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This week we announced the release of the second issue of the 2.0 magazine, titled Customer-Led Growth. It’s an exploration of the teams, systems, and skills needed for Customer Success to drive a Customer-Led Growth model.
Customer-Led Growth is a term I expect we’ll begin to hear more often. That’s why this newsletter features the foreword from the new magazine, which outlines the principles of Customer-Led Growth.
But first: What is Customer-Led Growth?
Customer-Led Growth is an operating mode where everyone at the company is obsessed about the value customers are receiving from the product. And, you’ll read this below, it builds on the principles of Product-Led Growth.
And how did it come about?
First we have to start with the CEO. The CEO’s primary responsibility, in the eyes of their investors, is to increase the value of the company.
In the early days of SaaS, investors rewarded companies that grew very quickly, which created the Sales-Led growth approach where companies were willing to spend 100% or more of revenue to acquire new customers. These companies also tended to have high customer churn rates.
Then, when Wall Street saw how expensive it was to grow these companies, they started rewarding companies that could grow more efficiently. And from that emerged Product-Led Growth, a model where the value delivered from the product and network effects allowed companies to grow quickly with minimal Sales and Marketing investments. These companies also had much higher customer retention rates.
But here’s the rub: 95% of companies will never be Product-Led. That’s because they’re missing the key ingredients that enable PLG, the most important one being that the product has to be very simple to use, and also the customer has to get high value with minimal effort. Very few companies have a product like that.
So if 95% of companies will never be Product-Led, but investors still want low-cost growth and high retention rates, another model is needed. That’s where Customer-Led Growth comes in.
By obsessing about the value customers receive, it forces the company to achieve product-market fit. Great product-market fit leads to great retention rates, great customer advocacy, and much lower costs to grow revenue than traditional Sales-Led Growth models.
Below you’ll find the foreword from the new magazine, which outlines the principles of CLG.
“Design for users!”
“Deliver value without friction!”
“Monetize upgrades that deliver more value!”
Read those declarations aloud, and your brain probably will go to Product-Led Growth. That’s because those ideas are core to the increasingly popular PLG model, and have helped companies like Slack, Zoom, and Airtable skyrocket their growth.
The principles of PLG power a very small percentage of companies. Most companies, which aren’t a good fit for PLG, latch onto the trend by putting a free trial on their website… And it doesn’t produce the results they’d expect.
That’s because most companies don’t have the core ingredients to enable PLG:
Companies that don’t meet all 3 of PLG’s criteria won’t be able to pull off Product-Led Growth. However, the principles of PLG are still solid. They can be built on to apply to customers who aren’t a good fit for the PLG model.
That’s where Customer-Led Growth comes in. Customer-Led Growth builds on the principles of Product-Led Growth and acknowledges that 95% of companies will never be able to truly be Product-led.
In a CLG model, the entire company obsesses about the value that customers are receiving.
In a CLG company, the Customer executive is one of the most important members of the executive team. They own “customer value” on behalf of the company, and arm their peers with the data that’s needed to acquire the right customers, with the right use cases, at the right price point, with the right features, to ensure the company maximizes its growth rate and profitability over time.
So for this issue, we explore the team, systems, and executive skills a Customer Success function needs to lead a Customer-Led Growth model. From unlocking CS Ops and designing digitally-led programs, to influencing Product, Marketing, and Sales — we hope this issue serves as a reminder that CLG is a company-wide job, and inspires Customer Success leaders to lead the charge.
PROCESS
QBRs Are Stupid
In the past 2 days both Aaron Thompson and Nick Mehta have called for a change to how most CS teams run QBRs. Nick’s post is tactical and Aaron’s takes a higher-level view at what makes QBRs ineffective (or his words: “stupid”). Consider using both to do an audit with your team.
LEADERSHIP
A Leader’s Job Is to Create Clarity on the Problems to Be Solved
Segment’s CEO Peter Reinhardt reflects on an experience at Segment (“everything was burning”), and explains why the solution was to share what the company’s problems were and let the team solve them. This lesson is easier said than done and it’s not the default way of working for many people. A helpful reminder.
MONETIZING CS
5 Models for Monetizing Customer Success
Marley Wagner discusses potential pathways for monetizing the CS motion. This piece might be a useful starting point for any leader thinking about implementing new CS models.
CAREER
Extending Your Personal Runway
Here’s a thoughtful examination by executive coach, Ed Batista, on how to assess a difficult professional transition. “Senior leaders do enjoy many advantages: They're well-compensated, have a great deal of autonomy, and often feel a strong sense of purpose. But such roles also come with significant downsides… [they] the subject of intense scrutiny, receive little developmental feedback, and are rarely viewed empathetically by others. So despite the many benefits of these roles, feelings of stress, fatigue and isolation can cause senior leaders to entertain thoughts of leaving.”
Success Happy Hour is a weekly newsletter for Customer Success leaders. Each week we feature one digestible piece of advice or a framework from a top Success leader, along with the best resources from that week. Subscribe here.
Some news: We have the next issue of the 2.0 magazine, print copies, in hand. We haven’t officially launched it yet (check out this sneak-peek of the issue), but the digital version is coming soon.
This edition is all about Customer-Led Growth, a business model that builds on the principles of Product-Led Growth but accounts for the fact that most companies aren’t a good fit for PLG. In a CLG model, the company 1. Measures the customer’s perceptions of the value at each step in their journey, 2. Uses that data to inform all important company decisions, and 3. Makes outsized investments in the Customer team.
This second issue of Nuffsaid’s 2.0 Magazine, called Customer-Led Growth, explores the team, systems, and executive skills a Customer Success function needs to lead a CLG model.
The following is an excerpt from one chapter in the magazine. This chapter hits on point #2 above (“the company uses customer data to inform all company decisions”) by explaining how CS leaders can influence an important decision: the Ideal Customer Profile definition.
Too often, the company’s ICP is an afterthought for CS teams. It’s easy to fall into being reactive, especially when you trust your Marketing team, or to ambiguously refer to the company’s ICP without holding anyone accountable for follow-through.
But acquiring the right customers is one of the first initiatives a Customer-Led Growth leader pursues. Good Customer Success teams proactively give Marketing the data they need to refine the company’s Ideal Customer Profile (ICP). Great CS teams take it a step further: they assign a Fit Scores to every customer, and use the ICP internally to identify and manage expansion opportunities.
That’s why we asked several leaders one question: What’s one action CS leaders can take to have a bigger influence on the Ideal Customer Profile? Hopefully their responses won’t just inspire you but give you something you can do today to immediately be more influential over who Marketing and Sales are targeting.
Here’s what they had to say.
1. Compare the ICP to reality
RACHEL ORSTON, CCO AT SMARTRECRUITERS
“Planning for the next quarter or year is a great time to revisit the ICP. The big question to answer is how your company is doing on the ICP. Where have you won, and how did that impact renewals or expansions? How many customers churned due to being a bad fit? Does the ICP definition reflect reality, or have the behaviors and characteristics of your best customers shifted?
“Then, don’t just say, ‘We need to revisit this’. Be part of the solutioning too. That means coming prepared to make changes, and having the data to back those changes up. It's the Customer Success leader's responsibility to be the internal voice of the customer and use data to share the experience your customers are having.
“Come to your strategic planning sessions saying, ‘Hey, this is where we're seeing success. CMO, can I better understand our ABM strategy? Are we targeting the right people?’ Or, ‘Hey, Here's where we're really struggling and finding friction. We need to revisit our marketing or sales process here.’
