In business, we often talk about the importance of listening to our customers. But how often do we actually take what we hear and use it to make real changes? This month, we're focusing on the power of the "Customer Voice" and how it can be a game-changer for your business growth.
Listening to your customers isn't just about solving problems or improving products. It's about creating a culture where every part of your organization—from marketing to product development—values what the customer has to say. When you really listen, you can uncover hidden opportunities, avoid costly mistakes, and build stronger relationships.
Enjoy!
Lihong
Forbes
This article discusses the importance of focusing on customer experience to grow your business and how companies like Zappos have succeeded by doubling down on customer service, even in tough times, and offers strategies like self-service options and customer feedback mechanisms to enhance customer trust and loyalty.
Kay Devlin - Linkedin
Voice of Customer (VoC) research is crucial at every stage of product development. Kay Devlin outlines various methods like surveys, focus groups, and social media monitoring to gather customer feedback, helping companies make better decisions and create products that meet or exceed customer expectations.
TheySaid
Ever wondered why your Sales, Marketing, and Customer Success teams seem to have different takes on what customers really want? Here are the the pitfalls of working in silos and the power of a unified approach to customer feedback. Learn how to get everyone on the same page for better customer engagement and business growth.
ChurnZero
This comprehensive report gives you the lowdown on everything from budget trends to the rise of AI in customer success. A must-read for anyone serious about keeping their customers happy and boosting their bottom line.
Netish Sharma - LinkedIn
Learn how Six Sigma methodology uses VOC to improve quality and customer satisfaction. From capturing customer insights to integrating VOC into the DMAIC (Define, Measure, Analyze, Improve, Control) process, emphasizing that VOC is not just a practice but a mindset.
In the current market environment, declining trends in Net Revenue Retention (NRR) should serve as an urgent catalyst for cross-departmental action. While NRR remains an important metric, it shouldn't be the only lens through which we assess customer value. It's crucial for Sales, Marketing, Customer Success, and Product teams to align on a multifaceted approach, incorporating a variety of metrics that can offer a more complete picture of customer behavior and value. This month's newsletter aims to provide a 360-degree view on the subject, featuring insights and best practices not just from practitioners on the front lines but also from venture capitalists who have a stake in long-term business sustainability and growth.
We will explore traditional metrics like NRR, as well as alternative viewpoints that contribute to a fuller understanding of customer retention strategies. So let’s get started—because recognizing the complexity of customer behavior and taking collective, informed action is no longer just advisable; it's a business imperative.
TheySaid Blog
The article delves into the limitations of the Net Promoter Score (NPS) in today's evolving consumer landscape. It introduces Customer Perceived Value (CPV), a more nuanced metric that aims to fill the gaps left by NPS. Through case studies and direct comparisons, the article provides actionable insights for businesses seeking to modernize their customer feedback methods. Readers will learn how CPV can offer real-time, comprehensive insights for enhancing customer experience.
Stripe Blog
Stripe provides a comprehensive understanding of why customer retention is crucial for SaaS businesses, how it impacts profitability, and how to measure and interpret it through metrics like NRR. The article also offers actionable insights for early problem detection and long-term strategic planning, providing a complete toolkit for evaluating and enhancing the health and growth potential of a SaaS business.
Smooth Scaling Podcast
An Insight Venture's podcast interview with Michaela Downs, Head of Global Sales Operations at Benchling about rapidly scaling the customer base by 10x while growing a high-performing sales organization.
Blossom Street Ventures Blog
The analysis focuses on net dollar retention (NDR) trends among 64 SaaS companies that have gone public since October 2017. While the current median NDR of 115% remains strong, it shows a decline from over 120% in the first half of 2022. However, there are indications that NDR rates may be stabilizing, as Q4 2022 also reported a 115% figure. More data is needed for conclusive insights on stabilization.
