Q&A: Customer Success – Gain Strength Now
Customer Success is a relatively new discipline and has not faced a major economic event such as COVID-19. We all know Customer Success professionals who have been laid off or furloughed. Based on company finances, CEOs and CFOs are determining which roles are necessary and nice-to-have.
To explain why Customer Success should be deemed essential, we hosted a webinar with Executive Director Mikael Blasidell from the Customer Success Association and Customer Success Consultant Ed Powers from Service Excellence Partners. Our panel discussed the financial effects of eliminating Customer Success during the pandemic and how Customer Success can become a source of financial strength.
If you missed the webinar, you can watch it on-demand.
- Mikael Blaisdell, Executive Director, The Customer Success Association
- Ed Powers, Customer Success Consultant, Service Excellence Partners
- You Mon Tsang, CEO & Founder, ChurnZero
Q: What is the source of the benchmark data mentioned during the presentation (22:35)?
A: [Ed]: These benchmarks came from David Skok, you may have heard his name before, and the KeyBanc Capital Markets SaaS Survey. He’s done this for ten years, and these are the industry averages across 400 different companies. The benchmarks, gross growth rates, logo churn, revenue churn, etc. are built into this model. This is a pro forma under those assumptions that you have on that one slide. I’m happy to share this with you. If you want to huddle up and look at the details. We can put in different numbers. This is widely accepted modeling with SaaS-based KPIs, such as CLTV, cost to serve, ACV, ARPU, and all kinds of unit economics that people use. There’s really no magic here. You can download David Skok’s spreadsheet and play around with it.
[You-Mon]: If you’re at a company where you believe that your department is at risk and you need to make a case to the CEO or board, there’s nothing more compelling than benchmarking numbers.
Q: COVID-19 is the first major downturn since Customer Success became an established function. Are you optimistic or pessimistic about the future of Customer Success as a permanent part of subscription businesses?
A: [Mikael]: I’m definitely optimistic. As I mentioned earlier, we have seen the number of Customer Success teams connected either directly or sharing to revenue sharply increase over the past five years. It came out of nowhere. A few years back at a Customer SuccessCon event, I had a Senior Vice President of Customer Success, an owner of a Customer Success technology platform, and a senior Customer Success professional—these people had pedigrees going back 10 to 15 years in Customer Success—on a panel. The question I quipped to them was “Do you think that Customer Success should own revenue?” and all three of them immediately sat back and said “No, absolutely not.” That was five years ago, and today, the picture is very different. If you’re going to talk to the to your board or CEO, you better do it in numbers because that’s what they pay attention to and there are no better numbers than money.
Q: Our senior staff is really pushing Customer Success to be more like Sales. At what point are you asking too much of your Customer Success team? For example, let’s say your CEO wanted everyone to be commissioned and 50 percent of Customer Success on-target earnings to be a variable. How do you feel about that and would you push back on your management team?
A: [Mikael]: Yes, I would push back on that. This is the closest thing to a religious war that we have in the worldwide Customer Success community. To commission, or not to commission? I’ve seen it work well both ways, and I’ve also seen it fail. Can you look your customer in the eye and say “Our Customer Success plan that we built together requires these things, and you’re going to make this amount of money if you increase your profitability, and your productivity is going to be this much if we do these things.” That’s an easy conversation to have. But trying to sell that customer when you haven’t clearly shown them the benefit is going to be rough, and it compromises you. I’m all in favor of Customer Success behaving as trusted advisers and doing counselor selling which is saying “If we do these things, you’re going to make one hundred thousand dollars and we’re going to get 10 percent of that.”
[Ed]: Let me give you another perspective. I’ve been on the other side of the table. I’m buying from Customer Success Managers. I’ve actually served them recently. I was running a marketing organization, and I was dealing with a lot of Customer Success Managers. As a buyer, it’s annoying when someone is selling to you when that’s not where your head is at. That’s not what you’re doing. There’s a time to buy, there’s a time to serve, and then there’s a time to buy again. When you mix it all together and constantly ask me for the next order after I just bought the software, I don’t trust you. I won’t even talk to you at that point. I haven’t gotten value out of what I just purchased. If we claim to be customer centric, we don’t think that way. We think about where the customer is in their journey and what’s appropriate; what do they need to do? If you’re aligned with them through that journey, then they will build trust in you. If you’re out of alignment and don’t have mutual goals or benevolence, then they’re not going to trust you. It’s counterproductive. I get that “everyone’s selling.” That’s true. Everyone needs to influence. Everyone needs to get ideas across. Everyone needs to lead and inspire people. That’s all part of selling. I get that, but there’s a time and a place for everything. I personally don’t believe in that. I do not believe in quota-carrying Customer Success Managers. I think there’s a sales motion and they should participate, but that’s not their mission. The mission is get to value quickly, maximize the value, uncover needs, handoff the leads, and build trust. That to me is Customer Success. Everything else is selling, so have the salespeople come in and do that. Like Mikael said, it’s a religious war.
