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March 17, 2021
Thought Leader & Strategic Advisor, CSTuners
To deliver consistent and repeatable success, your Customer Success team needs an empowered charter, supportive organization culture, right tools, incentives, budget, and cross-functional parity. To get, or, better still, earn a seat at the table, Customer Success Leaders should start owning (or at least speaking in the language of) financial performance metrics.
Hi Andreas, good afternoon
Welcome to Kaffeine and Karrots. You know, I’ve known you for a year and a half now, and we have had multiple conversations. Uh, so it’s good to have you under the Kaffeine and Karrots sort of interaction. Uh, Kaffeine, I literally have my caffeine right here. Uh, the literal caffeine and my incentive or the Karrot for today is to get some perspectives about the industry we all you know love and participate in. So hopefully we’ll have a good chat.
Yeah, look forward to it.
Yeah. If you’re fine, you know, there’s one thing I always thought I’ll ask you. Uh, you know, I really liked the name of your company you started, CS Tuners. Uh, the word tuning, you know, obviously has got a connotation to optimization and a lot of processes, tools, uh, people, skills, etc, need that tuning. And that’s why I’m guessing your named, your company around that.
So, in the past two years, uh, you know, from your experience having worked with multiple organizations, uh, what have you seen, uh, being requested for as the most tuned requirement or the thing which needs the most amount of tuning?
I would say most organizations that engage with me are in an adverse state of chaos. I had obviously tried to establish something that did establish something. It was growing, it was changing, it was morphing. And over time, even with the best intentions, it became more and more reactive … and, uh, their customer relations are suffering, their financial results are suffering and they need a way out of that conundrum. So they engage with me coming with that external perspective to assess what is going on and what I’m finding in many, many cases is that as you grow, you’re kind of clone what you have instead of strategically morphing, a larger organization with additional knowledge and with more specialized and dedicated roles that all provide some sort of assistance and service to, uh, to the customer and that this cookie-cutter repetition model is not scalable and it breaks down.
Right, right, right. That’s interesting. Now, is there a trend there? I mean, is there a reason why, you know, a lot of companies find themselves in situations like this and then have to react and, you know, go back and fix stuff. Uh, is there something going wrong right up front or, you know, what would you do to sort of prevent a scenario like this?
I think, and, and that’s what I have to unfortunately still tell most of my customers that they’re having embraced customer success as it’s meant to be. And when we look in the past, we had sales before, we had marketing before, we had professional services and support and account management before. And that all worked in a, um, economy, where you sell and then you move on to the next customer. In a subscription economy, that wasn’t working anymore. And so you need customer success. And they’re still trying to make this old model work, maybe under new names, but underneath it’s all the same stuff. So what I’m telling my customers is you need to empower customer success. Just being the… throw every problem at them, but not have any incentive, any rewards, not giving customer success the power to sell and renew, that is your first mistake.
Because then you end up in these situations where everybody is pointing fingers at everyone else, nobody can provide a cohesive experience for the customer, a cohesive journey for their customer, which results then in an increase in support tickets, reaching out to the CSMs for tactical things, onboarding not working, etc, etc, which are all these symptoms of not having this higher view and a higher power that directs all of these necessarily interactions with the customer. And that’s where people are wrong at what they see is the immediate pain. It’s like someone who has maybe an excessive lifestyle and then is complaining about the ulcers that they’re having or the heart pain when it’s the lack of carrots, right. Um, and too much caffeine though, whatever they were doing in, in the wrong proportions, led them already down to have those symptoms.
Right. And, and, you know, as a technology vendor, ourselves, you know, even we see a lot of what you just mentioned, that, you know, you have a tool and the tool will solve the problem along with the team. Uh, yes and potentially no. Uh, because there are riders to it, there are, you know, prep to it. There is… you used a very important aspect; I think empowerment. And, you know, one of the things I felt very strongly about in the past couple of years is, uh, uh, the CS function, uh, is still in this evolution of being empowered and it’s not yet there, you know. So once it gets there, obviously things become better. Uh, and, and will probably in our next interactions or in the next few questions, address some of those aspects as well.
Let me spice this up a little bit, I know you are very passionate, and you know vocal about your thought and beliefs, and we will try and get some of that out from you as well. What is something you feel or are completely dissatisfied with, or disappointed with the way the industry is structured, or, you know, approaching things in a certain way right now?
Well, it’s… this misconception that Customer Success is the department that makes friends with your customers and it’s not a department that is responsible for capturing this recurring revenue stream, or expanding these recurring revenue stream, or selling to the customer and turning a initial investment of sales and marketing, that in many cases is a negative investment if you would stop right here, into a long-term profit.
And so there is some pussyfooting around this… like… well… da da da da da… this! that! and the other, and here Customer Success becomes kind of the… sacrificial lamb of everyone else’s problems without any upsides, as I said before. So that… that is completely wrong from the outside, but then also from inside, within the Customer Success community, many of the declared leaders in Customer Success do not own, not even internally, financial performance metrics, they couldn’t tell how profitable they are, how much they are tracking.
