ArticleBest PracticesOctober 1, 2018
How to Plan a Budget Your Boss Can’t Say No To Image

How to Plan a Budget Your Boss Can’t Say No To

By Riana Upton

This blog post is based on questions and answers showcased in our webinar, How to Budget for Customer Success: 2019. Listen to the full recording here.

Every year, we gather members from our C-Suite to answer your questions on budgeting for Customer Success. Budgeting is a highly collaborative process; although each department has their own budget, what they ultimately decide to spend on will fuel company-wide business goals. This year, Gainsight’s Allison Pickens (COO), Igor Beckerman (CFO), and Karl Mosgofian (CIO) gave their perspectives on budgeting for Customer Success and best practices that follow a customer-centric philosophy. Here are the three biggest takeaways from their Ask-Me-Anything session.

Budgeting Tip #1: Involve other departments earlier than you think.

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CFO:
 Ultimately, a budget is all about accomplishing a company’s goals. So, in my mind, the core part of any budgeting process is aligning the company around the things that drive overall success. If you’re in a company that (for some crazy reason) doesn’t care about renewals or upsell, you’re going to have a tough time engaging with them on why Customer Success matters. You need to be able to create that discussion and align on those things, and then begin to figure out how to accomplish them cross-functionally. Fundamentally, in all the ways that CS is important, you need to start at that strategic stage.

CIO: People look at groups like IT or Legal or Procurement and think of them as a black box—you get requirements in and approvals come out the other side. There’s the common saying, “It’s not personal, it’s business.” But at Gainsight, we say the opposite; it’s all personal. At the end of the day, it’s all people.

My recommendation is to talk face-to-face with your peers and explain what Customer Success means to them and the company. Everybody thinks they know what it means, but they usually have a very narrow view. Share your enthusiasm—win people over to not just help you do some paperwork or a technical task, but really enlist them as part of the team that will help you make this transformational change. This partnership will smooth the way for future conversations. So, bring people in, make them part of your team, and make sure they really understand what you’re trying to accomplish and I think that will make things go smoothly with all your internal stakeholders.

Budgeting Tip #2: If you’re budgeting “lean,” know what you need and what you don’t—and why.

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CFO: Whether you’re talking about Sales, Marketing, or Customer Success, you start off with a certain number of people solving the problem in the trenches. In this case, you’ve got CSMs trying to create a proactive discussion to get customers in the direction they need to go. You’re dividing the jobs they have across the headcount you have available to you. After you start amassing customers, your Finance department will likely suggest that you think about the services you’re trying to optimally provide. For example, if EBRs are an important part of what the CS team provides, cutting that doesn’t make sense. You want to serve the customer's needs in a way that allows you and them to be successful. Think of it this way:

COO: If your customers require a lot of help, I’d suggest creating Services offerings and functions that carve out aspects of the CSM role and help you cover the cost. This way you can provide more help and value. Over time, you might want to outsource that Services team. Particularly as you’re gearing up to go public, you’ll want to maintain a certain type of gross margin that services will most likely detract from. This is why it’s beneficial to start growing a partner ecosystem that could help your clients in ways that your in-house team doesn’t have the budget to do.

The second thing you should focus on is the product. How can you reflect as an executive team to ensure that you can make the product easier to adopt and deliver more value on its own? Thirdly, can you focus on automating? Not just within the product, but are there certain aspects of what your CSMs are doing that you can automate? For example, build a small but strong customer engineering team that automates certain implementation processes or maybe even builds applications on top of your platform that addresses certain use cases. Or, build an automated tech touch program so you can replace human activities with in-app messages or emails. Or, create online tutorials or videos so customers can get up to speed without a person intervening.

Budgeting Tip #3: Your Customer Success platform needs to be purpose-built.

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CIO: When you talk about different tools like CRMs, marketing automation, etc., each is a point tool meant to solve a specific problem. But Customer Success is its own entity and draws on data from all of those systems. Trying to force fit CS into one of those tools may not be successful. It’s actually much more effective to have a purpose-built tool that's meant to do CS and pulls data from all of those other tools.

Part of what you get from that is a much faster time-to-value. A lot of people try to create a holistic view by building it in-house. This tends to be really time-consuming and it can become very difficult to build consensus between your different teams. Having an out-of-the-box software not only provides structure but comes with best practices that get you up and running much faster.

IT’s first thought when presented with a problem is, “How can I solve this with the tools I already have.” So, they really need to understand why it’s important to have a specific Customer Success tool, and why they can’t just cram it into an existing system. It’s very important IT understands that you’re trying to drive action.

A data warehouse will take too long to set up, and by the time you do, it won’t work anymore (that’s why there are twenty in your company instead of one). Data warehouses are also static and don’t do more than give you a dashboard. IT needs to understand that CS doesn’t mean just pulling data from other places, but it needs to synthesize it into a holistic health score and drive action. That’s the piece that existing tools don’t do very well.

COO: In the same way that a Sales team needs even a lightweight CRM, I believe that Customer Success needs technology from Day One. I think the question is, “What do I need?” Our Maturity Model gives a more exact answer but at a high level, I think the following makes sense:

  • Seed Stage: Track NPS and product usage data
  • Series A Level and Beyond: Invest in a workflow solution that will help you deliver a predictable journey regardless which CSM is working with a client

And whatever you do, just don’t make these mistakes

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The last question we asked all of our C-suite guests was, “What is the biggest Customer Success budget mistake you’ve seen people make?” The consensus was that you must plan ahead, both in terms of forecasting and bringing in outside stakeholders early on.

COO: Plan for the long term—anticipate what’s going to happen a year and a half from now. You should be thinking not just about your Gross Renewal Rate forecast, but also the likely inputs into that. For example, what do you believe is required by different functions to achieve the health that your clients need? What do you believe is the trajectory of the product improvements that are required in order to deliver a better CX next year? What sorts of leaders do you need to bring into the team? Do you need to hire more Operations or other resources that can make your client-facing people more effective?

CFO: I think that budgeting works cleanly and analytically if you can connect yourself to specific things that you think impact the business in a logical fashion that you can explain. Instead of saying, “I have two people, I need two more,” say, “I think that what I support and how I support it is the following. Therefore, because that objective metric has gone up, here’s how my budget will help.” It becomes a much more structured discussion when you’re able to give a specific business rationale that comes at it from a Finance team’s perspective.

CIO: One of the things I’ve seen over the years is that people don’t always think about the time IT needs to spend internally to do implementation projects. So just think about the ancillary things that will make things smoother and everyone more successful.

A final note

If you’re looking for more budgeting resources, we’ve got your back! Check out our Customer Success budget template for an easy-to-use way to layout next fiscal year’s budget. And for even more advice on how to spend those dolla dolla bills, read Gainsight CEO Nick Mehta's blog post on how not to budget for Customer Success. Good luck and may the odds be ever in your favor! 💰💰💰

Picture of Riana Upton
Riana Upton Customer Success Evangelist

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