From a Cost Center to a Profit Center – CS Playbooks and How to Use Them

There are many ways in which a Customer Success function can be set up within a business. Your customer success strategy will depend on the type of business you run, the revenue you’ve achieved, the type of customer you sell to, which part of the customer journey it covers, how technical is your offering, how you plan to scale, even your roadmap and competitive landscape.

Let’s explore a few potential playbooks, how they fit into different businesses and how success can be measured for each.

🔔 The Service Provider 🔔👌

• Characteristics: Reactive, non-strategic, typically responds when a customer inquires with an issue.
• Scope of the function: Support and/or service provision and similar functions.
• Organizational visibility & influence (internal): Often seen as a bug-reporter to Dev teams, sometimes helps with manual QA, too. Many times an afterthought rather than a serious priority.
• Customer perception (external): “The person that helped me solve the technical issue at 1am last time, and I had to escalate to the CEO in order to get a response.”
• Reporting line: Usually IT, Tech/Dev, even Product functions. There is probably a Lead or maybe a Head of the specific team itself.
• P&L impact: A cost center.
• Customer journey stages covered: None truly in terms of ownership, but usually engages post-implementation/go-live/start, on a need-to basis, sometimes also assists during initial setup – in short, gets involved in all post-sale stages but doesn’t own any.
• When is it a suitable organizational form for CS: It could work for service-based or highly transactional businesses that don’t require a lot of strategic involvement but prioritize effective troubleshooting.
• Typical KPIs: Transactional CSAT, CES and similar, # of tickets, response and resolution times, etc.
• NB! This is a much needed function within a tech business and the above description is not to say that this function is less important. The point is to show that in many companies, unfortunately, these functions are not evolved to their full potential (more on this below) and are unrightfully seen as a cost-generating necessity, without a proper strategic plan emphasizing the importance and leveraging the full capacity of this function.

📑🧑‍💻 The “Teach Them How to Fish” 🎣

• Characteristics: A ‘back-row’ function, focused on creating a lot of educational content with the hope that the customer will use it to self-serve when presented with it.
• Scope of the function: Training, education, content creation, documentation/technical writers.
• Organizational visibility & influence (internal): Go-to people when detailed technical/product knowledge is needed.
• Customer perception (external): “They told me they had detailed documentation but it was easier for me to get direct help from Support so I created a ticket instead.”
• Reporting line: Product or other tech functions.
• P&L impact: A cost center.
• Customer journey stages covered: Doesn’t own any stages in the customer journey, but supports or partially covers onboarding and general post-sale.
• When is it a suitable organizational form for CS: It could work well for businesses that offer a rather straightforward, largely self-explanatory product where a little extra education and documentation could go a long way, and where the business is highly transactional.
• Typical KPIs: Number of Engaged Learners, MAUs, CSAT and similar.

🎫🎁The Proactive Enabler 🥋

• Characteristics: Develops and executes on a full Customer Enablement strategy, including customer learning, Voice of the Customer program, and cares about continuous enablement and adoption.
• Scope of the function: Learning strategy expertise, instructional design and development, SMEs, content creators, etc.
• Organizational visibility & influence (internal): Regarded as a key function playing a crucial role in customer onboarding and product adoption, therefore influencing customer retention and enabling faster expansion.
• Customer perception (external): “They inform me of all the new features and have great learning content, I can learn at my own pace and with ease, and I feel like I make the most out of the product.”
• Reporting line: Most typically a part of a larger Customer Success organization. In some cases, it might report into Marketing.
• P&L impact: At a minimum, cost-neutral (pays for itself, mainly through increased retention and expansion). It has the potential to become a profitable function.
• Customer journey stages covered: Onboarding, adoption, retention, advocacy.
• When is it a suitable organizational form for CS: If the product continuously evolves and it is crucial to ensure customers continue to get the most value out of it; also suitable for large volume businesses, large number of customers where it is important not to compromise the quality of the overall service, as well as when scaling.
• Typical KPIs: Product adoption metrics, Onboarding CSAT and CES, Retention of engaged customers vs overall retention, CEQLs generated, etc.