They are tracking all sorts of other metrics but not that, and until you can prove to someone at the Board Level, to your CEO, that you are a profit-generating function and here is your business… as a P&L, right? And mostly as a Profit not just at a Loss, you will never be on par with Sales, because you still have to fight against that long-term belief that Sales is King.
Yeah. Yeah. And it’s a very important point. And I couldn’t agree with you more here, uh, you know, in my past experience also, which typically has been in account management more than in customer success, it’s the same, uh, sort of fundamental there. Uh, it’s, it’s funny because, you know, you’re saying 95% to 90% of the book of revenue is on this particular team to manage, uh, 5% to 10% is on sales, but, you know, empowerment and the budgets and everything else around it, it’s just the other way around. And it just doesn’t make logical sense. I get this aspect of, you know, acquiring being tougher, comparatively and arguably, at times and maybe so and I agree to that, uh, but at least there should be some better parity, uh, with regards to the budget and then you actually walk the talk of being a customer-centric organization. Otherwise, you know, it’s, it’s still, you know, over the hood and underneath it’s the same old engine, you haven’t changed anything really.
Yes. And since you brought up being a customer-centric organization, um, it manifests itself in other ways as well. I had a discussion in a communities setting with other CS leaders and the, we were talking about segmentation and all high touch, low touch, revenue or geography, this, that, or the other, nobody was talking about the customer. What are the outcomes the customer wants to have? What are their goals, whether they are all objectives, etc. And I say, you want to be a customer-centric organization, but all you’re talking about is me, not my customers, right? And so we need to break out of these internal views and really see everything through the lens of the customer, their experience with the product, that value that they’re getting from the product or service. When you talk about a, a more SaaS subscription in, in environment and helping them make the connection between the fees that they’re paying and the value that they were getting. And that’s what customer success was set out to do 10 years ago, and is still struggling to kind of claim that best seat at the executive table.
Right. And, and which brings me to another aspect. I mean, again, couldn’t agree with you more about the customer-centricity piece. You know, you really have to drive this if you really believe in it, uh, and the outcomes should be around your customer outcomes, for sure. But having said that there is this other aspect of earning the seat at the table, right? So, like I said, internally, it’s, it’s just not, you’re just not going to get empowered by your sales. Um.
No, Absolutely not.
Way to potentially earn that seat at the table is to show value around customer centricity itself. So I think the onus is also on a lot of CS leaders and their senior team members to drive this and say, Hey, we are today not seen at par potentially with sales, but let’s earn it. You know, let us get these results to show and our organization how to become customer-centric and it will follow. And once people start following you, you obviously become, you know, a sort of a leader in your own, right? Uh, yeah. You see trends like this at all. Are, you know, is this an anomaly right now.
It is still an anomaly, but it is getting better. I see some CS leaders who are more brave and bold. They were, for example, since we’re all resource constraints, right? They’re running some A/B tests, some customers that I take care of, like I would like to others, how I can, um, or how, how I have to neglect, right? And show what here the renewal numbers, here are the expansion numbers, right? Class A, class B, this is the value that I’m providing. So you, if you invest in this more with the tools, the people, the processes, everything, then I expand this success that I had in this small test tube environment, into my entire customer base. They are going in and they are actually measuring the profit curve that you have for a customer. So a very recognized analyst, um, was looking at companies, going, going public and found that, uh, sales spends between 90 cents and two and a half dollars in acquisition costs for an initial customer, right? And before nobody cared about the acquisition costs because you had all the revenue then with the contract. So that was all in one, now that we have this deferred revenue, you need to turn this around and you need to speak the language of the finance and everything in order to get there. So yes, some, some people are, are getting into this, but others are comfortable in roles that they are in are not really breaking out and claiming this, that seat at the table that they should have, and they haven’t earned it yet.
Yeah. And, and like, you know, most, uh, functions, uh, like you have good head of sales and bad head of sales. Uh, we will have good head of customer success and bad head of customer success as well. Uh, but the question here is a little bit more on the maturity front. And I think, you know, hopefully, uh, that, that curve accelerates sooner rather than later, uh, for all of us. I mean, it’s, it’s, uh, it’s an industry which is evolving and rightly so a lot of, uh, attention and a lot of value for sure. Uh, but it does need some of this plumping to, uh, work out, I guess again, very soon.
Well, yes. I hope that, uh, the adoption curve, like you said, accelerates, um, I came to think of a completely different example when, when I was in graduate school, the concept of, um, risk CPU is, was just emerging instead of having discarded complex when they have these very simple ones. And now you’ll finally see a company like Apple with the new M-one chip embracing that architecture and technology 30 years later. Right? And so it’s that type of stuff going against some of these entrenched expectations and behaviors and the patterns. In fact, in one of my blog posts during the COVID crisis, I, um, I was making a pitch for customer success and said, sales won’t help you out of this crisis because the investment in new sales is so great that you rather should try to keep every customer that you have to the most extent possible, right?
