Last week we held a live Q&A with four Finance leaders on how senior-level Customer Success executives should approach budgeting and planning conversations.


For context, the decision to hold a panel on this topic was a response to the engagement we saw around a blog post on speaking the language of the CFO. We heard that “finance” tends to be one the Customer Success leader’s biggest areas of weakness and that it’d be useful to have more training on how to improve. So we invited four top Finance leaders to answer the audience’s questions on how to best approach budgeting conversations, what KPIs to track, how to handle salary increases for top talent, and more.

Below, you’ll find a summarized version of the full discussion. If you’d rather listen instead of read, you can find the conversation on the 'wellsaid podcast (on Apple Podcasts, Spotify, or Transistor) or watch the full video below.




About the panelists:

  • Tricia Benedix is the CFO at Higher Logic. Previously, she was the CFO at companies like Social Solutions, Relias Learning, and Mitratech.
  • Tien-Anh Nguyen is the CFO at UserTesting. Previously, he was the Director of Market Insights at OpenView.
  • Marc Greenberg is the Head of Finance and People Operations at Blend. Previously, Marc was the VP of Finance and Strategy at Pixar.
  • Ed Tang is the CFO at Lever. Previously, he was the VP of Strategic Finance, Business Analytics and GTM Operations at Box—and before that, the VP of Finance and Strategy at Salesforce.


Moderator: Nuffsaid’s CEO, Chris Hicken, moderated the discussion. Chris has 15 years of experience as a leader, investor, advisor, and board member, and was formerly the President and COO at UserTesting.


The characteristics of a great executive

Chris: Let’s kickoff the discussion with a broad question. Who is the best executive you've ever worked with and what made them the best?

And by the way, the answer doesn’t have to be a Customer Success leader. We want to hear from you, in general, what a great executive partner looks like.

Ed: I've had the privilege of working with many great executives across my time here at Lever, Box, and Salesforce. I'm not going to name names as the list would be too long, but I'll highlight a few of the characteristics that, to me, make executives stand out: clear thinking with great vision, organized and prepared, disciplined and operationally sound, strong convictions but collaborative and open-minded, decisive, high integrity, a great moral compass, and very empathetic.

I've also always appreciated executives that understand the finance fundamentals so that we can speak a common language.

Chris: You said something that’s that's potentially hard to achieve, “strong convictions, but collaborative.” How does one have both?

Ed: Yeah. I appreciate executives that have a strong opinion, but they remain open-minded and can work with others. I don't think having strong convictions necessarily means you’re not open to change. It just means that you have a strong view towards something.

Tricia: I’d also add to that, to the fact that it's really important that you do have a collaborative partner. It's about having a discussion as opposed to feeling like you're being pitched to.

There's nothing that raises my skepticism more than when I'm feeling like I'm getting pitched to. Particularly if, you know, someone's coming in with an answer and trying to convince me of something that the data doesn't necessarily support or an answer that I otherwise wouldn't logically arrive at.

A better approach is to come in and say, here’s the facts, here’s what I know we’re trying to do as a business, and here’s how my team can contribute to that. Or, this is the issue we’re trying to solve, here are three options we can go through, and here’s the option I think solves the problem best.

It's not a pitch, it's a discussion where there's openness just naturally in that type of discussion on both sides to get to the best answer for the business.

Chris: That's a great description of how to be collaborative, even if you have an opinion going in. Anything else that you would add to the list of characteristics that make a great partner on the executive team?

Tricia: I totally agree with ed about integrity—just having a sense of integrity is absolutely key.

But also, to the finance side, the strong folks I've worked with tend to have a strong command of the key metrics and levers of the business. They understand our five-year plan and what our strategy is to get there. They understand their role in that process. They also understand what drives enterprise value and can speak to their investments in how they grow that enterprise value, as opposed to the small view of here's what I need for my team. I'm hearing that my team is overworked and overwhelmed, and I just need more people. That's a very small narrow view of how to manage a business, but understanding how to link that to how it's going to drive enterprise value is how to get a yes from a CFO.

Marc: I'll just add that empathy also goes a long way in a relationship.

We all have different goals and limitations, and having an understanding and appreciation from executives about the varying priorities we have as an executive team is super important to me.

