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In business, we often talk about the importance of listening to our customers. But how often do we actually take what we hear and use it to make real changes? This month, we're focusing on the power of the "Customer Voice" and how it can be a game-changer for your business growth.
Listening to your customers isn't just about solving problems or improving products. It's about creating a culture where every part of your organization—from marketing to product development—values what the customer has to say. When you really listen, you can uncover hidden opportunities, avoid costly mistakes, and build stronger relationships.
Enjoy!
Lihong
Forbes
This article discusses the importance of focusing on customer experience to grow your business and how companies like Zappos have succeeded by doubling down on customer service, even in tough times, and offers strategies like self-service options and customer feedback mechanisms to enhance customer trust and loyalty.
Kay Devlin - Linkedin
Voice of Customer (VoC) research is crucial at every stage of product development. Kay Devlin outlines various methods like surveys, focus groups, and social media monitoring to gather customer feedback, helping companies make better decisions and create products that meet or exceed customer expectations.
TheySaid
Ever wondered why your Sales, Marketing, and Customer Success teams seem to have different takes on what customers really want? Here are the the pitfalls of working in silos and the power of a unified approach to customer feedback. Learn how to get everyone on the same page for better customer engagement and business growth.
ChurnZero
This comprehensive report gives you the lowdown on everything from budget trends to the rise of AI in customer success. A must-read for anyone serious about keeping their customers happy and boosting their bottom line.
Netish Sharma - LinkedIn
Learn how Six Sigma methodology uses VOC to improve quality and customer satisfaction. From capturing customer insights to integrating VOC into the DMAIC (Define, Measure, Analyze, Improve, Control) process, emphasizing that VOC is not just a practice but a mindset.
In the current market environment, declining trends in Net Revenue Retention (NRR) should serve as an urgent catalyst for cross-departmental action. While NRR remains an important metric, it shouldn't be the only lens through which we assess customer value. It's crucial for Sales, Marketing, Customer Success, and Product teams to align on a multifaceted approach, incorporating a variety of metrics that can offer a more complete picture of customer behavior and value. This month's newsletter aims to provide a 360-degree view on the subject, featuring insights and best practices not just from practitioners on the front lines but also from venture capitalists who have a stake in long-term business sustainability and growth.
We will explore traditional metrics like NRR, as well as alternative viewpoints that contribute to a fuller understanding of customer retention strategies. So let’s get started—because recognizing the complexity of customer behavior and taking collective, informed action is no longer just advisable; it's a business imperative.
TheySaid Blog
The article delves into the limitations of the Net Promoter Score (NPS) in today's evolving consumer landscape. It introduces Customer Perceived Value (CPV), a more nuanced metric that aims to fill the gaps left by NPS. Through case studies and direct comparisons, the article provides actionable insights for businesses seeking to modernize their customer feedback methods. Readers will learn how CPV can offer real-time, comprehensive insights for enhancing customer experience.
Stripe Blog
Stripe provides a comprehensive understanding of why customer retention is crucial for SaaS businesses, how it impacts profitability, and how to measure and interpret it through metrics like NRR. The article also offers actionable insights for early problem detection and long-term strategic planning, providing a complete toolkit for evaluating and enhancing the health and growth potential of a SaaS business.
Smooth Scaling Podcast
An Insight Venture's podcast interview with Michaela Downs, Head of Global Sales Operations at Benchling about rapidly scaling the customer base by 10x while growing a high-performing sales organization.
Blossom Street Ventures Blog
The analysis focuses on net dollar retention (NDR) trends among 64 SaaS companies that have gone public since October 2017. While the current median NDR of 115% remains strong, it shows a decline from over 120% in the first half of 2022. However, there are indications that NDR rates may be stabilizing, as Q4 2022 also reported a 115% figure. More data is needed for conclusive insights on stabilization.
You’re probably tired of hearing about this, but growing revenue in today’s market is rough. So for SaaS companies, growing revenue from your existing customer base through upsells and cross-sells is what we should all be focused on. However, most companies' upsell efforts are terribly inefficient:
No one is talking to each other, which causes a significant silo and lack of data.
The key to unlocking these opportunities lies in a customer-first approach, where Sales and Success are incentivized to deliver customer value.
In this month's newsletter, we explore the dynamics around expansion more closely, providing insights and tips on improving your upsell strategy and driving strategic growth for your SaaS business from the TheySaid team and other go-to-market leaders.
Happy upselling,
Lihong & the TheySaid team
This blog discusses the importance of a clear ownership structure for upselling and how the teams involved should partner. It provides insights and tips for finding the right combination to drive customer growth. Read the blog
Most sales models focus on new revenue, especially PLG. But regardless if you are a more traditional sales-led or product-led company, your biggest source of growth will be to expand and retain existing revenue, so how are you prioritizing your customer insights to fuel that growth? Read TK's post
So why are we surprised? The reasons could include a lack of customer engagement and ineffective communication strategies. Read this blog for insights and suggestions for preventing churn and improving customer retention.
Revenue organizations often prioritize customer acquisition costs and Customer Lifetime Value but neglect expansion opportunities, missing out on potential upsell and cross-sell opportunities. This leads to a significant impact on customer value. Shiv Narayanan highlights this and suggests companies capture all the value a customer brings by pulling various levers to impact Total Customer Value.
Marketing leader Matt Heinz suggests companies apply what we know that works with account-based marketing to post-sales for a more proactive, customer-centric approach to retaining and growing your customers.
When it comes to investing in the stock market, Warren Buffet famously offered the advice to “Be fearful when others are greedy and greedy when others are fearful.” I argue that the same thought process should be applied in the down market of today’s tech world—while seemingly everyone around us is tightening their belts, I say it’s actually a great time to invest.