You’re probably tired of hearing about this, but growing revenue in today’s market is rough. So for SaaS companies, growing revenue from your existing customer base through upsells and cross-sells is what we should all be focused on. However, most companies' upsell efforts are terribly inefficient:
No one is talking to each other, which causes a significant silo and lack of data.
The key to unlocking these opportunities lies in a customer-first approach, where Sales and Success are incentivized to deliver customer value.
In this month's newsletter, we explore the dynamics around expansion more closely, providing insights and tips on improving your upsell strategy and driving strategic growth for your SaaS business from the TheySaid team and other go-to-market leaders.
Happy upselling,
Lihong & the TheySaid team
This blog discusses the importance of a clear ownership structure for upselling and how the teams involved should partner. It provides insights and tips for finding the right combination to drive customer growth. Read the blog
Most sales models focus on new revenue, especially PLG. But regardless if you are a more traditional sales-led or product-led company, your biggest source of growth will be to expand and retain existing revenue, so how are you prioritizing your customer insights to fuel that growth? Read TK's post
So why are we surprised? The reasons could include a lack of customer engagement and ineffective communication strategies. Read this blog for insights and suggestions for preventing churn and improving customer retention.
Revenue organizations often prioritize customer acquisition costs and Customer Lifetime Value but neglect expansion opportunities, missing out on potential upsell and cross-sell opportunities. This leads to a significant impact on customer value. Shiv Narayanan highlights this and suggests companies capture all the value a customer brings by pulling various levers to impact Total Customer Value.
Marketing leader Matt Heinz suggests companies apply what we know that works with account-based marketing to post-sales for a more proactive, customer-centric approach to retaining and growing your customers.
When it comes to investing in the stock market, Warren Buffet famously offered the advice to “Be fearful when others are greedy and greedy when others are fearful.” I argue that the same thought process should be applied in the down market of today’s tech world—while seemingly everyone around us is tightening their belts, I say it’s actually a great time to invest.
Think about it. Some of the most legendary companies in the last century came out of hard times.
And it wasn’t because they went into survival mode. It’s because they were bold and they were smart. In life and business, when everyone around you is panicking, you have to be brave.
There's an ethos right now across the technology industry of, “It’s a down economy, so I need to be efficient and I need to save money.” And the way that a Customer leader usually thinks about this is, understandably, “Well, I can't cut my team. I have to protect the headcount that I have.” So the focus on cutting expenses naturally shifts to our tooling.
Here’s the thing—you can preserve headcount and invest in tools. In this piece, I’ll be sharing why I think, rather than buckling down and being cautious, you need to invest in the tech that’s going to protect your revenue and improve your product and customer experience.
In a tough economy, the place people usually start cutting the fat is by getting rid of unessential tools from their tech stack. The idea of purchasing new tools is suddenly taken off the table. No new headcount. No new spend. No new tools. No new things.
But this mindset of “no new spend” is the wrong way to think about saving money.
The questions we need to be asking ourselves are:
To invest smartly in tech, the first step is to start prioritizing tech that protects your revenue. And in tech, high customer retention = revenue. So the strategy shouldn't be to save money at all costs. It should be to save accounts at all costs. Even if it means spending new money, doubling down on investments that can save the most revenue and drive the most growth is the way to becoming as efficient as possible and surviving this downturn.
Think about it this way–technology can be a revenue-generating and account-protecting asset. And the technologies that protect revenue and retain customers more than any other are the ones that surface churn risks, scan for expansion opportunities, and help your team act on customer feedback. In some cases, the smartest decision you can make is to buy a new tool that is a fraction of your current headcount spend, but that can have an outsize impact on saving accounts and creating growth via upsells and cross-sells.
In essence, you need to prioritize tools that help with retention and establish practices that can help your team scale your retention efforts. And as a Customer leader, you are well aware of how critical retention is. But here’s the catch. There are very few tools that directly impact customer retention in the market today.
