Top Metrics for a Chief Customer Officer

Live from Schenectady, New York, it's SAS Talk with the Metrics Brothers, Growth and CAC.

And I'm Growth, better known as Ray Reich, founder and CEO of Benchmarkit.

And I'm CAC, better known as Dave Kellogg, independent consultant, EIR at Balderton Capital, and the author of Kelblog.

And together we are the Metrics Brothers.

Just like click and clack, the Tappan Brothers.

Hey Dave, did you know that growth and CAC actually rise with click and clack?

Well, that was, that was indeed the point, Ray, but we ended up not making this a call-in show like Car Talk. Maybe we should have.

Yeah, but we're not that funny and maybe not even that smart, Dave.

I'm not sure, Ray. So okay, what do we have on tap? I'm gonna flip this one around.

Well, the last 2 episodes we focused on the top metrics for the Chief Revenue Officer and then the Chief Marketing Officer. So I thought, hey, let's give the Chief Customer Officer equal billing.

I love that. The CCO is growing as a role, kind of like to have the CRO— CRO role. Boy, try to say that. CRO role 5 years ago was growing. So I think it's a great topic.

Yeah. And the other thing The chief customer officer almost always owns customer success, so our new presenting sponsor, Gainsight, will be a big fan of this episode.

Oh, you found a new presenting sponsor, Ray. That's very exciting. Glad to hear Nick's on board at Gainsight. Great to have them, and hopefully, we'll pay a little more attention to some customer success metrics as a result.

Perfect. Well, since we've mentioned Gainsight and gave Nick a little bit of airtime here, Let's hear from them as our presenting sponsor. The Metrics Brothers is proudly sponsored by Benchmarkit, the B2B AI and software industry's largest, broadest, and most contextualized benchmarking index. Dave Kellogg and Ray Groth Wright have put the Metrics Brothers podcast on hiatus for the remainder of 2026. All episodes we have ever recorded are still available on your favorite podcasting app. You can reach Dave @Kellogg and Ray on LinkedIn @RayReich. Thank you so much for listening to the Metrics Brothers podcast. Okay, Dave, why don't we start? And I'm going to ask you the first question or to start it off. What do you typically see the responsibilities of a Chief Customer Officer being?

So, to me, I think there's 3, Ray. There's probably 5 that we could talk about, but the 3 core ones are customer success, You know, being responsible for renewals, often adoption, onboarding, sometimes expansion. Customer success, number one. Number 2, customer support, answering the phone, if you will, when people call or come in via the portal or 100 other channels people now have for reaching the company, setting up a customer portal to deflect calls, etc. So number one, customer success. Number 2, customer support. And number 3, Professional services, also known as consulting, where we sell kind of by-the-hour professional services to help people get implemented and use the system. Those are the 3 core functions. Often, you'll find training/education in there as well, and sometimes you find community in there.

Yeah, and community is one of those in a very early stage of evolution. I think a lot of organizations are trying to find ways to reduce customer success costs. So they're trying to turn some of that educational support over to their customer community. But I love the top 3: customer success, customer support, professional services. Why don't we start with just the top 3 metrics per those 3 functions? And maybe we start with customer success, Dave?

Okay, so we'll alternate. I'll do success and you'll do the next one. So in customer success, I think there's 3 things I would look at. And again, part of the exercise here is to filter back, because we could talk for a very long time about all the different things you can and should measure in customer success. But we're kind of saying, at a board meeting, at a QBR, if they only give you 3, and I always think that is a very important thought exercise, if you only get 3, what do you report on? And first would be NRR. And that does entail that customer success has some role to do with expansion. Right. And that role could be they sell fries with your burger upsell. It could be they do real expansion deal upsell or not. It could be as simple as they have basically a responsibility to generate a certain number of opportunities, expansion opportunities, and hand them to sales. So, provided your customer success team has kind of anything whatsoever to do with expansion, I would say NRR would be the first metric. Then I'd, just because we've talked about this in other episodes, Ray, With NRR, there's always a place you can hide. And when you look at NRR and GRR, there's nowhere to hide. So I would show both, because I want to know if a good NRR is a healthy situation of, say, 10% churn plus 30% expansion, or is it an unhealthy situation of 30% churn and 50% expansion? And there's a difference. And then finally, this is more of a Dave-ism. There's a lot of different success metrics like NPS you could use. I like being direct and just asking renewal intent. Do you intend to renew? So I'll ask the NPS question, but I'll also ask right after it, do you intend to renew the software? They are not 100% correlated. And you can argue they're not in control of that. Maybe they're more in control of NPS, but I certainly want them to track that because I want to know what's coming.