“There’s an opportunity to pause and reflect before we jump into next year and say, ‘Well, do our teams still know what makes for successful customers?’”
“The CS leader must start this conversation, and they need to have a strong voice about what's working and what's not. Most CS leaders aren’t doing enough of that—we go right into OKR planning, we start with targets and back our way into them. There’s an opportunity to pause and reflect before we jump into next year and say, ‘Well, do our teams still know what makes for successful customers?’ And that’s a great opportunity for the CS leader to show their ability to be strategic and bring the right data points forward to the rest of the executive team.”
2. Require Sales to assign a Fit Score to every prospect
SHAWN RIEDEL, EXECUTIVE CS CONSULTANT AT ESG
“I’m a fan of Ideal Customer Profiles (ICPs) with a Fit Score. That way, everybody has visibility into what customers we are bringing on board. Fit Score also allows me to plan for more resources to make a less than ideal customer successful.
“The Fit Score needs to be agreed to by all pillars that touch the customer—Sales, Marketing, Support, Services, & CS. After all, they all benefit from adopting an ICP.
“In theory, low Fit Scores will lead reps to find and spend more time on good fit customers. You don't want to be the rep with all the low Fit Scores.
“In practice, a Fit Score is similar to a Health Score. The calculation will depend on an organization, but the output should be a rating that is objective as possible with one subjective measure:
3. Highlight the consequences of acquiring bad fit customers
KATE WALSH, VP OF CUSTOMER SUCCESS AT KLAVIYO
“Proactive data and communication is what CS leaders need to focus on. They should be leading the conversation and showing things like, ‘Look at these customers that are successful. If we sign up more of these types of customers, this is what our business looks like in 12 months, 24 months, five years, 10 years.’
“And then on the inverse, CS leaders need to be equally intentional about sharing the data around what happens if the business doesn’t acquire customers that are a good fit. We're all shooting to build that healthy business, so in your next planning exercise think about how you can get Marketing, Sales, and CS to better understand the ICP and the consequences of not following it. It requires building a plan together.”
“CS leaders need to be equally intentional about sharing the data around what happens if the business doesn’t acquire customers that are a good fit.”
4. Incentivize ICP fit by compensating Sales reps and CSMs on renewals and expansions
ALEX HESTERBERG, CCO AT DELPHIX
“Customer Success is gaining more clout and influence on major strategic decisions, particularly as we go from subscription into consumption. Most companies now are trying to get more than 50% (sometimes as high as 80%) of their revenue for the year from their installed base. So as that shift happens, the most important thing is for CS leaders to have the confidence to influence and change compensation plans.
“The CS and Sales organizations should both be compensated on renewals and expansion deals—although not necessarily at the same rate. There are different ratios your company may use, but both functions should be incentivized and compensated on both so that there is discouragement from selling deals and customers that we know are not in the ICP.
“And at the same time, incentivising both teams should drive a lot of alignment through reward for going after the right profile and working together to get those companies, not just renewing but expanding.”
CULTURE
Don’t Worry, Be Happy
Feeling happy at work requires a combination of harmony, impact, and recognition. Amidst this “Great Resignation” this is a good piece for managers to consider—how can you create more joy, and therefore success, within your teams?
(One typo from the article: the author mistakenly calls NBA player Stephen Curry, “Steph Kerry”)
RETENTION
“Five Stars, Six if I Could!” Strategies for Upping Your CS Game to Add Value and Drive Growth
Here are some strategies builder and investor, Chris O’Neill, suggests to earn more customer love and ensure customers renew year after year.
COMMUNICATION
The Art of Becoming a Better Listener
“It’s easy to assume that listening is merely about showing up and paying attention to the other person, but it’s also deeply tied to paying attention to ourselves.” In this piece, Ximena Vengoechea offers a trove of tactical advice for how to become better, more engaged and empathetic listeners—something that most everyone needs to work on.
OWN A NUMBER
Why the ‘Proof Gap’ is An Existential Threat to CCOs & CMOs
Peter Armaly shared this on LinkedIn last week; the TLDR for this one is that revenue attribution, and specifically owning a number, is key to securing more budget. Written for Marketing but the same concept applies to CS.
Success Happy Hour is a weekly newsletter for Customer Success leaders. Each week we feature one digestible piece of advice or a framework from a top Success leader, along with the best resources from that week. Subscribe here.
Recently we heard of a situation you might be familiar with: CSMs, possibly because of the way they’re thought of within the company, feel undervalued. They don’t know their worth.
It can seem like an ambiguous problem to tackle. So we recently sat down with Neelam Patel, someone we know has managed this dilemma before, to talk about where the issue comes from and how others can approach it with their teams. The following is an excerpt from our conversation.
Neelam: I see this problem stemming from a few areas:
1) Imposter Syndrome. On the individual level, most everyone has imposter syndrome when they’re starting something new. CSMs aren’t the only ones who experience this. Everyone has basic self-worth work they need to do like, “Hey, I exist. Therefore I should be in the room.”
2) Diplomatic Role. CSMs are people who care about people, right? That’s a big reason why we hire them. But the problem with this kind of diplomatic role is that if you’re skilled, you likely won’t be seen or heard. Often the only time you’re called out is when you’ve made a mistake or there’s a fire. No one thinks about the glue, right? CSMs are glue—they hold everything together and only get seen when something breaks.
3) Misunderstood Department. Customer Success and the role of the CSM are often misunderstood, so CSMs can be seen by others in a company as “the person who helps make customers feel better” or a project coordinator.
If a CSM already struggles with imposter syndrome and on top of that, the words and actions within the company support those fears, a CSM is going to fail to see their worth. That's the problem.
Neelam: #1 Build confidence by leveraging your subject matter expertise.
You need to get to the point where you're like, “I have value in this room because I understand my job and understand that I have a position that is unique.” As a CSM, you’re a subject matter expert on the customer—you’re part of the only group in an org that understands the customer on a deep level.
One way to build confidence is to create value within your company. Use what you know about customers, what you’ve heard in calls, and bring that information to your team (“here’s how I’ve handled this” or “here’s a pattern I’m noticing”).
#2 Draw a straight line from yourself to revenue.
When you have nothing to do with revenue, you’ll often be treated as someone who has nothing to do with revenue. Most people in an org are tech experts and subject matter experts, meaning their entire job and reputation is based on being highly skilled in a certain discipline and knowing the deliverable that is the profit center of the company.
If I'm responsible for the profit center, the most important thing to the company, then I’ll be treated as such. Everything else is secondary. And that’s not because everyone at a company is a jerk, that’s just business. The closer you are to the money, the more influence you have.
For your self-esteem and to have greater influence within a company, attach yourself to revenue and start tracking it. Start answering some questions:
This will give you the feeling of being responsible for the business.
#3 Know the product & how to help customers.
If CSMs don’t have the product knowledge to help a customer with a given request, they will often wonder, “What am I doing here? All these tech people know all the answers and I don't know anything.” This can be avoided with great product knowledge and understanding the common areas where customers struggle or places where they can find more value in your product.
You are also in a unique position to be able to translate to the customer in user-friendly terms. The more you understand from your “non-tech” perspective, the easier you can make it for the customer to understand as well.
#4 Think about your unique value.
I’ve had to do a lot of coaching, even with senior CS hires, about how out of the whole org, CSMs are the only ones who must wear two badges: 1) the company's badge and 2) the customer's badge.
