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CSQLs: Creating an Integrated Journey from Sales to CS and Back Again Image

CSQLs: Creating an Integrated Journey from Sales to CS and Back Again

By Martta Eicher Rabago

In the era of Customer Success 2.0, the solid force of customer-centricity ensures that no department is isolated within your company, certainly not the Customer Success team. CS adds value to all parts of your business, whether Product, Sales, or Marketing. It can make your company a truly customer-centric organization. It’s so important that it is one of the New 10 Laws of Customer Success. 

It is not enough for CS to be a top-down, company-wide initiative anymore. It must be a part of every motion in your business. So how do you ensure the transferability of value across your company without giving up operational control of your team? That’s where CS comes in. By advising and incorporating CS ideas into other teams in your company, especially Sales, they make the team members better at what they do. First, let’s discuss what a Customer Success Qualified Lead (CSQL) is.

What’s a CSQL and Why Is It So Important?

A CSQL is similar to a Marketing Qualified Lead (MQL) or Sales Qualified Lead (SQL), yet it is considerably higher in value because the lead is sourced from an existing customer. A CSQL is considered a source of lean revenue because it comes from the existing customer install base. In SaaS, there are two types of recurring revenue—lean and expensive. 

Expensive revenue comes almost entirely from new customers. Because it contends with measuring against high Customer Acquisition Costs (CAC) incurred against Marketing and Sales expenses, the cost to acquire new logo or customers is much higher than CAC from existing customers. In fact, according to a 2021 KeyBank Survey, the median cost of attaining $1 of new logo revenue is $1.67 versus $.63 on upsells and cross-sells from existing customers. Additionally, the ROI from new logo is not seen for almost over a year. 

That is why marketing and selling to your install base involves less spend and has a faster rate of return. Logically, Sales would want to have an almost guaranteed sale from existing customers.

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Creating Alignment Between Sales and CS

For years, CS team members have wanted a voice in the Sales process or at least a more influential role as to the plausibility of attaining the customer’s desired outcomes based on company resources. Why? CSMs want customers who have the potential to be a success. When they reach that goal, they have the ability to share that news to your Sales team. According to Gainsight’s New 10 Laws of Customer Success, shared knowledge is paramount to the success of the customer and your company. And who knows your customer’s better than CS?

In this new era of CS maturity, shared knowledge is imperative. Marketing and SDRs share all their customer data with Sales because it increases the probability of a positive sales outcome. As for CS, they deliver valuable outcomes to the customer. In turn, they set up, provide satisfied and successful customers, and all the knowledge on that customer back to Sales as references for cross-sells, upsells, and expansions.  

The Customer Success org helps create a positive customer experience. The customer begins to evaluate their experience with your product immediately. That is why onboarding, adoption, and engagement are critical to the customer journey. When customer’s reach their desired outcomes, they are prime for outreach by Sales and potentially become advocates or referrals for Marketing. But how do you make this a successful and consistent strategy? 

CS and Sales leaders should be BFFs. They need to recognize that their relationship is mutually beneficial and not competitive. Through cooperation, they create a golden ring of revenue. An alignment between Sales and CS allows for three things:

  1. A better feedback loop.
  2. Promotion of collaboration and communication to avoid missed opportunities.
  3. Surface new and more detailed customer insights.

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So, how can you make Sales an ally? Empower them with created highly qualified leads. In the past, in SaaS, this responsibility usually fell on Marketing’s shoulders as a demand generation function. However, in a mature Customer Success 2.0 organization, this function should expand to the Customer Success team.  CS needs to formalize processes to identify highly qualified leads, especially cross-sells and upsells, that Sales can close. 

CSMs are the most customer-facing employees of your company. They can provide insight and analytics to your teams and departments that need feedback on everything from marketing initiatives to product improvements. Most of all, they help decision-makers understand how CS impacts value and revenue. 

Sometimes companies struggle to report on the value of opportunities coming from CS. The CS team members combined with technology can accurately report that customers are a consistent source of revenue pipeline via qualified leads.  When appropriately evaluated, these leads will likely prove to be the highest quality Sales opportunities in the entire Sales pipeline because CSMs have already vetted them.

At Gainsight, our CS team establishes CSQLs targets every quarter primarily because they are the most customer-facing team and are in the best position to identify new opportunities. They know the customer’s health and the indicators of portfolio growth. That is why the relationship between Sales and CS is so valuable. Success breeds success. When this information is shared openly, it makes the Net Retention target a number everyone can rally around. And everyone wins!