Yeah, I sure couldn't disagree with those top 3, but I'm going to push the edge of the envelope a little bit and say, There's one more that I think is going to become really important going forward, and that's the customer retention cost ratio. And this is how much expense, primarily customer success expense, are you spending per dollar of ARR that you're trying to retain and then that you actually renewed? Now, a lot of people can say, hey, you can measure that with CSM per dollars of ARR. I'm sorry, per number of customers?

I think you're upside down, right? ARR per CSM more than CSMs per ARR, right?

Correct, correct. And then the last thing, and I got this from Kelly Capote, who's the Chief Customer Officer at GameSight, and she goes, you know, what I present to the board every quarter is what percentage of our customers were we able to verify the customer outcomes Because there's such a high correlation to be able to verify customer outcomes and share those with the client to renewal rates. So those are the 2 I would add.

Yeah, I think for me, if I were to add some here, and renewal intent, I'm not— I'm very mixed on having it there. I like to talk about it because I think it's an important metric that few people track. So we may have amplified it just a little bit to get it on the radar. But certainly ARR per CSM, some people do accounts per CSM. I prefer ARR per CSM. The verified outcomes is an interesting metric. The other one that that if I had to kind of jam 5 into 3, I would do so, especially if the mission of a particular success team is about adoption. Because sometimes adoption and deployment is really a PS project that we sell for $50K. Sometimes it's free because it's a light system, and it's kind of a free service provided by your CSM. In that latter case, I would definitely have something about successful onboarding within a certain amount of time.

Totally agree with that because there is empirical evidence that if you have successful deployment and then adoption, they're going to have a higher retention rate. So totally agree with that.

And there's absolutely rock-solid concrete evidence that if you never get deployed, people don't renew. So look at the inverse.

That one would be easy to track. But, you know, Dave, I was thinking about this as we were preparing for this one. I was thinking, boy, there's a lot more customer success metrics. So Maybe we should think about dedicating an entire episode to customer success and going deeper into not only the lagging but also the leading indicators.

Yeah, I mean, all 3 of the areas we're going to talk about today— customer success, professional services, and customer support— the primary responsibilities of the CCO. Each of them is probably worthy of an episode, Ray. So we should do that.

Okay, well, let's go on to professional services, and I'm going to take the lead on this one. This one was near and dear to my heart. Especially growing up in the enterprise software business, it was a major revenue lift. And especially if we could goose that throughout the quarter, it was a great way to increase revenue growth rate. But number one is the bookings versus the bookings plan for professional service. So I always thought that was really important for the services leaders to know, but there may be another school of thought on that one, Dave.

Well, It all depends whose job it is to sell services. So, and you gotta be very careful with this question because if you hire somebody out of a professional services firm and into a software company, they may try and sell services on their own. And I've seen big companies that get frustrated with not selling enough services where the services team hires its own kind of overlay reps. And I think those are all disasters. I think the right answer is sales has to sell services. It has, it's not a major financial incentive, it's more like a penalty, almost a hygiene factor rather than a motivator. But if you don't sell enough services, we're gonna come yell at you because we think for a $100K deal, we need to attach at least $30K to $40K of services or they won't be successful. And you either need to sell those of ours or convince me that a partner took them. But if you're selling $10K of our services to solve a $40K problem, then I've got an issue with you. So in my favorite model, sales is responsible for selling services. Therefore, I would not view service's job as generating services bookings. I would view them as having a strong supporting role in that, but I would view their primary job as taking the pile of orders that sales dropped on me and turning them into revenue. And therefore, longest speech about one metric on earth, I would look at professional services revenue relative to plan as the first metric.

