Request Demo

Customer Success, the Third Funnel: What are the metrics?

Blog by Ian Luck
November 16, 2022

Marketing and sales funnels are long-established practices and for a while this was the end of the story. For, as the purpose of these processes was to win new customers and revenue, acquiring a customer was the final step. But now a third funnel, aimed at growing and retaining the existing customer base, is growing in importance.

As a VP of Sales, I have been selling for almost 15 years and while my sense of ‘history’ may not be 100% accurate… this is how Sales and Marketing ultimately leads to Customer Success.

First came CRM

With the arrival of CRM systems, sales teams were able to have access to customer information in a centralized location. Things like account and opportunity tracking became a thing, and it made sense to share rolodexes with colleagues to maximize territory management.

The real advances, however, came when you could access information from anywhere, improve sales processes, use tools to make workflow easier, and provide insight into forecasts via robust reporting functions.

In the beginning, CRM was a revolutionary tool to help optimize sales departments.

With CRM came the sales funnel. Most of us are familiar with this – a deal starts with a “lead” and works its way down to either “closed won” or “closed lost.”

The sales funnel makes sense. Have marketing fill the top of the funnel with leads and the sales team educates the leads and moves them through all the sales stages. Ultimately, companies rarely (if ever) have a natural cone-shaped funnel, most of the time you see a drastic martini-shaped funnel, with teams speaking of bottlenecks.

There are amazing tools out there to help maximize and optimize the performance of different stages of this funnel. Many of these tools today are filed under ‘Sales Acceleration’. Some that I have had success with are:,,

This funnel came first, but I consider this the Second Funnel.

Then came Marketing Automation

“Leads” were looked at by sales as the business equivalent to a magical leprechaun – sure, they might exist but we were unsure of where we could find them, and we knew that it was fortunate if one ever landed in our lap.

Leads were once thought to be any person your company came across – students downloading information from your website were treated the same as a C-level decision-maker from a top company.

The first startup I worked for handed me 35 phone books, and I was told the leads were within the yellow pages (true story!)

When marketing automation arrived, we suddenly had the ability to understand the definition of a Marketing Qualified Lead. More importantly, as a former colleague of mine would always remind me, you could base the creation of MQLs on “plain, simple math.” Thank you, Josh Verrill! Marketing began measuring demand generation in their version of a funnel, where it measured “suspects” to “customer.” Today, marketers talk about acquiring “suspects” and measuring the conversion rates between each stage of the marketing funnel.

Just as with CRM, excellent tools have been developed to further qualify or predict leads beyond the marketing automation platform into your CRM.

So while the marketing funnel came second, I consider this the First Funnel.

The Customer Success Platform

Before now, marketing would own the first funnel and sales would own the second funnel.

Sales has always been good at identifying which customers are willing and able to spend more. While, marketing helps with identifying customers that could potentially purchase additional products, but it is not so great with clients who are underusing the existing products sold. Client Services has always been great with helping put out customer fires, but this group may not be the team your company wants to upsell or cross-sell additional products or services.

So who owns the client? Who is paid a bonus on retention statistics? Who is in charge of training new users on the value of your products and services? Who sells more to your existing client base?

Many organizations have not yet thought of these questions. But I recommend that you discuss each question with your Sales, Marketing, and Client Services teams. CustomerGauge has a great ebook to help you take control of this and successfully grow your customer base; you can download it here.

Ultimately the first and second funnel are ways CEOs can monitor and share ownership of growth metrics with marketing and sales departments. And while it is common for companies to think growth equals ‘new client acquisition,’ growth can also occur with a ‘reduction of churn.’ So for example, if your current book of business is $100M, you could increase next year’s revenue by $1M if you reduce churn, year over year, by 1%.

Smart business leaders are creating teams to help grow and retain their existing customer base. Some of the metrics these teams measure are, but are not limited to:

  • NPS®
  • Contract amount
  • Over usage / under usage
  • Sponsor tracking / Family tree build-out
  • Support cases
  • CRM activities

Customer Success now has its own cohort funnel: Customer Success Lead, Identified Upsell/Cross-sell, which then gets measured until Closed Won (or Lost), and this is where we find the Third Funnel

How the third funnel works can vary from company to company, but the three primary outputs of measure are churn, retention, and cross-sell/upsell. To maximize the third funnel companies need to spend time understanding how their current customer base can feed both their marketing and sales funnels.

For when the three funnels work together, you end up with more control over Account Management and Customer Success. So, have you started thinking about Third Funnel metrics within your business? If so, what metrics do you measure?

About the Author

Author Icon
Ian Luck
Ian has been in the CX market for over a decade evangelizing best-practices and strategies for increasing the ROI of customer programs. He loves a loud guitar, a thick non-fiction book, and a beach day with his family. You can catch him around the north shore of Boston, MA.
Subscribe now to get the latest from the CustomerGauge Blog
See our Privacy Policy and GDPR terms.
More On This Topic
Loading Symbol