2022 Customer Success Leadership Study Signals Industry at a Turning Point

November 21, 2022

Marley Wagner

Category: Customer Experience, Customer Retention, Customer Success as a Service, Customer Success Maturity, Customer Success Strategy, Customer Success Tools

It’s back! And it’s bigger, badder, and packed with more thrilling drama than ever. No, I don’t mean the new season of White Lotus. I’m talking about the 2022 Customer Success Leadership Study (much more exciting, IMHO). For the third year in a row, we’re tracking all the twists and turns unfolding in the Customer Success industry. In collaboration with ChurnZero and sponsored by Higher Logic Vanilla and involve.ai, our mission is to support the Customer Success community with reliable benchmarking data that we can all use to better understand where we’re at, where we’re heading, and where we want to go.

We use this opportunity every year to check in with CS leaders and insiders, collecting information about their teams, experiences, and goals. This year, we had a record number of respondents (over 1,000!) and we added more questions for deeper insights into the specifics of CS team structure, budgets, technologies, and priorities. We’ve also split out more data by demographics so we can parse trends even further by size and revenue. Here’s a little bit about what we learned from the annual report.

A growing industry full of fresh talent

Customer Success is growing, which is no surprise. Last year, CS leaders told us that one of their highest priorities revolved around recruiting, training, and retaining CS talent. This aligns well with the results from this year’s study. 63.3% of CS teams are increasing, and only 7.8% say they are shrinking. Over half of CS teams have increased their budgets, too.

Given that the labor market remains tight as teams expand, CS leaders have had to get creative in their search for talent. We’re seeing many new hires from outside the industry. The Customer Success profession itself is still fairly young, with over 82% of respondents having been in CS for less than 10 years. For 44.3%, it’s been less than five years in the industry. It’s exciting to hear how many people are switching to a career in Customer Success, which means that many are bringing their unique perspectives and talents to the table. Customer Success has always benefited from innovation and new ways of thinking. This influx of fresh talent can only continue the tradition.

Slight slowdowns due to economic uncertainty

Yet, some clouds on the horizon threaten our hard-won progress. Customer Success in the age of uncertainty means tighter budgets and new challenges as businesses roll with the punches of economic volatility. We found that too many CS teams are dealing with critical underinvestment in purpose-built technologies, causing mounting inefficiencies as they attempt to scale. About 58% of CS leaders say financial uncertainty impacts their company’s purchasing decisions, and this delay lasts 3-6 months.

In particular, Customer Success Operations is suffering from the lack of technologies tailored to fit the requirements of an organization that needs to scale. Almost 83% of those surveyed utilize a Customer Relationship Management (CRM) software versus 46.3% that have a specialized Customer Success Platform (CSP). We’re not seeing enough CS Ops teams with the tools they need to help their organizations make data-driven decisions. CS Ops maturity requires a healthy tech stack to enable these higher-level capabilities.

NRR rules the roost

Speaking of Customer Success Operations, more organizations are recognizing the importance of this critical function. Nearly 60% of CS organizations now have a dedicated CS Ops role under their umbrella. And the most essential metric for CS Ops, the one that’s got everyone in a tizzy (in a good way), is Net Revenue Retention (NRR). There’s a reason NRR is the undisputed king of CS metrics. It ties Customer Success activities to revenue in a concrete, tangible way. CS leaders in almost every revenue band told us that NRR was their most important metric to gauge success.

Another reason it’s such a shame that more CS teams don’t have access to a CSP – a whopping 57% of teams with a Customer Success platform report an NRR of over 100%!

To scale or not to scale

Overall, we can see from this year’s report that some bumps in the road have stalled forward momentum for Customer Success organizations. Non-headcount related budgets are too low – 64.1% of CS leaders reported theirs at $200,000 or less. This explains why so many CS teams are struggling to make do with fewer technologies and resources than they require in order to advance their capabilities and maturity.

We believe that Customer Success is approaching a turning point. Businesses want to scale and see the value of investing in their CS capabilities, but hesitancy in a shifting economic landscape is weighing us down. There’s more work to be done. Those in Customer Success can take action during these uncertain times to improve rapport with other departments, strengthen influence on crucial metrics like NRR, and increase the implementation of purpose-built technologies.

For additional insights on Customer Success influences and trends, download the full 2022 Customer Success Leadership Study.