Know the Roles and Responsibilities

Roles and responsibilities must be well defined between Customer Success and Sales. You don’t want anyone to usurp authority or claim domains. So leaders must establish the roles and responsibilities needed with the support of the entire C-suite. While it’s essential to align CS leadership with the CMO and head of sales, every part of leadership needs to have buy-in on the value that CSQLs can bring to the organization. If they can understand that, they see more value in CS.

Some advocate for CSMs to own renewals, upsells, and cross-sells. However, most Customer Success orgs aren’t always responsible for those motions. Mainly, this is because CSMs have enough responsibilities keeping customers healthy and successful. The balance of value comes when customer’s experience success that leads to renewal outcomes and expansion through upsells or cross-sells.  Sales should partner with CS, but the actual sale’s responsibility has to remain with Sales professionals. 

The process usually unfolds once a CSQL is identified. The CSM or CS leader should discuss specifics about the customer with the Account Executive to ensure a handoff is accomplished. Ideally, there is already a predetermined governance process around this motion. At Gainsight, our CS leaders regularly sync with Sales. They discuss expected new deals, the status of customers being onboarded, renewal strategy for high-value customers, and upsell and cross-sell opportunities.

The issue of compensation still is a controversial one. Some believe that the CSM should not be incentivized in the same way as Sales. But they are in the position to know the value of the customer and the upsell or cross-sell opportunity. They also own the responsibility to ensure the Sales rep has all the information required to close the opportunity and drive it. So, how do you reward them? As we move forward into the new era of CS, the reality is that the CSM should be motivated and compensated for identifying and sending CSQLs to Sales.  Establishing compensation and bonus metrics shows the CS team that their contribution is highly valued and impacts the company’s NRR numbers.

Track Your Results

Tracking the result or your CSQL efforts is vital to this process. First, track your CSQL by individual CSMs. More importantly, track your CSQLs as a whole. If it is set as a team metric goal, it helps address the imbalance that often exists between CSM portfolios. One CSM could have the luck of the draw by having an extraordinarily healthy set of accounts. By contrast, your best CSM may have been assigned your most challenging and at-risk accounts. Their primary focus is on saving the customer, not expanding them. Making CSQLs a CSM team goal is the fairest approach.

It’s crucial to also measure actuals against goals. Assess the results and iterate as necessary. Customer Success doesn’t have the same competitive tradition as Sales. However, CSMs love being acknowledged for their efforts, including those that facilitate expansion. They should get as many accolades as Account Executives or Sales Reps who close new logos.

There you have it. Leveraging CSQLs could be an assured path to building a strong partnership with Sales, and they’re vital to the success of any company. Create an environment of collaboration and not conflict. It all starts with building an effective process to track CSQLs tailored to your Business Operations and Customer Success team goals. Define cross-functional roles and responsibilities by defining and sticking to your swim lanes. That way, you’ll reduce the possibility of “stepping over” each other.

If you continually battle with Sales and want to veto a deal, you need to find a different approach. The key is to add value and, notably, demonstrate it constantly. If you do, I believe you’ll get what you ultimately want: a seat at the table and even veto power. How about that?!

CSQLs: The Winning Element

The goal of CSQLs is to help Sales expand accounts with leads identified through Customer Success from the same accounts that CSMs are responsible for keeping healthy and renewable. If you think about it, this benefits the entire company with growth. Here are the benefits and ROI of CS that can really be seen through CSQLs. 

  • CSQLs can be opportunities for expansion to existing customers. They can be new business units or groups not using your solution but are introduced by existing users. CSQLs can manifest as referrals from former customers that leave and join other companies, resulting in new Logo sales.
  • CSQLs are also uniquely valuable in that they are accompanied by customer insights that help raise the sale close rate. They speed up the process by identifying customers with high subscription utilization. They also give you future insight into potential strong customer champions. Data surfaced through technology, and your CSM helps reveal the state of your relationship with key customer stakeholders and decision-makers. 
  • CSQLs can be validated during EBRs by proving that customers are getting value from your solution. CSMs know how the customer quantifies this value and whether they are on track to achieve their goals. Additionally, CSQLs can reveal if the customer is ready to be a part of a new use case. Are they looking for more products, services, or licenses? They’ll tell you! During EBRs or check-ins, has the customer expressed interest in using more of your platform? If they don’t bring it up themselves, you should ask.

With all the benefits we have shown, who wouldn’t want to utilize their CS org to develop CSQLs? It is the missing element to a company’s revenue growth. Combine it with alignment with your Sales team and it will prove beneficial to your retention revenue. It’s a winning situation for everyone.

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  1. Jessica
    Sep 20th, 2017Reply

    Are your CSMs incented on CSQLs? For example, are they expected to create a certain number based on their book of business? How have you ensured adoption of this process?