When someone says “I understand your goals here,” or “I want to understand your goals here at the outset of a conversation is,” I find that powerful. So for me, empathy and communication always rise to the top of important characteristics of a strong executive.

And when you you're working with great executive, the comment about being able to change their mind and being open—like actually being open to changing your mind based on that set of competing priorities—is also incredibly important to me.

Tien-Anh: I totally agree with all the characteristics that Marc, Tricia, and Ed have shared. All three of you did not name names, and I'm going to name some names.

I was recruited to UserTesting from OpenView, a venture capital firm, where I was able to meet a lot of different companies and a lot of executives, but I really fell in love with UserTesting. I joined the company because of Chris right here. And I learned that Chris was a great partner. For me, I valued that Chris was very organized and has a way to structure the strategy of his organization, and communicate the focus and goals of the organization.

That’s an incredibly important characteristic because the CFO really wants to understand what their partners’ number one goals are, and how they’re making priorities and how they fit into the overall company strategy. It’s important for an executive to be able to communicate that they understand the organization’s goals and priorities and how that feeds into the company's goals and hiring these help.

An executive should also be able to show that they can delegate. As a CFO, it helps to know that they can rely on their executive peers to be efficient and that they can build a team that they’re able to rely on.

Tricia: One final thing I’d add that I think Tien-Anh touched on is really important, which is about the building of trust between the team. I find that, just as Tien-Anh said, there are executives on my team that, you know, we've been to battle together. They've said that they're going to do something as a result for an investment, and they delivered. So the next time they come into my office and they say, “hey, this is what I'm thinking. I want to do x, what do you think?” I'm more apt to be like, yep. I know you can handle it, and I'm not going to dig in as much because we’ve built that trust.

When you build trust, you get more flexibility. So I would just advise folks that where you can actually start building that trust and relationship with your CFO, that's going to be key to getting to a yes in the future when you need it.

Chris: That’s great. And Ed, the last thing that I think everyone will be interested in hearing a little bit more detail from you about is you said you appreciate executives who have had at least basic finance training. What does that mean for you? Is that like someone who's has MBA-level finance training, or they've been to courses, or they've just had a lot of experience working with CFOs?

Ed: Yeah, so something that Tricia mentioned that resonated was that I appreciate executives that understand enterprise value, shareholder value. They understand the metrics and the business performance results that drive valuation. And these are not super complex concepts. The metrics are pretty clear out there on the types of things that we have to deliver as a business.

So for starters, I think understanding an income statement is table stakes. I think for folks who are either who I've been in Customer Success for a long time, or are just getting into it, believe it or not finance folks aren't evil and they want to help.

I guess a description that I didn’t including in my list earlier was business partnership. That's something I think most CFOs really appreciate. And a partnership means things go both ways, so you come to your finance partner and we're happy to talk to you about the value drivers of P&L, or why certain accounts and a balance sheet matter more than others, or what cash flow really means and how investors think about it.

When you start that dialogue and you start talking about whether it's your three statement model or whether it's the various ARR metrics that matter. For CS, sit down and have the conversation with us and no questions are dumb questions. Because the more educated you are as CS leaders, the more successful the company is going to be.

Marc: I think that's great. I agree with you, ed. I'll just add that building the connection between what's happening in CS to those broader company metrics is critically important.

Like, to your point Ed about understanding things like what customer success looks like, and are there more profitable customers or not? Are there more demanding customers or not? And what are the characteristics of upsell or resell or renewal? Those are things that are components of the overall company ARR metric, or revenue metric, or head count metric. So what's the connection between what I do on a day-to-day basis and how I think about the customer and the customer relationship, to the overall company goals to the overall company P&L, MRR, and spend target?

The leading indicators of portfolio performance

Chris: Since we're already talking about metrics, let's go ahead and segue into the next question, which is focused purely on metrics.

As CS leaders, we all report to the CFO what our retention rates are, our net gross retention rates and our health scores. But those numbers tend to be lagging indicators of portfolio performance and we're trying to predict forward. So what additional leading indicators, um, do you find especially valuable, or what do you wish that Customer Success was reporting to you so that you could do a better job of forecasting?

Marc: Well, I get a weekly Customer Success update from our CS leader that has a whole host of metrics, narrative form, as well the numbers.

