Any department must demonstrate how they achieve value at the bottom line. Product, Sales, Support, Customer Success, Finance, Legal — it does not matter. There’s a reason most companies do not have a blacksmith to reshod the company horses.
Calculating the value of a department simply must be quantified. To do otherwise is irresponsible to investors, owners, fellow management, and your team. For example, many Support departments wait to hire till it hurts because that is their only measurement. Because the upside value is difficult to perceive, we focus on the negative: how far can I stretch these resources till I need to get more?
It reminds me of growing up with a soap dispenser by the sink, when we got low we simply added water to dilute and extend its life by just a little bit more. The same is true of Support. When we were onboarding X number of customers a week, but now that we’re onboarding 20% more per week, we’re getting strained.
The same thing is true of Customer Success: we believe it’s adding value, but it’s still hard to measure. If we do not take the time to understand the value we provide, who will do it? If we cannot report on something, how can we truly exercise authority and accurate decision making?
Reporting is an absolute necessity to promote value. It’s not about being arrogant; humility often reigns as reporting gives us an honest understanding of ourselves rather than viewing the department through rose-tinted glasses or a mud-covered lens. But if we do not understand the outcomes, how will we improve? How can we understand if we’re doing the right thing? How will we know we are doing our best for our customers?
The ROI and Work Required
Measuring the Return on Investment (ROI) of Support is one of the hardest parts. Sales? Easy. Customer Success? Somewhat harder, but still doable. Support though?
One of the primary issues is our starting point: a presupposition of Support as a cost center. This small, usually unconscious concept changes our behavior in numerous ways.
First, we see Support as something to be made more efficient because it’s something we must have but don’t see much upside from it. Sort of like car insurance: you have it in case something goes back, but you really won’t get much more by paying twice as much for it.
Second, measuring the value of it is exceedingly murky and can be subjective. Support corresponding with a customer is almost by definition one of many touch points along the way. It’s very difficult to quantify the value a specific conversation brought. Even if the person didn’t churn, can we attribute it purely to Support? How much did the product play into it? Was it because the sales rep did a great job setting expectations?
Third, many companies view Support as something that, while it has an affect on mitigating downside losses, it’s upside potential is capped. That framework is derived from non SaaS-based thinking, such as from the Industrial Revolution onward. It’s akin to a warranty department for some product, or the phone number on the back of the cereal box for questions and complaints — do you really gain much more value by having a better, more effective team? No, therefore, you don’t need to invest in a SaaS-based Support team. Or so goes the thinking.
I believe in the future we will see many truly innovative — and contrarian — companies elevate Support to a much higher level due to the rising meaning ascribed to the metrics of Lifetime Customer Value (LTV or LTCV) and expansion revenue. Support will be a leader in that effort.
All that said, there is, I believe, a bright future for Support. However, a warning to readers: like a drum set in the hands of a toddler or trained professional, the future of Support will fail miserably with anyone who caps it as a cost center but thrive with brilliant leaders who know how to properly wield it.
This isn’t a silver bullet; every company is different and pulling certain levers in one business may demonstrate strong correlations between Support and the bottom line and be negligible in another company. Below is a non-exhaustive list of drivers and outcomes that Support has significant control over. This is what will help determine the value that Support gives. The difficulty is applying data to find correlations then test those correlations for causal relationships.
- Quick response times
- Quick resolution times
- Satisfaction ratings (CSAT): High satisfaction ratings
- Satisfaction ratings (CSAT): Percentage of customers who give feedback
- Hold times (phone or live chat)
- Abandoned calls (calls that were not picked up)
- Fewer escalations/transfers to another rep
- Contact rate
- Bug resolution time
- Expansionary revenue
- Customer referrals
The next step is the most difficult: use the data you have (or worse: finding a way to get the data you need) to draw correlations. A good starting point is to look at reasons why your customers say thank you. What stands out? Are they impressed with a speedy response? A well-laid out email full of technical explanations? That they rarely wait on hold through a couple cycles of bland music? These may not be the reason, but serve as a starting point.
The trick, however, is that if your company is growing, you’re making lots of improvements in Support — but this also means your teammates in other departments are doing the same. That will increase the noise to signal.
Measuring Customer Success Management
While I believe the current construct of Customer Success is easier to measure than Support, it’s still not a walk in the park. It’s “easy” since we’re adding something on to the existing platform and can A-B test the efficacy. For example, since I’m writing this after dinner, it’s easy to measure the deliciousness of simply a brownie vs. adding ice cream on that brownie (for uncertain readers, adding ice cream is better — it just is). It’s not straightforward to measure a negative.
- Customer Health
- Successful onboarding
- Touch points per customer
- Surveys (if customer surveys inquire about CSMs)
- Feature adoption
- Quarterly Business Reviews performed (QBRs)
- Winbacks (preventing a customer from churning)
- Expansionary revenue
- Customer referrals
Similar to Support, we then draw correlations from drivers to outcomes. Some of these are easier than others (e.g., relationship of winbacks to retention). Some questions to wrestle through: do I have the data I need? How does a CSM affect Customer Health? How do CSMs create successful onboarding and how much is that a factor of Product?
Measuring It All Together
In all of this, we need to remember we’re on the same team. Too many times we’ve heard distinctions between teams and departments that only yield a ripe harvest of arrogance and “them vs. us” mentality. If I climb a ladder and step on others for my growth, what value am I to the company? We’re a team — let’s act like one.
We’re a team — let’s act like one.
As an aside, as a company scales each individual — and team — naturally focuses less on the company’s goals and more on their team’s goals. This is a lose-lose, as putting more of my time and attention on my team means less of a laser-focus on what the company needs. In the long term, that means my team suffers, too.
If we can measure the value we give, that gives us a benchmark not to stagnate at, but to grow from. Support can grow from their benchmarks, Customer Success from theirs, Product from theirs…and so forth. There’s no reason to accept the current environment is the way it will always be; we are in a growth mindset and know the future will continue to evolve. A few decades ago SaaS, Customer Success, and the Cloud all had something in common: they didn’t exist. And we haven’t seen the full ramifications, nor the maturation of these — even today.
Let’s combine, consolidate, and evaluate the metrics and remember that we can challenge each other to be better. Silos work well for storing grain and holding missiles. They do not function well for delivering customer value. The more nightly-knit we are, the better the customer experience we deliver, and the better the bottom line we achieve.