Think about it. Some of the most legendary companies in the last century came out of hard times.
And it wasn’t because they went into survival mode. It’s because they were bold and they were smart. In life and business, when everyone around you is panicking, you have to be brave.
There's an ethos right now across the technology industry of, “It’s a down economy, so I need to be efficient and I need to save money.” And the way that a Customer leader usually thinks about this is, understandably, “Well, I can't cut my team. I have to protect the headcount that I have.” So the focus on cutting expenses naturally shifts to our tooling.
Here’s the thing—you can preserve headcount and invest in tools. In this piece, I’ll be sharing why I think, rather than buckling down and being cautious, you need to invest in the tech that’s going to protect your revenue and improve your product and customer experience.
In a tough economy, the place people usually start cutting the fat is by getting rid of unessential tools from their tech stack. The idea of purchasing new tools is suddenly taken off the table. No new headcount. No new spend. No new tools. No new things.
But this mindset of “no new spend” is the wrong way to think about saving money.
The questions we need to be asking ourselves are:
To invest smartly in tech, the first step is to start prioritizing tech that protects your revenue. And in tech, high customer retention = revenue. So the strategy shouldn't be to save money at all costs. It should be to save accounts at all costs. Even if it means spending new money, doubling down on investments that can save the most revenue and drive the most growth is the way to becoming as efficient as possible and surviving this downturn.
Think about it this way–technology can be a revenue-generating and account-protecting asset. And the technologies that protect revenue and retain customers more than any other are the ones that surface churn risks, scan for expansion opportunities, and help your team act on customer feedback. In some cases, the smartest decision you can make is to buy a new tool that is a fraction of your current headcount spend, but that can have an outsize impact on saving accounts and creating growth via upsells and cross-sells.
In essence, you need to prioritize tools that help with retention and establish practices that can help your team scale your retention efforts. And as a Customer leader, you are well aware of how critical retention is. But here’s the catch. There are very few tools that directly impact customer retention in the market today.
The uncomfortable truth—Customer Success is accountable for retention but doesn't control any of the top reasons for churn like:
Since Customer teams don't control these things, they instead focus on what they can control:
You see the problem? Everyone in Customer Success is very busy doing stuff, but none of it will substantially move the retention needle. Customer Success software companies have delivered exactly what the market asked for. Unfortunately, what the market asked for were features that made it easier to accomplish low-value tasks.
Stop investing in tools that help you accomplish low-value tasks. Invest in getting more customer insights. And though it might seem like a huge lift to piece together tools (like Qualtrics, AskNicely, etc.) to get customer feedback, there is hope. Get a customer insight engine that is specifically designed to protect revenue. Then you can set it and forget it while you enjoy the flow of insights coming in every day.
Invest in customer data technology
If you’re not already, it’s time to start thinking about which technology will give you the best data to survive this down economy.
This is something our team has been thinking about for years. We have a business decision framework at TheySaid (formerly Nuffsaid), which helps ensure we put customers at the center of our decision-making. Here’s how it works.
We rank the data sources that are used in decision-making at the company in terms of credibility and importance. We seek the best possible data to propose a solution:
This means that any decision that uses customer data is the most credible decision that’s being made. And any decision that’s being made with less quality data can be challenged with customer data.
The problem is, very few organizations think about customer data first when building their tech stack. In fact, most Customer leaders are placing their bets on the wrong tech entirely, or they buy the right tech but in the wrong order.
So, how do you help your team be more efficient when you don’t have a budget for new tech? You must prioritize your tech stack.
As a Customer leader, there’s a particular sequence you likely stick to, subconsciously or consciously, when buying new tech to support your organization as you scale. Prioritization usually goes something like this—
Most everyone agrees that CRMs, at this point, are must-haves. But after that purchase, most Customer leaders think, “Okay, now I need a CSP for health scores”, or “We’ve got to have a tool for better onboarding to hit TTV goals”, or “My team needs a QBR framework before we start collecting customer data.”
What people don’t realize is that, regardless of business size or stage, we need to gather customer insights very early.
The problem with a Customer leader’s standard approach to tech prioritization is that it deprioritizes arguably the most important piece within any Customer Success motion and the most vital asset in your company’s possession—what the customer has to say. When Customer leaders forget to listen to the voices of their customers, they forget the foundation that their organization rests upon—qualitative customer insights.
Without customers, there is no Customer Success. Then why is it that so many Customer leaders get caught up in all the tactical minutia of running a team, setting up playbooks, reducing Time To Value (TTV), implementing fluffy process tools, and adding more product usage data?
Here’s an analogy that anyone married will understand.
Let’s say you’re engaged and preparing for your wedding. You write out your guest list. You send out invitations. You pick out the caterer. You set up a registry. You arrange the musicians. You pick out flowers. And meanwhile, you’re so preoccupied with preparing for the wedding, that you completely forgot about the person to whom you’re getting married. Your relationship suffers greatly and your partner ultimately leaves you because you neglected the only piece that really mattered–your relationship.
The same can be said of Customer Success tech. Without an advanced way to collect, analyze, and act on qualitative customer feedback, we’re forgetting the most important piece in the whole Customer Success motion.
Here’s a better way to look at your tech stack prioritization—
When you buy technology in this order, you’ll be set up for success.
You’ll be able to:
1) get quality data into your CRM and reporting,
2) have visibility into your accounts, and
3) deliver the value your customers expected to receive.
Above all, to make it through this down market, you’ll need to focus on customer data collection. Build a successful foundation by reorganizing your tech stack prioritization and invest in customer data tech.
