Our CSMs sourced growth ops. 91% of them closed. Here's what we did.

I hope by now business leaders understand the value customer success brings to organizations by retaining and growing existing business. 

Because I see it every day. 

We’re fortunate to have a technically sound CSM team that customers desire to talk to because of their domain expertise in web development, marketing automation tools, and CRM systems. 

Their expertise provides an additional layer of trust and confidence with our customers — as well as an opportunity for growth.

So like many other successful SaaS companies, the CS leadership here at Chili Piper consistently tracks CS-led metrics like LTV, NRR, and GRR and ties them back to positive outcomes. 

But late last year… we uncovered a missing piece. 

This missing piece stood in the way of us showing our team’s growth related efforts.

We weren’t measuring the direct impact our CSMs had on the expansion revenue coming in from our existing customer base.  

We needed to make a change.  

So we decided to roll out a Customer Success Qualified Opportunities (CSQO’s) program to track and measure expansion efforts specifically from our CSMs. 

Why? 

Well, similar to how sales orgs track CAC (Customer Aquisition Cost) to determine how much it costs to acquire a customer, we wanted to explore ways to tie CSMs’ efforts to CEC (Customer Expansion Cost).

How did we do it? 

Well, we didn’t have to look too far…  

First, we reviewed our pre-sale handover process between SDRs and AEs.  

As soon as an SDR qualifies a prospect, Chili Piper auto-generates an SFDC opportunity, enabling SDRs to instantly book demos for Account Executives. They don’t have to waste any time manually building opportunities (selfish plug: That’s the magic of Chili Piper!) 

Then, we applied the same workflow and automations to the CSM-Account Manager “Handoff” process. After a CSM qualified an upsell or cross-sell opportunity, they could instantly book a meeting between that customer and their dedicated Account Manager.

We knew that CSMs were contributing to expansion, but now we had an automated workflow to track it. Here’s what this looks like in our CSQO SFDC Report:

What’s in for our CSMs?

We knew our CSMs would do a great job — but we wanted to make an active effort to celebrate their hard work.  

So we added an additional SPIFF (Sales Program Incentive Funds) for Qualified Held Meetings (QHMs) sourced by CSMs. Here’s how we present this to our CSMs in our discretionary variable compensation package:

CSQO SPIFF: CSQOs are new Qualified Meetings Held (QHM) booked for Sales and Account Management by the CSM, including upsell, cross-sell, and new biz referrals. A bonus will be paid out to the CSM for each QHM.

$250: Bonus per Qualified Meeting Held.

But does it make sense for the business? 

We love giving CSMs extra money for a job well done, but does it make financial sense? Especially since we already have other departments single-mindedly focused on growth opportunities for existing customers (shout out to our incredible Account Management team!). 

That’s when we explored the concept of a Customer Expansion Cost (CEC): 

“Customer Expansion Costs (CEC) are all costs, including Sales and Marketing, associated with expanding revenues within the existing customer install base. Best practices suggest allocating 15% of Sales and Marketing costs into this bucket 

- Gainsight, The Essential Guide to Budgeting for Customer Success

OK… but this “best practice” appears to be about allocating costs within Sales and Marketing. What about Customer Success efforts?  

If we consider the unique position we have with customers, is there a way to leverage CSMs’ time (as our team’s commodity) to understand if there is a positive return on investment?  

Here’s how we explored answering this question:

1. Calculate the closed/won rate of CSQO’s:

In Q2 ‘22, CSMs generated $156,000 in pipeline via CSQOs. Of this, $141,000 was closed-won (91%). In terms of those opportunities, here are some additional takeaways: 

• Closed Won opps: 29 of the 36 QHMs (80%)
• Average ARR opp: $4,300
• Max ARR opp: $23,000
• Min ARR opp: $450 

2. Determine total time spent:

We learned that these expansion discussions are typically surfaced during working sessions led by our CSMs (e.g.meeting on configuration adjustments, Additional End-User Enablement, Admin Training, or additional license needs). 

Then we use Chili Piper to track time spent per meeting type in SFDC (we love using our own tech, if you couldn’t tell). 

From Chili Piper, we know that this type of meeting averages roughly 30 minutes per quarter — so they’re spending two hours per year on working sessions. 

We automate the creation of the SFDC opportunity but ask CSMs to include a summary of how they qualified the opportunity. We then add additional upsell/cross-sell details within the opportunity for it to be considered a CSQO. 

Here’s a quick rundown of the steps we require our CSM’s to complete in order for them to qualify for each CSQO SPIFF:

Step 1: CS has to use Chili Piper (Specific Meeting type) to book QO meeting:

Step 2: A SFDC Opportunity is automatically created via Instant Booker

Step 3: CSM needs to open the qualified Opportunity in SFDC and update all required fields 

Step 4: Create a NOTE on the Parent Account (summarizing how CS qualified the opportunity with relevant communication (video, email, etc.)

This amounts to another half an hour of admin work.

0.5 hours of admin work + 2 hours of working sessions = 2.5 hour per customer CSQO

3. Calculate cost metric:

For this exercise, let’s use an hourly rate of $60 per CSM 

2.5 hours of work = $150 per CSM 

$150 * 36 = $5,400 (Cost of Investment)

4. Derive CEC/ROI 

ROI = (Total $CSQO / Cost of investment) x 100%

($141,000/ ($5,400)x100% = 2611% or 26x ROI‍

 You read that right.

We saw a 26x ROI by incentivizing CSMs to source growth ops.

So, is it worth is?

Without a doubt. Having our CSMs identify upsell and cross-sell opportunities that align with our customers’ business objectives using Chili Piper yields a 26x return on investment.  

In fact, we’re currently leveraging this program to help drive additional growth for our new product, Distro, in addition to efforts from our Account Management team.

Takeaways:

1. Don’t settle  

Established metrics aren’t necessarily right for your team or your business. Instead, explore other creative ways to prove your team’s efforts can positively impact the business.

2. Crawl, walk, and then run…

Crawl… by first finding the right way to measure CSQO’s within your organization.

Walk… by letting the data dictateyour next steps. If the CSQOs have a high win rate, go with it! Then explore if the amount of time is worth the return.

In our case, it was quite a low lift (in terms of time) with a high ROI. But if you’re not seeing the expected outcome or win rate, you may need to go back to the drawing table to understand if CSMs are qualifying expansion opportunities correctly.

Run… by monitoring and tracking. These programs can contribute to strong quarterly performances, but it’s important to ensure CSMs are not spending all their time on these efforts. You still need to retain happy, active customers! 

3. Treat CSMs as strategists 

When CSMs provide strategic and consultative work, a lot happens. First, they build trust with their customers (and improve retention). But more than that, they often have a better pulse on your customers’ needs — and will be able to identify expansion opportunities at the right time. 

4. Leverage time as a commodity

By using Chili Piper! With Chili Piper, we can automate workflows, establish prescribed meeting types, and leverage time-tracking data. 

From that we’ve been able to surface new, quantifiable metrics that prove the value of our team’s efforts!