One of the places I always look is the zeros—obviously a P0 is a pretty critical indicator of a future problem. Also, Support metrics. How many tickets, what's the response time—those are great early indicators. Customers that are submitting more support tickets that have a slower response rate are going to be part of my problem on renewal.

Ed: I mean, similar to Mark, those are very familiar metrics on our end. You know, one thing, our, our amazing, CXS leader here at Lever focuses on is actually new business customers. So customer inflow based on the different segments that we have, whether it's small business or mid-market or enterprise size customers for our profiles. So we’re looking at what our new business sales teams are forecasting in terms of not just ACVs and ARR, but also the number of customers per segment that they’re estimating are coming in the pipe. That sort of leading indicator allows our success teams, whether they're CSMs or preserve or implementation or support, to make sure that they're prepared to offer the right level of support for the right level of customer and make sure they have the right capacity.

Chris: Ed, does your team also track first year renewals differently than recurring customers who have renewed at least once in the past?

Ed: Yeah. It is something that our CS team tracks. It doesn't necessarily reach me on a repeatable basis, more like on a QBR basis. But the distinction between more tenure cohorts versus new, is something that we, we definitely paid attention to.

Tricia: One key metric that we've found is usage. We think it’s a great leading indicator for retention. So for reference, we’re a community platform. So the number of people who are logging in the amount of activity between all those folks really indicates the value that the client is getting out of our product. And when it comes down to a decision, whether they're going to renew or not, of course, they look at well, what value are we getting from our product?

And if they're not using it very well, or, you know, folks aren't logging in, then that's a main reason why people would leave us. So being able to look at that usage data and then identifying clients who have a low amount of usage and then proactively reaching out to them and saying, “here are our best practices, is anything we can do to support you in order to increase the amount of usage?” — this will definitely help reduce the amount of what I call preventable attrition.

So it's a key metric for us.

Tien-Anh: I agree with Tricia, we look at usage all the time and you know, usage really becomes part of the health score that we review as well. But I would just also add that it really also depends on the scale of the company.

What I have found is that for companies that are the earliest stage in the life cycle, you know, when they don't have thousands of customer or when they don't have thousands of data points, usage is a little hard to measure and a little hard to infer on. And in that case, what I have found to be effective is for the head of finance to actually be embedded in the renewal forecast or the CS forecast meeting, and really understand case by case what is happening with the customer.

But when the company gets to a certain point, when the customer base gets to a certain point, then usage metrics and other metrics become very powerful. I can see that from my own experience at UserTesting into the last five years now, we mostly manage the business on a portfolio perspective.

We'll look at metrics across the different segments, different cohorts, but usually they are becoming more and more predictable for us.

Increasing the company’s investment in Customer Success

Chris: We have a question that came in from the audience that we'll take offline, but the audience wants to know how you're receiving your KPIs. So is it a dashboard BI tool, CS tool? Is it an Excel spreadsheet? We don't have to answer that live, but people, we, we might take that offline and just get your thoughts on that. I want to keep moving here because we still have a ton of more questions to get through.

So, without boundaries in place, the budget for CS tends to grow linearly with the growth of the company. And so as a result of that, its kind of a favorite place for finance leaders to look for ways to reduce customer success costs as a percentage of revenue. So the cost to retain customers. And so, in the past, what arguments have CS leaders made to convince you to increase your investment in CS as a percentage of revenue?

Tien-Anh: One of the common approaches is to speak to how over-investing in Customer Success now will help ramp up the team quickly and support the growth of the customer base. You can argue for a short-term deficit to level-up the outcome and retention rate in the future.

Chris: So the points that CS leaders have made that convinced you are, they mentioned that retention will improve in the long-term. And the second piece is expansion. So it looks like there's a component of a retention, that's not just the dollar for dollar retention rate, but it's actually the expansion dollars, it's the cross sell and upsell, so it sounds like that's potentially a compelling argument as well.

Marc: To me, it goes back to the customer. What are your goals with the customer? What are your expectations with the customer? What response times do you want? What level of project management do you want on implementation? What level of service do you want? And there's a collaboration that happens around what that means in terms of head count, internal spend, or prioritizing one customer over another, oftentimes that has to happen.

There's just often too many fires to fight. When do you concede on rate? You know, we try to always go back to the the customer, so how's the customer going to perceive this? And are we investing for the long term with this relationship?