As a CSM you're the only one with this vantage. Who else in the room at your company has the most intimate relationship with the day-to-day work and lives of your customers? You'll realize it's just you. You're literally a living, breathing avatar of the customer and nobody else can say that. Use this to your advantage.
#5 Track your impact.
The more you realize your value, the more you can vocalize it, so people “get” your worth.
If you’re able to share how a customer wouldn’t have renewed if you hadn’t done ‘XYZ’, a salesperson will start to think, “Wow, I want this CSM on my accounts because she always has my customers’ back.” People around you should know how the things you do help their paychecks.
As a CSM, you have a role that's 1) not understood by most people and 2) requires you to constantly advocate for yourself and educate people on how you’re worthy.
#6 Network and find a community of support.
It's helpful to network with CSMs at different companies to understand that you're not alone in your role. Partnerships will also help you think about how much your company values Customer Success. How does your company score compared to others?
A note from Chris:
Let's start with the root of the problem here, which is that if you’re a CSM and you don't own revenue for your accounts, then you don't own a number that matters to your company. No one cares. So the reality is if you don't own a number, you will be perceived as a project coordinator or Customer Support.
If you do own revenue, you will have power and influence within your company which you can use to pipe into conversations, share data & anecdotes from your customer accounts, etc.
Let's say you don't own revenue, but you still want to have a bigger voice in your company and you want to feel more valued. The most important thing that you can do is help bring the customer's voice into decision-making at the company. There are key decisions that happen over the course of the year without any customer input at all—it's crazy town. For example:
1) Product is making decisions about what features to build without understanding how much value it would add to customers' lives.
2) The Sales team is acquiring customers without deeply understanding the ICP.
3) Marketing is making decisions about pricing without knowing what's working and what's not working for customers around pricing.
4) Customer Marketing is coming up with content strategy without the knowledge of what customers need to help make their journeys more successful.
The next best thing that CSMs can do is to ask the same structured questions [see examples below] to all of your customers along their journey, and then summarize and share that information with managers and other leaders so that they can make better customer-centered decisions.
A CSM understands their customers more than any other person in a company but without quantifying that understanding, it's useless. At that point, all a CSM has is anecdotes, which don't mean anything to executives. What you need is quantified data about the customer experience that you can share.
PROCESS
The Power of Performance Reviews: Use This System to Become a Better Manager
“Done well, performance reviews improve performance, align expectations and accelerate your report’s career. Done poorly, they accelerate their departure.” Lenny Rachitsky, former Product Lead at Airbnb, offers a clear framework for a well-orchestrated performance review.
VOICE OF CUSTOMER
Who Is The Owner of The VOC?
Here’s an interesting discussion on which department should own the VOC program. Our opinion: VOC must be owned by a leader who is part of the executive team. Ideally, that leader is the CS leader since they’re closest to the customer, but it also requires the Customer leader to proactively deliver that information to other departments.
SPICY TAKE
Is Your Customer Success Team Helping Or Hindering Retention?
Here’s a CMO’s take on how not to approach Customer Success. If you’re reading this newsletter, you’ve probably already thought about the points in this article. But it may still serve as a helpful reminder that CSMs must be aware of their customers’ time, and treat their customers like humans. (Hint: Checking in to “see how a customer is doing” right before renewal isn’t a great experience.)
Success Happy Hour is a weekly newsletter for Customer Success leaders. Each week we feature one digestible piece of advice or a framework from a top Success leader, along with the best resources from that week. Subscribe here.
FEATURING: Jason Baldree (CCO at Alida), Nicole Alrubaiy (VP of Customer Success at Ping Identity), Emily Garza (VP of Customer Success at Proton), & Emilia D’Anzica (Founder of GrowthMolecules).
You’ve heard this one too many times: “Nothing beats face-to-face time.” Indeed, many of us are Zoom fatigued and virtual Happy Houred out. But with the recent surge in COVID-19 cases around the globe, you might again be finding yourself scrambling to pull off another virtual Sales Kickoff (SKO) or Revenue Kickoff (RKO) for 2022.
A great Sales Kickoff sets the tone for your year. So does a bad one. The good news is that running an effective and motivational virtual SKO is possible with some prep. That’s why this week we’re featuring advice on how to run Customer Success’s portion of a virtual SKO in a way that’s (almost) as good as in-person.
Chances are your week-long, in-person SKO of the past is too long of a time for your GTM team to be sitting in Zoom calls. It’s important to consider your event’s length and the cadence of sessions. Consider designing your SKO agenda using a healthy mix of the following elements:
For example, here’s Emily Garza’s solid plan for Proton’s 2022 Revenue Kickoff:
Day 1
Day 2
If you want your team and company to continuously improve, nothing beats hearing feedback straight from a customer’s mouth. In this year’s Sales Kickoff, make sure to bring a customer on stage and ask them about their full customer journey. You can get them talking about Sales, Services, Product, Pricing, Onboarding, and Content with questions like these:
Humans are designed to be “in-person”—teamwork and connection are a whole lot easier to foster when we’re not confined to little 1x1 inch images on a 12 inch screen. But since we can only play with the hand we’ve been dealt, it’s up to team leaders to do as much as they can to help facilitate building personal connections during virtual SKOs.
Here’s some advice from Jason Baldree, CCO at Alida: “We do a global Field Kickoff (vs. traditional SKO). This comprises all customer-facing functions in the field (primarily Sales, CS, Solution Engineers and Services). We have virtual networking sessions interwoven into the agenda for FKO. Our event is over 4 days (4-5 hours per day) since it is virtual. That is a lot of Zoom to consume, so we spread it out. On one of the evenings we are doing small team dinners where we send an UberEats to everyone and then get together to enjoy a dinner together virtually. We also are using some various tools to facilitate networking sessions (Hopin as the primary event tool, it has networking capabilities, Wonder.me for the Lunch & Dinner sessions). For my team's tracks we are separating the CSM's into small groups to have work assignments together and build some bonding.”
If in 2021 your Sales team had issues with setting customer expectations, for example, about how much CSM time customers get, or if the CS and Sales team need to level with each other about customer handoffs, there’s never been a better time to address the problem or iterate on processes than at your SKO.
Emilia D’Anzica, Founder of GrowthMolecules says, “Customer Success is responsible for segmenting the different experiences customers get which helps create some boundaries to help the team stay efficient. But they’re also responsible for making sure Sales is able to 1. understand how their deals map into the appropriate segments, and 2. communicate to the customer what type of support they will receive.
“It takes regular communication to make sure Sales is in-tune with Customer Success’s engagement models. But one tactic I’d note that I’ve seen work is running a session on this during your SKO. Map out your engagement models, train Sales on customer segments, explain the levels of support provided for each, and share that in a presentation to the entire Sales org—and do it again at every Sales summit.”
Nicole Alrubaiy, VP of Customer Success at Ping Identity, says, “Our sales process leverages a framework where Sales captures the customer’s challenge, impact of the challenge on their business, what solution we’re implementing and the expected outcome from that solution. That becomes the primary handover asset for our CS teams to lead the customer to those outcomes. Soon after SKO, we’re rolling out some new handover packages including this CISO framework, an org chart, and more.”
And for those who don’t have a challenge in Sales <> CS handoffs: Jason Baldree, CCO at Alida adds, “[At Alida] the CSM's are part of the majority of the sessions at our Kickoff event, including the sales process sessions with the AEs. Since we don't really have a challenge on the handoff side, we’re doing a number of sessions to further strengthen the bond of CS / AE alignment - joint account planning workshops, etc.”