Qualitative customer data is your path to better churn and upsell prediction
Other than being the foundation of Customer Success, customer data is the first thing you should focus on during a hard economy because the insights formed from qualitative feedback are tied to better predictions of churn and expansion. And when you can forecast better, your revenue increases. When you increase revenue, your team will no longer be viewed as a cost center by your CEO. And if your CEO views the Customer team as a revenue-generating organization, they will ultimately give you a seat at the decision-making table and be less likely to cut your budget or headcount.
And in today’s economy, where Customer Success budgets are getting slashed, billionaire enterprise software CEOs like Frank Slootman are questioning the value of Success teams altogether, and layoffs are rising within company functions that are thought of as dispensable, it’s understandable that as a Customer leader you have an urgent need to save rather than invest.
But remember—technology is a revenue-generating and revenue-protecting asset. It’s an investment to which you will see real returns.
Forget about the money. It’s time to save accounts and revenue. It’s time to invest in the right technology. The Customer leaders who will survive this downturn are the ones that realize the most important technology in a tough economy is the one that collects, analyzes, and acts on customer feedback.
CONTRIBUTORS
A special thank you to Jeff Justice Williams (Senior Executive Director of Enterprise CS at Box) and Jeff Beaumont (Senior Director CS Operations at GitLab) who contributed to and reviewed this piece.
COMMUNICATION
Finding Language/Market Fit: How to Make Customers Feel Like You’ve Read Their Minds
At TheySaid, we’ve done a lot of thinking and talking about how Customer leaders can be Product-Market Fit machines for their companies. But this article by Matt Lerner, Co-founder and CEO at Startup Core Strengths, addresses a new idea to consider—as the leaders closest to the customer, how can we also help to improve our Language/Market Fit? As he puts it, “When you can understand and articulate your customers' goals and struggles and anxieties in simple, precise language, your developers and product teams will not have to guess at what to build.”
CULTURE
How Company Values Drive Customer Experience and Brand
VP of Customer Success at GitLab, David Sakamoto, joined Irit Eizips on her show, CSM Practice, to share how GitLab’s focus on strong company values has benefited employees and customers alike. Skip to 2:15 for some amazing examples of how his company upholds their core value of transparency.
LEADERSHIP
How to Spend Your First 30 Days in a New Senior-Level Role
Read Lara Hogan’s comprehensive guide to avoid common pitfalls during the first month in your new leadership position.
CUSTOMER JOURNEY
Love & Marriage
I enjoyed reading this clever piece by Aaron Thompson, CRO at SuccessHACKER. In it, he compares our customer relationships with personal relationships. A little sneak peek: sales=dating, onboarding=the honeymoon, renewal process=renewing of vows, and churn=divorce.
Emily Ryan has over 15 years of experience coordinating teams across Sales, Post-sales, and Product/Delivery to ensure successful customer interactions.
Being the senior client executive at a customer lifecycle consultancy obsessed with helping companies drive best-in-class Net Dollar Retention, Emily has a unique perspective into what it takes to establish, analyze, and scale incredible customer-centric teams and processes. And one of her core philosophies is that for a SaaS company to thrive, leaders must build out an advanced Voice of Customer program.
In this piece, which was featured in the recent edition of the 2.0 magazine, Emily digs into her top four recommendations to do so:
#1 Kill off big surveys or NPS and move towards periodic pulse checks
#2 Always close the loop on feedback
#3 Treat VoC as a lagging indicator (until you’re taking pulses)
#4 Combine what customers say with what they actually do to get the most value out of VoC
At the heart of every customer-centric organization is a powerful Voice of the Customer (VoC) program. Through this program, many enterprises collect baseline customer feedback and metrics, such as NPS. But no VoC initiative magically appears as an impactful and fully actionable program; many leaders are starting to realize that their VoC data isn’t telling them the whole story. In order to derive meaningful and actionable insights that lead to strategic improvements, you need a carefully curated and thoughtfully implemented VoC program.
To help you make the most of your customer insights, here are my top recommendations for creating a cutting-edge Voice of the Customer program that is data-driven and actionable.
It can be challenging to measure something as complex as a customer’s relationship with your business. When attempting to do this, many organizations make the mistake of distilling this relationship down into a single measure; Net Promoter Score (NPS). Due to its simplicity, NPS has been touted as the all-encompassing metric to determine customer satisfaction. But when used in isolation, NPS has some significant shortcomings.
One of the biggest challenges with using NPS as your singular source of truth is that it doesn’t tell you what’s really going on with your customers in granular detail. NPS is an oversimplification of a multi-faceted relationship; without the granularity required to accurately capture value and drive real change for your customers, it is meaningless. To make matters worse, the NPS score merely sits on a dashboard and capturing the score often becomes the focus rather than how to drive meaningful change and improvements.
To combat these challenges, organizations must shift their mindset from Business-To-Business (B2B), thinking of your customers as one entity, to Business-to-User (B2U), thinking of your customer as an entity full of users. This is where the real Voice of the Customer is—a collection of insights that live across all of your users and their unique experiences and perspectives about your product.
To accurately capture and understand this collective perception of value, move away from NPS and towards conducting periodic pulse checks. This is often done best as quick bursts of questions directed at different users within the different personas your company engages with. These short, easy-to-answer pulse checks should have minimal questions (1 or 2 at most) to encourage greater engagement and feedback from people who wouldn’t normally respond, such as Senior Leadership. Ultimately what you want to measure is how much value you’ve delivered to each user along their journey.
In many businesses, Voice of the Customer programs live and die within a single team or organization. Usually, Customer Success or Marketing is tasked with the VoC program, and the insights they gather are confined to their team alone. With this approach, it’s nearly impossible to take meaningful action on your VoC insights. Instead, you must ensure that there’s 360 connectivity across your entire organizational ecosystem so that your customer-facing teams are accountable to take action and implement the changes that your customers are requesting.
