Revolutionizing Customer Success: From Cost Center to Revenue Driver

The Evolution of Customer Success

Customer success has traditionally been viewed as a support function - an extension of sales that takes over after the deal is closed. However, this perspective is rapidly changing as companies recognize the critical role customer success plays in driving revenue and growth.

As Miranda Diansky, a seasoned customer success leader, explains:

"I've been talking about this for a few years... CS leaders and CSMs needed to make themselves more valuable in the organization in order to not be displaced. When customer success started, the focus was always heavily on driving NPS, driving satisfaction, keeping customers happy."

But in today's business climate, that's no longer enough. Customer success teams need to tie their efforts directly to revenue and prove their value to the organization.

Tying Customer Success to Revenue

So how can customer success teams make this shift from cost center to revenue driver? Miranda recommends:

"The important thing right now because of the current state of technology is leaders have to find ways to tie themselves to revenue and the easiest way to do that is to own revenue, own revenue, own revenue outcomes."

This means taking ownership of key revenue metrics like:

• Renewals
• Upsells
• Expansion revenue

Customer success leaders need to be able to stand in front of the board and clearly demonstrate the revenue impact of their team's efforts. As Miranda notes:

"Be able to get in front of your board and show them like these are the renewals that we drove, these are the upsell or expansion revenue that we've driven."

This shift requires customer success teams to take a more proactive, sales-oriented approach. Rather than simply reacting to customer needs, they need to actively look for opportunities to drive additional value and revenue.

The Blurring Lines Between Sales and Customer Success

As customer success takes on more revenue responsibility, the lines between sales and CS are blurring. Miranda argues that customer success is, in many ways, an extension of sales:

"We are hopefully driving so much value that customers want to continue to invest in us and give us more of their wallet share and hopefully we're making them such rock stars within their organization that the expansion is just another day."

The key difference is in the approach. While sales focuses on hunting for new business, customer success aims to farm existing accounts by:

• Driving value from current investments
• Identifying additional problems to solve
• Making customers successful with the product

This creates natural opportunities for upsells and expansions as customers look to solve more problems and derive more value.

When to Invest in Customer Success

For startups and growing companies, knowing when to invest in a dedicated customer success function can be challenging. Miranda recommends:

"Once you get to a certain level of customers to where your CEO can't keep up with doing customer success and selling or your CEO is now doing customer support, customer success and you know all of those things, that's when I think you look at bringing in your first customer success manager."

The first CS hire should be someone who can both build the infrastructure and manage customer portfolios. They need to be willing to get their hands dirty and figure things out as the function grows.

Miranda cautions against getting too hung up on titles at this early stage. Whether you hire a "Head of CS" or a "Customer Success Manager" matters less than finding someone with the right skills and mindset to build out the function.

Aligning Sales and Customer Success Incentives

As customer success takes on more revenue responsibility, aligning incentives between sales and CS becomes crucial. Traditional sales compensation models that reward overselling can create misalignment.

Miranda suggests a few potential approaches:

1. Give sales reps a window of time (e.g. 6-12 months) to drive upsells in new accounts before fully transitioning them to CS.

2. Implement clawback clauses if customers churn quickly.

3. Provide better incentives for expansion revenue vs. new logos.

The key is finding the right balance that encourages sales to bring in good-fit customers while also motivating them to set those customers up for long-term success.

The Importance of a Smooth Handoff

Regardless of the exact model, ensuring a smooth handoff between sales and customer success is critical. Miranda recommends:

• Bringing the CSM into the last few sales calls
• Having the sales rep join the kickoff call and first few CS meetings
• Creating a warm, well-orchestrated transition for the customer

This helps build continuity and trust as the customer moves from prospect to active user.

Leveraging Product Usage Data

To be truly effective, customer success teams need visibility into how customers are actually using the product. However, getting actionable product usage data into CS tools remains a challenge for many companies.