We’re at a point in time where employees are extra motivated to look at other companies if their current company isn’t helping them grow personally and/or in their careers. In place of the fun, but nonessential concerts and trivial events of SKOs of the past, give your team the gift of leveling up. Coach them for the upcoming year, provide them with new skill sets, and work through scenarios so they leave the SKO ready to face the challenges ahead.
Advice from Nicole Alrubaiy, VP of Customer Success at Ping Identity:
“Up-leveling the CS team is core to our 2022 strategy. We started in 2021 with understanding the skill and comfort gaps in our current team to where we need to be in 2023. We built a roadmap to “CSM of the Future” and rolled it out to the team. Some of the key elements we’re focusing on are engaging decision makers in our accounts, improved success plans, and a deeper understanding of our product use cases and the value they drive. The team have also done personal assessments so their managers can work with them on tailoring learning plans to their needs.
“Our CS Architect team has done a similar self-assessment, but their learning plan is more focused on the products they each have as a speciality, as well as learning our newer products in depth.”
Advice from Jason Baldree, CCO at Alida:
“Our dedicated CSM sessions are focused on 2 themes this year—1) Value Discovery and 2) Solutioning. For Value Discovery, we have a couple of sessions on "how to" - e.g. questioning strategies, customer/industry research, Command of the Message tactics, etc. For Solutioning, this is all about upskilling the team to understand the customer tech landscape, as it relates to how we enhance and play a role in the martech stack/CX stack. We are going to be training on the types of tools, data, integrations, etc. that enhance the customer value from our tech and create greater stickiness.”
From Jason Baldree, CCO at Alida:
“The main thing my team has appreciated after an SKO is that it is a true field event and not just focused on Sales. There are sessions, training, awards, etc. focused on the entire field teams.”
From Nicole Alrubaiy, VP of Customer Success at Ping Identity:
“Hands down, our CS team members rave the most about the personal connections they build with their Sales counterparts. Sitting next to someone at a dinner or collaborating on an activity goes a long way to building trust that we can draw on throughout the year. Of course, the team also loves being part of the awards celebration, and getting the cool swag. The event helps us feel like we’re all on the same team.”
LEADERSHIP
The Best Managers Don’t Fix, They Coach
Here’s a message for any manager out there exhausted from being a “solution vending machine”—your over-reliance on fixing problems “constrains [y]our ability to lead and robs [y]our team members of growth opportunities.” This piece is a great place to start if you’d like to learn how to be a better team coach, not team manager. Worth sharing with directors on your team.
BEST PRACTICES
These Are the 5 Best Data-backed Sales Tips of 2021
Gong Labs’ research team set out to uncover the best-kept secrets of 2021. This post presents their findings, shares tips like “never negotiate over email”, and highlights trends like “longer emails are significantly more effective at booking a meeting”.
CAREER
Hugging the X-Axis
If you’ve accomplished anything big in your career, you’ll know that it took sacrifice, hard work, and above all, a commitment to a goal. But as David Perell’s essay argues, most people in Western culture suffer from some degree of commitment phobia. “People think they’ll be happy if they don’t have any obligations. In actuality, total optionality is a recipe for emptiness […] The challenge is that the greatest rewards generally go to people who are tied down in certain ways.” This piece will make you think deeply about responsibility and ownership.
Success Happy Hour is a weekly newsletter for Customer Success leaders. Each week we feature one digestible piece of advice or a framework from a top Success leader, along with the best resources from that week. Subscribe here.
The following is an excerpt from Bill Cushard’s article “The Business Model Innovation of Customer Success”.
We are thinking about Customer Success all wrong. We think it’s a function. A department. A post-sales team. The enlightened among us think CS is a philosophy or even an organizational design principle. That’s better, but still not quite right. I mean, what am I supposed to do with “Customer Success is a philosophy?” I have no idea. After spending two and a half years running a SaaS business as a general manager with P&L ownership, I have come to this realization in my thinking: CS is a business model innovation.
To understand what I mean by business model innovation, we must first define business model. According to Alex Osterwalder, “a business model describes the rationale of how an organization creates, delivers, and captures value.”
Notice the three parts of this definition: create, deliver, and capture value. All three are required in order for a business model to work. A mistake I see Customer Success teams make is focusing solely on “delivers,” ignoring “creates,” and “captures.” When a Customer Success team over-indexes on delivering value, the primary purpose becomes retaining customers, which seems like a noble pursuit until you examine the behaviors of a retention mindset.
Retaining customers is defensive. The mindset is, “If we are going to retain this customer, we have to get them to log in more or get them to use the software more or build a better relationship with the champion or get them to understand the value they are currently realizing. We must compel or persuade customers to act in ways we want them to act.” When a customer renews, we are relieved that we got the renewal at the same price as the last contract. We celebrate it.
I know what you are thinking, “Bill, that is a good thing. We saved/retained/turned around that customer by delivering value. What’s the problem?”
I see two [business model] problems.
Here’s another way to look at it. A CEO came to me for advice on how to get her team to focus on net revenue retention (NRR) and said to me, “You know, I see my teams celebrate all these renewals, but I don’t see the value of the contracts going up. All of our costs are going up, including the raises everyone wants, but the prices we charge customers are not. This is not gonna work.”
This is what happens when a software subscription business focuses primarily on delivering value and retaining customers. There is no “what’s next.” No forward-thinking about how to continuously help customers grow.
Software companies that understand their business model get all of their teams rowing in the same direction by getting everyone involved in all three parts of the business model:
The “what’s next” mindset is built into the system (your business model). There is no need to upsell or for account managers to sweep in to “close the deal” or argue about who should own the renewal or waste energy on debates about whether people can sell AND be a trusted advisor. You will understand how this is possible as you read further.
A well-designed business model answers the question, “What’s next?” It creates a flywheel effect of the following:
Step 1: Create “something” that solves a problem
Step 2: Deliver that “something” to a customer
Step 3: Capture 10% to 15% of the value of that “something” with reasonable pricing
Step 4: Repeat this process with existing customers. FOREVER.
Steps one through three are simple in the sense that most software companies already do this. The founder noticed a problem in the world, built a product to solve it, and found customers willing to pay for that solution. Step four is where the magic happens, where the flywheel can start turning, and where many software companies mis-understand their business model.
When you get to step four, I assume you have already delivered on the one main value proposition that new customers bought your product to address in the first place; and that the product has been designed to address.
Step four is about “What’s next?” More precisely: “What is the next value proposition you intend to help a customer achieve; and if we do help a customer achieve that next value proposition, how much of that next, new value will we capture?”
Pause and think about that for a moment, and while you do, let me ask those two questions differently.
To over simplify what is happening here. If we operated our Customer Success in accordance with the business model innovation, at each renewal cycle (ideally before) we would identify the next value proposition that we are positioned to help the customer achieve. Better yet, the customer would identify the next value they want to achieve. We create an offering (or select an existing one) that will help the customer achieve this next value, and we charge a price such that a customer is willing to pay because of the value they will realize. “If we do this, we will save $100, I’d love to pay you $10 to do that. Where do I sign?”
So the flywheel of the business model innovation (step four from above) is:
It is similar to what Rav Dhaliwal calls the continuous sale. What Dave Jackson calls the next best value. If you look through the lens of business model innovation, you transcend debates about who owns the renewal, the customer relationship, and a quota. The business model is designed more like an algorithm and less like a customer journey with owners and silos and hand-offs and confused customers, “Who are you again? My account manager? Then what’s my customer success manager for? Wait, I should call my technical account manager for that? When do I call support? Oh, I should have put in a ticket instead of calling you? Sorry. I’ll try to get it right next time.”