To ensure this organizational alignment, leverage your VoC program to produce quarterly action items for every department based on customer insights from every team. Your customers are your North Star—often, businesses make product decisions to generate net-new customers but won’t give the same credence to product decisions for existing customers. To maximize customer retention and expansion, you need to prioritize capturing and actioning product feedback from your current customers.
Another crucial component of closing the loop on your VoC program is taking action on the insights you gather. In the article “Survey fatigue? Blame the leader, not the question” McKinsey & Company said, “We found that the number one driver of survey fatigue was the perception that the organization wouldn’t act on the results.” This proves that if you want customers to provide feedback, you have to let them know 1) that you received their feedback and 2) how you intend to take action.
While many leaders launch surveys or start Customer Advisory Boards with the best of intentions, they lack a comprehensive plan to follow through on the results of the program. The most successful leaders proactively incorporate VoC insights into the product roadmap and enable direct input from customers that thoughtfully flows into product enhancements.
To ensure this is done successfully and consistently, conduct a monthly cross-departmental customer feedback session where leaders from Sales, Marketing, Customer Success, Support, and Product teams share their biggest wins, opportunities, and areas for improvement. This will ensure that all teams have insight into the customer across the customer journey and that they can collectively and collaboratively take action on improvements.
While VoC is an important part of understanding your customers’ perception of value, it should not be used as your “be-all and end-all” metric. VoC gives you a snapshot in time—your customers are responding to their experiences so far. But, your customer's relationship with your business isn’t static—the next time you ask that customer that same question, you may get an entirely different response.
Given the dynamic and complex aspects of this ongoing relationship, VoC is too one-dimensional and, therefore, a lagging indicator. As such, it should be incorporated as an input into your overall customer health score, but never act as the only indicator of customer health. By combining VoC with other measures and indicators of health like usage of differentiated features and overall utilization, you’ll gather the insights you need to be truly proactive and predictive.
Once you introduce a pulse check program (mentioned in section 1 above), you can use customer responses as a leading indicator because you’re asking the right question, of the right person, at the right moment in their journey.
Responses from your VoC program should be taken with a grain of salt—people don’t always express, or know how to say, what they really think, need, or want. As Steve Jobs said; “People don't know what they want until you show it to them.”
A perfect illustration of this is through the market research conducted by the psychophysicist Howard Moskowitz, who famously produced market-leading changes for Campbell’s Soup, PepsiCo, and Kraft. He asked respondents what qualities they like in their coffee. While nearly everyone responded with qualities such as dark, rich, and hearty, the taste test revealed that what nearly 75% of people actually liked most was milky, weak coffee.
To truly understand what your customers want and need, you must contextualize your VoC insights by looking at what your customers are actually doing, not just what they are saying. By combining VoC responses with customer data and feeding those insights into a system of action where it can make an impact, you can ensure maximum value delivery and product alignment.
Generate data-driven insights by answering the following questions:
To derive the most value from your Voice of the Customer program, focus on strategies that help maximize the impact of customer insights. By conducting regular pulse checks, ensuring cross-functional impact from your VoC program, and combining your VoC responses with other metrics and data-driven insights, you can drive measurable and meaningful change across your organization to strengthen engagement and optimize customer value.
INDUSTRY
Why Are SaaS Companies Unprofitable?
“The bottom line: The largest SaaS companies in the world are generating operating incomes equivalent to low-margin retailers.” Here’s Thomas Lah of TSIA with a smart, research-backed piece that dives into why most SaaS companies don’t make money. He also argues as to why cutting costs in Customer Success doesn’t make sense on the road to profitability—“CSMs are there to drive adoption which leads to the expansion and renewal of contracts. The highest margin revenue for any SaaS provider comes from existing customers. Putting that revenue in jeopardy is risky.”
CAREER
Giant List of Remote Customer Success Jobs
Here’s a great resource for anyone you know who’s on the Customer Success job hunt. Enterprise CSM at Superside, Fouad Adel, has compiled a list of remote CS jobs that contains more than 400 open remote roles and is updated weekly.
TACTICS
6 Practical Ways To Increase Customer Centricity
Shane Ketterman shares some quick tactics to show customers that you value their business. One that I highly recommend every company experiments with: “Invite a customer to share their story at your next all-hands meeting.”
LEADERSHIP
Questions for a New Leader
If you’re starting a new role leading people, here are some great questions to ask to help you 1) gain the trust of your new teammembers, and 2) prioritize your work moving forward. Some of my favorites:
Last month we announced the release of the third issue of the 2.0 magazine, titled Product Market Fit. In it, the community comes together to show the impact that Customer Success can have if it owns Product Market Fit (PMF) for its company.
You might be asking, “What in the world does Customer Success have to do with Product Market Fit?”
In this newsletter, we’ll include the foreword from 2.0, which tees up how we got to a place where the Customer leader must own PMF to unlock an entirely new growth lever for their business: Customer-Led Growth.
But to get the full story, download the magazine. It’s free!
Dear 2.0 readers,
Let’s start by talking about the Rule of 40 and its impact on software companies.
Before 2015, companies were incentivized to grow at any cost. That led to Sales Led Growth companies that had good growth rates, but they also burned so much cash on Sales and Marketing that they never became profitable.