Chris: Yeah, that's compelling Mark. So it's kind of like this level of investment gets us X. This little level investment gets us Y. And we as a company, where will we decide to make our investments in the portfolio? That's, that's a nice way to think about it.

Ed: I couldn't agree more, particularly on having a CS leader be able to play back to me their understanding of the importance of gross and net retention and LTV. That goes back to that sort of fundamental finance knowledge that I would, I would really encourage folks that if you feel any insecurity about anything we're talking about here, reach out to your finance business partner and they're happy to educate you.

I've always appreciated CS leaders who talk about productivity gains on a per rep or per FTE basis versus just raw capacity.

Like, hey, I need more CSMs because our customers are growing 50% year over year. And you know, this is what the CSMs could cover last year—so it's just a ratio. I'm like, well, it's not really just a ratio. Right? We've been investing in systems. We've been investing in customer marketing. Our product has gotten stronger. That should lead to on a per FTE basis, people to perhaps cover more or reach more customers. So I've always appreciated folks that go that extra step to show that, hey, by investing another, you know, 15% in this area, You're going to see a productivity gain on a per unit basis versus, you know, this is just what we need to cover, you know, cover the needs of the business and the same way go.

Like if I was talking to a new business sales leader on a per rep basis, you know, when they talk about attainment against quota, um, with everything else we're investing in the business, I think CFOs are always looking holistically across the business. We're plowing investment dollars in the R&D and, and product and marketing—all those things should be leading to a stronger value proposition for your product, which should make us see us leader's job, hopefully a little bit better in the next year, and be able to enable them to sign up for productivity gains.

Tricia: I think everybody covered kind of my thoughts, but the one thing I would add is that I think the metrics are important, but as a finance leader, that's not the main driver for what budget ends up being for CX it, is it their goalposts or boundary lines, just to give you a sense for where you are, but ultimately like how much you actually invest in the CX organization is determined by exactly what Marc said, like the service level that you need to give your customer base. And that differs widely depending on what type of business you're in and what your customer base is.

So understanding that, and, and also to what Tien-Anh said, if you're in, in a stage where you're going through a huge change in the organization and you're trying to become more efficient, and it requires some initial investments so that you can transform that organization to scale as the business scales, then it makes sense to spend more money now. So those metrics again are really goalposts and it's all those other factors that need to be considered and discussed to determine really what level spend is required.

The right level to spend as a percentage of the cost to retain customers

Chris: Do you have a rule of thumb for what the right level of investment is in customer success as a percentage of the cost to retain customers. Do you have any rules of thumb that you use to determine what the right level of spend should be? And if anyone has an answer besides “it depends” because I think that ends up being the answer, but if anyone has an answer other than it depends, I think the audience would like to hear that from you.

Marc: We try and stratify our customers into various categories. Blend is the application layer between consumers and banks. We sell primarily to lenders that are collecting consumer information. So we think about our biggest customers, the strategics differently than we think about the smaller customers.

We think about banks and credit unions different from independent mortgage banks. We think about depository institutions, different from independent mortgage banks. So I think that for me, it's about working with your finance team to figure out what the right goals are because eventually this all rolls up into some budget.

It's not like, Oh, we want it. Everyone's like, Oh, well we want to have the best customer service ever. And then there's like an unlimited pile of gold to making that happen—no, there are sacrifices and prioritizations that have to happen. There's limited time and there's limited money. So yeah, I think we at least work with our teams to create goals on how we want to treat different piles of customers or different times. And, and if there's a set of challenges, those, you know, if we're rolling out a new feature, that's particularly impactful to this set of customers, we're going to shuffle things around in order to make sure that we're delivering the right value to make our customer successful.

Tricia: If I can just give some practical advice who whomever asks the question, I think the best way to kind of handle it is to understand where you are today. And then start thinking about how you can develop a plan to improve that over time. And that will go a long way regardless of where you are, whether you're at 14% or if you're at 5%.

Just having a plan to start having that discussion with your leader. And then again, as I said, there's so many other factors in there about where it makes sense to spend more money in order to support your clients and maintain a certain retention level, have those conversations. But that's where I would start rather than trying to pinpoint a specific number.

Ed: I think Tricia nailed it. I mean, from my perspective, I think if you're presenting a draft of your investment plan or portfolio to myself, for me to feel like not only do you have a plan but that the plan is in-depth and demonstrates your knowledge of what it takes. And whether it's like not just anecdotal customer quotes, but just data that suggests like customers have a higher propensity to, to renew upsell, cross sell, etcetera.

