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The following is a summarized excerpt from Dennis Geelen’s new book, The Zero In Formula: The Definitive Guide to Sustainable to Building a Disruptive and Sustainable Business through Customer-Centric Innovation. Some of the content has been edited (with Dennis’s approval) to speak directly to Customer Success leaders.
Businesses often utilize customer satisfaction as a common metric or KPI. Scores in this area are generally believed to be an indication of how well you are meeting your customers’ needs. Yet it makes me wonder, is that the level we are trying to achieve? A satisfied customer? I hope not.
If your company is truly customer centric, then satisfaction is not your goal. You want to know and understand your customers so you can ensure your products and services not only satisfy them but that there is loyalty and goodwill created.
Satisfaction, loyalty, and goodwill. These are three radically different concepts I have had the pleasure to discuss with Dr. Olaf Hermans on several occasions. Dr. Hermans resides in Belgium and is the Chief Science Officer at R-Intervention, a Pennsylvania-based company that designs and implements relational interaction protocols at scale. Over the past ten years, Dr. Hermans and his colleagues have studied cognition in relationships: how customers frame their relationship with you.
“What we have found, I believe, are the keys that unlock goodwill in customer-firm relationships,” Dr. Hermans told me.
Dr. Hermans would describe the “satisfied customer” as someone being happy with the value and user-friendly experience through interactions with your product or service.
Surpassing satisfaction, loyal customers appreciate your transparency, personal authenticity, and recognition of their patronage, which results in more intensive usage and positive referrals. However, loyalty still is transactional and fragile, and customers continue to keep an eye on your competition to see if they want to switch (loyalty is rarely exclusive).
Instead, goodwill customers take themselves off the market from your competitors and are forward-looking based on their ongoing relational engagements with you. Dr. Hermans’s research shows that goodwill customers behave and feel valued as insiders and active contributors to your brand or organization. Goodwill, which can be individually observed or reliably surveyed, is the metric to hit for maximum and durable customer success.
If goodwill is the level we want to achieve and measure ourselves by, Customer Success leaders need to start by helping their entire company have a vested interest in both understanding its customers and responding to their needs.
Here, I’ll outline some of the tactics you can use to help other departments better understand customers.
1. Go beyond just collecting contact information. Use your CRM to get to know customers
Most organizations have some form of CRM, but some companies fall short of collecting enough information and utilizing it for the right reasons.
Your CRM should be viewed as a system for tracking who your customers and potential leads are so you can get to know them, not just contact them. Who are these people? What age demographics are they in? What geographical regions are they in? When’s their birthday? What frustrations do they have? Getting to know your customers is where the real power in having a CRM lies.
If you see your peers in other departments collecting contact information to simply keep in touch with customers and know the basics about who they are, they’re only scratching the surface of the value of having that data. Challenge them to use data to understand customers’ habits. What products or services are purchased more or less often? By whom? At what time of day, week, or year? What methods of payment are most or least popular? All of these will help other departments become “closer” to the customer while highlighting opportunities to create a better experience.
2. Be intentional about how you’re collecting (and listening to) customer feedback
Surveys, forums, reviews, and customer calls are all powerful tools for obtaining the voice of your customers. But you need to be decidedly intentional about the questions you’re asking and the mindset with which you’re listening to the responses.
If the company intends to do NPS surveys or focus groups under the premise of trying to prove something that’s already believed to be true, or to merely capture metrics to indicate what level of satisfaction customers have, then I would suggest these will be missed opportunities for something greater.
The real opportunity in collecting this feedback is not to find out that some things resonate more or less with your customers, but why. Asking customers to rate you on a scale of 1 to 5 will not tell you why. If you do not ask, you will only be left to speculate, which can be dangerous.
Now, it’s not so simple to ask your customers point-blank questions about “why” some things resonate more or less with them. Customers can easily describe a problem they’re having. But it’s not their job to describe the best solution, and they’re likely to have difficulty in trying to do so.
When collecting customer feedback, be sure that your approach (or your Product team’s approach) is all about understanding what clients like and do not like about working with you and why.
3. Data + Stories = Engagement
It has long been believed and proven that humans ultimately make most of their decisions based on emotion. There can be data and stats leading people toward a logical conclusion, but making a final decision typically happens when someone is emotionally stirred to do so.
I have experienced this emotion-based decision-making phenomenon many times throughout my career when presenting to senior leaders. In proposing a new project or initiative, I would make a case using all the data, stats, and ROI information required to prove it is something worth investing in—but then, I’d find myself in a room with several executives nodding their heads in agreement yet not committing to make a decision.
My instinct would be to assume the people in the room didn’t understand the data I was presenting. But that wasn’t the case; the missing link was an emotional connection to what I was saying. Nothing was making them feel stirred or compelled to make a decision to move forward. I have since learned that there is a simple equation that needs to be followed when you want someone’s full attention and buy-in: Data + Stories = Engagement.
The data can speak to the logical side of the brain. But if you tell a compelling story touching on the emotional side of the brain, stirring people, now you are painting the full picture.
