After working as a consultant for over 13 years or as a member of the executive team, I have had the opportunity to work with over 45 tech firms. Over this time, I’ve profiled three types of customer success managers during my travels, each with different, yet substantially important, impacts on the monthly recurring revenue (MRR) of an organization.
Think of the customer success management (CSM) role as a swinging pendulum. There are three stages, or tiers, to that swing:
- On the left end of the swing: the “bank teller” CSM
- In the middle: the “business advisor” CSM
- On the right end: The “quota carrying” customer success managers (CSMs)
These roles help retain revenue, “farm” and cross-sell within their customer bases.
CSMs play different roles depending on the stage and growth maturity of your organization.
As a company grows, these roles will morph to accommodate different needs. It will be important to properly structure your CSM strategy and operations to refocus those roles. This will better serve the end customer and make the needed impact to your organization.
1. The “Bank Teller” CSM
Key Measures of Performance: Churn and Customer Satisfaction
For new or small companies, this is a very common starting point of the CSM pendulum. This type of CSM is the “white glove concierge” of support and service. They are the one point of contact for a customer for their onboarding, training and possibly their support needs.
Typically, companies that do not yet have a complete onboarding, support and account management infrastructure will create this type of CSM role/function to make up for this lack of infrastructure.
This type of CSM’s role is almost completely based on the tactical requirements to help satisfy customers by problem-solving the immediate needs of the end-user(s). However, there is little to no focus on strategic relationships with decision-makers or the expansion of the business within any given account.
- Your organization has one source who will have deep knowledge of the user community in any given customer.
- The customer knows exactly who and how to contact their CSM, making your organization seem approachable and accessible.
- Since this type of CSM is more service oriented versus business oriented, it is generally easier and less expensive to find strong customer service oriented professionals to fill these roles.
- As you grow, you will find that this model is not scalable and ultimately will result in poor service and poor customer satisfaction because a CSM can only deal with so many customer requests in any given day. Usually, the CSM starts focusing more on onboarding new customers – due to growth – at the expense of properly supporting and account managing existing customers.
- The “bank teller” tends to have a good relationship with the end-user of the software or technology, but rarely do they interact with the executive level or decision-making level, which is often required to confirm that your solution is meeting your customer’s evolving needs and therefore ensures renewals and stronger LTV (Life-Time Value).
- Often, because their relationship with your customer is based off the “front line” user community, the “bank teller” CSM may not even know or be exposed to the kind of growth opportunities within an account. After all, their prime responsibility and skill set is to fix any potential challenges and keep the customer happy. It’s unlikely that the CEO or executive sponsor is going to engage with the “bank teller” on areas where you can further impact their business.
2. The Business Advisory
Key Measures of Performance: Net Revenue Retention & Customer Referenceability
When the pendulum analogy swings to the center, the CSM’s prime function is to extract as much business value on the behalf of the customer as possible and to be a staunch advocate for the customer within your organization.
The business advisor CSM works with his/her customer to ensure clarity of how their customer will measure success with your technology or service and what specific business metrics they are trying to improve.
This CSM type will create account management plans, including tactics and communication cadence to partner with the key leadership stakeholders of their customer to ensure they are trending towards the business objectives.
- By focusing on business success metrics, the CSM can justify the use of as many elements of your software or service needed for clients to achieve a measurable business objective.
A software or service that is being maximized by the customer will create greater stickiness and higher business impact, thereby facilitating net revenue retention (including reduced churn, increase revenue).
- There is greater engagement and relationships with decision makers and influencers within the leadership stakeholder group.
- You can more easily establish your company as a trusted advisor as opposed to just a vendor.
- One of the few cons of this role is related to organizations who need to transition from “bank teller” CSM to “business advisor” CSM. Business advisor CSMs require a high level of business acumen to readily translate your features and functionality into specific business benefits of their customers, specifically with senior leadership stakeholders.
These skills tend to be the prime barrier to transition a person who was originally hired as the “bank-teller” CSM.
- Business advisor CSMs generally have bonus compensation attached to key success criteria, such as net revenue retention, meaning that you will need to spend more on this team than their “bank teller” counterparts. However, the impact they make are worth the added investment.
3. The Sales-Oriented CSM
Key Measures of Performance: MRR Sales Growth
At the far-right of the pendulum are sales-oriented CSMs who sell through relationship development, versus their “hunter” sales counterparts who focus on growing market share.
These CSMs generally have a sales quota and are charged specifically to upsell/cross-sell to increase the MRR of each client. Generally, these CSMs (who may or may not have the title of CSM) are assigned to large enterprise customers where getting complete sales penetration could take many quarters or years.
- Active sales management (MRR Growth) of large customers, ensuring the “hunting” sales organization can focus on net new deals.
- Success is easily measured.
- Often, this CSM is perceived as the “sales guy” instead of the business advisor of the customer.
- They are often not an expert in the solution or technology that they sell and require other members of the team to fill in the gaps – such as a business advisor CSM or a pre-sales engineer.
A CSM is a critical role in your Company’s MRR growth
The key is to know what type of CSM you need for your current size, growth and customer segmentations and ensure you have the best skill set in the most suitable CSM role.
Whether your CSM team members are “bank tellers”, “business advisors”, sales-oriented or a combination of each type, your MRR depends on them.
This team will be able to focus on critical metrics to your organization, such as Net Revenue Retention, Upsell/Cross-Sell revenue growth, customer satisfaction and customer referrals, and will be a pivotal focal point for overall customer intelligence. -Jeff Bennet, VP Customer Success, Fusebill.