Nobody Knows the ROI of their Customer Success Managers (Audio)

This conversation examines why calculating the exact ROI of Customer Success Managers is far more complex than it appears. It explores the standard employee ROI formula and explains why it breaks down in Customer Success due to the lack of a reliable baseline and the presence of significant intangible value. The discussion highlights challenges such as the absence of valid control groups, the limitations of historical comparisons, and the influence of product maturity and customer segmentation. It then introduces a design-centric approach focused on optimizing CSM-to-customer ratios through iterative thought exercises and touchpoint refinement, rather than relying on precise mathematical ROI calculations.

Covers:
• The traditional employee ROI formula and its three components
• Why ROI is easier to calculate for sales than for Customer Success
• The lack of a reliable baseline or control group in CS
• Why enterprise vs lower-tier customer comparisons distort churn data
• The problem with using historical pre-CS metrics as benchmarks
• How product maturity, marketing, and customer fit skew retention data
• Intangible value of CSMs in supporting enterprise sales efforts
• Product feedback loops driven by Customer Success insights
• The impact of positive and negative advocacy on growth
• Why ARR or net retention alone cannot define CSM ROI
• The concept of a design-centric optimization approach
• Modeling extremes to identify optimal CSM-to-customer ratios
• Theoretical A/B testing of CSM portfolio sizes
• Practical alternative: thought experiments on adding or removing accounts
• Iteratively refining touchpoints to balance cost and impact
• The need to align CFO and CEO expectations around intangible value
• Emerging metrics such as Customer Success Qualified Leads (CSQLs)
• Tracking advocacy and expansion signals as alternative performance indicators