It’s important to practice this when communicating with other departments about how customers are experiencing the product—you can’t just show data, and you can’t just tell stories. There has to be both.
4. Everyone in the company should be a customer
Finally, I highly suggest you influence the company to invite all employees to experience what it’s like to be a customer. Meaning, all employees will use the product for themselves, even if they’re not in a relevant audience to who you sell to.
The first and most effective way to feel exactly what your customers feel—to understand the experience and have an interest in improving it—is to become a customer of the business itself. And this goes beyond just experiencing the product, but also to get the emails that customers get, to fill out the surveys and forms that customers fill out, to call you customer service number as if you were a customer, and more.
MEETINGS
My #1 Rule for Running Meetings
“I’m often complimented by CEOs on how I run meetings... So here’s my #1 rule: Before participants share their opinions, ask them to write them down. Some participants moan about it. The far bigger time-waster, I've learned, is free-form sharing. You inevitably get rat-holed because of someone's proclivity to blab or because one opinion generates endless debate." Here’s Andy Raskin with some ideas to try in your next meeting.
ONBOARDING
10 tips for Onboarding a New CSM
Artem Gurnov, Manager - Customer Engagement Global at Wrike, shares a list of advice and helpful reminders for onboarding new CSMs. Some of my favorites: “focus on value, not features” (he says you can get the team to practice this in your weekly meetings by brainstorming solutions to specific problems), and “prepare real client examples for the mock calls… Every time I have an interesting call with a client, I take notes and use them as examples for a mock call.”
DECISION MAKING
Good Decision-Making Depends on an "Archer's Mindset"
Annie Duke, World Series of Poker Champion and author of Thinking in Bets, offers advice for reframing how we think about making decisions. “Part of becoming a better decision-maker is shifting your mindset about guessing… the value in guessing isn’t in whether the guess is ‘right’ or ‘wrong.’” She also says, “the beauty of approaching each decision by first examining what you know is that little bit of knowledge can go a long way toward improving your aim. The more you know, the better equipped you are to counter uncertainty in your decision-making."
COMMUNICATION
How CSMs Can Manage Difficult Customer Situations
Here’s a resource from Brooke Goodbary (Manager - Customer Success at Roku) that breaks down some “types of difficult customer situations” (e.g., “disengaged point of contact” and “unrealistic expectations”) and lists possible reasons and solutions for each situation. It’d be worth making a copy of this and adjusting it to fit your business and how you’d like the team to manage these situations, and then share it with your team.
Success Happy Hour is a weekly newsletter for Customer Success leaders. Each week we feature one digestible piece of advice or a framework from top Success leaders, plus four of the best resources from that week. Subscribe here.
There’s a consistent playbook for building foundational elements of Customer Success. Most companies start by segmenting their customers, defining engagement models for those segments, and identifying metrics to see how customers are getting value—those are all common practices. It’s scaling the Customer Success organization where the playbook begins to diverge.
And while there’s no one-size-fits-all playbook for scale, there are a few core areas that all Customer Success leaders need to focus on to create a scalable program. Here, I’ll outline four of those areas:
1. Customer Success needs to be a top priority at the executive level
In order for any Customer Success organization to be successful at scale, it needs to be 1. Strategic, 2. Funded, and 3. Aligned.
Customer Success needs to be a strategic initiative of the company, and it can’t be a group that’s buried in Sales, Services, or Support. When you do have Success embedded in another team, CS begins to take on the behaviors and metrics of those organizations and can end up missing out on the point of “customer success” entirely.
If it’s truly a strategic initiative—meaning one that’s reported to the board—then Customer Success will have the executive team’s support, it will have a defined and separate budget, and it will be equally aligned to other departments. If any one of those three things are missing, that’s a big red flag.
2. Narrow the focus of CSMs
Customer Success tends to start off as a team that owns everything post-sale, but it gets to a point where CSMs are expected to handle too many responsibilities for too many customers. It becomes time to start peeling off the responsibilities that aren’t about helping customers reach their desired outcomes. Remove them from the role of the CSM, and create new teams dedicated to owning those responsibilities.
For example, at Pendo we created a Subscription Success team to own renewals and expansions for the commercial (mid-market) and corporate (SMB) customer segments. The CSMs were still responsible for helping customers get value out of the product, and they therefore heavily influenced renewals and expansions, but the Subscription Success team lifted the burden of the operational aspects in getting renewals and expansions done.
CSMs can’t be expected to juggle the responsibilities of a typical CSM plus renewals, upsells, and expansions — at least not at scale. Something will suffer and it’s usually the customer experience.
3. Segment customers along experience, not spend
One of the first pieces of thought leadership in our space was that you can’t treat all customers the same. You’ve got to segment on something. But while for most companies that means segmenting customers by ARR, I’m a proponent of aligning customers to the experience they should be getting—taking into account not just their ARR and growth potential, but their preferences too.
For example, some customers don’t want or need a regular 1:1 with a CSM. They prefer self-service, so they should be enrolled in a tech-touch experience. And on the other hand, you might have a customer with a high growth potential but that needs that regular touchpoint with a CSM. They should be enrolled in the company’s high-touch experience.
