What’s your favorite equation? Is it the Pythagorean Theorem? E=mc²? i²=-1? Euler’s Identity?
Unless you’re a huge math geek, you probably don’t think about formulas as much as I do—if you think about them at all. For most, equations are like noses: it’s always right in front of your eyes, but you never really notice it. Maybe that’s because as software becomes more and more ubiquitous, the mechanics of it are becoming more and more abstruse.
But for those of us “behind the curtain” dealing with analytics or code or spreadsheets or consoles day-to-day, equations are also like noses: we’re constantly, almost unconsciously using them. There are some equations, however, that aren’t just tools of the trade. They’re transcendent.
The greatest equations fundamentally reframe the way we see the world. Einstein’s equations for special relativity completely upended how we think about time and space. The fundamental theorem of calculus opened up a whole new world of mathematical potential.
Here’s an equation that fundamentally reframed how I look at my day-to-day world. It’s not something you’ll ever use to calculate a result or compile a spreadsheet, but it could transform how you structure your organization, how you collect and analyze feedback, and how you manage your customer relationships from onboarding through renewal.
It’s simple: CS=CX+CO, or Customer Success equals Customer Experience plus Customer Outcomes.
CS=CX+CO can reshape the landscape at your company in two ways:
1. Optimize your organizational structure
When you think about the words, “Customer Success,” you’re likely thinking about a relatively new business function inside mostly SaaS companies. A company might have “Customer Success Managers,” a “VP of Customer Success,” or even a “Chief Customer Officer.” That function is similar in practice to Account Management with an emphasis on data and the goal of making sure customers achieve their objective with your product. That way, come renewal time, they won’t churn.
With CS=CX+CO, it’s clear that we’re not explicitly talking about a role at all. Your company may have CSMs, but it may not (though it probably should have an equivalent function). What it must have is an organizational commitment to both customer outcomes and customer experiences.
What does that look like?
Sales teams and Account Managers collaborate closely on defining a shared vision of the customer’s goals for the product and what it will take to achieve them before, during, and after the sale. (CO)
Support teams issue CSAT surveys with every interaction, and surface the results to all stakeholders to ensure each touch point is a positive experience for the customer. (CX)
Product teams digest customer feedback to engineer a roadmap that helps customers achieve their goals. (CO)
Marketers protect customers from unwanted communications. (CX)
Success stories are fostered and leveraged through the community to support other customers. (CO)
And so on and so on.
How do you unify these disparate business units around a shared vision of the customer’s success (both outcomes and experience)? There are three main ways:
Unify post-sales under a single leadership unit. Account Management, CSM, CX, Support, Services, Renewals, etc. all roll up to one executive.
Elevate Customer Success to the C-Suite. More and more companies outside SaaS are recognizing that a Chief Customer Officer (or equivalent) is crucial to implementing Customer Success across the company and maximizing their most valuable asset: the customer base.
Incentivize based on customer-centric metrics. Salespeople should be comped in part by retention. Support in part by CSAT. Make sure all teams are accountable in an objective way for Customer Success.
2. Improve revenue growth
Speaking of metrics, just because our equation doesn’t include numbers, doesn’t mean they’re not an integral (pun intended!) part of it. You can’t afford to lose sight of the “why” behind the equation—in other words, “Why CS?” That’s another simple formula: Higher Retention = Faster Growth. Top performers in growth have higher Net Revenue Retention (NRR). The most significant driver of Net Revenue Retention is Gross Revenue Retention. And finally, the best lever for Gross Revenue Retention is a high performing Customer Success org.
Accepting those premises, we can write our core formula syllogistically: Faster Growth = CX+CO.
That plays out in McKinsey’s research as well as our own at Gainsight. We created a spectrum of Customer Success sophistication separated into four categories based on organizational and technical maturity. You can see a dramatic bend in NRR between the third and fourth stages of maturity:
How do you bend that curve? This Maturity Model shows the criteria, but to sum it up, you’ll need high levels of sophistication and automation across functions in ensuring positive experiences and outcomes for your customer base.
Solving the equation
CS=CX+CO is going to look different at every organization. But here are two major steps your organization will need to take in today’s economy to affect your growth curve:
Spin up dedicated teams reporting up to a head of post-sales at the executive level to manage customer outcomes and customer experiences in coordination with Sales, Support, Services, Product, and Marketing.
Start tracking all CX- and CO-related metrics (CSAT, NPS, support tickets, customer health, etc.) in a “single source of truth” dashboard in your CRM across all customer-facing teams.
If you're interested in learning more about this topic, I'd highly recommend joining Tiffani Bova, CX expert and Global Customer Growth and Innovation Evangelist at Salesforce, and Allison Pickens, CCO at Gainsight, for their upcoming webinar.