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Each day, I talk to members of TSIA’s Customer Success and Support discipline, and while the topics of those conversations are unique to each member, I have noticed some common struggles. This year alone, I have seen more members set up customer success organizations than ever before, which confirms what we already know: customer success is not just a growing trend, but is here to stay. When I work with our members on defining their charter, discussing key KPIs, compensation for Customer Success Managers (CSMs), and organizational structure, I test on a number of practices, but one practice in which I see the most weakness is in customer success funding.
Based on these conversations with our members, it is clear that a majority of companies do not have a model to determine how much money should be spent on customer success. Without a solid funding model to work from, these teams are set up for underfunding, lack of clear direction, and worse, failure.
Whether you have a new CS team or are streamlining your existing organization, work together with your colleagues and consider the following key questions when establishing your funding framework to determine what will work best for your organization.
Here are a few questions to help you get started in building a customer success funding model that works for you and your company:
To answer this question, you’ll need to determine if the model is sustainable and can be profitable. Decide how much can you afford to spend on sales and customer success and still be a profitable company.
The answers to these remaining questions will determine whether or not the funding aligns with your team charter. Are they responsible for Adoption, Retention, and Expansion? Depending on your company, these teams can be responsible for one, or even all three of these charters. In many XaaS companies, for example, the allocation from subscription revenues is larger if the charter includes all three.
You should also consider if there are other tasks your customer success team is responsible for, such as support activities, which could also impact the funding for CS. The charter of the customer success organization undoubtedly has the heaviest impact to the amount of funding needed.
Once you’ve answered these five key questions, your company will be able to document your model for funding customer success. By establishing a funding framework, businesses at any stage in their customer success journey can start making rational decisions regarding future customer success functions along the way.
For more insight on starting down the right path to further developing your customer success organization, be sure to check out my two-part webinar series on the Customer Success Journey available to watch on-demand. Part one, "The Customer Success Journey: Onboarding and Adoption," covers the topics of customer on-boarding and adoption. In part two, “The Customer Success Journey: Benchmarking and Monitoring,” TSIA's executive director, Thomas Lah, and I talk about the key KPIs for customer success benchmarking, consumption analytics and monitoring trends, and the impact of CS on the customer engagement life cycle. Check it out!
Post Date: August 6, 2015
Judith Platz, is vice president of research, Support Services, for TSIA. During her over 25 years of customer support experience, she has been responsible for supervising and coordinating multiple functional, strategic, organizational development and technical work streams, including technical support, account management, business consulting, implementation management, and training.
The Technology Services Industry Association (TSIA) is dedicated to helping technology and services organizations large and small grow and advance in the technology industry. Find out how you can achieve success, too. Call us at (858) 674-5491 or we can call you.