In order to create a stronger and more scalable customer experience, Customer Success teams need to evolve their thinking around segmentation from giving the highest paying customers the high-touch experience and giving the lowest paying customers the “low-touch” experience. Every customer deserves an investment in their success, and a more comprehensive engagement model provides value to all of your customers regardless of their size or contribution to your business.
4. Scale your right-touch engagement model by creating a community for customers
Creating a right-touch program is table in stakes for Customer Success. One of the best ways to scale a right-touch program is to create a community: bring customers together in some type of forum and encourage them to connect and ask questions. If you have this one-stop-shop where customers can have discussions, find resources, and stay connected to the product (and have an open line with Support or a CSM when they need it), you’ll bring more value to customers while also alleviating some of the work from the Success and Support teams.
5. Education needs to be close to CS
Customer Success leaders should work to partner with their peers in Education. In order for both teams to be successful at scale—to deliver the right training to the right customers at the right time—these two teams need to be in sync on content, timing, and delivery method.
ALIGNMENT
The First Step That Can Make or Break Your Customer Success Buildout
Lauren Mecca, Customer Centricity Advisor and former CS leader at Hatch, Talla, and Placester, on how to secure buy-in for Customer Success across the company: by booking 1:1 time with each functional lead. Here are her tips on running those meetings.
CLARITY
CSM Excellence
Pat Phelan, CCO at GoCardless, shares a simple framework for defining what excellence looks like for a CSM team.
FOCUS
Time Confetti and the Broken Promise of Leisure
This post by Ashley Whillans highlights how easily “a few seemingly harmless interruptions” can usurp our time. She says, “the happiest and most time affluent among us are deliberate with their free time. Working toward time affluence is about recognizing and overcoming the time traps in our lives and intentionally carving out happier and more meaningful moments each day.”
STRATEGY
Team Customer Journey Mapping
Here’s a template from Atlassian for journey mapping, and guidelines for doing this exercise with your peers in other departments.
Success Happy Hour is a weekly newsletter for Customer Success leaders. Each week we feature one digestible piece of advice or a framework from top Success leaders, plus four of the best resources from that week. Subscribe here.
Note: I wrote this while at my previous company, Instructure. I’ve recently joined CaptivateIQ so I’ve added in the onboarding template we’re using at the new company.
We had remote Customer Success team members prior to the pandemic, but of course we’ve moved to a fully-remote team since. We were still hiring when we went remote, so I turned a careful eye to our onboarding process to see whether it needed change. Here’s why: when managers develop a winning culture, they build a team that’s fast, effective, and able to weather any storm—and the manifestation of a high-caliber culture starts with the onboarding process.
So if you haven’t already, it’s time to give your onboarding process a tune-up. Here’s my advice on how.
Work closely with your recruiting team
We have a recruiting team, but I’ve always played a hands-on role in the recruiting process. Sure, you can be direct with the recruiting team and detail what you’re looking for in a hire, but it helps to work closely with that team to ensure you’re getting the right hire.
Communicating with the recruiting team about when you’re posting things and following up with people also helps move things quicker and make sure the candidate isn’t getting a disjointed experience from your company. Plus, it gives you the opportunity to know about candidates that aren’t interested in switching jobs at the moment so you can develop relationships and help build a future candidate pool.
Plan the first week of work for the new hire
One of the pivotal changes we’ve made to our process is to plan the first week of work for the new hire. We have it all outlined in one document (linked below) that we share with them before their first day.
This has helped get new hires up to speed and integrated with the team faster. Here’s what we include in that plan:
Here’s the template used at Bridge - Instructure if you’d like to borrow from it.
ADDITION: Here’s the template we use now at CaptivateIQ.
We also build in blocks of time in that first week where the new hire can work on their training courses, listen to calls, and otherwise take things in. But filling their calendar, especially when everyone’s remote, helps them feel like they’re getting set up for success and that the team was ready and prepared to take them in.
Build relationships as soon as possible
It’s harder to develop relationships when you’re not face-to-face so this has to be built into your onboarding process. For new hires on my team, I’m already running most of the sessions in their first week so those touch points are built in.
Beyond that, I try to keep 1:1s from being status updates—they’re always about what’s new in their lives, how they’re feeling on a personal level, how their energy levels are. And in our first 1:1s, it’s all about getting to know each other. I ask how they like to receive feedback, what their goals are, what their concerns are, what work energizes and drains them, and so on. I also ask targeted questions to receive feedback from the hire early on, most of which are about the onboarding process, so they feel more comfortable giving me feedback in general.
One more thing on this topic: context gets lost when you’re remote and chatting over Slack or email. When a team has strong relationships with each other and their manager, you can be more confident that everyone is assuming good intentions.
Understand that everyone is experiencing remote work differently
I have four daughters. I’m working, and they’re either doing school or running around the house and I’ll be the first to tell you that working remotely can feel chaotic. Add the pandemic and the election on top, and managers need to be hyper-focused on making sure team members are getting the space, rest, recognition, and social interaction they need.