Miranda emphasizes the importance of understanding usage patterns by persona:

"We could map out their usage based on persona and understand how frequently they should be logging in or in using the product. For example, if you're someone that is serving public transit in customer service... I would expect to be in that tool every working day for 8 hours. Where you have folks who are doing planning or scheduling, they may only log in quarterly and that's okay."

Without this nuanced understanding, raw usage data can be misleading. The key is defining what "healthy" usage looks like for each user type and role.

Miranda also cautions against over-relying on usage data alone:

"I think that's where this whole tying product usage to health misses the mark. I think people don't go deep enough to understand the personas, the problem statements, what is the actual usage that would make them healthy."

Usage should be one data point among many in assessing overall account health.

Beyond NPS: Measuring Customer Success

Net Promoter Score (NPS) has long been a go-to metric for measuring customer satisfaction and loyalty. However, both Miranda and I agree that NPS alone is insufficient for truly understanding customer health and predicting churn.

Miranda uses NPS primarily to track trends over time and identify which stakeholders are (or aren't) responding. She looks at NPS by persona and segment to get a more nuanced view.

I prefer more granular metrics like Customer Effort Score (CES) for specific features or workflows. This provides more actionable insights into where customers are struggling.

Ultimately, the most effective approach combines multiple data points including:

• Usage data (properly segmented by persona)
• Survey feedback (NPS, CES, etc.)
• Support ticket volume and themes
• Engagement with CSMs and other touchpoints
• Business outcomes and ROI

The Criticality Factor

One crucial element that's often overlooked is how mission-critical the product is to the customer's business. As Miranda points out:

"If you're not mission critical, it really doesn't matter. People could be logging in every day and still when it comes to budgeting be cut."

Even highly engaged, satisfied customers may churn if your product isn't essential to their core operations. This underscores the importance of continually demonstrating and reinforcing the value and ROI your solution provides.

Building a Customer-Centric Culture

While having a dedicated customer success function is valuable for most companies, it's not the only path to customer-centricity. Miranda cites Snowflake as an example:

"Snowflake has very openly never had customer success and if you look at their numbers, they're wildly successful. They haven't had customer success as a function, but I think that they've built it directly into the core of the ecosystem of their organization and also their product."

The key is embedding customer success principles throughout the entire organization - from product development to sales to support. Every team should be focused on driving customer value and outcomes.

The Future of Customer Success

As the business landscape continues to evolve, customer success will play an increasingly critical role in driving growth and revenue. Key trends to watch include:

1. Deeper integration with product and sales

The lines between customer success, sales, and product teams will continue to blur. Expect to see more hybrid roles and tighter collaboration across functions.

2. Greater emphasis on customer outcomes

Rather than focusing solely on product adoption or usage, CS teams will increasingly tie their efforts to concrete business outcomes and ROI for customers.

3. More sophisticated use of data and AI

Advanced analytics and AI will enable CS teams to better predict churn risks, identify expansion opportunities, and personalize the customer journey at scale.

4. Evolution of CS career paths

As the function matures, we'll likely see more specialized roles within CS (e.g. onboarding specialists, renewal managers) as well as more CS leaders moving into broader executive roles.

5. Continued focus on efficiency

With ongoing economic uncertainty, CS teams will need to continually prove their value and find ways to scale their impact without proportionally increasing headcount.

Conclusion

Customer success is no longer just about keeping customers happy - it's a critical driver of revenue and growth. By taking ownership of key revenue metrics, leveraging data effectively, and deeply understanding customer needs, CS teams can position themselves as strategic partners within their organizations.

The most successful companies will be those that embed customer success principles throughout their culture, ensuring every team is aligned around driving customer outcomes and value. As the function continues to evolve, customer success leaders have an opportunity to play an increasingly central role in shaping company strategy and driving sustainable growth.

By embracing this shift from cost center to revenue driver, customer success teams can secure their place as indispensable partners in their company's success story.

Article created from: https://www.youtube.com/watch?v=ASA0ZiPtZlc