How to Implement Customer Success in Managed Services

By Jonathan Lee – ISSI Customer Success Practice Lead

Customer Success Practice Blog Series #5

In my previous blog posts (#1, #2, #3, and #4) I wrote about the importance of establishing Customer Success as an integral part of a partner’s business. The goal is to create an established set of practices and workflows to ensure customers achieve the business outcomes they were promised during the partner’s initial sales pitch. 

The idea of Customer Success has been around for many years now, starting in the SaaS community and then getting adopted by many non-SaaS companies.  

Customer Success is now gaining a lot of momentum in Managed Services. As a reflection of that, the Technology and Services Industry Association (TSIA) recently mentioned the importance of Customer Success in Managed Services in two articles: The State of Managed Services 2023 [a] and Why Customer Success is Vital to Managed Services [b].  

The big cloud providers are pushing it too. Google Cloud’s latest version of the Cloud Managed Service Provider checklist, which is used to assess Managed Service partners, contains an entire section on Customer Success requirements. Similarly, VMware and Hewlett Packard Enterprise (HPE) have sections on Customer Success in their respective Managed Services programs.  

Integrating Customer Success into a Managed Services practice is becoming more relevant and urgent. In this post, I’ll recap the “why” and “what” of Customer Success in Managed Services, and then discuss in how managed services partners can implement Customer Success functions. 

Why Customer Success Matters in Managed Services

Managed Services are based on recurring subscription models. Companies need to manage adoption to ensure successful renewal while growing their business through Expand engagements. In the “Why Customer Success Is Vital to Managed Services” article cited above, TSIA underscores how a Customer Success practice guides your customers to the value of your services and through successful adoption, thereby achieving the outcomes they desire. Companies lacking a Customer Success organization tend to have challenges in the subscription renewals; that, in turn, leads to a higher discount rate at the time of renewal and is less effective in Expand (upsell and cross-sell).  

This is especially important in challenging economic scenarios. It’s always easier to sell more to existing customers than to new customers. Customer Success Managers (CSMs) with an intimate understanding of the customer’s environments and needs are best suited to fulfil this role in the areas for expansion where they are engaged in customer’s Managed Services. CSMs can also leverage the depth of offerings typically offered by Managed Service Providers (MSPs) as shown below. However, many MSPs are leaving money on the table by not leveraging existing customer relationships to upsell and cross-sell across their entire scope of services.  

TSIA Minimum Viable Product Framework

Source: TSIA article "The State of Managed Services: 2022" [c]

What is the Customer Success Role in Managed Services?

Let’s look at the role of Customer Success in Managed Services. The responsibilities of a CSM include: 

  • Understanding customer business challenge, including pain points and desired outcomes. 
  • Driving customer outcomes by helping customers optimise use of existing products and services.  
  • Overseeing adoption activities such as onboarding, training, and communication. 
  • Ongoing monitoring of consumption trend, use case activation, features usage. 

Further clarity of the specific Customer Success role can also be found in the Google and VMware Managed Services programs, where a common theme is a focus on Adoption engagement and ongoing success review to monitor the customer health status.

How to Implement Customer Success in Managed Services

So how does an MSP implement Customer Success? Let’s examine that from the perspectives of Process, People, and Tools.  

Process:  Land-Adopt-Expand-Renew vs. Land-Adopt  

First, an MSP needs to recognize the need to have a “lifecycle” approach in the form of Land-Adopt-Expand-Renew (LAER) as compared to a Land-Renew approach. 

Adopt and Expand become new phases so there will be a need for new processes, hand-offs, and templates, such as a Customer Success plan and adoption plan – in other words, a new operational handbook. Adoption activities such as knowledge transfer, change management, and use-case workshops must become a norm for onboarding and ongoing adoption activities.

The Customer Success Plan (CSP) should become a standard requirement to document the client’s desired outcomes by deploying technology, tracking adoption activities to make technology use successful, and aligning the expectations. The importance of this plan has been reflected by the requirements of several cloud vendors’ MSP program checklists. 

Another important change is that the traditional Quarterly Business Review (QBR), where MSPs review the SLA and operational issues with their customers. It should now include topics beyond the SLA metric tracking, such as adoption progress, outcomes achievement, health scores discussion, and opportunities for new workloads.

People: Customer Success Managers vs. Service Delivery Managers 

The next step is mapping the responsibilities to the roles. Sales personnel have traditionally taken the Land and Renew phases, but with the new LAER framework, CSMs are in the best position to take the Adopt and Expand. Ideally, MSPs should hire dedicated CSMs. However, not all of them have the budget to do that in the initial phase, so an alternative is to have existing Service Delivery Managers (SDMs) take on the Customer Success role.  

This table looks at the pros and cons of each option:  

 Customer Success Managers (CSM) Service Delivery Managers (SDM) 
Pros Professional with a Customer Success background who can better perform the role. Existing resources who already have a good operational understanding of the customer. 
Dedicated headcount who can better scale to support customers. No additional headcount and budget. 
Cons Additional headcount and budget. Insufficient knowledge of Customer Success to perform the role well, so substantial training is required. 
Additional time to understand the Managed service operation and customers. May be overwhelmed managing both operational matters (SLA) and Customer Success matters (outcomes/adoption). 

Probably the biggest difference between them is that the CSM is outcome-driven while the SDM is SLA-driven. 