To fix that problem, investors introduced the Rule of 40 in 2015, which is calculated as follows:
What the calculation means is that when you add a company’s growth rate to its profitability, if the combined score is over 40, then the company is an attractive investment. Let’s apply the Rule of 40 to two different companies:
Before 2015, Company A would have been the more attractive company because of its high growth rate. But let’s apply the Rule of 40 and add the two numbers together and we get the following:
After 2015, everything changed. As you can clearly see above, not only is Company B more attractive than Company A, it has more than double the score. Now companies were handsomely rewarded for balancing growth with costs. For example, in 2021, Expensify and Weave went IPO. They both had similar revenue and growth, but here’s how things ended:
It’s no surprise that Product Led Growth (PLG) emerged as a popular growth model shortly afterward. In PLG, companies made it stupid simple to try the product. Combined with ease of sharing and network effects, companies were able to grow quickly with minimal investment in Marketing and Sales.
We were sold the idea that PLG was the new gold standard for software companies, but it has 2 major problems.
First, almost no B2B companies have a product that’s simple enough for PLG. In fact, if you have an onboarding team, a training program, or an online university then your company is definitely not PLG because the product is too complex to use without help.
The second problem, arguably the bigger problem, is that PLG is hard to control. Even if you are a PLG company, you can’t “double your features” to “double your growth from the product.” Let me explain.
What’s the biggest Sales Led Growth software company you can think of? You probably thought of Salesforce. As of 2022, Salesforce has an enormous 26% of its headcount in Sales or Marketing (source: Linkedin).
Now let’s compare that to three of our PLG darlings: Zoom, Calendly, and DocuSign. Their Sales and Marketing headcounts are as follows:
So our poster-children PLG companies invest more in Sales and Marketing than the largest Sales Led Growth company. How is that possible? Because these companies have not been able to sustain growth via their products alone. They needed Sales to activate accounts that didn’t engage with the product and to chase larger Mid Market and Enterprise deals.
So now we’re stuck. Product-Led is difficult to control, and Sales-Led is too expensive. So what’s the path forward?
That’s what we’ll explore in this edition of 2.0. We’ll propose that ownership of Product Market Fit is the biggest opportunity for Customer Leaders, and when done correctly, unlocks an entirely new growth lever for their business: Customer-Led Growth.
While the 2.0 magazine is compiled and published by Nuffsaid, it’s a community effort to develop the content which is shared with you for free. So I’d like to thank everyone who contributed to this magazine, everyone who posts their ideas online, everyone who challenges the status quo, and everyone who helps us level up our skills as Customer Leaders.
CAREER
The Hierarchy is Bullshit (And Bad for Business)
Here’s an absorbing read from CEO of Honeycomb, Charity Majors, who challenges the vertical organizational structure tech workers have become accustomed to and offers practical tips to “drain your hierarchy of social dominance.”
OPINION
The One Thing Billionaire Frank Slootman Got Wrong
In his book Amp It Up, enterprise software CEO, Frank Slootman claims, “If the basic functions of the company are working properly, and are held to account, you won’t need a separate [Customer Success] department.” Here’s Nick Mehta’s reaction to that argument and why “Slootman’s view reflects a dated perspective around the future of software.”
MANAGEMENT
Should I Create a Performance Improvement Plan For My Direct Report?
Queen of leadership content and coaching, Lara Hogan, shares how to navigate the Performance Improvement Plan process “in a way that’s as fair as possible to your direct report”. Definitely worth a read if you, like many, have complicated feelings about PIPs.
INDUSTRY
The Problem With Customer Success
For Customer Success thought leader and Investor at Crane Venture Partners, Rav Dhaliwal, now is the time for a major overhaul of Customer Success. With an economy that has put CEOs and CFOs into survival mode, this important piece makes you wonder, is a Success team with no commercial responsibility a "must have" to survive?
For this newsletter issue, we handed the reins over to a team of Customer Success experts at SV Academy who asked their recent graduates, "What will it take for you to stay at your company for the next 2-3 years?"
SV Academy prepares job seekers for an entry-level position in Business Development and Customer Success in weeks. But what makes SV Academy such a uniquely strong organization is the fact that 76% of their 2,000+ grads belong to an underrepresented group.
Here's what the team at SV Academy came to understand about how to retain top underrepresented talent. Take note.
We asked our Customer Success Program graduates employed within the last year what their company could do to make them stay another 2-3 years.
Across 34 individuals who responded, 84% were non-white, and 65% were female or non-binary. The top two resounding responses were:
Respondents also reported other top retention initiatives including:
The overwhelming theme, however, revolved around the need to feel like a company is sincerely committed to its employees’ financial and career growth. And companies can implement many new practices to ensure career growth is fairly applied to the entire workforce.
Wherever you sit in an organization, there are immediate steps you can take to ensure promotions and pay increases are transparent and equitable, and that the overall culture values the contribution of all individuals.
#1 Revamp company infrastructure to prioritize inclusivity.
#2 Create salary bands that meet or exceed industry standards.
#3 Ensure there is clear and transparent career pathing.
#4 Think about benefits more inclusively.
Ensuring fair and transparent pay and growth opportunities benefits every single employee. Luckily, targeted, intentional changes to create a true meritocracy are achievable and will go a long way to supporting individuals from all backgrounds as you work to maintain top talent.
EVENT
Join Me at the CS100 Summit Conference Sept. 27-29
There’s 11 seats left for the CS100 Summit in Sundance, UT. Come check out Silicon Slopes and meet top Success thought leaders like Maranda Dziekonski, Eugene Lee, Aaron Thompson, Kristi Faltorusso, and more.
DIVERSITY
Why CS Has the Best Opportunity to Hire, Retain, and Promote More Black Leaders
Customer Success, especially at the leadership level, is predominantly White. This piece wasn’t written to highlight a problem, though. We wrote it in partnership with the CS community last year to share tactics that will result in better hiring, retaining, and promoting Black team members.