Yeah, absolutely. Absolutely. Yeah. And, uh, you know, one related aspect, just crossed my mind as well. And, you know, we see this with a lot of our first-time adopters of customer success, sort of customers. We have one big shifting from competitors to SmartKarrot, and we have first-time adopters of a tool as well. I think very common is, uh, uh, and it, and it a little bit, it’s disappointing to see overall that, uh, the team, uh, the young customer success teams, which are being set up, uh, typically get thrown under the bus a lot of times, because one, it is difficult with so many moving parts. Uh, you are coming from a different background that is obviously not too much of exposure yet in the industry. Uh, so it’s evolving, but then you get thrown a lot of KPIs, KRAs, metrics and the brunt of doing probably the most difficult thing in the organization, which is to show value to the end customer.
Uh, and you know, you get thrown a lot of data. So, nothing really gets done proactively about managing the team or are actually doing something for the team. And I know there are courses that are learning material and stuff like that, and all of that will evolve and get better. But, I guess it’s also a little bit of empathy, it’s a little bit of, again, empowerment, more than training, which is required to get your front line value creators, uh, you know, the sort of Pat on the back of the need, uh, you know, our approach to this Andreas, as we have mentioned earlier to you as well as, as we to try and make the life of the CS practitioners slightly easier through, you know, certain intelligent aspects to certain aspects of automation and we are also evolving and trying to make this better. Uh, but that’s our technology approach towards this. It has to probably marry a cultural approach, a process-driven approach, even it’s HR-centric approach, you know, uh, and leadership approach to, for it to finally work because that team, I really feel for, you know, you’ll be pick up in a literally anyone and say, Hey, guess what? Tomorrow you are a customer success manager, and there you go, show value. What do you feel about that? You’re seeing this, you know, uh, and how do you come out of this?
Well, I couldn’t agree with you more. In… Professional Services, the world that I emerged from into Customer Success, you are dealing with basically the implementation & onboarding part of a customer journey. Correct!
And it takes already technical and business skills and interpersonal skills just for that part, and then you are asking someone in CS to do even more, when it transitions then into the adoption phase with the customer into this nurture phase, into this support phase, into the executive alignment phase. Suddenly it’s like… I need to be six people in one…Right?
Um… and that becomes very taxing and that is why I typically… describe Customer Success, not as a huge bag of swiss army knives that have all these tools, blades, and gadgets and everything else that matters.. that Customer Success is more like an orchestra! The CSM assigned to an account draws the other resources and keeps them in harmony.
So you need a technical architect, you don’t need to have all the technical knowledge. You need to have someone to talk about some of the financial analysis or do some data analytics or this that or the other. So that you as a Customer Success Executive really that is assigned to maintain that relationship with the customer on the other end are empowered to make more strategic decisions instead of doing all the things that are involved in this. You don’t need to be proficient in 20 different systems, how to solve a technical problem how to do all this other stuff a lot!
But for that you need in more mature large organization, I would say typically above 40 50 people to do this bifurcation into specialties. And in that does also by many of the younger groups fail because you have to start small and most organizations, they start small, but they never learn and adapt.
They start small and they’re stuck in that, early stage for the rest of their lives to, to, uh, basically, uh, get along. So that is, that is one way to empower and incentivize CSMs and the other is, again, when you look at, if you define customer success, if you lose the customer, you get punished. I hate that if you keep the customer or expanded customer, someone else takes the, uh, the victory for that, then, um, you’re always in, in, in this losing proposition, right? You never have any successes to celebrate. And I think that is also important, not just from a business perspective for us, for customer success, but also from an interpersonal, um, perspective, um, from the emotional context. Otherwise, you have people that are burned out because all they’re doing is firefighting and they’re getting all the negativity and never anything positive.
Yeah, absolutely. The one, I think it’s on us as leaders to ensure that the Karrot doesn’t get stolen, you know, so the right sort of credit, uh, in this case, so. Andreas, absolutely wonderful talking to you. I think, uh, you know, we are at the top of our time for today, uh, hopefully, we’ll continue this and, you know, I’m hoping you enjoyed it as much as I did, uh, interacting with you.
Yes, absolutely. Our conversations are always fun. And now being able to share some in this context of a Coffee and Karrots or Kaffeine and Karrots, right? is even more exciting. And I look forward to drilling down the more aspects of this and being able to share some of the experiences that I collected, um, in my engagement with customers, for the customer success performance index benchmark, and in other ways, right, into the audience that you will approach as well, both from the executive as well as the practitioner level. So I’ll look forward to next time as well. Thank you for having me.
Thank you so much, Andreas. Yeah, catch you next time.
Vrushali is a passionate and accomplished professional with expertise in digital marketing. She has a proven track record of driving successful outcomes for businesses. Vrushali loves traveling and exploring new places.
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