CULTURE
Manager Guidance: 2020 US Election Response
“There is an incredible focus on the Nov. 3 US federal election which will have wide-reaching consequences for the global political and economic systems… This period has caused a huge amount of stress and anxiety.” Here’s a guide from Culture Amp’s Aubrey Blanche on checking in and supporting your team through the coming week.
PHILOSOPHY
Lincoln Murphy on Why Customer Success Matters
Here’s an interview with Lincoln Murphy on the origins of “Customer Success”, whether CSMs should be commercial, and more.
LEADERSHIP
Coaching Managers: Authenticity Over Cheap Popularity
Gilad Horev, VP of Product at Eventbrite, shares a lesson he coaches his managers on: what “cheap popularity” looks like, why it ultimately hurts the team and the company, and how to navigate the temptation to succumb to cheap popularity.
2021 PLANNING
Get the CFO to See CS as a Revenue Driver
ICYMI: We released a Customer Success Budgeting Template for 2021 that was created in collaboration with a handful of CFOs and CS leaders. Today I posted a new episode on the ‘wellsaid podcast as a follow-up to that piece. Listen in to hear my 7 tips on working with the CFO to invest more heavily in Customer Success on Apple Podcasts or Spotify.
Success Happy Hour is a weekly newsletter for Customer Success leaders. Each week we feature one digestible piece of advice or a framework from top Success leaders, plus four of the best resources from that week. Subscribe here.
This week we’re featuring a Q&A with three CS leaders, all who are in or are leading CS Ops teams. CS Operations is an up-and-coming role, so here are some tips and advice from Lea, Jeff, and Matt on how to approach building out this function.
Interviewees:
What are some signs that it's time to hire CS Ops?
Matt:
“Hiring for CS ops should be done early on in the process of building a team. Many teams lead with people resources to reach out to the largest customers, but with a CS Ops team you can leverage your tech stack to reach out to many more customers and drive success with those customers with minimal human resources. The CS Ops team is also able to help show the impact that your CS org is making with its customers which is always useful to help with funding and getting additional budget.”
Jeff:
“Ultimately it comes down to scalability. We started building out our CS Ops function when we noticed a few dynamics happening in the team:
“Those were all things we felt that encouraged us to invest in building a CS Ops function. Now that we’ve experienced what it’s like to have this function embedded in Customer Success, I can say that CS Ops is the glue for the Customer Success team. They’re focused on making sure we can scale both our team and our customer experience, and they’re helping make everyone’s life easier.”
How is your Ops team structured, and what is the team responsible for?
Lea:
“Customer Success Operations reports to the VP of Customer Success, and works alongside the Director of Customer Success as well as our Account Management Team Leads. When I first joined Quorum, the directive was ‘we want to scale our customer success team.’ Part of the project was figuring out what the role of CS Ops was in manifesting that.
“To scale, you need efficient processes; to develop efficient processes, you need good data; to get good data, you have to build the system that delivers it to you. It’s very hard to have one of those functions without the other — for example, it’s difficult to productively analyze data without having a part in selecting the data that’s available. CS Ops bundles those three functions: systems integration, business analytics, and process improvement.”
Matt:
“The CS Ops team should be responsible for reporting on the CS Organization’s metrics. They should drive the tech stack decisions and make sure that there’s consistency across the team in terms of tools and practices. I also feel that the CS Ops team should be in charge of the content that’s sent out, so an embedded marketing communications resource is very useful to have on the team.”
What skill sets, experience, or traits are important to excel in this role?
Lea:
“When hiring for CS Ops, the first aptitude I would look for is empathy. By definition, as a full-time CS ops professional, you are usually trying to solve problems that you’re at least one degree removed from. Empathy is the quickest way to overcome that information asymmetry.
“The second aptitude is an ability to hack software workflows. This is an underrated skill in the year 2020, when every business is utilizing 10+ software tools, usually at least somewhat inefficiently. As an Ops Manager, when you figure out which team processes you should improve or design, you then have to manifest the ideal solution in tools you likely did not purpose-build from scratch for this endeavor. There are always going to be deliverables, be it a process or a report or a dashboard, that you cannot easily produce given the constraints of the tools you have at your disposal (ex., Salesforce, ChurnZero). Can you get creative with what a software gives you?
“Beyond that, I am a big believer that skills can almost always be developed on the job. I was a liberal arts major; as a CS Ops professional I spent 50-70% of my time building models and analyzing data.
Jeff:
“The skill sets and focus of an Ops function will depend on your business model — if your company serves tech-touch and medium-touch market segments, where you have tens of thousands of customers, you’re going to need Ops people that are good at analyzing a lot of data to see where process improvements can be made. If you’re serving enterprise customers, that skill set is less important. You might need someone that’s good at listening to customer calls and identifying points of friction, creating onboarding plans, and transferring that knowledge across the team.
“No matter the business model, I’d say the ability to wire up and manage Customer Success software is necessary, and the ability to report on metrics is critical too. Other than that, having experience running drip campaigns and email nurtures, or building out training programs, are all bonuses when hiring in CS Ops.”
Any resources, courses, or tips that you'd recommend to help CS Ops professionals ramp up in their roles?