HIRING
Good Interviewer/Bad Interviewer
”Good interviewers understand that interviewing is as much about identifying talent as it is about attracting talent — they’re talent scouts and talent magnets.” Here’s a useful post for anyone who is part of the interviewing process (or wants to be). Because above all else, getting the right people to join your company and team is the most important thing you can do.
INDUSTRY
Customer Success in the Age of Uncertainty
In this piece, Peter Armaly, VP of Success at ESG, shares his clear-eyed perspective on what Customer Success teams face and how they should be thinking about their situation in this economic downturn. “Your customers are still invested in what your company offers. They still need your solutions and your help. All of what you need is in your control. You just have to start building and executing so that you can prove that what you do matters.”
For this week’s newsletter issue, we asked over 10 Customer Success leaders this question: “What’s one skill every CSM needs to learn to be eligible for a Customer Success leader position?”
Here’s what they had to say.
Rod Cherkas - Strategy Consultant and Advisor to CCOs at HelloCCO
CSMs need to demonstrate an ability to prioritize. For example, in their day-to-day roles, they need to prioritize how they invest their time and which clients to focus on. This is a critical skill to demonstrate you are ready for a leadership role.
In this position, you will be asked to optimize results across a wide number of levers. You will need to demonstrate that you can identify and focus on the most important areas, and be willing to let go or delegate others.
Shashi Aryal - Head of Customer Success at Prelude
Effective communication—it’s as simple as that. Everyone can communicate, but not everyone can communicate effectively. Customer Success is the voice of the customer and interacts with almost every department internally.
You also have to be bold, as you’ll continually have to challenge both the customer and the company to make positive impact; whether it be to drive adoption or innovation. Everyone has different communication styles and it’s important to be able to read a room and tailor your communication style accordingly. You want to resonate with your audience in your initial meeting, not the second or third. Your first impression matters.
Daniel Rose & Angela Hooper - Leading Customer Success at Alation
A CSM needs to up-level themselves from being the hero CSM that every salesperson wants to work with. They need to establish themselves as a process and Customer Success strategist that each CSM leans on when they begin to develop account plans and adoption strategies. They should become the CS team’s go-to growth advisor.
It is one thing to win one battle, but as a CSM, you need to establish the vision to win the hearts and minds of all the go-to-market teams. This will put you on the top of the list when your organization begins to look for its next CS leader.
“A CSM needs to up-level themselves from being the hero CSM that every salesperson wants to work with.”
Sara Khafaga - Trusted Advisor, Growth Seeker, & Sales Retention Expert
Be empathetic! I learned this during my leadership role with Gartner managing a Customer Experience program across Australia and New Zealand. Empathy was the key success factor in working cross-functionally with different local and global teams, while collaborating, influencing, coaching, and managing operations across remote teams in different time zones.
Empathy is the capacity to place oneself in another's position which helps you establish and build social connections with others. Why? It improves productivity, boosts organizational growth, makes collaboration easier, brings out the best with a diverse workforce, improves reputations/personal branding, and leads to reciprocity of empathy across an organization.
Craig Wahl - Sr. VP of Customer Success at Boast.AI
Decision Making - It’s essential to have the ability and willingness to make decisions and try new things, knowing failure is part of growth. Taking action and being accountable for those actions will help grow you into a strong leader.
Curiosity - CSMs need the ability to continually ask thought-provoking questions. They need to be open to always learning more about their customers, peers, and those that report to them, which will consistently highlight areas of growth.
“It’s essential to have the ability and willingness to make decisions and try new things, knowing failure is part of growth.”
Cindy Greeratiyuth - CG Consulting
There is no ONE skill that a CSM needs to master to be eligible for a CS leadership position. Instead, there are many. Let me expand on a few crucial skills that a CSM must hone to be ready to climb the career ladder of leadership.
#1 The best CSMs are astute “Students of the Customers.” They are curious and eager to learn about their customers, the business, and how to align solutions to help customers achieve their desired outcomes and ROI.
#2 Emotional Intelligence is essential as a leader. CSMs must be able to connect, influence, and inspire the internal team and customers to achieve their respective goals. One of the ways to effectively connect, starting with your team members, is to learn the art of Radical Candor (i.e. understanding how to “care personally and challenge directly.”) If done correctly, this will enable people around you to do their best work while building trusted relationships.
#3 Skilled CSMs poised to be CS leaders often have great active listening skills. They believe in the motto “Seek to understand before you can be understood.” Active listening means listening and responding to improve mutual understanding.
“Leaders don’t have to have big titles to be great leaders.”
#4 CS leaders have diverse experience and strong business acumen. These qualities allow them to challenge the status quo in a skillful manner, have the intuition to ask the right questions, and identify the right problems to solve. I’ve found that CSMs with solid Consultative Sales, Account Management, or Consulting backgrounds are adept at this as they are trained in objection handling and navigating tough conversations with all levels, particularly at the executive levels.
#5 Another leadership skill that CSMs need to develop is critical thinking and data-driven decision-making. There will be lots of data. Depending on where your company is in its journey of data management and reporting, the best CSMs take the initiative to learn and rally the right resources to provide relevant data to aid in decision making.
High-performing leadership skills often include effective communication, the ability to influence, decisiveness, problem-solving, relationship building, and the ability to coach and/or mentor. But one thing to keep in mind is that leaders don’t have to have big titles to be great leaders. Like John Quincy Adams said, "If your actions inspire others to dream more, learn more, do more, and become more, you are a leader."
Farzad Khosravi - Sales, Growth, & Customer Experience Consulting
The one skill every CSM needs to learn to be eligible for a CS leader position is to move beyond focusing on traditional CS metrics and instead work towards departmental alignment and company goals. Too many CS leaders obsess over downstream metrics like churn, retention, and upsells. But this is overrated.
