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You’re the New VP of Customer Success. Now What? Image

You’re the New VP of Customer Success. Now What?

By Dan Steinman

So you landed that new VP job, huh? How exciting! Especially in a field as rapidly growing as Customer Success. It’s a tremendous step forward in your career. Good luck and go get ‘em.

Not sure how to get started? That’s not surprising; chances are you’re your company’s first Customer Success executive, and it’s your first time in the role. The Customer Success movement is still relatively new, and many organizations are just now implementing it at the executive level. However, since I’ve done this a few times, perhaps I can help. Here’s a list of things that should be at the top of your priority list:

  1. Understand your customers
  2. Understand your team
  3. What is your segmentation strategy?
  4. What is your engagement strategy?
  5. What tools do you have at your disposal?
  6. What are the boss’s expectations?
  7. Make sure your CEO is all-in

Understand Your Customers

As the VP of Customer Success, your job is essentially to manage the installed base of customers and, if you are a recurring revenue business, maximize their dollar value. You may or may not be held accountable for the company’s retention number but that’s likely your North Star when it comes to prioritizing your team’s efforts. Virtually everything you do should be designed to improve that metric just as a VP of Sales thinks and executes against his or her revenue number all day, every day.

So, if you’re managing the existing customer base, you should probably first understand them. I don’t mean talking to them, although that’s a really good idea, too. I mean doing some real analytics to see what the current state is. I’d start by simply getting a list of all customers that have ever signed a contract with your company, sorted in descending order by contract value. That will give you a few insights immediately just by reading – no analysis needed:

  • How many are there?
  • What’s the contract value range?
  • How much is your largest contract worth?
  • How much is your smallest contract worth?
  • Who are they? (You will probably know some of them)

Now, get that information, along with a few other key pieces of data – original contract date, renewal date, beginning contract value, lifecycle stage (at least active vs. churned), renewal dates (if you don’t have all monthly contracts) – into a spreadsheet so you can start understanding some of these key elements:

  • What’s the average of all contracts?
  • How long has the average customer been a customer?
  • What’s the average value of all churned customers?
  • How many customers have churned?
  • What’s the average length of your contracts?
  • Where’s the 80/20 break for ARR?
  • Where are the contract value breaks when you trifurcate?
  • What has been the churn rate each year (logos and $$)
  • How much has the average contract grown or shrunk annually?
  • What’s the contract growth rate for the top 10%?
  • How many renewals are due this month, next six months, etc.?
  • How many customers in each lifecycle stage?
  • What’s the average age of customers in each lifecycle stage?

There’s one more critical thing you need to understand that you can’t get through analytics alone: why are customers churning or at-risk? This may be tracked already, although you should be very skeptical of the quality of this data. You may have to gather this anecdotally at first and you may have to reach out to several customers who have churned. However you do it, it’s critical to know why. If retention is your number, you better understand why some customers are not retained.

There’s lots more you can do, too, but that’s a start. The bottom line is that you need to fully understand your business – which is your customer base – especially regarding retention. If you are the first VP of Customer Success, it’s likely that you will learn things that no one else in the company actually knows. Make sure you do the math right because you’re likely to get challenged on some of the numbers.

Understand Your Team

This is Management 101 of course, and it applies to any new management job. You need to dig in with each individual, or each leader if you’ve inherited a really large team. You’ll want to know them personally anyway so you can establish a relationship and lead accordingly. You also need to begin the process of understanding their skills and work background.

In the particular case of Customer Success, it’s especially important to know what drives their daily workload. This is about completing the Pareto chart on why they are doing what they are doing and how much of their time it’s taking. This can be kind of a crude method but you may consider asking each of them to track every hour of their time for a couple of weeks so you know why they are doing what they are doing and how much time it’s taking. Are they chasing down Support escalations? Are they helping Sales guys close new deals? Are they working on your CEO’s pet projects? Remember that your job is to make them more efficient and productive and you can’t remove obstacles from their lives if you don’t know what they are doing and why. Put the time and diligence in to figure this out.

What Is Your Segmentation Strategy?