The uncomfortable truth—Customer Success is accountable for retention but doesn't control any of the top reasons for churn like:
Since Customer teams don't control these things, they instead focus on what they can control:
You see the problem? Everyone in Customer Success is very busy doing stuff, but none of it will substantially move the retention needle. Customer Success software companies have delivered exactly what the market asked for. Unfortunately, what the market asked for were features that made it easier to accomplish low-value tasks.
Stop investing in tools that help you accomplish low-value tasks. Invest in getting more customer insights. And though it might seem like a huge lift to piece together tools (like Qualtrics, AskNicely, etc.) to get customer feedback, there is hope. Get a customer insight engine that is specifically designed to protect revenue. Then you can set it and forget it while you enjoy the flow of insights coming in every day.
Invest in customer data technology
If you’re not already, it’s time to start thinking about which technology will give you the best data to survive this down economy.
This is something our team has been thinking about for years. We have a business decision framework at TheySaid (formerly Nuffsaid), which helps ensure we put customers at the center of our decision-making. Here’s how it works.
We rank the data sources that are used in decision-making at the company in terms of credibility and importance. We seek the best possible data to propose a solution:
This means that any decision that uses customer data is the most credible decision that’s being made. And any decision that’s being made with less quality data can be challenged with customer data.
The problem is, very few organizations think about customer data first when building their tech stack. In fact, most Customer leaders are placing their bets on the wrong tech entirely, or they buy the right tech but in the wrong order.
So, how do you help your team be more efficient when you don’t have a budget for new tech? You must prioritize your tech stack.
As a Customer leader, there’s a particular sequence you likely stick to, subconsciously or consciously, when buying new tech to support your organization as you scale. Prioritization usually goes something like this—
Most everyone agrees that CRMs, at this point, are must-haves. But after that purchase, most Customer leaders think, “Okay, now I need a CSP for health scores”, or “We’ve got to have a tool for better onboarding to hit TTV goals”, or “My team needs a QBR framework before we start collecting customer data.”
What people don’t realize is that, regardless of business size or stage, we need to gather customer insights very early.
The problem with a Customer leader’s standard approach to tech prioritization is that it deprioritizes arguably the most important piece within any Customer Success motion and the most vital asset in your company’s possession—what the customer has to say. When Customer leaders forget to listen to the voices of their customers, they forget the foundation that their organization rests upon—qualitative customer insights.
Without customers, there is no Customer Success. Then why is it that so many Customer leaders get caught up in all the tactical minutia of running a team, setting up playbooks, reducing Time To Value (TTV), implementing fluffy process tools, and adding more product usage data?
Here’s an analogy that anyone married will understand.
Let’s say you’re engaged and preparing for your wedding. You write out your guest list. You send out invitations. You pick out the caterer. You set up a registry. You arrange the musicians. You pick out flowers. And meanwhile, you’re so preoccupied with preparing for the wedding, that you completely forgot about the person to whom you’re getting married. Your relationship suffers greatly and your partner ultimately leaves you because you neglected the only piece that really mattered–your relationship.
The same can be said of Customer Success tech. Without an advanced way to collect, analyze, and act on qualitative customer feedback, we’re forgetting the most important piece in the whole Customer Success motion.
Here’s a better way to look at your tech stack prioritization—
When you buy technology in this order, you’ll be set up for success.
You’ll be able to:
1) get quality data into your CRM and reporting,
2) have visibility into your accounts, and
3) deliver the value your customers expected to receive.
Above all, to make it through this down market, you’ll need to focus on customer data collection. Build a successful foundation by reorganizing your tech stack prioritization and invest in customer data tech.
Qualitative customer data is your path to better churn and upsell prediction
Other than being the foundation of Customer Success, customer data is the first thing you should focus on during a hard economy because the insights formed from qualitative feedback are tied to better predictions of churn and expansion. And when you can forecast better, your revenue increases. When you increase revenue, your team will no longer be viewed as a cost center by your CEO. And if your CEO views the Customer team as a revenue-generating organization, they will ultimately give you a seat at the decision-making table and be less likely to cut your budget or headcount.