🖨️ A Renewals Machine 🧾

• Characteristics: Focused almost exclusively on ensuring the renewal of each customer goes through, administrative and execution-oriented.
• Scope of the function: Purely renewals.
• Organizational visibility & influence (internal): Seen as an administrative, paperwork-focused, ‘back-office’ team. Likely collaborates with an existing CSM team or with Sales on selected renewals. Customer-facing but with a limited remit.
• Customer perception (external): “Someone usually reaches out to do the paperwork for each renewal.” -> usually this engagement doesn’t generate value for the customer.
• Reporting line: Part of a larger CS organization if one is in place, otherwise could be a part of the Sales organization, RevOps or Sales Ops, in some cases even Finance.
• P&L impact: A cost center.
• Customer journey stages covered: Renewal.
• When is it a suitable organizational form for CS: Businesses where for some reasons the renewals cannot be automated.
• Typical KPIs: Renewed ARR, Renewal Rate, Number of customers renewed.

⭐ The ‘Trusted Advisor’ ✅

• Characteristics: Strategic, with business acumen and good knowledge of the industry/domain.
• Scope of the function: Oversees customers throughout the customer journey and largely focuses on helping them realize value from the product; obsesses about ‘the desired outcome’.
• Organizational visibility & influence (internal): Seen as an important part of the company, key to customer happiness and success. In some businesses, seen as the truest definition of CS. Collaborates closely with Product, influences the roadmap and exchanges insights with Marketing.
• Customer perception (external): “I have no doubts about XYZ company. I regularly speak to my CSM and they are showing me relevant data insights on how we make good use of their product. It really solves a problem for us.”
• Reporting line: Typically part of a broader Customer Success function. Might report into Product, Revenue or directly to the CEO.
• P&L impact: If not done right, it is a cost center. When done properly, it is either cost-neutral or profitable (maximizing retention).
• Customer journey stages covered: All stages from onboarding through continuous loyalty, in some cases including renewal.
• When is it a suitable organizational form for CS: Depending on the business and product, some companies prefer to keep CS as this trusted advisor, largely focused on value creation for the customer. In such case, there is likely a dedicated capability within the Sales function focused on customer expansion. This means that the CS and Sales functions need to work together very closely.
• Typical KPIs: Value realization metrics, product adoption, customer health score, CSQLs, NPS, retention.

🤝 The All-Round Partner 🙌

• Characteristics: Strategic, entrepreneurial, data-driven, understands farming and sales methodologies, has good knowledge of the industry/domain.
• Scope of the function: Takes care of the customer entirely post-sale, including all commercial aspects. Typically, the Proactive Enabler and the Service Provider are a part of the broader CS function in this organizational form.
• Organizational visibility & influence (internal): Participates in the shaping of the product roadmap based on customer input, is deeply embedded and collaborates with all the other Go-To-Market functions, leverages executive engagement as needed, executes on a customer success strategy and plan.
• Customer perception (external): Customer executive: “I met with XYZ yesterday. We talked about our strategy update and our new release. We will likely scope an expansion with their company. I trust these guys to partner with us on the long term.”
• Reporting line: Usually part of a scaled CS function and reporting into a CEO. In some cases, it can be a part of a broader Revenue function together with Marketing and Sales.
• P&L impact: Profit center.
• Customer journey stages covered: Everything post-sale.
• When is it a suitable organizational form for CS: Suitable for mature organizations, companies working with large and strategic customers and where high-level stakeholders from the customer side are involved in the relationship.
• Typical KPIs: NRR, product adoption, customer health score, NPS, etc.

These CS playbooks and functions are an example of many different possible setups, and the best one for you depends on many factors like the ones mentioned in the beginning of this article. More often than not, organizations would morph a function into their own setup by modifying some of the usual characteristics, or would run hybrid functions that might combine two or more of the above mentioned playbooks.

Not sure how to go about making CS a profit center, or what’s the best setup for the CS function at your business? Let’s talk! ✉️