Q: During this time, would you take a portion of the money you’re investing in Customer Success Managers and spend it on Engineers to build Customer Success software capabilities?
A: [You Mon] I think you do this no matter. You do this in good times and in bad times. Human beings go a long way, but if you look at what your Customer Success Managers are doing day to day, you’ll find a lot of redundant actions that could be automated. Or if your customers is using your product, you can target them with guidance or a video at the right time. You should always try to scale your Customer Success efforts.
[Mikael]: The discussions around using artificial intelligence and making it into programs is sort of a grail that people are dreaming of and pursuing, but it points at an issue that we should already be talking about which is defining our communication strategy. You see this in discussions about which things can be tech touch and which things need to be human touch. Which parts of the conversation go best if it’s human to human and which parts can you safely automate? That’s going to vary by company and product. But sure, should we make the user interface and the apps more intuitive? Of course. That’s a never-ending thing. Should we rely on that when money is on the table? I wouldn’t.
[Ed]: You Mon, you’re spot on. This is something you continuously do. What are your customers’ expectations? They’re buying similar products from similar software companies. What do they expect? Go ask them and figure that out. Determine what’s appropriate and use your best judgment. Sometimes it’s automation. Other times a human touch pays off big.
Q: How do you create trust in a high-velocity business model where you don’t have the time or resources to manage customers on a one-to-one basis?
A: [Ed]: I have a great story for you. I have a good friend who’s a professor of marketing at Colorado State University. He teaches in their MBA program, and they have a distance learning program. And just like you would imagine, he has a physical classroom with 30 students normally in there (not now during COVID), and three or four hundred virtual students. He told me that every time he goes to graduation exercises commencement, students come up to him completely out of the blue and say “I really enjoyed your class. It was awesome.” He has no idea who they are, and they just walk up and start talking to him like they know him. He’s never seen or talked to them before, but because they’ve repeatedly seen him, they’ve become attached to him. They believe in their minds that they’ve had this relationship with him. That’s really interesting. As it turns out, there is a company in Colorado Springs called BombBomb. They have a really cool product that allows you to shoot little videos with your phone or with your webcam and send them out in mass to your customers. I’d be all over that. In fact, they have customers that are doing exactly that for customer success and relationship building. You can absolutely do that, and one of the things that helps—I know we’re getting zoom fatigue—is if you show your face smiling. Looking into the camera smiling automatically builds trust. The neuroscience supports that people become about 20 percent more cooperative when they see a smiling face. It’s not important that you see your customer, it’s important that they see you. That is absolutely something you can do at scale. You can communicate at mass “I’m concerned about you. Here’s what’s going on. Here are some tips and tricks.”
Q: For Customer Success teams that own a commercial part of the customer lifecycle, how do you overcome the challenge of the typical Customer Success professional not being adept at closing a sale?
A: [Michael]: The vital skill or attribute that a good Customer Success professional has to have in my book is domain expertise. You have to be able to fluently speak the language of your customers’ business if you’re ever going to achieve the status of a trusted adviser—and that’s our goal. When we give customers advice, we want them to take it. We look at their situation and we give them the advice that will increase their productivity and profitability. That’s the proof of it. So, when a customer trusts you and believes that you’re looking out for their interests then you don’t sell in that. You simply say “Should I send the invoice for the renewal?” There’s no question about it. As I mentioned earlier, if I’m telling a customer “Together, we’re going make you one hundred thousand dollars next quarter, and I’m going to keep 10 percent of that,” I don’t know anybody that’s going to turn that down. But when you phrase it in that language, it’s not selling or persuading them to do something where they’re uncertain about the value. They know they’re going to get the value. They know it’s a good deal. So, you do it. If you don’t have that expertise as a Customer Success professional and you’re not able to speak your customers’ language, then you’re in the wrong vertical. You need to find the one where you can.
[You Mon]: I agree that it gives you the inner confidence to make the ask. I’ll add one simple thing on top of that: practice. If you have a Customer Success professional who is uncomfortable, practice it a few times. If you roleplay again and again, I guarantee they’ll get better.
To learn more about how your Customer Success function can gain strengthen in your organization, watch the webinar on-demand.
Customer Success Around the Web
- Losing Your Executive Sponsor Without Losing Your Customer– The exit of a champion is one of the most common reasons for churn in SaaS companies for many reasons, learn how to prevent that from happening.
- Keeping CS Teams Engaged While Remote– Check out these activities to inspire you and your teams to stay engaged and motivated during this unprecedented time.
- How Customer Success Can Come Our of This Crisis Stronger– Find out why shifting to XaaS is more important now than ever.
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