And in today’s economy, where Customer Success budgets are getting slashed, billionaire enterprise software CEOs like Frank Slootman are questioning the value of Success teams altogether, and layoffs are rising within company functions that are thought of as dispensable, it’s understandable that as a Customer leader you have an urgent need to save rather than invest.
But remember—technology is a revenue-generating and revenue-protecting asset. It’s an investment to which you will see real returns.
Forget about the money. It’s time to save accounts and revenue. It’s time to invest in the right technology. The Customer leaders who will survive this downturn are the ones that realize the most important technology in a tough economy is the one that collects, analyzes, and acts on customer feedback.
CONTRIBUTORS
A special thank you to Jeff Justice Williams (Senior Executive Director of Enterprise CS at Box) and Jeff Beaumont (Senior Director CS Operations at GitLab) who contributed to and reviewed this piece.
COMMUNICATION
Finding Language/Market Fit: How to Make Customers Feel Like You’ve Read Their Minds
At TheySaid, we’ve done a lot of thinking and talking about how Customer leaders can be Product-Market Fit machines for their companies. But this article by Matt Lerner, Co-founder and CEO at Startup Core Strengths, addresses a new idea to consider—as the leaders closest to the customer, how can we also help to improve our Language/Market Fit? As he puts it, “When you can understand and articulate your customers' goals and struggles and anxieties in simple, precise language, your developers and product teams will not have to guess at what to build.”
CULTURE
How Company Values Drive Customer Experience and Brand
VP of Customer Success at GitLab, David Sakamoto, joined Irit Eizips on her show, CSM Practice, to share how GitLab’s focus on strong company values has benefited employees and customers alike. Skip to 2:15 for some amazing examples of how his company upholds their core value of transparency.
LEADERSHIP
How to Spend Your First 30 Days in a New Senior-Level Role
Read Lara Hogan’s comprehensive guide to avoid common pitfalls during the first month in your new leadership position.
CUSTOMER JOURNEY
Love & Marriage
I enjoyed reading this clever piece by Aaron Thompson, CRO at SuccessHACKER. In it, he compares our customer relationships with personal relationships. A little sneak peek: sales=dating, onboarding=the honeymoon, renewal process=renewing of vows, and churn=divorce.
Emily Ryan has over 15 years of experience coordinating teams across Sales, Post-sales, and Product/Delivery to ensure successful customer interactions.
Being the senior client executive at a customer lifecycle consultancy obsessed with helping companies drive best-in-class Net Dollar Retention, Emily has a unique perspective into what it takes to establish, analyze, and scale incredible customer-centric teams and processes. And one of her core philosophies is that for a SaaS company to thrive, leaders must build out an advanced Voice of Customer program.
In this piece, which was featured in the recent edition of the 2.0 magazine, Emily digs into her top four recommendations to do so:
#1 Kill off big surveys or NPS and move towards periodic pulse checks
#2 Always close the loop on feedback
#3 Treat VoC as a lagging indicator (until you’re taking pulses)
#4 Combine what customers say with what they actually do to get the most value out of VoC
At the heart of every customer-centric organization is a powerful Voice of the Customer (VoC) program. Through this program, many enterprises collect baseline customer feedback and metrics, such as NPS. But no VoC initiative magically appears as an impactful and fully actionable program; many leaders are starting to realize that their VoC data isn’t telling them the whole story. In order to derive meaningful and actionable insights that lead to strategic improvements, you need a carefully curated and thoughtfully implemented VoC program.
To help you make the most of your customer insights, here are my top recommendations for creating a cutting-edge Voice of the Customer program that is data-driven and actionable.
It can be challenging to measure something as complex as a customer’s relationship with your business. When attempting to do this, many organizations make the mistake of distilling this relationship down into a single measure; Net Promoter Score (NPS). Due to its simplicity, NPS has been touted as the all-encompassing metric to determine customer satisfaction. But when used in isolation, NPS has some significant shortcomings.