Got you. I, I think I totally agree with that. At the same time, one of the cautions that I've seen is, especially when Professional services hire their own salespeople, which happens sometimes in bigger companies, is that PS becomes too large a percent of total revenue, specifically subscription revenue, and that actually impacts enterprise value. So I know that's not for today, but I say be cautious of driving too much PS revenue. What say you?

Yeah, it's the other reason you want sales to hit it and you want to hit plan on this. You do not want to reward massively, reward or leverage reward over achieving plan. Why? Because this is typically a very very low gross margin revenue stream. And as Ray points out, if you come in too high on the mix of services versus subscription, you will typically crush your gross margins, i.e., crush in a bad way your gross margins. So you'll pick up the problem through other metrics. But Ray, I would say that problem not— I mean, I've seen the case where they hired separate services salespeople, did not work, terrible idea. I think the senior managers in the services org are effectively salespeople, just like they are in a consulting firm. And their job is to support the account manager in sales in getting the business, showing up, doing good RFPs, making good presentations, hiring people the customer wants to work with, but their sales responsibility kind of stops there.

Yeah. So then I look at the second one, since, you know, we do want to drive the revenue, the professional services revenue to meet plan, but then it's the utilization. And a lot of times what I see happening is you're getting a lot of non-billable utilization. you're doing rework, or you're making up for product feature functionality issues or challenges. So I think billable utilization, which I don't know what you think, Dave, but I always try to have it at 80% or higher. Do you think it's a good second one?

So I like it. I'd probably make gross margin number 2, to be honest, but I know we have it as number 3, so we'll come back to it. But I would do gross margin number 2. But on billable utilization, I think it's an important metric. It's— but 2 things. One, it's a leading indicator of gross margin, right? So if everyone's billing the right percent at the right rate, then we should kind of automagically hit the gross margin target. So if gross margin is correct, I'd expect to see this correct. If gross margin's off and this is on plan, like 80% billable utilization, but somehow we missed gross margin by a material amount, it's probably down to your definition of billable. Like, oh, it was rework, but it wasn't free, but I gave it to them for, you know, $100 an hour instead of $400 an hour. So they're billing at a low rate, or maybe they're on a project that was bid price fixed— price fixed, I'm thinking about a menu— fixed price, and it's going over on hours, which will also drive down margins. So billable utilization is a good metric. It's a very common metric. People run it around 80%. So I would recommend using it. I also like realization as its kind of cousin. Which is, hey, Ray, if you bill at $200 an hour and there's 1,800 billable hours a year, you should be generating $360K a year in billings. And that's called realization, right? It's how much you realized of your notional kind of price list-based capacity. And if you see a big gap between realization and billable utilization, you kind of know what the problem is. I.e., people are billable but at the wrong rate.

And Dave, that's a really important clarification. Utilization is traditionally a percentage of available hours that are billable, and realization is the dollar equivalent to that.

Yes.

And like you said, number 3, you know, everyone loves gross margin. And unlike subscription revenue where, you know, it's pretty standard between 65 to 80%, maybe even 70 to 80%, Gross margin on services can be so varied. I've seen it as high as 50% and as low as 0%. So do you think that that 30%, 35% gross margin for a SaaS business is where we should be?