Lea:
“My first tip is that if you are already working in Customer Success, there are always problems that you can start solving right away. A big one that is usually present at midsize companies is that customer information can and should be a virtuous feedback loop that improves all parts of a business, and CS ops can be the role that leads that information-sharing. A valuable task for those who want to ramp into the role is to figure out how to do this without even having the title. What information does sales, product, and finance want to know about your customers that customer success knows? How can you get them that information, such that it will improve their ability to make decisions?
“Secondly, from a capabilities standpoint, build the skills so that you can successfully liaise between sales, sales ops, finance, and product. Learn about SaaS financial metrics, basic data science tactics, and (probably the single most important business skill I have ever learned) the FILTER command in google sheets. Learn how to use your company CRM very well — take a few Salesforce classes, if that is helpful.
“That all said, CS Ops is a brand new business function. My advice to new Ops Managers is: make your own toolkit. Ask yourself what your team really needs to know and do, and build the tools that will help you answer those questions.”
This week's newsletter features posts on:
BUDGETING
Speak the Language of the CFO When Setting 2021 Budget
Why does Customer Success always get its budget slashed compared to other teams? It’s time to flip the script and make the case for investing more heavily in CS. For this article, we interviewed and collaborated with a handful of CFOs and CS leaders to cover 1. What the CFO wants to hear from CS, 2. How to quantitatively show how increasing budget will increase efficiency, and 3. How to handle common “steering” questions CFOs will ask.
Read the Full Post or Join the discussion here
REMOTE WORK
How to Debug Distributed Teamwork, As Suggested by New Research
Atlassian’s Head of Research & Insights, Leisa Reichelt, shares a list of insights from their study on how people have been affected by the sudden shift to working from home. The graphic on that illustrates why people are experiencing remote work differently due to their “household complexity,” “role complexity,” and “network quality” was especially insightful.
PROCESS
A Success Planning Framework
Here’s a framework by CS Leaders Irit Eizips and Disha Gosalia that’s used to scale Success Plans.
DECISION MAKING
Okta's CEO on What Goes Into Making Decisions
“Before I was a CEO, I made decisions faster. But now, I have the final call so I find myself pondering things more.” Here, Todd McKinnon breaks down his decision making process into a few elements.
Success Happy Hour is a weekly newsletter for Customer Success leaders. Each week we feature one digestible piece of advice or a framework from top Success leaders, plus four of the best resources from that week. Subscribe here.
This week's featured piece is an excerpt from an upcoming article on Business Planning for 2021.
While Product, Engineering, Sales, and Marketing can argue for additional budget that leads to increased revenue or engagement, Customer Success is often tied to financial metrics like “revenue per CSM” or “Customers per CSM” which are efficiency metrics. But if CS continues to be perceived as the department that needs to “be more efficient” it will always lose the battle for more budget against other department leaders.
It’s time to flip budgeting conversations from being around efficiency to being around how the company can invest more heavily in Customer Success to increase revenue.
Part of doing that requires the Customer Success leader to be prepared for the CFO to ask questions about how CS intends to be more efficient, and handle those questions in a way that brings the conversation back to being about investing more in Customer Success.
Here are some of the questions a CFO might use to steer the conversation and how to navigate those questions.
Question #1: “I need you to be more efficient next year, so where are we going to cut costs?”
The Success leader should respond to this question by first recognizing where the CFO is coming from, then showing how increased budget will drive more revenue and explaining why that’s a better option than cutting costs.
Here’s a quick overview on where the CFO is coming from: The Board and the CEO hold the CFO accountable for profitability and, in some cases, overall company growth—so the CFO manages a suite of metrics that allow them to control profitability and growth. And the metric the CFO wants the CS leader to care most about is cost to retain revenue.
CFOs want to see a decreasing trendline on the cost to retain revenue over time, and they typically want CS to decrease costs to achieve that. But decreasing the overall cost to retain revenue doesn’t have to be achieved by being more efficient, it can also be achieved by increasing budget that helps CS drive more revenue.
So an appropriate response to this question could be something like this: “I understand what you care about is making the Customer Success functions more efficient so that we reduce the cost to retain revenue. But reducing the cost to retain revenue doesn’t have to mean cutting costs. In fact, we may even want to increase the cost to retain revenue in exchange for more revenue and profit. I’m going to show you a few options for us to discuss.”
Question #2: “I gave you $x budget for tools this year, where are the efficiency gains?”
The temptation is to respond to this question by examining the performance on “revenue per CSM” or “customers per CSM.” But that keeps the conversation focused on efficiency, and we want to shift it towards investment.
In addition to showing the expense and revenue forecast you created, respond to this question by showing progress in areas of investment. Demonstrate how previous investments have improved overall business metrics, even if the cost to retain revenue remained constant. You might show improvements in:
Improvements in the above metrics will impact higher-level trends like the company’s growth rate, portfolio health, or profits—which are all trends the CFO cares about. They also demonstrate how Customer Success isn’t a cost center but instead a department that can drive overall business performance.
Question #3: “What’s your long-term plan to get our cost to retain revenue below x%?”