All of these metrics are determined by a whole host of decisions made months or years ago by your Sales, Marketing, and Product teams. They are multivariate problems that can't be simplified into single variate problems. True Customer Success is a collective enterprise spanning the entire company. You must identify, collaborate, and align with your entire company if you really want to impact retention, churn, and upsells.
Harsh Shah - Customer Success Manager at Woliba
The most important skill required to be a great Customer Success leader is taking ownership of process optimization. This means solving the most important problems your team, and company, face.
Within every team and organization, there can be a seemingly endless number of moving parts at any moment each with a different impact on different parties. Due to this, CS teams can struggle with lots of challenges, which decreases a team's efficiency.
"Too often, there are mountains of challenges at a company, but no one steps up to fix them."
Here’s an example. Imagine you work at a company where customers continually share issues or enhancement requests, but the team only provides temporary solutions. No one actually works to resolve the core problem. To solve this, you have to set up a core process first to gather feedback from customers. At particular events or points of their journey, you can reach out to them to gather this data, and after cleaning and filtering the data, you can work on permanent solutions.
As a part of this solution, you can grow your knowledge base by adding answers to any repetitive questions, creating educational materials, product enhancements, etc. After every such sprint, your product and support will become stronger. As a result, questions or concerns will decrease and customers will begin to seamlessly use your solution.
But too often, there are mountains of challenges at a company, but no one steps up to fix them. Too often, people say “it’s not my job.”
CSMs who are ready to take on a leadership role have a history of identifying unsolved problems, raising their hand to help solve those problems, and oftentimes see it as an opportunity to better the entire organization. This requires a problem-solving mindset and the desire to learn new techniques and tools. That’s why the best Customer Success leaders help their company grow by taking on ownership of process optimization.
Ivette Muller - Enterprise CSM at Friendbuy
I think one critical skill is empathy. To be really successful in this role, you have to be a great business partner—one that understands the customer, knows their challenges, celebrates their accomplishments, and cheers them on when it's tough.
Having experience on the client side has been invaluable as a CS leader. I've been in their shoes and now I can share my experience with them to help navigate their current situation. Sometimes the most valuable lessons come from my past mistakes! My clients appreciate that I have a common history with them and know I have their best interests at heart. My success is their success.
Gary Allum - Customer Success Manager at PlexTrac
The most important skill every CSM needs to have, especially if they want to become a leader, is humility. While, yes, it is a personality trait, I believe it is also a skill set. Let me explain—whether you’re speaking with a client, or someone who reports to you, reigning in your pride and being transparent enough to say "I don't know", can go a very long way.
Leading by example and showing humility in your dealings with employees will have a trickle-down effect and lead to your clients being treated the same way!
ECONOMY
3 Ways Tech Companies Can Thrive in an Economic Downturn
"Best practices are not convenience, they're survival." Here’s a must-read piece by TSIA’s Thomas Lah that digs into where specific departments (from Partner Channels, to Support, to Product Management, to Customer Success) can cut back and where they can find new revenue.
HIRING
Why Now’s the Perfect Time to Retool Your Hiring Process and Get Creative
In this piece, the co-founders of Peoplism argue that even amidst these economically turbulent moments in history, right now is the best time to improve your hiring processes. Their step-by-step hiring outline is great right out of the gate with the first step being "Start with the job description — Don't just copy and paste."
ONBOARDING
Duplicate This Onboarding Process and Best Practices to Create Raving Fans
The art of customer onboarding is ever-evolving. Scan Gong's tips to ensure your team is providing a customer onboarding experience designed to create raving fans.
EVENT
What the &%^! Is Customer-Led Growth?
Pulse 2022 is in a few weeks! Join me live in SF on August 18th at 2pm PDT to learn about why CLG is the only path forward in a hard economy. (Get 20% off with this code: PULSE22_SPEAKER20)
Shreesha Ramdas, 7+ year CEO of the Customer Success platform Strikedeck (acquired by Medallia in 2019), is passionate about customer onboarding.
We sat down with him recently to get a better understanding of how he thinks companies can elevate their onboarding experience to the next level. This newsletter includes an excerpt from our interview with Shreesha.
CHRIS: Should onboarding be treated separately from the rest of the customer journey?
SHREESHA: I believe it should be treated as separate because of the immense impact that onboarding has on the customer and the rest of the phases of the customer journey.
If you are not onboarded well, the chances are zero that you will have good adoption. Onboarding is where first impressions are formed, so your customer will assume that their experience during onboarding is a reflection of the experience they’ll have as a customer of your company.
Onboarding sets the tone of the relationship, so it's incredibly important during this phase to convince a customer that they did the right thing by buying your product.
Even when your product has flaws, if you onboard customers well, and if you get them to understand how they can get the most value from the product, they may overlook the flaws. That's the reason why you have to pay very special attention to onboarding.
CHRIS: React to this statement—Time To Value doesn't matter.
SHREESHA: I'm on the middle here because value is subjective. Having said that, you need to measure the benefits customers are getting from the product or service as a part of the onboarding journey.
I like the ‘aha’ metric better than TTV. The ‘aha’ metric is when a customer finally understands how a product serves them and you can measure it by looking at a customer’s usage behavior. Before ‘aha’ their usage will be unpredictable. But once they figure out how to use and leverage your product, you will see a consistent, predictable behavior and frequency of use.
I'm also a big fan of having a uniform measure by looking at the time it takes for the customer to use a particular feature. Let's take email automation, like Marketo or MailChimp, for example.