Well, I've seen it a lot lower than 0%, and I took over one company that was at -75%. So, um, so, so yeah, you can lose a ton of money on services if you want to. So I believe gross margin is a key metric for services. And this is going to come down. And I think, you know, a good target— well, if it was an independent company, I think running for 30 to 40% gross margin is pretty good. But that's if you're an independent services business. If we had Dave and Ray Consulting, we'd want to shoot for those targets. When you're an adjunct to a software business, I believe your mission is basically to maximize ARR without losing money. So I want you helping on presales. I want you doing rework. I want you putting in low billing hours or putting in extra free hours to make sure the customer is successful. I want you doing sales. Where customers are mad at us and we need to reimplement all or part of the system to try and get the renewal, right? So, so that's what I'm gonna do with that 20 or 30%. So I always say that a good target is like 5%, and I pick 5 because in case you miss it, you don't go negative. Because if I pick 0, we could end up negative, and I don't want to do that. So, so I'll pick like 5 to 10%, single-digit margin target, and then accept down to 0 and not accept negative, and then ask a lot of questions about what they did. But the 25% I have made, right? I don't want to just forget that and go, you know what, if we were running this as a real business, we could have been driving 30% margins. So tell me where all that extra work went because I want to do an account of it. And a lot of times people get very sloppy. Like a consultant will work with the customer they like the best, not the most strategic, because you're not getting alignment between sales, CS, and services on who to go work at.

That's interesting. So let me make sure I heard that right. So you would say target like 5%?

Yeah, that's what I say. The SaaS business, I mean, SaaS business is worth 5 to 10 times ARR. Let's go make more ARR. And the services business is best case ignored. Worst case, people get nervous if it's 30 or 40% of revenue, then people are like, oh no, this is a stealth services company. It's not a software business. It's not worth 5 to 10 times ARR. It's worth 2 to 4 times ARR, right? Or maybe 2 to 3 times ARR, right? So The service is a weird thing because you do too little and everybody fails. You do too much and all of a sudden you're a services business. It's not a software company.

Yeah. Back in the day when we didn't have CROs and CCOs, we have SVPs of sales and SVP of services. One of the biggest misalignments I ever had in an organization was the debate on, we don't want to maximize professional services revenue because when you're doing a deal, let's say the customer has a $100,000 budget. I wanted $90,000, $95,000 of that to be subscription and $5,000, $10,000 to be services. But she wanted $30,000 to be services because it made her team look better.

Yeah, it's a very common problem. It's another thing you'll get by dropping the margin target. So I will say be more flexible on the pricing because we're giving you a 5% margin target instead of a 35% margin target to make the math easy, precisely so you can be flexible with sales, work on account saves for customer success, etc. So I like to remind them all the time, That we're not asking you to run a 35% margin business, so don't ask like it. We're not asking you to build an empire, so there's a cap on your revenue of 20% of sales. In my mind, that's what I tell 'em. And if you go over 20, it's bad, bad. Don't go over maybe 25 tops, but you, there is a cap. And therefore we need to think about you as a scarce resource and how we allocate your people's time and then what we give to partners. It's also super good for the partner ecosystem when you're capping your own services business.

Yeah.

So let's move on to number 3 of 3 under a CCO's responsibility, and that is customer support or customer service. And Dave, I don't know if most people know this, but you used to be the general manager at Salesforce of Service Cloud. So I think you should take the lead on this one.

Sure. And maybe even more relevantly, my first job in the software business was, guess what?

A customer service rep?

Yeah, absolutely.

Yeah.

