Scaling Customer Success: How to Increase Capacity Without Increasing Your Headcount.

Customer Success organizations are expected to own more.

These days, Customer Success (CS) organizations are expected to own more. They are expected to own more customers, more processes such as relationship building, referral & advocacy programs, and more KPIs such as renewals, upsells & satisfaction.

All of the above indicates that CS organizations are expected to increase their capacity. 

In order to be able to own more and increase the organization’s capacity, the CS leader would typically ask to increase the headcount of their department, which will increase the department's cost. In days where growth is more important than efficiency, such requests would be accepted.

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The Capacity-Headcount Loop

However, nowadays VCs and CEOs start looking into the efficiency of the CS organization. Why?

Because of the macroeconomic situation. In uncertain times, it’s harder to justify hires. VCs and CEOs are looking for ways to increase their run rate, so they will question any additional headcount increase. Growth at all costs? Not anymore.

Because customer success has become an established profession. Therefore, it needs to be formulated. The CS profession has come a long way in the last decade. While it became one of the most promising jobs in tech (according to LinkedIn), there are proven processes and benchmarks to rely on.

‘I don’t think a lot of people 10+ years ago knew what customer success managers did'

^{Rachel Jugai, Head of North America Customer Success, Mitek Systems from EverAfter webinar.}

It is not uncommon for CS leaders to be asked to reduce the costs of their organization. In many cases, this will end up in reducing the headcount… which will result in reducing the capacity.

But didn’t we agree that CS organizations are expected to increase their capacity? 🤯

Well, this leads us to the Capacity - Headcount Loop.

On the one hand, increasing capacity can be achieved by increasing cost; On the other hand, the need to reduce cost will, unfortunately, result in reducing capacity. HELP!

You can too increase the capacity without increasing your headcount

In this article, I will try to answer the question: How to increase capacity without increasing headcount?

Before that, let’s break it down a bit. To increase capacity (while maintaining the same headcount), you should either increase revenue or decrease expenses. 

Increasing revenue can be achieved either by reducing churn or increasing upsells. Any of these will result in an increase in the $ of Book of Business each CSM manages.

Decreasing expenses can be achieved by looking into what prevents us from managing more customers. If you’ll be able to identify, and remove unneeded touchpoints or reduce manual work, the number of accounts each CSM manages can go up pretty easily.

I’m going to offer a framework that will help you identify when you should focus on each approach, and a few areas to take into consideration when doing so. While all of the areas are important, sometimes it’s not feasible to focus on all of them at once - depending on your company size, maturity, product offering, and more:

• Reduce Churn
• Increase Upsells
• Reduce Manual Work
• Remove Unneeded Touchpoints

Increase Revenue / Reduce Churn

Churn is the loss of a customer logo or revenue. While it’s always important to actively prevent customer churn, in some cases this would be the top priority of the CS organization. When?

If you are ‘bleeding’ customers. To state the obvious - if your company suffers from a high percentage of customer churn, a focus is needed. There are not many upsell opportunities. As upsell is a great focus for CS, if you offer a one-line item or if your product has a fixed price, focusing on upselling might not be beneficial. Customer acquisition is tough. If you have a low number of logos, with high ARR, and if the sales cycle is very long - every churn will hurt.

How to reduce churn?

Make your ROI clearer on an ongoing basis

This would be the best case - preventing the potential churn beforehand. Find a way to quantify your value (does your product save costs? Increase revenue? Increase sales?), and make sure your customer can see it - you can add it to your product, share it in your weekly emails with them, or during ongoing customer meetings.

Invest in early indicators

Do you manage a health score? Start by focusing on key usage and engagement metrics to help you find dangerous areas. Follow this recipe to build a predictive health score.

Get obsessed with customer feedback. Occasionally ask for honest feedback from your customers. Don’t be afraid to get ‘negative’ feedback - but make sure to address it and follow up with the customer. Find the right channel and trigger for your customers to increase the response rate (remember: no response is more dangerous than a negative response).

Build playbooks to address risks. When you identify a potential risk, equip your team with the right set of actions - email templates, how-tos, and processes. This will help your team to act fast without reinventing the wheel each time. At one of my previous companies, each time we identified a customer that didn’t log in for a while, we automated a ‘personal’ email from their CSM. Over 70% of customers that received the email, logged in within 48 hours.

Increase Revenue / Increase Upsells

47% of companies saw over 10% new revenue from upsells. And when taking into consideration that acquiring new customers is up to 5x more expensive than retaining, upsells are not only a great way to increase revenue, but profitability as well.

If you have a multi-product offering, or usage-based pricing, if you have a quick or clear way to show ROI on the upgraded plan, or if you succeeded in upselling customers in an unplanned, sporadic way, you might want to consider building an upsell process. 

How to increase upsells?

Build an Upsell Lead mechanism. The more ‘upsell leads’ you have, the more ‘upsell wons’ you’ll have. Invest in a data-driven outbound approach: identify potential leads based on usage/engagement data, and give your CSMs the opportunity to qualify or reject them. Use each result as an opportunity to optimize your model and provide better outbound leads in the future.

In addition, focusing on an inbound approach can be achieved by exposing product features to your customer base. Share it wisely - when the time is right (for each customer based on their own journey), to make your customers ask to learn more.

Then, manage an upsell pipeline like a sales organization. Choose the right stages for your upsell opportunities, run weekly pipeline meetings and invest in removing deal blockers. You might consider compensating your team on upsells - either qualifying upsell leads for sales, or for additional revenue increase.

Decrease Expenses / Reduce Manual Work

In our 2022 Customer Onboarding Industry Report, we found that 65% of CSMs complain about manual work, that is being done offline from customer meetings. This is a lose-lose situation: there is 0 (zero!) value both for CSMs and for customers from the manual work; no one appreciates it.

