What is a Customer Success Framework and why do you need one?

What exactly is a 'framework'?

Without a framework, or even if part of the framework is missing, there's no stability and eventually your structure will fail. So, as long as you have a minimum customer success framework in place you have a solid foundation to build your bespoke processes around.

What a framework isn't is a blueprint. Due to the individual nature of all businesses, it is not possible to lift and shift the same way of doing Customer Success from one company to another. A framework on the other hand covers all the fundamentals and should be present in all B2B SaaS businesses.

As Customer Success is relatively new, does a CS framework replace something else?

A few years ago when post-sales activities were either Support or Account Management, the only pseudo-frameworks in place were Service Level Agreements and a commission plan for upsells. This was fine when all vendors were really interested in was building a product and selling it to as many customers as possible. The aim was to service customers with as little effort/expenditure as possible.

The recurring revenue model has turned this on its head - customers now effectively rent software without a huge upfront cost and with a low barrier to moving to an alternative provider. This means that post-sales suddenly got serious. Failure to keep your customers paying their monthly fees is the death knell for any SaaS business.

So why is a CS framework needed now?

Before recurring revenue business models became the norm, C-Suite Executives were primarily focused on their product and their Sales team. "Are we building great product and are we slick at selling it?" were the biggest questions asked at board meetings. If the answer to either question was 'yes' then the board meeting was pretty short; any other answers would lead to long discussions about the efficacy of the Engineering and Sales frameworks. If a Client Services Director was present at the meeting, their presentation slot about Support and Account Management was short, near the end, and if the meeting overran, would be skipped altogether.

These days there is a third big question: "Are we retaining all our customers?" and it has equal billing with the other two. If the answer is 'yes' then great, the meeting need not be extended, however if it appears that churn levels are on the rise, the COO or Chief Customer Officer can expect to be grilled on all the other metrics associated with their Customer Success framework.

So a CS framework is needed now because Customer Success is more important?

Yes, the Customer Success function is now critical to the success of the business and it needs to have a framework in place which demonstrates (with metrics) what is and what isn't working and what needs adjusting.

So what are the key elements of a Customer Success Framework?

All Customer Success frameworks revolve around one central structure: Customer Health which, in turn, has four essential supports: Measure, Engage, Target, React.

Customer Health. The focal point of any Customer Success Framework is the definition and measurement of Customer Health. Trends in your customers' health are your bellwether to understand how your churn rates will change. The data feeds you use as inputs, and the algorithms used to calculate the health scores, need to be bespoke to your business.

Measure. How you calculate Customer Health needs to be simple to understand, with as few overrides/caveats as possible, and, most importantly needs to be agreed at the company leadership level. There are a vast array of metrics that can be used to determine health but the two key ones that every SaaS business should use are usage and survey scores. SaaS businesses have access to a fantastic source of empirical data on how well your end-users are accessing and using some, or all, of your product/service. Even though it needs valuable engineering resource, building the mechanism to extract usage data should be committed to very early in your product roadmap.

Although usage data is invaluable, it doesn't paint the whole picture. End-users may have no choice but use your system which ensures usage stats are very high, but they might really dislike your product because it has bugs or the user experience is poor. When renewal time comes around, if these faults are not corrected the users will be very vocal in their desire to move to a competitive product. One way to capture user sentiment/satisfaction is to periodically use surveys to gauge product perception but also measure onboarding proficiency, support responsiveness, etc.

Engage. Having customers and an agreed way to measure their health is the start of a customer success framework. The next stage is to ensure your customers gain the maximum value from your product/service. If customers are not helped to gain maximum value from your product/service they are very likely to churn at the end of the term. This is where the Customer Success Managers earn their salary: proactive engagement with clients.

Pro-active client engagement needs to be both planned and recorded. All customers, or at least High Touch ones, need a Customer Success Plan. Customer Success Plans are too large a topic to be explained fully here but to do them properly you need to need to tailor them depending on both the customer segment and the phase of the customer journey the client is in.

Depending on the complexity and the value of your customers, you may wish to segment your customers into High/Medium/Low touch groups. The alternative segmentation, High/Low/Tech touch, is also common where the lowest touch customers do not have a named CSM but are managed by automated means. However you do this you need to agree what the segments are and what the engagement looks like.

The same is true for the phases of the customer journey: what phases are applicable for your business will determine the level of engagement your clients can expect. As an example, here is a common way to depict a company's customer journey phases:

The level of engagement by Customer Success and Onboarding teams will vary across those phases. What that engagement looks like needs to be defined and followed. It's important that if it's agreed that high touch customers get business review meetings every two months during the adoption phase, that this actually happens.

Target. Once you know how to define/measure customer health and you've figured-out your engagement strategy, you nearly have the basic framework in place. The next essential element is setting the right targets and KPIs. It's simple to be very busy in Customer Success but just being busy without knowing what 'good looks like' is a mistake.

Customer Success Managers KPIs should be focused on the levers they can pull to improve Customer Health. The obvious one is usage. Falling usage trends is a dead give-away that a customer is not seeing full value from your product/service. It's standard for CSM to be targeted on keeping usage high and arresting any falling trends.Targets around CSat/NPS survey results are also common as well as ones ensuring that the engagement plans are being successfully executed.

React. The last section of a Customer Success framework is one that many people might think is too tactical but is one that I believe fills an important gap in the overall quest to minimise churn. No matter how many preventative measures you put in place, you cannot please all of your customers all of the time. The reason for customer dissatisfaction could be many fold (product/service/competition/etc.) but no matter what it is, when a risk that a customer will churn becomes so high that it trips a certain threshold, senior leadership need to react.

The threshold will be different for different businesses and will depend on the value of the revenue at risk as well as the absolute number of customers likely to churn. You would like to think that the underlying problem was already well known to the Customer Success function but it could be that it has come to light that a certain proportion of customers are vulnerable to a new competitive threat. Whatever the reason it is good to ensure there is a mechanism for key members of the leadership team to regularly meet to decide actions for the at-risk customers.

So what are the key takeaways?

Customer Success is now firmly at the forefront of SaaS businesses, especially B2B ones. Along with the additional importance comes extra responsibility and scrutiny. Customer Success needs to have its ship in order and needs to be able to demonstrate that there are no holes in the hull and even if there are, it knows where the plugs are and how to use them. The way you demonstrate this is by ensuring you are working within a well thought through framework that covers all the major reasons why customer churn.

At the heart of any Customer Success framework is the definition and the measurement of Customer Health both individually and collectively. With this in place you have your churn early-warning system ready to go.

The way to ensure your customers are enabled to gain maximum value from your solution is to proactively engage with them. Engagement needs to be planned and it will vary depending on what segment your customer is in and the phase of their journey.

Make sure the CSMs themselves and the team as a whole know what good looks likes and that means targets and KPIs.

Lastly, don't be surprised when some customers need urgent recovery activity to stop them churning. Churn is the responsibility of the whole company so have placeholders where you can gather relevant leaders together to react to urgent customer situations.