All of this noise and friction becomes unnecessary.
The business model innovation of CS is an algorithm with the following rules:
IF a customer wants to realize this value proposition, THEN they need to buy that offering.
IF a customer wants to realize the next value proposition, THEN they need to buy the next offering.
Your job is to work with multiple teams in your company and write as many IF/THEN statements as you can, such that you can help your customers.
FOREVER.
We, CS teams, just need to take one more step in our evolution. We are concerned with helping customers achieve value. One of our most important charters is to help customers achieve “first value” and help customers accelerate “time to first value.” All I am suggesting is that we don’t forget that we inserted the word “first” for a reason; because we know there is more value that we can create, deliver, and capture.
My call to action to you is this. Write down a list of value propositions that you could help your customers achieve over time. Then, prioritize that list using the model above, answering the question, “What’s the next value proposition I can help customers realize? And what is the next one after that?” Then write down the list of offerings you have (or need to create) in order to help your customers achieve those value propositions; and capture some of it.
COVID-19
Risk Calculus and Social Norms
Here’s Ed Batista with a useful reminder as teams consider making in-person events virtual, or not: “We can legitimize others’ definitions of “risk” and “safety” and the resulting social norms that may differ than our own. I’m not suggesting that we should participate in activities that feel unsafe, or tolerate safety measures that feel oppressive. But we don’t need to stigmatize others’ choices and make them “wrong” in order to pursue the path that feels right to us.”
STRATEGY
Customer Success: Defined for 2022
Lincoln Murphy has revamped his “Customer Success definitions” to reflect some changes in thinking. Consider how his definitions of Customer Success, CSMs, and Appropriate Experience match how your teams’.
INDUSTRY
5 Takeaways From OpenView's Podcast
Here’s a roundup from OpenView’s team on the top 5 things they learned on their show, BUILD. They’ve had some great guests on the show including HubSpot CEO Yamini Rangan. One takeaway: “It’s easier to say that you’re customer-centric than to actually be customer-centric. Most companies delegate this to user research, annual surveys or maybe the founder’s gut. It’s not enough.”
METRICS
Discovering the New “North Star” KPIs for Customer Growth
TSIA’s Jack Johnson makes the case for shifting your focus from Gross Renewal Rate to Net Revenue Retention (+ see his advice on how to create incentives around renewal goals), and explains how Resolution Rate helps build a sustainable renewal engine.
Success Happy Hour is a weekly newsletter for Customer Success leaders. Each week we feature one digestible piece of advice or a framework from a top Success leader, along with the best resources from that week. Subscribe here.
In a Customer-Led Growth company, CCOs are put in a unique position. Because the entire company obsesses over the value that customers are receiving, CCOs must use their close understanding of customer perceptions, use cases, and areas of friction to influence the company’s strategy. It requires an executive that thinks about the business, not just Customer Success, and has the ability to see gaps in the customer experience that other departments are responsible for solving.
In short, Customer-Led Growth companies demand a higher-powered Chief Customer Officer.
To become the executive CLG companies need, CS leaders will need to grow their skills in 10 core areas. We’ve outlined those areas in this rubric. The rubric will help you see what areas need to be focused on in the next 6 months and beyond.
(Click the image to expand it in a new window.)
Note: I created this rubric for measuring executive performance almost 15 years ago. I've shared it with each company I advise and it's consistently the best tool I've used for aligning the company around the customer.
The rubric above outlines two areas of growth: the second sheet outlines general executive skills, the first sheet outlines how to grow as a CS leader in a Customer-Led Growth company.
How to use this rubric:
If you don’t know where to start, begin by getting to Excellent in three specific areas to have the greatest impact.
Access those high-impact areas and read the rest of this article by following this link.
REVENUE
7 Reasons Why Chief Customer Officers Need to (Eventually) Own Revenue
Here’s Nick Mehta on how everyone benefits when the head of CS owns the revenue number. “You don’t have to do it all at once. Get clearer attribution of how your team impacts renewals and up-sell. Maybe take over renewals for small clients. Experiment with a new coverage model in your SMB customer base. Try something.”
ALIGNMENT
Cultivating a Strong Product <> CS Relationship
This is a solid, in-depth post by Jennifer Chiang who offers 5 impactful principles and corresponding initiatives to guide the relationship between Product and CS at your company.
ADOPTION
How Microsoft Uses the ADKAR Model to Improve Customer Success
Microsoft 365’s Customer Success organization primarily uses the ADKAR (Awareness, Desire, Knowledge, Ability, Reinforcement) Model to influence buy-in and diagnose common barriers to adoption. Share this resource with your team so they can help customers through seamless change management.
PREDICTION
IBM’s Janine Sneed on Where CS Is Headed Next Year
Janine Sneed, VP of Customer Success at IBM, breaks down 6 ways she thinks Customer Success is going to evolve in 2022. I’m a fan of predication #2 where she says, “Net Revenue Retention is the north star metric that underpins what a CSM contributes to the business. I believe most of the industry gets this now. Where we are heading is taking this mainstream into the boardroom.”
Success Happy Hour is a weekly newsletter for Customer Success leaders. Each week we feature one digestible piece of advice or a framework from a top Success leader, along with the best resources from that week. Subscribe here.
It’s the end of the year—a time when, among the festivities, we are given a chance to reflect on the challenges and celebrate the accomplishments of the last 12 months. That’s why this week we're highlighting some of the wins experienced this past year in the Customer Success community.
The truth is Customer Success professionals deserve it, now more than ever. Being tasked with ensuring customers realize value everyday during an ongoing global pandemic is no easy feat, so we owe it to our teams to recognize the astounding impact they have on a company’s biggest growth driver—its customers.
In this newsletter issue, 21 CS leaders from companies like Coursera, VMware, and AvePoint share their proudest moments from 2021 in the hopes of inspiring others as we head into a new year.
Yolanda Lau, Chief Experience Officer, Liquid (goliquid.io)
Even as an early-stage startup, we've been very intentionally focused on creating a customer-centric culture while building, scaling, and operationalizing Customer Success. Based on customer feedback, and in close collaboration with a small group of users, we recently implemented a comprehensive knowledge base / help center to meet users where they are. Our customers have told us how much they appreciate having yet another way to get what they need when they need it (along with our biweekly Office Hours webinars, weekly Intro to Liquid webinars, regular chairsides, etc).
Boaz Arbel, Co-founder and CCO, MaiView
Founding a new startup, where we’ve called Chief Customer Officer the role overseeing Marketing, Sales, and Customer Success! That’s a bold statement and a token of putting customers in the center of ANYTHING the company does. ❤️ Customer Success gains its seat around the executive table one role at a time.
Will Stevenson, Founder & COO
As an early stage company, a problem we set out to solve was maximizing value during the trial period. We were able to streamline a self-led onboarding process, which resulted in a high trial conversion rate and a +78 NPS.
Ronni Gaun, Top 100 CS Strategist
Using the 3 As to ensure productive meetings. These include always having an Agenda, the right Attendees, and Action items. The latter being most important to mitigate the need for an additional meeting.
Chilik Hochberg, CCO, ezbob
Creating a straightforward and online feature request process for our customers.
Guy Galon, VP Customer Success, Hysolate
With 1 year from product launch, the team was able to define the major milestones customers need to hit in order to realize the value of our product.