Having a dedicated CSM is the best option if budget allows. If the existing SDM is tasked also to perform the Customer Success function, then several changes will need to be made. These include: 

  • Adjusting KPIs to reflect the additional responsibilities, with equal focus on SLA accountability and adoption/outcome accountability. 
  • Intensive training of the SDM on Customer Success, including concept and new templates. 
  • Possible adjustment of the number of accounts handled. With the increased responsibilities, it may be difficult for the SDM to handle the same number of accounts. 
  • Using tools to automate some part of the operation; a Customer Success tool could automate a significant part of the Customer Success operation, thereby reducing the time in the high-touch engagement.  if

Tools: Customer Success vs. Managed Services Tools (ITSM tools)

MSPs typically have a wide range of tools to manage their operations, but most of these are focused on operational aspects, such as monitoring service levels, performance levels, and devices/virtual machine status. 

Customer Success operations requires a distinct set of monitoring that is associated with the health score of the customer’s usage of the subscriptions. These health score metrics are related to the adoption status of the subscription such as active login, “golden” (critical) features usage, use case alignment, traffic utilization, financial growth such as Annual Recurring Revenue, and customer satisfaction.  

These metrics also need to be weighted and assigned a threshold to create a color-coded, easy-to-understand dashboard. Any changes in the color should trigger a call-to-action (CTA) to alert the necessary action to be taken by the CSM. A dedicated customer success tool can assist CSMs with automating the update of the health score metrics and tracking the associated CTA.  

Can the Managed Services Tool be Used for Customer Success?

It’s possible to customize existing tools used for Managed Service operations to address specific Customer Success functions, but the effort can be long and tedious. Tools are typically built for purposes and retrofitting them requires extensive effort. If budget allows, a simpler option is using an off-the-shelf Customer Success tool. This table provides a comparison of the difference between the two tools.  



Customer Success tools [d] 

Managed Services tools (ITSM tools) [e] 


Customer success software is used by businesses to ensure that customers achieve the outcome that enterprises anticipate them to reach through interactions with the company as they use the product. By using this platform to track customer behavior, preferences, and usage patterns, the CSM can coordinate its success planning with greater accuracy and prevent the likelihood of churn. Unique in-built features include subscription health score, CTA workflow, etc. 

IT service management (ITSM) platforms offer workflow management and related insights that enable organizations to design, automate, manage, and deliver integrated IT services and digital experiences. 

Metrics measure  

Monitor Customer Success centric metrics such as: 

  • Active logins 
  • Features usage 
  • Use case activation 
  • Financial growth (ARR/MRR) 
  • Renewal rate 
  • Customer satisfaction 

Monitor Managed Services centric metrics such as: 

  • Ticket escalation for Incidents, problems, events  
  • Patch management  
  • Workload – Devices/virtual machine/database status 
  • Security events management 


Call-to-action is configured based on the change in the status of the health score. 

Trigger can be an alert for under-utilization, which leads to adoption intervention or over-utilization, which leads to an Expand engagement. 

Workflow is based on ticket triggers from the workload environment. 

Usually, the trigger is an alert for rectification of an incident/problem.  

Examples of tool vendors  

Gainsight, Totango, ChurnZero 

ServiceNow, Jira, BMC  


Purpose-built for Customer Success, plug and play. However, requires additional budget and IT support. 

The lack of in-built Customer Success-specific features such as color-coded health scores and CTA means that substantial customization is required to create these features. Unless the MSP has the programming expertise, can afford to wait for a period of time, or only wants to implement a subset of the Customer Success features, this option is not recommended. 


TSIA notes in “The State of Managed Services 2023” [a] that Customer Success within MSP practices “will gain scope at a drastic rate compared to years past.” There are significant benefits if MSPs invest in Customer Success functions. However, the implementations can be challenging. There are substantial restructuring, alignment, and investment activities needed, including:  

  • Processes: New templates such as Customer Success plan 
  • People: New Customer Success Manager role (or Service Delivery Manager doubling up) 
  • Tools: New Customer Success tools (or customize existing tools) 

A smooth implementation of the above will ensure that the Customer Success function operates effectively and contributes actively to the Managed Services. Each implementation of the Customer Success function is also different, depending on the maturity, budget, resources, and urgency. Perhaps not all MSPs require a dedicated Customer Success tool for a start; further analysis will be required to ascertain the right path to take. 

If this all sounds daunting, a good start is a third-party assessment of the current maturity of the process, people, and tools to understand the baseline along with the gaps, followed by establishment of a structured roadmap to implement the Customer Success function.  

To learn more about the Customer Success role, processes, and tools, refer to our Customer Success enablement workshops or contact us via email at sales@issi-inc.com 

About the Author

Jonathan WM Lee is ISSI’s Customer Success Practice Lead. He holds the following certifications – Prosci Certified Change Management, Cisco Customer Success Manager, Microsoft Services Adoption Specialist, Certified Customer Success Manager Level 1 & 2 (SuccessHacker) and has extensive experience of over 100 engagements in training, consulting, and auditing of Customer Success programs, processes, and tools. He is the co-author of the Cisco Advanced Customer Experience Specialization Checklist and Juniper Networks Business Model Transformation Blueprint/Playbook. He has previously spoken in the ISSI-TSIA webinar on “Identifying Strengths & Gaps of your CS Practice.” [f]   

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