You might say, ‘When my customer is able to use the email campaign with the scheduling feature, that's when I know they're completely onboarded.’ By measuring time to use a feature rather (an objective measurement), rather than the subjective TTV metric, it ensures your features are tied to benefits and that you have a uniform way of measuring milestones for your customers.
CHRIS: Measuring Time To Value as an average is problematic because a few customers who onboard quickly could mask customers who take much longer to onboard. Or the opposite—you could have a single customer that takes nine months to onboard, which throws off your TTV metric for all the other ones that onboard correctly.
SHREESHA: You're right. Using the mean just wouldn't work. A better measure of TTV would be frequency. This is why patterns are important. One thing is very clear—the worst punishment for a SaaS company is being condemned to being a ‘shelfware’.
(For all the confused readers out there, software used to be sold and installed via a physical CD, so ‘shelfware’ could be defined as unused CD software that has been relegated to a dusty old shelf.)
If customers are not using your product frequently, then it's as good as shelfware because you know they will give up on it.
Now if you work at an early-stage SaaS software company, then you should not care about the average or any single metric. Instead, put all of your focus on the customers who struggle to get onboarded. Because especially early on, that reason is very important.
Now, let's say you've been around for a long time and you have a deep understanding of why customers don't onboard well, then outliers actually don't matter as much. There will always be outliers or customers who for their own intrinsic reasons will not be able to use the product.
You should not care as much about those outliers because the majority of your customers will be in their own swim lane.
CHRIS: So in that case, why does Time To Value matter?
SHREESHA: What matters is that there is a predictable pattern. Basically, the TTV metric ends up being a steady-state metric, and only when that metric moves out of the boundaries of normal, should you start paying attention.
CHRIS: What's your take on the new emergence of onboarding tools?
SHREESHA: In the past, I was used to seeing numerous companies function for the different aspects of the onboarding experience. Asana managed the milestones and key dates with the customer. Google Drive was used for customer collaboration and document sharing. Customer interaction happened on Slack. And training took place via Loom videos.
But now I see a benefit in unifying all of those steps into a single place with a comprehensive onboarding tool where the 5 core areas of onboarding are covered.
The 5 core areas of onboarding include:
#1 Project management
This includes timelines, milestones, and activity reporting to track the progress of customer onboarding.
#2 Artifacts management
A repository of documents, data, and collaterals that need to be shared.
#3 Customer collaboration
Enabling real-time collaboration between the customer and vendor to ensure everyone is on the same page.
#4 Education
Planning the customer's education and training needs helps to ensure ramp-up and the transition to the adoption phase.
#5 Customer satisfaction
This includes measuring the customer's pulse on the activities completed and collecting feedback on a continual basis.
I believe that ‘well begun is a job half done’ meaning that if a customer has a good start with you, you are already halfway to your goal. People should place a separate focus on onboarding from the rest of the customer journey. That's why I'm a big advocate of using a best-in-breed, all-in-one tool to focus on elevating the onboarding experience.
CHRIS: What factors help decide the right onboarding program for your company?
SHREESHA: I’m an advocate for CS leaders evaluating their need for onboarding specialists rather than general purpose CSMs. Leaders should especially consider employing onboarding specialists if their product requires a highly technical integration process or if onboarding is typically very time-consuming.
The benefit of having onboarding specialists is that they understand the product implementation process really well, they’re meticulously data-oriented, and they’re experts at deploying specific onboarding dates, documents, and deliverables that customers need to meet.
CHRIS: What tips would you like to share with folks about improving the Sales to CS handoff?
SHREESHA: There are a lot of opinions on the internet about what constitutes as the best Sales <> CS handoff. But the point I would like to emphasize is the importance of Sales passing on two things to CS teams during the handoff.
#1 Attributes of stakeholders and influencers.
Once a prospect buys a product, Sales usually has had ample time to become familiar with the buyers’ needs, wants, environment, and style of communication. Unfortunately, it’s rare when a salesperson passes along intricate persona details to the CS team.
Maybe a customer is meticulous about the details, or likes responses to come back within two hours, or is hardcore when it comes to negotiation. Those kinds of attributes, if passed to CS, will save CSMs an incredible amount of time. Otherwise, CSMs tend to spend three to four months getting to know customers better when the knowledge was held all along by the salesperson.
#2 Company dynamics at play.
What I mean by that is, what is the culture of the organization that purchased your product? Are they fast in decision-making? Are they slow? For all the important decisions, do they look up to the CIO? Or someone else? Does the IT organization come into the picture every time you have to talk about integrating with another system?
Again, if Sales can document and pass those details on to the CS team, it’ll make their job much easier and allows the CS team to provide a better experience right from the start of the customer relationship.
—
Connect with Shreesha on LinkedIn.
PROCESS
Deliberately Underselling as Sales Strategy
Tomasz Tunguz tells “a tale of two software sales processes”—1) overselling by accident, and 2) deliberately underselling. You can guess which leads to “better unit economics, healthier customer relationships, and more expansion.”
LEADERSHIP
What to Do When Your Feedback Doesn’t Land
Here’s leadership coach, Lara Hogan, on how to best handle the situation where you’re unsure of whether a direct report has internalized your feedback or plans to make any changes. She outlines some useful steps to take and shares this good reminder: “after you’ve made a statement or asked a question, be sure to create a long pause and not say anything at all. This will give your teammate time to process and respond.”
CUSTOMER EXPERIENCE
Customers Hate These 3 Things (And How to Avoid Them)
In this post, Lincoln Murphy takes a deeper look at the 3 things most despised by customers:
CUSTOMER-LED GROWTH
Measure Value to Customers
Check out the chart below. Most of us agree that we must maximize value delivered to customers, but if we're being honest, we're barely scratching the surface. Where is your company now and where do you need to be in 12 months?
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