Let's face it: Sales teams are revenue orgs, and customer support teams are spending orgs.
If you still think that, you probably need to segment your cohorts further, have a deep chat with your Data team, and, eventually, design control groups.
Sure, I’m not a data expert. But, I’m surrounded by great professionals who make my life easier and take my critical thinking further. In my time as the leader of customer support and success at Landbot, I made it my mantra to stick to common sense and ask advice from people who overcame the challenges I’m facing today.
Hence, I wrote this article in the hope of reaching other customer-facing team leaders. Your Customer Support/Success team can be a Revenue Org!
Don’t believe me?
Then read on as I share my painstakingly earned insights below.
When we think of teams within a company, we tend to unconsciously divide them into two groups:
- The ones making the money
- The ones spending it (and therefore ruining the party margin).
You got the Sales team killing it with 1-call, 5-figure deals, Marketing crushing CRs all across the customer lifecycle, and, well, the Support folks putting out fires and complaining.
Yet that's so far from the truth that it itches!
There's one undeniable truth, though.
Correlating an AE's 'closed won' deals with revenue for the business is significantly easier than a 5-star conversation rating given to a support rep. And, well, not everything can be correlated, especially when you face the classic, early-stage nightmare of sample size — even more painful in the B2B space.
Beyond Functional KPIs
We've all been there: A new quarter begins, and your team starts working on OKRs for the next three months, ensuring alignment with the company’s strategy.
In the old startup days, Customer Support/Success teams used to base their planning on the functional KPIs they owned by default. This, for a Customer Support team, could be First Response Time or NPS.
In my humble opinion, while you need to track those down to make sure the foundation is working correctly, there's another approach to goals that can help you strategically position any team within your company as a relevant, revenue-generating engine.
If you ask me, the beauty of OKRs is the focus on impact rather than task completion.
Although, there are always exceptions.
For example, instead of setting "Creating 10 Knowledge Base articles" as a KR, go for something like "25% more customers check out our help documentation".
Bonus Insight: There is also some discussion around whether you should use percentages or absolute numbers to track the progress of your KRs. While there is no rule of thumb here, my preference is usually percentages/conversion rates as it makes you agnostic of the potential volume that specific initiatives could have, often out of your control.
The next natural question you might be asking yourself is: What's the impact of, e.g., having more customers checking out the documentation? And we'll delve into that in a minute!
Retention as Your North Star Metric
In subscription businesses, retention is king.
You want to get signups, convert them into customers, and retain them for as long as possible to ensure your CAC to LTV ratio is healthy. While a retained customer is not always a happy customer, it is good for the business.
The most extended way to measure retention in a SaaS company is by tracking payment retention. That is, what's the number of customers that renew their subscription — pay again — over a given period (weekly, monthly, yearly).
The caveat with payment retention is that it's lagging, especially if a significant portion of your customer base is on annual plans.
So we need to find a proxy. That is a leading indicator that correlates with payment retention, allowing us to get insights faster and make decisions quicker.
Usage retention is usually the way to go. A customer that logs into your product every day is — ceteris paribus — more likely to keep paying than one we haven't seen around for weeks. Yes, every business has "zombie paying accounts," and that's the reason why payment retention is so lagging — sometimes it is just too late to go and resurrect a sleepy customer.
How to confirm the correlation between usage and payment retention?
Assuming you have access to a product analytics tool (e.g., Mixpanel, Amplitude), you need to look for relevant usage events. Some are common to every other business (such as log-ins), while others are solution-specific (in our case, having a 'chat' is one of the core usage indicators).
Find one that sharply represents value for the customer. Then, export a list of paying customers that completed that action a certain amount of times in the past 24 months and import it into your financial analytics tool. You should be able to analyze this particular cohort's net MRR retention compared to the entire base or, even better, a control group (e.g., a group of customers who didn't complete that/those action/s over that period).
Is the payment retention better for customers who completed that key action(s) in your product? Then that should be a good (usage) leading indicator worth pursuing through your retention initiatives. If not, repeat the process until you find valid, leading usage indicators you can wrap your team's goals around.
Oh, and by the way, net dollar retention is just one out of the many indicators we can check here. Lifetime value, logo churn, or expansion rate are other interesting ones that will help you quantify the impact of certain actions and, therefore, the initiatives you design to empower them.
Important: Be thoughtful about cohort sizes. You might find an action highly correlated with payment retention but only performed by 1% of your customer base. Pushing that 1% to 2% is probably more complicated than taking 25% to 30%.
The Correlation Trap
We need to keep in mind that correlation and causation are two different things. While correlation is "a mutual relationship or connection between two or more things," causation is "the relationship between cause and effect."
In other words, we might know that users who integrate Landbot and Airtable check our dedicated article in the Help Center (correlation).
However, we don't know if the action of checking the article alone drives the adoption of that particular integration (causation). It's usually the other way around (customers want to learn how to integrate something, then check the documentation).
Let's put it this way: We genuinely think that our documentation is so good it helps users discover new ways of using Landbot. So, the million-dollar question is how can the team that owns the help content creation leverage, e.g., integrations and, therefore, revenue for the company?
The answer is by effectively delivering that content to relevant users.
You probably need to join forces with the Marketing team, but, well, that's a different ownership discussion.
Putting It into Practice
Long story short:
1. You correlate the adoption of the Salesforce integration with 50% higher LTV;
2. You create a dedicated guide to teach users how to plug both tools;
3. You include it in an email sent to customers who haven't integrated it yet.;
4. You measure the number of customers that, after a given period of time, completed the integration;
5. You multiply that number by the net increase in LTV;
6. That's the impact in revenue your help documentation has brought to the company. 🙂
Yes, for pedagogic purposes, this is an oversimplified example.
The impact of your communications (from open rate to CTR) might not be as ideal as you expected.
You might not see the LTV of the customers who integrate Salesforce after reading your help article increasing that much.
But, hopefully, you can take this as an inspiration for the other million things you can do to cause a real impact on your company's traction from any angle.
All the above being said, sometimes we need to get into the qualitative side of the force.
Following the previous example, as a Customer Support Manager, you might notice that several customers complain about how complex it is to integrate a given tool. Maybe you're even able to quantify how many ended up churning for that reason. Suppose you create quality content around the topic, making sure it's accessible and easy to follow. In that case, you can probably compare the outcome from users trying out the integration for the very first time, which now comes with world-class documentation.
And, if not, at least you can gather qualitative feedback that you can take advantage of in future initiatives.
A quick reminder here!
There are some activities I like to call 'no-brainers.' Things that every other top player in the SaaS industry is doing, such as sending a welcome email to new customers or creating a help article about your first steps in the product.
Don't overthink these initiatives, and go for them as soon as you have the resources.
At the end of the day, we all hate verification emails but need them for security reasons.
- Always keep an eye on your team's functional KPIs. They're called 'functional' for a reason!
- Understand the key events that correlate with your north star metric to discover leading indicators. In SaaS, this goes around retention and the activities that, if completed, stick customers to the product.
- If possible, measure the impact of your initiatives rather than their completion. You can get support from other customer-facing teams to make this possible.
- Try out things that don't scale! These usually generate a more significant impact, and, once validated, you can always chat with your Ops team to see how you can improve your efficiency.