#27: How To Monetise Your Customer Success Team

Offering a "free" Customer Success Manager has become the norm for most B2B subscription and consumption businesses.

 The 3 main reasons that I hear from leaders sticking to this path are:

1. Not having a CSM will increase the propensity to churn

2. Customers are price sensitive, they don't want to pay for services

3. The competition doesn't charge for the CSM, so we can't

The issue with these arguments is that they all seem to ignore that the CSM is an indispensable high-value service for customers. And that charging for it could help you deliver an experience that is 10x better. 

It's weird to watch the same people that defend the importance of Customer Success, be the first ones to say that customers don't see enough value to pay for it.   

My counterargument is:

When priced fairly and positioned correctly, customers will not only agree to pay for a CSM, but they will be more committed and engaged, thus will get better results.

And in this economic climate, it's especially important for CS leaders to test these assumptions and truisms about the right way to price and package customer success.

What if charging for Customer Success could improve engagement and adoption, deliver better customer outcomes and enhance the experience all in one?

In this issue, we will explore how you can package and price a paid CS Offering in 3 steps!

1- Understand What Help Your Customer Needs

Everything always starts with understanding your customer's needs.

• What are the customer's long-term goals?
• What are the customers' pain points once they complete their onboarding? 

These 2 basic questions will help you identify areas where your CS is uniquely positioned to drive value for customers.

For example in HubSpot, a critical long-term goal customers have is to increase demand for their services/products.

Once they have a basic setup, customers tend to struggle with things like:

• creating reports and dashboards to help monitor the progress of their team

• migrating their website 

• driving adoption and managing change as they often transition from another CRM

• understanding the performance of their marketing campaigns

• finding strategies to improve their results

• training new team members on how to use HubSpot 

Mapping all of these pain points and clustering them by topic will help you understand how CSMs can best service your customers.

Even if you stop the exercise here, you've already got something of value you can take back to your CSMs to improve the current experience.

2- Define The Scope Of Your Paid CS Offering

Some of the challenges you map will fall under the scope of Customer Success and some won't. Others might be small and unimpactful.

That's why it's important to refine the list and decide which of the pain points should be part of your offering.

You can package them as:

• Outcomes-Based Services: Multiple services that customers purchase to get specific outcomes, for example, a website migration service, or an integration.
• Retainers: Customers have access to a number of hours or "tokens" with a CSM and they can use them as they go.
• Paid CSM Subscription: An ongoing service that will give customers access to a CSM that will be available to support them with their challenges and opportunities.

These packages will be how your services are sold, so it's important to think deeply about the USP and clearly outline what customers get when they buy these.

Packaging is an art and knowing what resonates with your customer is your superpower!  

3- Pricing Your Paid CS Offering

There are several pricing models you can consider when looking at the packages above, including:

• Tiered pricing: Create different tiers or packages based on the level of support and services offered. Higher tiers can include more personalized assistance and access to advanced features.
  
• Usage-based pricing: Tie the pricing of your customer success offering to the customer's product usage. For example, you can charge based on the number of users or the volume of data processed.
• 
Flat fee: Set a fixed monthly or annual fee for your customer success offering, regardless of usage or package level. This provides predictability for both you and your customers.
• Add-on pricing: Offer premium customer success as an optional add-on to your base SaaS product, allowing customers to choose whether they want to pay for additional support while offering the basic account management element for free.

There is not one size fits all approach here.

The pricing model should align with the packages you design and be reflective of the value that customers get from the service.

Charging solely on the basis of "hours" is often a limiting issue as it hinders your ability to go above and beyond for customers. 

A word of caution: If you are selling Customer Success as a paid offering, it's important to monitor the impact of that on discounting of your products. Your sales reps should not be shifting dollars from products into services, but instead positioning CS as a high-value add-on service.

To summarise:

Customer Success Managers provide excellent value for customers and in some cases charging for their service is the right thing to do.

There is an argument to be made that by charging for CS you can improve engagement and adoption, deliver better customer outcomes and enhance the experience, while also building a sustainable servicing model for your business. 

If you are considering charging for CS, there are 3 things you should do:

1. Understand what pain points your CS team is uniquely positioned to solve

2. Define service packages with explicit scopes and USP

3. Price your offer in a way that makes sense for your business and customers 

And if it's not right for your business, that's ok.

View it simply as an exercise to challenge group think ;)

 See you next Friday :D