Key Takeaways from the 2018 Customer Success Industry Report

Posted by Jamey Jeff on Jul 12, 2018 12:31:27 PM

We are excited to announce the release of the Coastal Cloud 2018 Customer Success Industry Report. Our team conducted in-depth interviews with nearly four dozen Customer Success leaders, asking them everything from how they manage their customer journey to their customer success team structure to how they measure customer health and budget for customer success. Our goal with this study was to empower CS leaders and the broader market with key insights to help drive their CS programs forward.

Below, we share a few of the findings we discovered while conducting our study. You can find all the details by downloading the full Coastal Cloud 2018 Customer Success Industry Report.

The Importance of Measuring Customer Outcomes

“Measuring customer outcomes is the bane of my existence” says one of our interviewees, who like many of our other study participants is struggling to report on her customers’ success.

According to our study, only 56% of CS teams are measuring customer outcomes (in terms of ROI, value delivered, or results achieved with their products). Most notably however, companies that do measure customer outcomes see higher logo retention, gross dollar retention, and net dollar retention.

Average retention rates: Do you measure customer outcomes?

 

Measuring Customer Health - The “How” Matters

Our study participants shared a variety of ways for measuring health. In our analysis, we found two aspects in common with companies that have better retention rates:

  1. They use multiple data points to measure health. A single “Red / Yellow / Green” based on a CSM’s gut feel doesn’t cut it.
    Retention Rates vs. Customer Health Measurement
  2. Health score formulas can’t be viewed as “set it and forget it”. It’s important to regularly re-calibrate them as your customers, products, and business evolve. 

Net $ RR vs. How do you re-calibrate customer health?

Developing Greater Budgeting Maturity

“Our budgeting for headcount is unscientific. We base it on ‘these are all the accounts that aren’t assigned.’” - Sound familiar? The vast majority of our participants budget for CS headcount (by far the largest CS expense) using hiring ratios based on either total ARR or total number of accounts.

CS Budgeting Methods

It doesn’t take very long in a company’s history for their renewing ARR to far exceed new bookings in a given year, so we were surprised to see that only 10% of our participants, as revenue owners, budget for CS in a way that demonstrates the ROI of CS in clear terms.

The best companies have shifted the discussion from CS as Cost Center, to CS as Profit Engine.

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Got your attention? Learn more about our findings on the current state of Customer Success and discover best practices for your organization by downloading the full Coastal Cloud 2018 Customer Success Industry Report.

Topics: Customer Success