When these types of things happen and those types of things typically have a cost that come with it, cause it can vary. For some of us, for different places I've been in investment, oftentimes can certainly go to see us department that's whether it's preserved, you know, IAA or CSMs or support, but it can also go into things like R&D to fix bugs. Maybe you have an underserved R&D function where folks are focused too much on innovation and not enough on just fixing what you've got and that's actually leading to your highest churn rates.

So I think coming to us with a a well-balanced cross-functional view on what's it going to take to retain customers and grow your base is really effective for someone like myself. Also just like understanding sort of the elements of gross margin and how you play into that as well as the elements of your organizations that may be hitting sales and marketing costs, because we care a lot about gross margins.

We care a lot about sales and marketing efficiency, both gross and net, and some of your costs land in both. So demonstrating your knowledge of you play a role in that, I think helps us sort of connect us from a language standpoint.

Common mistakes CS leaders make when advocating for budget

Chris: There’s one last budgeting question. What are some common mistakes that you've seen CS leaders make when they're advocating for budget or basically they killed their chances of getting a better budget outcome?

Tricia, you mentioned coming in with a sales pitch. That sounded like a clear losing approach.

Tricia: Yeah. Sales pitch, or just coming at it from that type of approach. “We're overworked. We got too much work, so I just need to add head count.” And not coming with any sort of analysis or data or connection to the overall goals of the business. Or just feeling like you're trying to build an empire, right. It's the “let me hire as many people so I can.” You know, rule over my fiefdom like that.

Marc: I'll take the positive on this one is that to the extent that CS goals and budgets are connected to the company's mission, vision, values, and principles, um, around how we treat the customer. Then that's a winning budget for me.

Like our goal is to reduce response times to X and to have assigned account managers to, for Y and I to roll out these new features for Z and, and to support that this is what we think we need. And this is the data that supports why. I think my request is a reasonable one.

I really do want people to come back to me, not the renegotiate, cause it seems like it's, there's like two sides of the table, but to the tell me that conditions have changed. I'm doing better and things are happening faster than I expected or things are slower than I expected. I need to add headcount midway through the year. And we're lucky enough to be still be private. So those, those mid-year adjustments are possible, and are reasonable and connected to the company's mission, vision, values, and goals.

How to calculate Cost to Retain Revenue

Chris: Awesome. So the audience wants to hear about your opinions about the best way to calculate the cost to retain revenue. So specifically, what things should get included in the cost — like CS, services, support—what gets included in the cost, and then what gets included in the revenue. So, gross retention rate, upsell, cross sell. Is there a formula in there that you really liked that you've honed in on that you feel is the most helpful for managing the cost of retain revenue?

Ed: I don't have like a battle-tested formula so to speak. I’ve found in different places I've been, there are different costs related, but what I will say is I think about the costs to retain as truly a cross-functional effort.

I truly believe investments, whether they are across the obvious departments, that some of the folks on this call lead. But also going back to R&D and product and just making sure the product works well, performance is high, your platform is reliable. Those costs, I would allocate a portion of, I look at even customer marketing, what we invest in that area to make sure customers are informed.

I also even think about the backend of departments. Like I want that billing experience to be something that is very consistent with the brand of our service to our customers. So I kind of look across the whole spectrum and I partner closely with all the execs and the thought leaders within my company to make sure I understand the details around those. And then we look at that holistically, and we allocate where appropriate, but really it's kind of across the P&L so to speak.

Tien-Anh: One of the things that I find very important about the metrics is that they have to be pretty simple and straightforward to calculate and easy to agree to across the company, especially to my fellow executives, because I'm going to use that to speak to them in the budgeting conversation.

But I'll be in there also in the performance discussion. So for me, I actually just take it very simple. I just take the cost of the CS organization, whatever rolls up into the CS leader and divide it by the total revenue of the company.

And the rationale for that is that, again, that is a metric that they can measure. They can manage, they can manage their budget, they can manage the organization. So if they need to improve it, they know where to go. And then on the same time, the, the revenue really truly represent the scope of the work that they have to do.