The best response to this question is to position Success as the key driver of the company’s growth.
There’s an inflection point in a company’s maturity when its growth rate falls below 100%. At that point, revenue from existing customers exceeds revenue from new customers, meaning Customer Success should become the most important lever to build a sustainable business.
If Customer Success is perceived as a cost reduction center, then the business will never invest the necessary resources to maximize growth and retention. For that reason, any discussion about cost to retain revenue must include a discussion about investments for long term sustainability and growth. Customer Success must seize responsibility for influencing and driving expansion revenue (upsell and cross-sell) which, combined with renewals, is called net renewal rate by most companies.
In planning meetings with the CFO, present a plan that shows how Customer Success will drive improvements in expansion revenue. This could include things like adding account manager roles in Success, focusing CS Ops on expansion opportunities, partnering with marketing to drive better Customer Marketing programs, asking better expansion questions during onboarding, etc. Then ensure that Customer Success receives credit for net renewal rate in the cost to retain revenue calculation.
Combining growth campaigns with cost to retain revenue is the best way for the business to both meet efficiency goals while also maximizing revenue and profit.
This week's newsletter features posts on:
CAREER
The Customer Success Leader's Journey
Here’s a great infographic from Method Garage that walks through a CS leader’s career. It lists out the steps as a CS leader becomes more mature and experienced in their career, starting from the very beginning, “taking the job,” to “focusing on the fundamentals,” “gaining buy-in” by digging into the data and segmenting customers, “operationalizing Customer Success,” and beyond.
ALIGNMENT
Customer Success Management From the Investor's Perspective [Podcast]
In this interview, Rav Dhaliwal, Investor and Venture Partner at Crane (and former Head of CS for Slack - EMEA), draws from his experience to share best practices and pitfalls in building out Customer Success teams.
PROCESS
Quarterly Business Reviews Best Practices
Here’s Diana De Jesus (Enterprise CSM at atSpoke) with a recap of a discussion about the process and details of QBR meetings—including when they’re necessary and when there are better options, front-loading the executive summary, and more.
Success Happy Hour is a weekly newsletter for Customer Success leaders. Each week we feature one digestible piece of advice or a framework from top Success leaders, plus four of the best resources from that week. Subscribe here.
This week's featured perspective is written by Brett Andersen, VP of Client Success at Degreed.
Note: This piece is a follow-on to this blog post on Creating a Rubric to Level-Up Your Success Team
One of the first activities VPs of Customer Success need to do when building or joining a new Customer Success team is to define what CSMs need to do their job well. That way, the VPs can either hire Directors of CS that have experience creating the systems and environment necessary for CSMs to prosper, or coach new Directors to develop those skills.
At Degreed, there are four organizational dimensions we recognize as necessary for CSMs to prosper:
High-performing teams need their Directors to consistently evaluate how they’re doing across all four of these dimensions (via 1:1s, surveys, anonymous feedback forums), and to consistently find ways to improve. That’s why it’s critical that we deliberately hire and coach Directors on their skills across those four dimensions.
Mapping your existing Directors’ skills across the systems and environment you’ve identified as “necessary for the team to prosper” can also help identify ‘skill gaps’ that can be filled with new hires. In our recruiting process, I emphasize looking for ways every candidate could elevate the team, and filling one or more of the team’s skill gaps is a great way to do that.
This week's newsletter features posts on:
CULTURE
Building Healthy Competition Into Your Customer Success Team
Aoife Sheridan, Manager - Corporate Customer Success at HubSpot, with a reminder to identify the specific behavior you’re looking to encourage or reinforce before building competition into the team. For example, “we want to encourage compliance” can be carried out with competitive initiatives like gamification, whereas it might be better to overtly incentivize individual goals with compensation in performance if you have the goal of reinforcing a competitive culture.
DISCUSSION
Measuring Customer Engagement With Marketing and Sales Data
Here’s a LinkedIn post from Jeff Breunsbach of Customer Imperative on how he’s finding new ways to measure customer engagement with existing data. Tracking around customer activities like reading a blog, engaging with an email, speaking with a CSM all exist—this information becomes actionable to CS leaders when we can see the recency of these interactions and the frequency that customers are engaging with different programs.
STRUCTURE
Converting a Support Team to a Customer Success Team [Podcast]
Boaz Maor, CCO at Talech, explains how he’s building his Customer Success function for scale.
He explains how he’s thinking about hiring and designing processes to shift the team from being reactive to proactive, his thinking around charging for training, and more.
CAREER
Manager Handoffs
This post by Lara Hogan was originally published a few years ago and is still just as useful and relevant. If you’re a manager switching teams or if you’re getting a new manager, use Lara’s framework (the “1:1:1 Manager Handoff”) to ensure the transition is as seamless as it can be.
Success Happy Hour is a weekly newsletter for Customer Success leaders. Each week we feature one digestible piece of advice or a framework from top Success leaders, plus four of the best resources from that week. Subscribe here.
“History doesn’t repeat itself, but it often rhymes.” — Mark Twain
I think Customer Success is going to go through what manufacturing went through about 40 years ago.