Star Hofer, VP of Customer Success, PartnerStack
One initiative I am proud of is rolling bonuses into base pay based on feedback the team provided on the effectiveness of incentives. The ability to think outside the box related to compensation and then see it through in a short period was rewarding.
Seth Dovev, Director of Customer Success, Chili Piper
Creating a new Discretionary Variable Compensation plan for the Customer Success Department focused on both team and individual goals and activities.
Himanshu Garg, GM - Global Customer Success
Ensuring success stories are well captured, documented, and presented for overall visibility internally as well as with our customers to learn and share best practices from across segments!
Krystal Lamoureux, Vice President of Customer Success, Credly
Our team developed a series of onboarding courses designed to set our customers up for success through videos, examples, and best practices. CSMs guide customers through the modules and provide insights to help them apply what they are learning. These courses allowed us to double the number of customers we onboarded while reducing the TTV significantly.
David Ellin, Customer Success Architect, Winning by Design
I've begun to incorporate 9 different technology solutions into my day-to-day processes. One that I'm far from mastering but that has been extremely powerful is the use of short video clips to clients to educate and inform.
Apoorva Thuse, Head of Customer Success, QASource
As a customer-centric organization, we put our customers at the core of everything we do. This year, we were able to build a customer advisory board which is a customer community focused on supporting customer-led growth initiatives for FY22 and beyond.
Cesar Coba, SVP - Customer Success, AvePoint
This year we were able to implement a more process-oriented and consistent engagement model for the CS team. This included a revamp of our post-sale customer journey and associated playbooks for CS team member execution. As a result, we've noticed an uptick in overall gross retention rates by about 5 percentage points YTD and an increase in customer engagement levels.
Rod Cherkas, CEO, HelloCCO
Partnering with CCOs at fast growing companies to scale their organizations. Developed the HelloCCO brand as an industry thought leader.
Dana Soza, CEO & CCO, Dana Soza Customer Solutions
My team completed our Tech Touch engagement model for CS Career Newbies called the #CustomerEverything Club, or #CEclub. That was a huge undertaking and we did it! We've also gained a ton of Contributors and Affiliates who are giving back to Newbies by providing content and promoting the program.
Jeff Heckler, Director of Customer Success Solutions
For one of our legacy customers, our new 4-month old Customer Success by MarketSource practice turned a $20M SMB and Mid-Market churn issue into a total end-to-end customer lifecycle solution for their existing customer base of over $150M in NRR.
Leslie Stark-Heffron, Head of Customer Success, Prepared
I am so proud of my team's determination. Our company zigged and zagged, but the team stayed strong to provide the best customer experience possible.
Dan Morris, Director of Customer Support and Professional Services, Carrot.com
We wanted to attack our response times in live support this year in a way that didn't impact our team happiness ratings. With some targeted staffing changes and customer onboarding improvements from our Product team, we were able to bring our median response time to 2 minutes in live chat and just under an hour in email support. This was also instrumental in increasing our CSAT ratings to 96% (on 51,000 inbound conversations) and increasing our eNPS to 60.
Josh Buckley, Director Customer Success Innovation, VMware
We developed VMware's first tech-touch customer success program resulting in delivering significant improvements in customer adoption for long tail customers.
Syed Altamash, CS Ops Analyst, Coursera
NPS was a big deal for us this year and having achieved 46% response rate (compared to 30% last year) this year was a huge accomplishment for the team.
Marius Laza, VP of CX, Instapage
We started offering 24/5 live chat support and dedicated customer success managers to our entire client base, even free trials. We hired dozens of people to do this but also used automation to help connect our clients with their customer success manager at the right time in their lifecycle. We had our lowest churn rate year to date and we are now closer to our customers than ever!
Elaine Cobb, SVP Customer Success, Coveo
As I reflect on 2021, I'm most proud of the team we have been building to keep pace with the growth trajectory we have been on. We all have diverse backgrounds, experiences, locations, but what unites us is our passion to help people achieve their goals. We are a team that cares deeply for each other and that tackles new challenges together. We are not afraid to challenge the status quo in pursuit of delivering an exceptional experience. To say this team has been resilient over the last 18 months is an understatement. We have an incredible team that I feel privileged to work with each and every day!
CAREER
The Top 9 Customer Success Career Paths
Brian Lafaille, Global Lead - SaaS Customer Success Programs at Google, shares the most common career paths CSMs will take.
COMMUNICATION
These Are the Best Email Tips You'll Read in 2021
Here’s Devin Reed of Gong Labs with a list of research-backed email tips. Although intended for Sales, these insights are also applicable for those in CS: make emails about the recipient, keep the content short, and add a specific CTA.
CHURN ANALYSIS
Stop Treating the Symptoms of Churn
According to Lincoln Murphy, when it comes to churn, too many companies treat the symptom and not the cause. In this piece, he breaks down the “root cause” reasons why customers don’t achieve their desired outcomes.
CSM COMPENSATION
3 Questions To Ask When Building a CSM Comp Structure
Ejieme Eromosele, VP of CS & Account Management at Quiq, shares how to thoughtfully design comp plans to attract and retain top talent. She provides some clarifying questions that would be useful to consider whether you’re building out your comp structure for the first time or reviewing your existing one.
GROWTH
What It Really Means to be a Manager, Director, or VP
If you’ve ever thought the lines between Manager, Director, and VP seem blurry, here’s an excellent article by Dave Kellogg to bring some clarity to the distinction. He says, “The biggest single development issue I’ve seen over the years is that many VPs still think like directors” and Dave goes on to define exactly what makes one VP good and another great.
Success Happy Hour is a weekly newsletter for Customer Success leaders. Each week we feature one digestible piece of advice or a framework from a top Success leader, along with the best resources from that week. Subscribe here.
There are a handful of leaders pushing forward the way we think about CS Ops: Jeff Beaumont, Gitlab’s Director of CS Ops, is one of them. He’s been with GitLab for over 2 years, helped the company with their IPO this past October, and is seen internally as a key strategist in the Customer Success function.
I recently sat down with Jeff to get his take on a topic he’s given a lot of thought to: how CS Ops drives Net Retention.
Below is an excellent excerpt from our conversation where Jeff shares 3 ways his CS Ops team helps to drive Net Retention at GitLab. You can also listen to the full interview on the ‘nuffsaid podcast.
JEFF: As a quick background, I lead the CS Ops team here at GitLab. In CS Ops we support our TAMs (Technical Account Managers), SAs (Solution Architects or Sales Engineers), and the Professional Services teams. And our current initiatives are around product usage data, getting a digital motion going, renewal ops, and enhancing Gainsight as the backbone system of CS.
CHRIS: One of the topics for today is how CS Ops is able to influence a Net Retention number. How do you think about the impact that CS Ops can have on Net Retention?
JEFF: For CS Ops to have an impact on Net Retention, the starting point needs to be that we act as the CSM to our CSMs. Their success is our success. We also have to hitch our wagon to theirs. If their goal is Net Retention, I must orient myself and my team to that. I come from leading CS teams and so it’s important that my team can empathize with the opportunities, challenges, and obstacles in front of CS. I try to make sure that I hire those with that industry experience, so that they know what it's like to be a CSM. Then, when they jump into an Ops role and begin working with CSMs, they don't have to ask questions like “Why is that important to you?” They already know what’s needed. Instead they say things like, “I get it. Let me go build that.”
