someone claiming that if you build a great product and sell it with correct expectations, you don’t even need a CS function. (Disagree, but that’s for another article).
I’ll let you behind the curtain on this article: I was originally going to write about creating compensation plans - with a focus on CSM plans - which is a relevant topic this time of year and I sincerely hope all you leaders reading this are going to give your downstream teams their goals as close to January 1 as possible. But as I wrote, a shadow crept more and more over the article about all the things CSMs can’t control and I couldn’t ignore it anymore. I had to rip my draft apart and go in a different direction, so here we go.
The Paradox of Controlling Big Goals
Proper goal setting means any goal you come up with is SMART: Specific, Measurable, Achievable, Relevant, Time-Bound. Let’s zoom in on Relevant; Relevant means you should only set goals around things that are important. Ideally, you’re measuring an important business result (an output) rather than an activity (an input). In Customer Success, this almost always means Gross (GRR) or Net Revenue Retention (NRR).
The problem, of course, is there are myriad factors going into whether a CSM’s book of business has a good GRR or NRR result. CSM quality is one, but after that you quickly get into “all the responsibility, little of the power” territory. Can a CSM control it if customers churn or fail to expand because:
The product is deeply flawed?
Sales targets and wins bad-fit customers?
Sales sets unrealistic expectations?
Onboarding is incomplete?
Customer training doesn’t happen?
Support doesn’t fix what’s broken in a timely way?
Marketing doesn’t counteract what competitors are saying to our customers?
No, of course not. Please understand, this isn’t about pointing fingers or de-valuing other teams. This is recognition that everyone in a company should understand where they fit into the bigger picture of keeping revenue up and cost down, and should execute their part. Listen: you have enough competition out there in the marketplace. You don’t need to compete with yourself on top of it. And here’s the dirty little secret: most companies struggle with silos at least, or infighting at worst. So if your company can pull it together, you’re different and you have a head start.
Developing Compensation Plans to Drive Results and Behavior
If a CS department can’t control every factor that makes customers stick around and grow, it’s tempting to create goals - and individual compensation plans - around only things they can.
If you were to do that, a good start would be to look at the customer journey map for one of your customer segments. Survey the touchpoints delivered by someone on your CS team; there may be somewhere around 30, give or take. Now narrow those 30 down to only the very most important ones, about 5 or so. What does that list look like? For a strategic segment, it might be something like: Kickoff call (delivered cross-functionally, but it includes CS personnel), some type of adoption check, relationship checks to ensure you’re multithreading in the account, an Executive Business Review, and a renewal cadence.
These are all valuable and you could reasonably say a CSM is doing a great job if they execute those touchpoints well. Does it therefore make sense to compensate them on whether they did? Probably not - because these are activities, not results:
Compensating on activities falls short of drawing an explicit line between what your team does and the eventual result.
If you base compensation plans on activities you thought were most impactful and you were wrong, you aren’t leaving your CSMs or yourself free to experiment on other touchpoints that might more reliably drive the result.
If you were right, the activities are still valuable as ways of explaining and forecasting results.
Going back to the customer journey, those 30 touchpoints delivered by someone in the CS organization - and I am leaving room for that to include Onboarding and Support as many organizations do - represent the vast majority of the journey. So while ultimate customer GRR and NRR are affected by non-CS roles, CS roles account for the bulk. Someone has to own the number, and CS is the most thorough match.
Branching Out
Given all of the above, how do you account for those key moments where your company’s revenue relies on good teamwork from cross-functional teams? Well, you don’t hold them against your team, and instead you package them up in a collaborative, actionable way.
I strongly encourage all vendors to bucket churn in terms of controllable (by whoever owns the revenue number) and uncontrollable. Examples of uncontrollable churn might be external - like, the customer went out of business; or internal - like, the product didn’t deliver a key functionality it should have. Remove uncontrollable churn when calculating a department’s or an individual’s retention result. Tactically, a CSM’s GRR goal formula could be:
GRR = (Starting Revenue - Controllable Churned Revenue) / Starting Revenue
Make sure you work closely with your Finance team to ensure you’re both clear on how you’ll communicate the difference between total company revenue retained and controllable revenue retained.
Finally, the inspiration behind the title of this article: it’s still massively important to track reasons behind uncontrollable churn. Remember, “uncontrollable” means uncontrollable by a CSM - but maybe controllable by someone else in the company. If you see consistent churn because of product issues, for example, that’s something actionable for your company and your cross-functional leadership teammates. Huddle with your Product or Development leader and show them the data. They’ll appreciate you for presenting a good sample size instead of an endless stream of anecdotes. Collaborate on a plan - including creating goals - where they can fix the issue and you can mutually report upward that you solved a problem and show the revenue saved by doing so. As a CS leader, you’re not literally writing another team’s goals, but in a way you’re constructively dictating what they should be.
There’s been a groundswell of CS leaders becoming CEOs, or of companies creating CCO positions where they hadn’t been before. These leaders are positioned for those roles precisely because of the holistic, company goal centric view as described here.
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Russell Bourne - Russell is a Customer Success Leader, Coach, Writer, and Consultant. In a Customer Success career spanning well over a decade, his human-first approaches to leadership and program management have consistently delivered overachievement on expansion sales and revenue goals, alongside much friendship and laughter. Russell serves on the Board of Gain Grow Retain as co-lead for Content Creation. He is passionate about equipping individual contributors and business leaders alike to lean on their Success practices to grow their careers and help their companies thrive. He holds a BA from UCLA, and in his free time plays guitar semi-professionally.
