How to build and evaluate your Customer Success team, with Dave Blake

Improving customer experience has increasingly become a priority for B2B SaaS companies.


Building a Culture of Customer Success can be crucial for developing customer empathy and, consequently, driving retention and growth.


In the 23rd episode of the Leaders of Growth podcast, Dave Blake delves into how to build and evaluate a Customer Success team to strengthen customer advocacy and boost revenue retention.


Dave has spent most of his career working in Customer Success. After starting in a groundbreaking customer success company that Adobe eventually acquired he became Global VP of Customer Success at Adobe. Afterward, he founded and became CEO of ClientSuccess, a Customer Success platform specializing in the post-sale process.



What are the most common mistakes companies make in Customer Success?


The most common mistake for both early-stage and mature companies is failing to establish a culture of Customer Success from the very start. This means aligning every team to develop Customer Success as a priority rather than an afterthought, to have empathy for customers, and invest the right resources in it. Failing to do this can hurt your company in the long run.



How can you create a culture of Customer Success?


A CS culture starts with the empowerment of the leader and the team. You need the right person to lead. The executive team must spend time with customers, listening to them and empathizing with them. That leadership can lead to further investments, enhanced focus, and an empowered CS team.


It’s essential to recognize that, even though the CS team is responsible for a portion of the retention metrics, they have little influence on the aspects that impact retention. There’s only so much that Customer Success can do to retain a client.


Customer Success is a team sport, and the leaders and the team are the stewards of the clients. Therefore, they need to be empowered to drive action, improve the business, and, most importantly, recognize what they can and cannot control.



How can you evaluate the Customer Success team?


I strongly recommend the RESALE model: these are key metrics contributing to the success of the CS team.


“R” stands for renewal and revenue retention; “E” stands for expansion; “S” is for second-order revenue or referral revenue; “A” is for advocacy; “L” is for lifetime value; and “E” stands for executive sponsors. A combination of metrics can be beneficial for evaluating CS teams.


If I had to pick one guiding metric, it would have to be net revenue retention. This is the best metric because it incorporates all of the RESALE aspects. If you have high revenue retention, you have high retention rates, high expansion, and great advocacy.


One critical leading indicator is engagement. There are three aspects to engagement: the first is engagement with the company, which usually means having regular meetings; the second is engagement with the product, meaning product usage and the right product expansion; the third is engagement with the customer’s goals and objectives, which is about meeting customers’ success criteria as a company.


If you can engage with the customer, the customer engages with the product, and you can, in turn, help the customer achieve their goals and outcomes to get the retention and growth you’re looking for.



Some startups evaluate teams using NPS. What are your thoughts on this?


I don’t recommend CS teams use only Net Promoter Score (NPS). NPS is only one signal of customer health and customer experience. It’s one of many metrics to gain insights and extract the value out of the experience.

I also think that Product teams should own more responsibility and accountability for retention. Product is a fundamental aspect of any company, and product teams aren’t always in tune with use cases and the gaps causing churn. Product leaders accountable for retention can do a great job organizing your business.


"The crucial characteristics make a good VP of Customer Success are leadership skills and the ability to inspire, establish a vision and communicate it correctly."

How should companies go about quantifying their value proposition?


Quantifying a value proposition is part science and part art. Discussing with the customer and helping them communicate their success criteria is the art aspect. Capturing this and tracking it to completion is the science aspect.


Customers buy your product to achieve a particular objective. The better you can align with the customers’ goals, articulate them and achieve them, the more likely you’ll have a positive outcome in the back-end.


To monitor and quantify a value proposition, you should identify the most typical goals customers try to achieve with your solution. This allows you to standardize your customers’ objectives and execute them in a more organized way.



What’s the best profile for a VP of Customer Success?


The VP should be a people person who enjoys building genuine relationships with customers. Empathy is crucial. This person must be able to walk in the customer’s shoes and constantly seek to understand them.


Operational excellence is also key. It’s about taking a vision and a strategy to operationalize it across the organization. Finally, this person should be a great mentor and coach to others. Customer Success Managers (CSMs) need to take ownership and know that they must be there to accompany clients along the customer journey.


In the end, there are three crucial characteristics that make a good VP of Customer Success: leadership skills, the ability to establish a vision, and the ability to communicate it correctly.



Is there such a thing as a career progression plan in Customer Success?


We try to create a career matrix, which identifies the entry-level base role of Customer Success up to the VP, with clear objectives, competencies, and performance indicators that help you understand how you progress from one level to another. This is a transformational tool for the team to have clear visibility on how to progress, not based on subjective management but performance, competencies, and progression over time.


You can monitor people’s performance based on quantifiable objectives, like hitting specific targets from retention and an expansion perspective. It’s not as black and white as sales competencies models because the sales role is much easier to quantify. There is a little bit of a qualitative aspect to it, but we try to find quantifiable areas.



What are your thoughts on CS compensation structures?


Contrary to popular belief, I believe CSMs should benefit from the hard work and receive some sort of compensation in return. CSMs take care of customers for years on end, and for them to not benefit from their efforts would be unfair.

The CSM profile is the key to maintaining a balance between good work and compensation. A CSM’s primary motivation should be driving value. Money is secondary. What you need to do is to find the right balance between sales and Customer Success. The best sales representatives are very motivated by money but also good at relationships. The best CSMs are great at relationships, but they also enjoy making money. I think that should be the natural dynamic between the two.



Is there some sort of fixed compensation model you can recommend?


The standard model is an 80%-20% split, or even a 70%-30% split, between base and variable compensation. 70% to 80% is base compensation, and 20% to 30% is variable compensation. Within that 20%-30% variable compensation, you typically have the same ratios: 80% comes from retention and 20% from expansion.


Over the past year, we’ve experimented with a model that consists in finding and defining more leading indicators. With retention being the end goal, you define leading indicators and then measure both leading and lagging indicators.



Is there anything else you’d like to share?


The wisest CEOs will invest in understanding the Customer Success side of the business because it can only improve your company and drive revenue retention.


I encourage CEOs from companies at any stage to take the time and effort to understand Customer Success, develop their empathy, and make meaningful investments on that side of the business.



Do you have any content recommendations?


Our company, ClientSuccess, has a website, www.clientsuccess.com, and you can find me on Linkedin and Twitter.


I think we create some of the best Customer Success content available and offer free of charge to the world: webinars, templates, blog posts, and more. Check it out!



To listen to the full interview, click here.



About Knight Capital

Knight Capital is a venture capital firm helping Series A and Series B SaaS companies expand through funding, growth expertise, and access to an ecosystem of partners.