And I think one of the other things that's actually been helpful for me is this book The Seven Pillars of Customer Successs by Wayne McCullough. He breaks down CS into categories including operationalizing CS, onboarding, adoption, retention, expansion, advocacy, and being a strategic advisor. This framework has helped me think about where my team is strong and where we need to improve from a CS perspective.
In my position, I have to be able to think about the strategy of CS, but then also the strategy of CS Ops. How is our onboarding from both a CS and CS Ops side? How about adoption? What about Voice Of the Customer? And then thinking about the future—do we need to go deep in one of those areas or should we focus broadly on several different pillars?
CHRIS: So onboarding, adoption, VOC... I get how CS Ops helps enable all those activities and streamline them. How do you actually measure whether or not CS Ops has been successful in driving the Net Retention number?
JEFF: Ultimately, we must use a framework to tie our activities back to Net Retention. There are three ways that I look at it. First is KPIs that CS Ops owns. Second would be projects that improve CS efficiency or effectiveness. Third is visibility.
We're currently building out a number of CS Ops KPIs. The focus right now is largely on digital engagement to measure greater adoption and product usage. Then we also have KPIs around data coverage, product usage, health scoring, and measuring toward completeness and accuracy of those health scores. Did they help our team forecast better? For example, if six months ago, we coded accounts as red, yellow, or green, we need to understand if our health scores were realistic or unrealistic.
We've also built out digital campaigns and can directly track and measure the impact that those campaigns have on things like license utilization and certain use case adoption. So I can show you a couple of graphs on the control group that didn't get the onboarding journey for example, the customers that did get the onboarding journey, and show you the measured difference of how more licenses were adopted and faster. That’s point #1—KPIs that point directly to CS Ops.
The second way CS Ops can drive Net Retention is around how well we can drive CS team efficiency. The main question we ask is, what are some initiatives that we could launch to make our CS team more efficient?
One example from GitLab: We launched an activity capture tool for our Solutions Architects. Previously they were going into Salesforce and logging their activity, which was hard, annoying, we didn't have great visibility into it, and we didn't have a lot of traction across the entire team to consistently follow that process. So we deployed a new tool called Troops, and now after meetings, it pings SAs and tells them what to do, where to type in notes, and then pulls that info into a reporting tool we use.
It's great because now after every QBR, our Solution Architects can report on that and track who we’re talking to (Directors, ICS, Managers?), what types of conversations we’re having (discovery calls, proofs of concept?), etc. This has enabled those teams to be significantly more efficient.
We can track this increase in efficiency directly back to the work of CS Ops. We evaluated the tool, helped deploy it, and worked with those leaders to ensure that SAs were successful with the new tool. It’s a little bit harder to measure the direct impact of the special projects CS Ops works on to Net Retention, but no in internal QBRs and leadership calls, everyone can see the value CS Ops brought in this instance.
Another example is how we implemented Gainsight. We launched it about a year and a half ago and it gives us reporting that we never had access to before. Gainsight organizes all the success plans, customer data, and Zendesk tickets, to enable TAMs to have all that in one place. They don't have to go to a million different systems, they can just go to one place. That's how I think about efficiency.
But those are just stories. A framework that might be helpful is to think about this: what are the inefficiencies your team is currently experiencing that could be helped by CS Ops?
If you're a small team of 3 CSMs and you're deciding between hiring a fourth CSM or a CS Ops person, a helpful framework is to say, “Okay, if I go hire that CS Ops person, I really need to have that person make those three existing CSMs at least 33% more efficient to make that payoff.” But if you have 30 CSMs and all you get is a 5% efficiency gain across the board, that's a no brainer. That's a massive improvement.
Another way I look at it is whether the Ops person helped a CS manager, director, or VP by freeing up their time to focus on other responsibilities. Maybe due to a CS Ops person, a VP is able to join more customer calls. Maybe they can focus their time thinking about how to engage with customers rather than spending too much time building reports or learning how to configure and look at data.
If CS Ops builds reporting, dashboarding, and deeper analytics that leaders don't have time for, how much is that worth to them? How much is it worth for a CS leader to be able to say, “I now have accurate churn metrics” or “I now have information on how much of the product our customers have adopted or where they're at in the adoption journey.” If we can do that, how much value is that to leaders?
This one is less measurable, but one great way CS Ops can drive Net Retention is by bringing visibility. I have a saying about this too—sunlight is the best disinfectant. I want to create not just a memorable metaphor, but also a way to cast light on what it is that we're trying to solve for.
Where I'm going with this is as leaders we often lack awareness of what's going on within the details. We assume everything's going fine until it isn't or until someone comes and tells us that it isn’t. So it's my job in CS Ops to shine that spotlight on what's going on, reveal the cobwebs, show opportunities, provide insights, and help CS leaders make better decisions.
That's how I want to become a trusted advisor to the CS leader—by helping to drive that strategy to increase Net Retention. It’s so important for me and my team to be able to help the greater CS org by shining a spotlight on different areas that they were unaware of—whether it's problems, data issues, process gaps, or even opportunities to improve on the customer experience.
INDUSTRY
Customer Success Is Where 90% Of the Revenue Is
Another OpenView piece on the 3 key value drivers of today’s SaaS businesses: renewals, retention, and expansion. And here’s a fun fact: “To put the power of strong NDR into context, Snowflake, who has NDR of 169% as of 11/21, can grow ~70% YoY without acquiring a single new customer 🤯.”
SCALING
5 Myths of Digital Customer Success
In this post, Erika Villarreal debunks some long-standing myths about running digitally-led CS programs. I particularly liked her reminder that “customers don’t have to suffer when moved from high touch to low touch.”
GROWTH
Assembling A World-Class CS Organization: An Interview With TSIA’s VP of CS Research
This concise interview with Stephen Fulkerson touches on a variety topics about how to staff and scale a winning CS org including CS team structure, org sizing based on budget, and CSM to customer ratios. Also, his VOC comment was on point—“Voice of Customer metrics play a critical role in determining whether you’ve sized your organization correctly – that’s ultimately for the customer to decide.”
LEADERSHIP
A Guide to Uncommonly Quick Decisions
Here Deepak Shukla covers the tactical advantages and true downsides of making decisions quickly. In the end, he argues that moving fast and (sometimes) being wrong far outweighs deliberating for too long. He says if you’re a leader of people or organizations, “that quick-fire decision-making based upon limited information + instinct is a necessity for success.”
Success Happy Hour is a weekly newsletter for Customer Success leaders. Each week we feature one digestible piece of advice or a framework from a top Success leader, along with the best resources from that week. Subscribe here.
There’s a pattern among many of the best CCOs: they weren’t “raised” in Customer Success, or at least they’ve had roles in other parts of the organization.
Paul Staelin matches that pattern: before moving into Customer Success, he led Operations, he’d been a co-founder, and he also scaled entire Go-to-Market orgs. And before all of that, he started his career in Product — which he points to as having been especially influential in how he approaches his work today. “Looking back, I can see how my perspective has been shaped by those years as a Product Manager. That job requires you to look across how people get engaged with products and how they use them to drive value. You also have to think about how to build things in a scalable way.”
Now as Chief Customer Officer at Trifacta, Paul says he views the customer experience as its own product. He says, “Customer Success is its own product within the company’s offering. And as such, we need to operate like a Product team by stamping out a process, mapping out journeys, and making sure we’re delivering predictably.”
This philosophy shows: he’s developed a framework for scaling the customer experience called the APACE framework. It’s essentially a tool that teaches CSMs how to reduce the perceived effort for the customer. And since rolling it out, customers have been measurably more satisfied with their experience.