One of the biggest challenges with using NPS as your singular source of truth is that it doesn’t tell you what’s really going on with your customers in granular detail. NPS is an oversimplification of a multi-faceted relationship; without the granularity required to accurately capture value and drive real change for your customers, it is meaningless. To make matters worse, the NPS score merely sits on a dashboard and capturing the score often becomes the focus rather than how to drive meaningful change and improvements.
To combat these challenges, organizations must shift their mindset from Business-To-Business (B2B), thinking of your customers as one entity, to Business-to-User (B2U), thinking of your customer as an entity full of users. This is where the real Voice of the Customer is—a collection of insights that live across all of your users and their unique experiences and perspectives about your product.
To accurately capture and understand this collective perception of value, move away from NPS and towards conducting periodic pulse checks. This is often done best as quick bursts of questions directed at different users within the different personas your company engages with. These short, easy-to-answer pulse checks should have minimal questions (1 or 2 at most) to encourage greater engagement and feedback from people who wouldn’t normally respond, such as Senior Leadership. Ultimately what you want to measure is how much value you’ve delivered to each user along their journey.
In many businesses, Voice of the Customer programs live and die within a single team or organization. Usually, Customer Success or Marketing is tasked with the VoC program, and the insights they gather are confined to their team alone. With this approach, it’s nearly impossible to take meaningful action on your VoC insights. Instead, you must ensure that there’s 360 connectivity across your entire organizational ecosystem so that your customer-facing teams are accountable to take action and implement the changes that your customers are requesting.
To ensure this organizational alignment, leverage your VoC program to produce quarterly action items for every department based on customer insights from every team. Your customers are your North Star—often, businesses make product decisions to generate net-new customers but won’t give the same credence to product decisions for existing customers. To maximize customer retention and expansion, you need to prioritize capturing and actioning product feedback from your current customers.
Another crucial component of closing the loop on your VoC program is taking action on the insights you gather. In the article “Survey fatigue? Blame the leader, not the question” McKinsey & Company said, “We found that the number one driver of survey fatigue was the perception that the organization wouldn’t act on the results.” This proves that if you want customers to provide feedback, you have to let them know 1) that you received their feedback and 2) how you intend to take action.
While many leaders launch surveys or start Customer Advisory Boards with the best of intentions, they lack a comprehensive plan to follow through on the results of the program. The most successful leaders proactively incorporate VoC insights into the product roadmap and enable direct input from customers that thoughtfully flows into product enhancements.
To ensure this is done successfully and consistently, conduct a monthly cross-departmental customer feedback session where leaders from Sales, Marketing, Customer Success, Support, and Product teams share their biggest wins, opportunities, and areas for improvement. This will ensure that all teams have insight into the customer across the customer journey and that they can collectively and collaboratively take action on improvements.
While VoC is an important part of understanding your customers’ perception of value, it should not be used as your “be-all and end-all” metric. VoC gives you a snapshot in time—your customers are responding to their experiences so far. But, your customer's relationship with your business isn’t static—the next time you ask that customer that same question, you may get an entirely different response.
Given the dynamic and complex aspects of this ongoing relationship, VoC is too one-dimensional and, therefore, a lagging indicator. As such, it should be incorporated as an input into your overall customer health score, but never act as the only indicator of customer health. By combining VoC with other measures and indicators of health like usage of differentiated features and overall utilization, you’ll gather the insights you need to be truly proactive and predictive.
Once you introduce a pulse check program (mentioned in section 1 above), you can use customer responses as a leading indicator because you’re asking the right question, of the right person, at the right moment in their journey.
Responses from your VoC program should be taken with a grain of salt—people don’t always express, or know how to say, what they really think, need, or want. As Steve Jobs said; “People don't know what they want until you show it to them.”
A perfect illustration of this is through the market research conducted by the psychophysicist Howard Moskowitz, who famously produced market-leading changes for Campbell’s Soup, PepsiCo, and Kraft. He asked respondents what qualities they like in their coffee. While nearly everyone responded with qualities such as dark, rich, and hearty, the taste test revealed that what nearly 75% of people actually liked most was milky, weak coffee.