20 to 30 calls a day about relational databases and how to write SQL queries and and performance tuning and all that stuff. So I've been on the front lines of customer support, as well as having run the Service Cloud business at Salesforce. So I've seen kind of two sides of it. My metrics here, I'll tell you my top 2, and then we can debate 3. 3 is debatable, but the top 2 to me are not debatable. It's cases per agent, and that should go up over time. To me, you can find benchmarks on it, but the main thing I wanna see is a table with 10 quarters of history, it's really 9 quarters, and I wanna watch it over time. And the goal is for it to steadily be going up. And there's reasons why that doesn't happen, right? Things can get harder, more complex products, whatever, bad releases. But in general, I want cases closed per agent to go up over time, subject to a constraint on customer satisfaction. So I would say the customer support job is to maximize cases per agent, subject to a post-case CSAT constraint of 4.5. So take as many calls per agent as you possibly can, holding CSAT at 4.5 or higher. And if post-case CSAT starts to drop much below 4.5, then we need to go say, that maybe we need to say, hey, maybe we're cranking too many cases per agent. So it's kind of a very factory view of customer support, but that's unfortunately kind of what it is, it's kind of a case resolution factory. And that brings us on to the 3rd possible metric, one would be first-call resolution, depending on the product. Look, in big complex enterprise software, first-call resolution is pretty hard to achieve, i.e., on one call, I resolve your problem. Oh, you forgot your password on a help desk internal, okay, I can do that on one call. But then again, the argument there should be, I should wanna do that in zero calls. I should deflect that call. So I should have a portal where that's deflected, and I measure deflection. So the third metric might be first call resolution. The other side of the first— any call that's resolvable, any case that's resolvable with one call is theoretically better off deflected. So you could flip that coin over and say, which one do we wanna measure? I think another super interesting metric is just cases per customer. So looking per quarter, how many cases per customer are we getting, and can customer support work with product to try and keep that, well, not only from not increasing, but going down. Then that's kind of the strategic. So customer support has really, its primary job is to answer the phone, and its secondary job is to get people to call less. And they can do that through deflecting calls. That's one level strategic. And the second level of strategic is working with product management to actually eliminate the calls from happening.

It's interesting about first-call resolution, because in those more complex products where you might not be able to resolve it, maybe it's a SEV 2 or something. I also really love time to resolution following that first call where it wasn't resolved. Do you think that one could sneak into a top 3?

Resolution time is very important. The question there is you should probably look at some 80%. The tricky thing about success metrics or support metrics in particular, it's true of other ones as well, but you don't want an average. I don't care about the average. If it took you 38 days to resolve my call, I am very unhappy and I don't care if the average one gets resolved in 2. So you need to set something like 90% of calls resolved within 3 days, or 90% of calls— I can't remember what to call that. I'll just call it kind of a tail criteria. It's not an average. So yeah, I would look at resolution time, not using an average. That would be another good one.

Cool.

Well, Dave, our time's up for this episode. I think we did a nice job of limiting ourselves to, you know, the top 3 for those 3 functions that a CCO is responsible for. Sometimes we move to 4 or 5. But I really do think we should dedicate a full 20-minute episode to each of services, professional services, customer service, and customer success, and dive deep into both leading and lagging indicators.

Yeah, believe it or not, Ray, this is one of my favorite areas to talk about. I was deeply involved in it at Host Analytics where I ran it. So, so it's an area where I ran the whole company. So, so customer support is important to me, and I work closely with my VP on this area. I like it a lot, just never end up talking about it a lot because everybody wants to talk about CAC and CAC payback period and all the GTM metrics. So let's go ahead and do that, Ray.

Okay.

Well, Dave, as always, thank you so much for being my Metrics Brother here on SaaS Talk. And thank you so much, everyone out there listening. Talk to you next week.

Take care, everybody. See y'all.

The Metrics Brothers AI, SaaS, and More is a production of the Metrics Brothers Growth and CAC and a member of the Benchmarkit Podcast Network. By accessing this podcast, you acknowledge that the Metrics Brothers make no warranty, guarantee, or representation as to the accuracy or sufficiency of the information provided or the humor content of the jokes told. Ray? Information, opinions, and recommendations presented are, according to our spouses, probably wrong and provided for information purposes only. This podcast should not be considered professional or, for that matter, unprofessional advice. We disclaim any and all liability for any direct, indirect, indirect, misdirect, incidental, special, ordinary, consequential, inconsequential, or other damages arising out of any use of, or God help you, reliance upon the information presented here. Ray Grothreich is based in New York City and available on X @rayreich. Dave Kellogg is based in Silicon Valley and available on X @kelblog. Schedectady, which is French for unspellable, is not our actual production location. Thanks for listening.