‘Wow, dear CSM, thank you so much for investing 2 hours updating your CRM after our meeting with my objectives, and then another 30 minutes in summarizing it over email’’

^{Said no one, ever.}

You cannot expect to eliminate manual work completely - this is a ground for creativity and exploration. However, many repeatable, redundant tasks should be automated. Examples?

Preparation time for kick-offs/onboarding is long. Do you create a new deck for each customer, deleting many slides for a very long template and copying information from the opportunity in Salesforce?

Details discussed during meetings need to be added to the CRM. During the meeting, you invest time in summarizing the details. Post-meeting, you update fields on your CRM, adding the touchpoint and action items.

A lot of information is from customer input. After your customer shared information across multiple channels (email, calls), you are asked to update it on the CRM (customer goals, tech-stack, contact information, billing information).

Reports (from many data sources) to customers are not productized. In my first position at Feedvisor, I was in charge of building custom reports for customers, that our product couldn’t provide. We spend a lot of time building the SQL scripts, running them, exporting to excel, beautifying them, and send to customers. Sounds familiar?

How to reduce manual work?

Build a recipe for your team. What does the onboarding process look like per segment, tier, or purchased product? When you build a successful journey map with the right resources, your team can spend less time tweaking it.

‍Let your customers update information by themselves. When you collect information from customers, you don’t have to keep the CSM as a mandatory stop. Build a smart connection that will allow your customers to update the CRM directly, for example through an in-product questionnaire, or connect your form to your CRM through Zapier.

Remove duplications. You prepare a deck for your meeting with action items. You take screenshots from Zendesk with the open items to discuss. You write on your notebook action items during the call. You send a meeting recap with action items. You enable and share the Gong recording. You update the touchpoint in your CRM. Repeat. If this behavior sounds familiar - work on merging some of the steps into a single record update.

Automate the value creation. Instead of manually working on report building for customers, consider developing an automated process for that. An outsource one-time project might be more cost-effective than the overall manual work. If the information is in Salesforce - you can consider building an APEX code to automate the sharing process; If the information is from another data source, such as billing or support system, integrating it with Salesforce or your product could help save time. In some cases, raising the feedback to product can help you productize it.

Automate emails and reach outs. You can automatically send a ‘Welcome’ email from the CSM once they’re assigned to the account; Or a weekly update with key information. Plenty of proven email templates can be found here.

Decrease Expenses / Remove Unneeded Touchpoints

According to NICE 2022 Digital-First Customer Experience Report, 81% of customers expect more self-service options. 53% of businesses believe their customers are very satisfied with their self-service offerings, but only 15% of customers agree 😱

While you probably have your top-tier, high-ARR customers, where a dedicated implementation team and a customized solution are needed, a big portion of your customer base can benefit from fewer touches and a more self-service approach. When should you prioritize building a more self-service experience?

A standard, repeatable onboarding process is feasible. If your product doesn’t require specific customization (solution engineering), and the implementation consists of several known steps.

Specific resources can be shared, based on customer needs, goals, or setup. When a customer has a specific setup, can you provide the right set of actions and resources to enable them to perform this? 

Many customer meetings are focused on setup or configurations. Do you find yourself investing tons of time in screen sharing, pointing your customer to admin pages in your platform?

The suggestions below are not here to replace all customer meetings, for all segments. Even if you succeed in making even one segment more self-service, the benefits and time saving are huge.

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How to remove unneeded touchpoints?

Can they start now? Once a contract is signed, the typical flow is to schedule a kickoff meeting with the customer, and only during the meeting we share the first list of action items with the customer. However, we lose the fact that the customer is highly motivated and eager to start the implementation. Prepare a focused onboarding plan that takes into consideration customer goals and setup. Share it prior to the kickoff meeting, and you can expect many tasks to be completed beforehand.

Focus on accountability. According to Lincoln Murphy, customer accountability is the missing piece in your customer success strategy. Unlike when purchasing a managed-service package, customers expect to perform actions on their end. Gamification can be a great approach to increasing customer accountability: 

• Sharing a checklist with your customers will motivate them to complete the action items you assign them. Checking items off of a checklist releases small amounts of dopamine that then fuel us to keep checking off more items, and we can use it to our advantage.
• Make it branded. Your brand is a part of why your customer purchased your product. Remove frictions by using the same font, colors, and tone & voice your customers are already familiar with.
• Set up a notification system to remind your customers of an upcoming due date. It could be an email notification, in-app or Slack. Remember to have a link to the checklist to see the full task.
• Assign project owner(s) from your customer end. It could be one or more, depending on the project complexity and areas (if you have multiple personas you sell to, make sure you have one owner per persona).

One-to-many resources. If you don’t have a dedicated help center yet - it’s a good time to start! But even if you do - invest in proactively pushing the right help center articles, based on each customer’s progress, type, or stage. Make it visible and effortless to use. Invest in webinars as their ROI is enormous - even by having only 3 attendees, you gained 3 hours of meetings, or even worse - untrained customers.

Result: Time saved ✅ (but there are more benefits)

When you focus on removing unneeded touchpoints and reducing manual work, your team will gain more time to manage more customers. But there are more benefits:

• Shorter onboarding time - our customers that implemented a self-service onboarding process with EverAfter report up to 50% faster onboarding time. Your customer sees value faster and more independently.
• Reduce CSM <> Customer back-and-forth-email - personalized checklists and notifications can save you up to 90% of the technical email communication between CS and the customer.
• Reduce time spent on CRM updates, while still keeping it the source of truth.
• Your team can now focus on value creation. You can tackle the technical action items in an asynchronous way, and keep your meetings with your customers much more valuable. Use your spare time to truly become a trusted advisor.
• Deliver white-globe experience, by automating manual, unneeded work.