The corollary to CS in manufacturing is the quality assurance department. Back in the 70s and 80s, manufacturing in the US went through a transformation in response to increasing competition around quality that led to an approach called Total Quality Management (TQM). Prior to TQM, the quality assurance function would deal with things at the end of the production line—they’d say, “this product doesn’t meet our quality standards,” or “we need to rework or scrap this part of the product.” So you’d have these huge operations at the end of the production line to fix things before they were shipped.
That was the paradigm for years until the Japanese started competing on quality. The US went through the transformation of realizing that quality has to be designed into the process of building the product. Quality assurance can’t just sit at the end of the production line.
So that was a very different way of thinking about how to build and deliver products. And Customer Success is on the same trajectory.
Customer Success started out at the very end of the production line. Software companies thought they had these amazing products, but then customers would buy them and churn. “Why are customers churning?” Companies responded by getting team members to focus on renewals, and to get on the phone with customers that wanted to cancel and try to talk them out of it. Completely reactive, right? That’s “quality assurance” sitting at the end of the production line.
So Customer Success started working upstream in the production line. Today, Success runs the onboarding process, implementation, and is managing customer health by getting in front of it from the beginning. (Some Success teams are starting to be part of the sales cycle even before the deal is closed.) So when it comes time for renewal, we’ve increased the chances that customers are going to renew and maybe buy more down the line. We’re working upstream in the manufacturing process to make sure products are built and delivered in the way customers want them to be built, just like they began to do in the 70s and 80s to make sure manufacturing defects were driven out of the process.
Here’s the deal: the different parts of the process of building and delivering software—how you’re selling it, how you market it, who you’re targeting, what the reliability of the software is—Customer Success today has nothing to do with all of that. Those are factors outside CS’s functional silo. But they are expected to fix it anyway.
The next evolution of Customer Success will be to be part of the entire process, to work across the enterprise to address the root causes of customer failure with the product. Success has to work across the organization to help the company design and build better products. To target the right customers. To sell better. To market better. And to deliver better.
The next generation of Customer Success is to be preventative and proactive rather than reactive. How do we prevent customers from going anywhere else? How do we create customers for life? I think companies are going to move in that direction, and we’re going to see a transformation where Customer Success is an enterprise-wide activity.
This week's newsletter features posts on:
LEADERSHIP
The Management Flywheel
“Most managers who see a team in a rut can quickly detect many things that are going wrong. But it’s the response to these problems that distinguishes the great ones.” Here’s Camille Fournier, Managing Director at Two Sigma, on how to begin building steam with a team that’s in a rut.
GROWTH
Two Underappreciated MRR Growth Levers
Travis Todd, Co-founder and CEO of SaaSync, on how Expansion MRR and Reactivation MRR can help drive pre-product/market fit businesses forward, both involving growing or deepening relationships with existing customers.
CUSTOMER MARKETING
Why Customer Marketing Must Live Within Customer Success
Typeform’s Head of Customer Engagement, Angela Guedes, shares tactical advice on how to structure, measure, and support a Customer Marketing team.
DISCUSSION
Building Out Tech-Touch: Here's What I'm Doing
Here’s a discussion in Gain, Grow, Retain where a few community members share how they’re building out their tech touch (aka “Digital Led”) segment.
Customer Success leaders have a big role: they’re responsible for championing customers across the company. Product needs customer data to balance features for future and existing customers, and Marketing needs to know which customers are good case study candidates and what content will be most helpful to customers. The Customer team has to help them get the information they need.
So, here are three steps for creating a feedback loop between those teams:
Note: This is a complement and not a substitute for product and marketing teams talking to customers directly.
1. Train all customer facing teams (sales, success, support) to properly extract feedback from customers. Teach them how to ask questions to get to problem root cause vs collect random feature requests.
Here’s a high level script of questions to ask to uncover an underlying issue when a customer shares an idea for a new product feature:
These questions will help you understand where the customer is coming from and will almost always surface insights that were not included in the original request.
Pro Tip: Record the conversation / video call with your customer so you can provide the product team with the actual conversation for them to review.
Where this training happens: I typically conduct this type of training in already scheduled team meetings on a quarterly basis and also include in new hire onboarding. The quarterly cadence supports a typical quarterly cadence of synthesizing product feedback from our internal teams and customers to collaborate with product on the future roadmap.
Being able to synthesize customer feedback allows the product team to have valuable input to help them accelerate identifying the most high impact items to improve the customer experience.
2. Host bi-weekly meetings with key stakeholders from sales, support, success, product and marketing to share qualitative feedback and inform front line teams of product releases and marketing campaigns. A positive side effect of this is better alignment and collaboration between these teams.
Typically a member of the product team will host these types of product feedback meetings. To make the most of everyone’s time, it is required that meeting participants prepare in advance and summarize their key learnings in a consolidated document that everyone has access to - everyone comes to the meeting having added their update and read the updates from everyone else so all attendees have a shared context for the discussion. The meeting leader then identifies the key trends / best 2-3 areas for a live discussion and frames the bulk of the meeting around digging into a few areas that will benefit from additional group discussion.
