Even though many C-suite executives are on board with chartering a Customer Success team to focus on customer retention and expansion, they are still figuring out how to fund them. With the goal of being cost neutral, or even a profit center, many are still validating the math on this. Knowing the actual cost of Customer Success team members, and figuring out the way to fund them involves assessing accurate data about time, resources and services, which is best gleaned from customer success tools with time tracking capabilities.
Building a sustainable Customer Success model
As a Customer Success leader, you want to get a handle on the real costs of hiring customer success team members and your ideal ratio of CSMs to accounts. But, it’s not a straightforward or simple calculation. While we all wish there were a magic CSM/account or ARR (annual recurring revenue) ratio, Lincoln Murphy is right to say that the perfect coverage ratio is a myth.
So, how should you approach capacity planning for customer success? There are a lot of moving parts to building a profitable model, but there are three foundational considerations you should start with:
- A realistic and marketable menu of offerings
- Clear role definitions
- A data-supported understanding of actual efforts as they affect actual capacity
Finely Tune Your Menu of Services
At its base identity, Customer Success is the delivery of expert services that your customers need to derive maximum value from your solution. Since every customer is different in its business model and preparedness to implement new technology, each has different needs for deriving that maximum value. These gaps in knowledge and readiness are where Customer Success delivers.
Some of these gaps and the services required to close them are more routine than others. The services most customers will need to attain first value may be considered your standard Customer Success offering. Those services that are either unique to a customer or involve more intensive or complex engagement may become your premium or expert offerings.
Jennifer MacIntosh, VP of Customer Success at Coveo, describes the process of determining her menu of offerings as an “iterate, fail, fast forward” process. She started by identifying the fires that they were regularly putting out and then designed services that could prevent those fires. As a result, she was able to develop structures and packages of offerings that would enable her team to deliver the greatest value to their customers.
“My goal was to figure out how we were going to build a team of trusted advisors, what services we could (and should) offer our customers, and how we would structure and package these offerings to consistently deliver value to our customers.” – Jennifer MacIntosh, VP of Customer Success, Coveo
At Bolstra, we define and distinguish our offerings as Customer Success (standard) and Concierge Services (premium). We have been able to develop this menu of services that distinguishes which services are included within your initial purchase price and which are offered a la carte or premium.
Capacity planning (and monetizing customer success) relies heavily upon the accuracy of this menu. Fine-tuning and tweaking the menu as your solution evolves is par for the course.
Know and Define Your Resources
The WHO of your team is critical to capacity planning. Do your customers need specific types of industry expertise to maximize the value of their investment? Do they need more product/technical expertise to be able to fully configure your software and be adequately trained? Or, is it a hybrid of the two?
Once you determine what skills, or combinations of skills, your Customer Success team must have, align the resources with the menu of offerings. Who will deliver what services? At what costs? In addition to understanding the real costs of each resource as they provide services, leadership is responsible for effectively communicating to team members their responsibilities and holding them accountable for fulfilling them.
Have accurate data on effort and time spent
Capacity planning for Customer Success is impossible without data on effort and time. This is where having a Customer Success tool (software) that tracks time is key to accurate planning. Customer Success platforms that focus largely on aggregating customer usage data (and don’t support workflows) often do not have time tracking capabilities. Knowing exactly how long tasks take and how much time it takes CSMs to get around to doing certain tasks is very important data for effective capacity planning.
Actual capacity analysis includes calculating and assessing Designed Effort (the amount of effort that best practices analyses suggest an account should require) and Effective Availability (the length of time a CSM is actually available to serve a client). These are actual values that require real data about time/effort spent and time available. A Customer Success management platform that doesn’t track time is of no help in developing a meaningful capacity plan.