To truly understand what your customers want and need, you must contextualize your VoC insights by looking at what your customers are actually doing, not just what they are saying. By combining VoC responses with customer data and feeding those insights into a system of action where it can make an impact, you can ensure maximum value delivery and product alignment.
Generate data-driven insights by answering the following questions:
To derive the most value from your Voice of the Customer program, focus on strategies that help maximize the impact of customer insights. By conducting regular pulse checks, ensuring cross-functional impact from your VoC program, and combining your VoC responses with other metrics and data-driven insights, you can drive measurable and meaningful change across your organization to strengthen engagement and optimize customer value.
INDUSTRY
Why Are SaaS Companies Unprofitable?
“The bottom line: The largest SaaS companies in the world are generating operating incomes equivalent to low-margin retailers.” Here’s Thomas Lah of TSIA with a smart, research-backed piece that dives into why most SaaS companies don’t make money. He also argues as to why cutting costs in Customer Success doesn’t make sense on the road to profitability—“CSMs are there to drive adoption which leads to the expansion and renewal of contracts. The highest margin revenue for any SaaS provider comes from existing customers. Putting that revenue in jeopardy is risky.”
CAREER
Giant List of Remote Customer Success Jobs
Here’s a great resource for anyone you know who’s on the Customer Success job hunt. Enterprise CSM at Superside, Fouad Adel, has compiled a list of remote CS jobs that contains more than 400 open remote roles and is updated weekly.
TACTICS
6 Practical Ways To Increase Customer Centricity
Shane Ketterman shares some quick tactics to show customers that you value their business. One that I highly recommend every company experiments with: “Invite a customer to share their story at your next all-hands meeting.”
LEADERSHIP
Questions for a New Leader
If you’re starting a new role leading people, here are some great questions to ask to help you 1) gain the trust of your new teammembers, and 2) prioritize your work moving forward. Some of my favorites:
Last month we announced the release of the third issue of the 2.0 magazine, titled Product Market Fit. In it, the community comes together to show the impact that Customer Success can have if it owns Product Market Fit (PMF) for its company.
You might be asking, “What in the world does Customer Success have to do with Product Market Fit?”
In this newsletter, we’ll include the foreword from 2.0, which tees up how we got to a place where the Customer leader must own PMF to unlock an entirely new growth lever for their business: Customer-Led Growth.
But to get the full story, download the magazine. It’s free!
Dear 2.0 readers,
Let’s start by talking about the Rule of 40 and its impact on software companies.
Before 2015, companies were incentivized to grow at any cost. That led to Sales Led Growth companies that had good growth rates, but they also burned so much cash on Sales and Marketing that they never became profitable.
To fix that problem, investors introduced the Rule of 40 in 2015, which is calculated as follows:
What the calculation means is that when you add a company’s growth rate to its profitability, if the combined score is over 40, then the company is an attractive investment. Let’s apply the Rule of 40 to two different companies:
Before 2015, Company A would have been the more attractive company because of its high growth rate. But let’s apply the Rule of 40 and add the two numbers together and we get the following:
After 2015, everything changed. As you can clearly see above, not only is Company B more attractive than Company A, it has more than double the score. Now companies were handsomely rewarded for balancing growth with costs. For example, in 2021, Expensify and Weave went IPO. They both had similar revenue and growth, but here’s how things ended:
It’s no surprise that Product Led Growth (PLG) emerged as a popular growth model shortly afterward. In PLG, companies made it stupid simple to try the product. Combined with ease of sharing and network effects, companies were able to grow quickly with minimal investment in Marketing and Sales.
We were sold the idea that PLG was the new gold standard for software companies, but it has 2 major problems.
First, almost no B2B companies have a product that’s simple enough for PLG. In fact, if you have an onboarding team, a training program, or an online university then your company is definitely not PLG because the product is too complex to use without help.