All company leaders want to have a pulse on customer sentiment about the product and service experience. I typically frame these initiatives within the context of being able to create a cadence where we are discussing customer feedback regularly so executive leaders can obtain these important insights once we have this in place.
3. Conduct quarterly deep dives into customer feedback, surveys, closed-lost opportunities and churn reasons to uncover meaningful trends. Synthesize this information and share with the company and use it to inform the product roadmap.
I recommend the head of customer success lead these quarterly deep dive reviews. I’ve typically taken this on in the past with help from other key stakeholders. It is a combination of pulling information like closed-lost reasons and churn reasons from your CRM to highlight why customers leave or choose not to buy and couple that with any recent survey feedback / qualitative insights from your internal teams to identify trends.
After the analysis, it is important to document the information in a brief presentation or document that can be shared more broadly with the company so everyone is operating with the same information and understands the friction points / benefits of using our product / service.
In my experience this process has generated important insights that inspired real change. For example, at one company the feedback showed clear friction in our users ability to request a service on our marketplace, which caused significant drop off in the experience. This identification coupled with additional customer research from the product team to validate it, resulted in a revamped user experience to find a service that dramatically improved the customer experience and increased the conversion rate of requests to purchases.
Have something to add to this list? Join the discussion on this topic here.
This week's newsletter features posts on:
ADOPTION
Breadth and Depth in Adoption
“When adoption is limited to a single dimension, that inherently carries risk.” Brian Lafaille, Global Head - Customer Success Strategic Programs at Google, breaks adoption down into breadth, meaning how widely is your platform adopted across the user base of your customer, and depth, meaning the stickiness of your platform.
COMMUNICATION
How to Use Feedback to Create High-Performing Teams
Here’s Ryan Sydnor, Co-founder of Grow, with a detailed framework (with talking points) for creating a feedback culture. The section on “how to request feedback” was especially good; Ryan explains why high-quality requests (e.g., “What specifically did you think was great?”) get meaningful responses, and he argues against using low-quality requests (e.g, “I’m always open to feedback”) which generally lead to feedback that’s too general to be helpful.
ADOPTION & EXPANSION
How a Hypergrowth Company Keeps Customers
Diana De Jesus recaps a workshop hosted by Brian Reuter (Director of CS at Zendesk) on how to build your way up to expansion. He offers 7 steps to getting adoption right, then shares how to frame your expansion outreach.
PRODUCTIVITY
Why Burnout Should Be a Topic at Your Next Leadership Meeting, and What to Do About It
“There are two paths to banishing burnout: the individual path, and the organizational path… An organizational approach starts with management first identifying mismatches that are commonly shared, and then connecting with individuals to narrow thes person-organization gaps.” Here’s Tomasz Tunguz on why preventing burnout in the workplace is especially important right now.
For more on this topic, read Christina Maslach’s article in the Stanford Social Innovation Review.
Today’s format is different from the norm. I typically share advice or frameworks from other Success leaders, or from articles we’ve written in collaboration with other Success leaders. But today I’m sharing a recently trending topic: the value of NPS.
...
NPS is the industry standard metric to track overall customer engagement with our company, product and brand. Some companies use CSAT as an alternative.
As President of UserTesting, I watched thousands of companies (SMB to Enterprise) struggle with NPS, so here’s my take: NPS is a vanity metric with minimal value for health scores. Here’s why:
Instead of complaining about NPS, here are the questions I’d advocate for asking instead to actually understand the customer experience:
The answers to these questions show a more complete picture of how the customer is experiencing the product. Success leaders can aggregate this data and share it with other executive team members—the CPO, CRO, CMO, CFO—to influence discussions around the product roadmap, the customer profiles the company should target, the content Marketing should be creating, and more.
And by relying on better data, Success leaders can get to the root cause of customer churn.
….
If you’re interested, I wrote more about this topic a few months ago for OpenView.
This week's newsletter features posts on:
REMOTE WORK
How to Prepare for an Extended Period of Remote Work
David Hassell, CEO at 15Five, with a comprehensive guidebook for leading a remote team that’s based on the lessons he’s learned from the last 9 years of building a remote-first company. Worth saving and referring back to.
REPORTING
The Lost Art of Churn Reason Analysis
Lincoln Murphy makes the case for asking for churn reasons after the customer has left, and offers an approach for performing churn reason analysis.
TEAM BUILDING
Use This Startup's Playbook for Running Impactful Virtual Offsites
“Even though we can’t convene as we normally would, that just means we need to rethink what [our offsites] look like—not skip them altogether.” One of the best pieces I’ve seen on offsites; this post breaks down everything you need to think through to create an impactful offsite, offering helpful tips all throughout.
ACCOUNT STRATEGY
How to Position Your Product as a Strategic Partner Rather Than a Technology Vendor
“The differentiator between a vendor and a strategic partner is how you define success with your customers.” Here’s Gözde Görce, CSM at Lob, on how other CSMs can build account strategy plans that serve as a map for helping customers succeed with the product, while also positioning the company as a strategic partner.
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