You know, any customer that is a revenue generating customer is the responsibility of the customer success team. Uh, you know, even if they are not renewing this, this quarter, right this month, the CS team is still needs to work on them. I still need to, uh, maintain them and support them in whatever way. So in a way, the CS team is always responsible for all the customer, for all of the revenue of the company on top of whatever the sales team is doing.

So to me, that's the way I tend to think about it. And I find that it's. Easy to use that very simple, um, uh, calculation to stick with, to my, both my CEO, uh, my fellow executive and especially the CS leader.

Marc: I agree. I'll just add that I caution us to be careful about creating a metric that is the lowest common denominator and is therefore relevant to no one. So to the extent that you can, have examples and data points and even anecdotes. And sometimes those have to be in narrative form and not in the form of a metric or a mathematical formula.

CS investments that have produced a great return

Chris: So there's been an explosion and SaaS, we're spending a lot of money on software now. Which software investments do you think have produced a great return for customer success and which haven't?

Tricia: Well, I have to say, so we actually just implemented Zendesk and the experience thus far has been super awesome in that we're finally able to get our hands on some data, because a lot of things that really drive like where we're taking a corner or shifting or going down another road is determined by understanding why our customers are leaving us. When they're calling in for support, what's the most common reason for them calling in to support. We can automate something in some way or fix a bug or having that data is what helps you actually create the operating leverage that you need, which means that, you know, CX is a smaller percentage of your total revenue.

So Zendesk has been really great in just getting us to that point because that's that's where we are in our evolution. We also have Salesforce, which just gets us visibility into the customer from a 360 degree view and is also really helpful, especially as we get usage data in there, it becomes very powerful for analytics.

The jury is still out on Gainsight. We do have Gainsight, but I would say the jury is out.

Ed: I would literally just echo what Tricia said verbatim. So yeah, even down to the Gainsight, like jury's still out.

Marc: Yep. Same with us. Although I layer in Asana for some of the project management piece, the team seems to be happy with that.

Tien-Anh: It might be more specific to my company but a lot of our CSMs find that actually having access to LinkedIn sales navigator is very powerful. And that's because it just allows them to build stronger relationships with their enterprise customer base.

I was skeptical of, of that for a long time because I felt that CSMs are not salespeople. Why do they need sales navigator? But they eventually convinced me.

Advocating for salary increases for top talent

Chris: Okay. Next question from the audience, and this one's a little bit more tactical. People want to know what the best way is to report their high and low performing CSMs. And I think what's driving this question is how can they advocate for budget increases to pay top performing CSMs more?

Tien-Anh: I will say CSMs are not like salespeople. Um, I think that sometimes the best measure of a CSM success is what the customer feedback is on the, what the customer survey says about them and the best CSM that I have worked with, you know, get that kind of feedback from the customer directly to management.

Sometimes the CEO gets an email from a customer gushing about the CSM. So that it comes in, in the engagement from the customer, it comes in in a long long-term view of performance. And, and it is where I have been thinking a lot about how to measure a CSM performance. You know, a lot of people do what are the performance of their retention rates.

But I, I started to think that you have to look at the whole portfolio of a whole period to really see how well they do with their customers and how well they work on the beginning of the year to see their fruits at the end of the year. So I would say it's hard to just use, you know, a couple of data points, a couple of metrics to run your CSI, because that's not always the, how, how CSMs outcome can be seen.

And you really want to have a pals of how they work with the customer.

Ed: Our CSMs are hybrids, so they both provide support and service to customer questions, but they also upsell and cross sell.

And so it's more of a book of business approach where on a per CSM basis, we'll look at the components of their net retention. We'll look at, in their territory and within their cohort, on any given quarter, you know, how they're performing against renewals and upsells and expansion and cancellation churn.

So it's pretty straightforward. From that regard and we can just, you know, look at the full roster. We're not that big. So we can look at a per, you know, per rep basis, um, per CSM basis and determine sort of who's at least statistically performing the best. And then obviously we would look at that some of the qualitative nuances as well, same, same, we're doing, we're doing the same in resonates with us.

Chris: I just want to take a moment to thank everyone on our panel for joining us today. You've really helped us think, uh, more deeply about how to partner with you in finance, how approach budgeting, how to think about leveling up our finance understanding, and connecting stories to the company goals and to enterprise value.

So thank you all for joining us today, and thanks to everyone who tuned in to the conversation.