There may be a customer segmentation system already in place or there may not be. In either case, you need to start thinking about this and determining what it should be. This task is fundamental to everything else you will do. It will drive your engagement model which will ultimately drive your headcount model. It’s also something that should matter to every other executive so it’s your chance to get to know them and get their input on this topic. Your personal reason for nailing down customer segmentation is so you can determine the different journey for each group of customers and the team responsible for each of those segments. There are a few pretty standard variables for determining your segments:

  • Contract value: one option is simply to do a couple of logical breaks based on how much customers are paying you. You’ll probably want to treat the bigger ones with a higher level of touch and try to be much more scalable with the ones who pay you less.
  • ARR/Revenue potential: if you can figure out a methodology for determining potential, it’s perfectly valid to put some customers in your top tier based on how much they could realistically be worth over some reasonable period of time.
  • Brand value: certain company names have higher value than others. That’s just the way it is. If IBM is a customer, no matter how small or how little opportunity there is to grow them, you still may want to protect that logo in a high-touch way.
  • Industry/Vertical: many companies have a very clear industry sweet spot when they start off. Let’s say that’s technology for the sake of this argument. If 90% of the current customers are in technology, perhaps a new customer in Health Care or Financial Services is more valuable even than a larger additional contract with another technology company.

It’s convenient if you can match customer segments with prospect segments. Your Sales team almost certainly has some kind of segmentation model. But it’s likely they didn’t think about managing customers when they mapped out their strategy so those segments may or may not make sense for you. Life will be easier for everyone if they are aligned but that just won’t always be the case.

What Is Your Engagement Strategy?

Now we’re getting to the fun stuff. Once you have segments, you can begin to think strategically about how you want to treat each customer within those segments. There’s a decent chance that, if it’s not true already, you’ll end up breaking your overall team into smaller teams each of which are focused on one of the segments. Because the segments almost always end up being a proxy for value (most valuable customers will be in your top tier, least valuable in your bottom tier), you’ll need to apply different skills to each segment in addition to a different process.

One thing your engagement strategy will do for you is to give you a framework for conversation with the rest of the company, especially those holding the purse strings. You will need to fight for headcount and your engagement model will drive your headcount model. It will be your working document for conversations with your CFO and CEO about the number of people you need. Let’s say your segmentation model puts 50 customers in your top tier and your engagement model for that segment maps out 16 touchpoints during a one-year contract cycle with each of those customers. Your estimate of the time required for each of those touchpoints has shown you that you need eight people to manage those 50 customers. Your CFO is likely to take that input and come back with an offer of six people instead of eight. Now you can have an intelligent business conversation with her about your engagement model and which of the touchpoints she thinks should be eliminated or automated to reduce the headcount needs while still meeting the retention goal for that segment (which will be really important to her).

One way to approach this task is to first map out the engagement model for your top segment. Many – probably most – of your touchpoints with those customers will be one-to-one, as that’s the most effective process, and your retention goal for that segment will likely be very high. Once you have that in place, you can use it as the model for your lower segments and simply determine for each touchpoint if you can eliminate, automate, or reduce the frequency to lower your costs. The model for each segment ultimately has to make financial sense.

What Tools Do You Have At Your Disposal?

Depending on the size of your installed base and your team, this can be extremely important. Automation is the only way to logically scale a Customer Success team. The alternatives are not great – 1) throw bodies at the problem or 2) ignore some customers. So you will need to assess the toolset that you have for yourself and your team to deliver on the company’s expectations. You most likely have a CRM system in place and almost certainly have access to Microsoft Excel. And that may be enough. If your company has been around for a while, there’s a chance that there are some processes in place already for managing customers and probably – at least crudely – for understanding customer health. That’s always a good start no matter how well it works because it means someone has been thinking about it already and may have even gathered some of the necessary data to deliver what you will need. Here are a few things you’ll want to be able to do and this will drive your technology needs:

  • Early warning on at-risk customers: you will want some way to help prioritize which customers your team is working on.
  • Overall assessment of customer health: this is for you what the Sales pipeline is for your VP of Sales.
  • Triggers on key dates/milestones: if you only have 20 customers, this isn’t an issue. But, if you have 100 or more, you will want a system alerting you 90 days before every renewal and once a quarter to prepare for your QBRs.
  • Triggers on key data: usage drops, survey scores, licenses deployed, etc. This will be critical at some point to help you deploy resources appropriately.
  • A snapshot of every customer for anyone in the company to see: this will help you avoid the scramble that happens when your CEO is going to visit a customer and will help prepare your CSMs for every customer call without having to hunt down information from other systems.
  • Dashboards/Reporting: you will have to create these in some way and Excel is always an option but it would be really helpful if you had some of this automated in a system.

What Are The Boss’s Expectations?

I know, I know. This is “New Job 101.” Nevertheless, you need to understand what it is your boss expects from you. As a VP, this should be a set of metrics that you will have to figure out how to deliver on. But these can be particularly subtle in the world of Customer Success. Think about it this way: does a new VP of Sales have to ask his boss what metrics she expects him to deliver? Never. Here’s your quota, here’s your team, go get ‘em. But it may not be quite that clear in Customer Success. Some teams are driven solely by their NPS score as an example. If your churn rate is high and you don’t have enough headcount to manage every customer, you may just be expected to focus on at-risk customers and improve the gross renewal rate. Unsure of how to calcualte gross renewal rate? Check out Gainsight’s free gross renewal rate calculator. If you’re reasonably well staffed and your churn is under control, there’s a good chance that upsell – and therefore net retention – is the driving metric. If your boss is a big believer that advocacy is the most important thing that comes out of the installed base, perhaps the number of references and/or case studies is the key measurable.

Regardless of your boss’s expectations, there are a few things that are really important and will, at least partially, fall to you even if they aren’t explicitly stated:

  • You are the voice of the customer. Don’t take this lightly. The reality of your customers is critical to the whole company and it’s your job to deliver that reality.
  • You are the torch-bearer for retention. You will need to constantly remind the whole company that you are a Customer Success-driven company, not just a Sales-driven company and that customer lifetime value is at least as important as making the company’s quarterly sales number. Don’t kid yourself about how easy this is for everyone else to forget.
  • You need to influence all other organizations in the company in order to hit your retention targets. If customers are struggling or failing because they aren’t onboarded properly, you need to apply some pressure to that team. If Sales is causing you problems because they aren’t setting expectations correctly, you need to go correct that. If the product demos beautifully but doesn’t live up to the demo in real life, you need to make sure that changes. Great Sales VPs don’t sit in their office hoping to make their number. They get out and influence everyone else in the company to help. You need to do the same.

Make Sure Your CEO Is All-In

It’s a top-down, companywide commitment. That’s Customer Success Law #1. If that’s not true when you enter into this new job, you need to make sure it quickly becomes true. If it’s already true, hallelujah! Make sure that does not change. It’s critical. You can’t be in this alone. Customer Success is the most cross-functional part of the company and some of those other functions won’t participate unless they know it’s a top priority for the CEO. Convince him that he needs to spend just as much time with customers as he does with prospects. Challenge him to engage with you in solving hard problems just like he does with Sales and Product. Make sure that he knows that the company’s churn rate is HIS choice because he holds the purse strings and can change the focus. Help him think through how to incent behaviors across all organizations that lead to successful customers. It’s a tough road to be sure. CEOs have to balance an impossible set of priorities but you can help make him successful and he knows it. Put his skills and authority to good use so you can deliver on that promise.

Congratulations again on your new role. It’s exciting and daunting, I’m sure. But it’s also doable. There are others doing it and there’s more information every day that can help. Fear not and go make it happen!


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  1. Bill Smith
    Aug 1st, 2016Reply

    Dan, thanks for the insights. This is a tremendously helpful post!

  2. Matt Myszkowski
    Dec 12th, 2016Reply

    Hey Dan,

    Thank you for this. This is hugely insightful and valuable for me as I have just taken a new role as Global Head of Customer Success at Rant & Rave, leaving Autodesk.

    Can you recommend any other good reads on this topic?