In this interview, Paul breaks down what the APACE framework is and how he’s implemented it at Trifacta.
CHRIS: What is the Effortless Experience methodology? And how did you hear about it?
PAUL: The Effortless Experience is the name of a book by Matthew Dixon, Nick Toman, and Rick DeLisi — the team that wrote The Challenger Sale. That’s where I first heard of the methodology and I’ve adapted my own thinking around it since.
Fundamentally I believe that we have two tasks we need to deliver on in the customer journey: first, the customer needs to receive value, of course, or they won’t write a check. Then there’s the investment — customers make decisions in part based on the ROI of their effort, so you want the customer’s effort to go down.
One of the findings in the book was that “delight” didn’t have a strong correlation with retention, whereas “effort” did. Delight isn’t a bad thing, it just isn’t predictive of whether a customer will renew. Customers do remember terrible experiences they have with your product or service. So making it easy for customers to get the value they expected is a much better investment than trying to delight customers in different interactions.
So driving an “effortless experience” is the goal. And there are two ways to attack that:
One of things we’ve done to reduce the actual effort is set up a system for getting feedback from Support into our Product teams, highlighting all the areas where people are having problems that take a long time to resolve. At the end of every support case, the Support Engineer tags which area the problem was in and any other helpful details. Then we track how many back-and-forth messages there were as a proxy for customer effort because we can't tell how much time a customer actually spent doing a task, but we do know that in the back-and-forth customers have to read, think, respond, and sometimes go research before coming back. It helps us gauge the level of actual effort.
Then we look at the areas of the product where we're seeing not only a high volume of cases but really high effort. And then we engage with Product to ask, “What can we do here? These are the areas we're seeing the effort. How do we make it easier?” Maybe there’s something we can do to obviate the problem altogether, maybe there’s an issue in the software, maybe it’s a UI issue, or it’s a training problem. We open up all possible solutions for making this problem easier to deal with.
So there's a wide array of things you can do to systematically reduce the effort that the customers have when engaging with your products.
Then there’s making the actual effort feel easier. This is the really interesting part of the book for me, and I’ve read other psychological studies outside of the book that support this claim. In the book, the “perception” of effort is described as 65% of the impact. So, much more than the actual effort itself, how you felt about the effort — the emotional piece — accounts for between half and two-thirds of the impact.
There are actions you can take to make an effort feel like less of an effort. One area is how you communicate with the customer — we’ve actually created a communication framework called APACE that captures our best practices for this.
We’ve done some work to operationalize the APACE framework across the organization as a broad enablement program. That includes requiring our teams to read the Effortless Experience book, which covers some of the framework. We also do annual training sessions on what APACE is, and monthly breakout sessions where groups workshop the communication skills in the framework.
CHRIS: Can you go into a little more detail about what APACE stands for?
PAUL: The analogy I use when teaching people how to do this is when you engage with a customer and there’s something preventing them from achieving their desired outcome, you need to be the traffic light. It’s ok to have a red light or a yellow light in that interaction, but you need a green arrow pointing somewhere. And there are a number of things that you can do as part of those interactions to help the customer feel like it was easy — these are best practices that make up the APACE framework.
APACE stands for:
Number one, people want you to advocate for the position they’re in. Simple word changes like, “The first thing we'll do is this” or “If I'm in your position I would do that” help make it clear that you are on the same team as them. You taking their perspective makes them feel like they're not fighting you to get the answer. You’re on the same team.
Then there’s positive phrasing, and this is where the green arrow comes in. You want to make it sound like “in a few short steps I'll get you there.” You don’t throw up a red light by saying the word “can’t”, “you can’t do that”. You need to give the customer a green light and make it sound like it's easy. A few clicks and five minutes later the task is done. Whereas if you just said “No, you have to do this another way, see you later, case closed” the person may go spend 15 minutes trying to figure it out, but they’re going to feel very differently about that interaction.
The third piece is to give alternatives. There's a whole host of psychological research that says if you give someone a choice between options, even if one is wildly unattractive, they’re going to feel much better about choosing the one they did versus if they only had one option to react to. So when customers run into problems, present alternatives. “We can either wait three months for this issue to be addressed in our code, or in a few clicks we can accomplish your objective another way. Which would you prefer?”
In addition, it is important to build the customer's confidence in you and the company through your statements and actions. First, you need to take ownership of the issue and say “hey, I am going to handle this for you.” Then there are a few things to avoid—things people sometimes do that can undermine a customer’s confidence.
So confidence has three parts: taking ownership of the problem and saying “hey, I’m going to handle this for you”. Communicating in a way that maintains the customer’s confidence. And then following up. If I say I’m going to get back to you in two days, I better.
The last E in APACE is empathy. Recognize situations that are stressful for customers, they’re under the gun, they’re tight on time. So recognize and acknowledge the emotion upfront, then follow with a confidence statement. “I’m on your side, let’s figure this out.” For the customer, it makes the rest of the interaction feel easier.
CHRIS: Part of helping customers achieve outcomes is making sure you’re reducing effort. You’re increasing the return by reducing the investment. But how does one measure whether or not the customer has received the value they intended to receive?
PAUL: We have an analogy for this too that we use internally and with customers.
The primary person who is going to be helping you (customer), is the CSM. We use an actual picture of Sir Edmund Hillary and Tenzing Norgay. We are Norgay. We’re going to help you organize and get to the top of Everest because we’ve climbed lots of mountains before. We'll help you get to the top of your mountain. We'll share best practices and go through our tried-and-true onboarding process. Our PS team generally handles the initial deployment for you, or supports your deployment by one of our world-class implementation partners.
And we want to make sure that your people are trained as part of that initial deployment. So as part of the sales cycle, we try to put an implementation plan in place as well as an organizational plan, which covers who will do which jobs, and the enablement plan for those individuals. So, as part of the initial deployment, we make sure that those individuals are trained to do those jobs. That way, when the PS team goes away, you have a valuable use case in production, your team is enabled to support and extend that solution and the CSM is still there to offer guidance and provide access to resources.
The fundamental way we’re measuring the overall success of the Customers For Life organization is Net Dollar Retention, which we call Same Store Sales.
COMMUNICATION
Don’t Soften Feedback
Here’s a clear-eyed reminder to all leaders of people: “Managers: it’s your responsibility to clearly (and kindly) articulate what’s expected of your teammates in their roles, and what the gaps are. If you avoid being direct—even if it sucks to do so, on top of everything else happening in the world!—you’re setting them up for failure.” In this piece, Lara Hogan then offers four specific tactics on how to avoid giving “fuzzy” feedback.
ALIGNMENT
Build and Scale Collaboration Between Customer Success and Sales
Built In interviewed 4 CS leaders on how Sales and CS can remain a united force even amidst “the bustle of rapid expansion.” The interviewees cover many topics spanning from the importance of knowledge sharing, the benefits of effectively integrating CS in the pre-sales process, how to train new team members to build upon a strong existing CS<>Sales relationship, and what it looks like to find a balance between the goals and objectives of both teams.
TEAM
The 9 Qualities of a Great Rep
There is much crossover between the makeup of a great CSM and a great Sales rep. In this thread, Jason Lemkin breaks down the qualities that set excellent team members apart from the rest.
PERSPECTIVE
How to Embrace An Abundance Mindset
Here’s another spot-on LinkedIn post by Megan Bowen, COO & CCO at Refine Labs where she details how to lead with an “abundance mentality.” I especially like her final point: “Help others generously - serving others is the most noble form of leadership”
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