The second problem, arguably the bigger problem, is that PLG is hard to control. Even if you are a PLG company, you can’t “double your features” to “double your growth from the product.” Let me explain.
What’s the biggest Sales Led Growth software company you can think of? You probably thought of Salesforce. As of 2022, Salesforce has an enormous 26% of its headcount in Sales or Marketing (source: Linkedin).
Now let’s compare that to three of our PLG darlings: Zoom, Calendly, and DocuSign. Their Sales and Marketing headcounts are as follows:
So our poster-children PLG companies invest more in Sales and Marketing than the largest Sales Led Growth company. How is that possible? Because these companies have not been able to sustain growth via their products alone. They needed Sales to activate accounts that didn’t engage with the product and to chase larger Mid Market and Enterprise deals.
So now we’re stuck. Product-Led is difficult to control, and Sales-Led is too expensive. So what’s the path forward?
That’s what we’ll explore in this edition of 2.0. We’ll propose that ownership of Product Market Fit is the biggest opportunity for Customer Leaders, and when done correctly, unlocks an entirely new growth lever for their business: Customer-Led Growth.
While the 2.0 magazine is compiled and published by Nuffsaid, it’s a community effort to develop the content which is shared with you for free. So I’d like to thank everyone who contributed to this magazine, everyone who posts their ideas online, everyone who challenges the status quo, and everyone who helps us level up our skills as Customer Leaders.
CAREER
The Hierarchy is Bullshit (And Bad for Business)
Here’s an absorbing read from CEO of Honeycomb, Charity Majors, who challenges the vertical organizational structure tech workers have become accustomed to and offers practical tips to “drain your hierarchy of social dominance.”
OPINION
The One Thing Billionaire Frank Slootman Got Wrong
In his book Amp It Up, enterprise software CEO, Frank Slootman claims, “If the basic functions of the company are working properly, and are held to account, you won’t need a separate [Customer Success] department.” Here’s Nick Mehta’s reaction to that argument and why “Slootman’s view reflects a dated perspective around the future of software.”
MANAGEMENT
Should I Create a Performance Improvement Plan For My Direct Report?
Queen of leadership content and coaching, Lara Hogan, shares how to navigate the Performance Improvement Plan process “in a way that’s as fair as possible to your direct report”. Definitely worth a read if you, like many, have complicated feelings about PIPs.
INDUSTRY
The Problem With Customer Success
For Customer Success thought leader and Investor at Crane Venture Partners, Rav Dhaliwal, now is the time for a major overhaul of Customer Success. With an economy that has put CEOs and CFOs into survival mode, this important piece makes you wonder, is a Success team with no commercial responsibility a "must have" to survive?
For this newsletter issue, we handed the reins over to a team of Customer Success experts at SV Academy who asked their recent graduates, "What will it take for you to stay at your company for the next 2-3 years?"
SV Academy prepares job seekers for an entry-level position in Business Development and Customer Success in weeks. But what makes SV Academy such a uniquely strong organization is the fact that 76% of their 2,000+ grads belong to an underrepresented group.
Here's what the team at SV Academy came to understand about how to retain top underrepresented talent. Take note.
We asked our Customer Success Program graduates employed within the last year what their company could do to make them stay another 2-3 years.
Across 34 individuals who responded, 84% were non-white, and 65% were female or non-binary. The top two resounding responses were:
Respondents also reported other top retention initiatives including:
The overwhelming theme, however, revolved around the need to feel like a company is sincerely committed to its employees’ financial and career growth. And companies can implement many new practices to ensure career growth is fairly applied to the entire workforce.
Wherever you sit in an organization, there are immediate steps you can take to ensure promotions and pay increases are transparent and equitable, and that the overall culture values the contribution of all individuals.
#1 Revamp company infrastructure to prioritize inclusivity.
#2 Create salary bands that meet or exceed industry standards.
#3 Ensure there is clear and transparent career pathing.
#4 Think about benefits more inclusively.
Ensuring fair and transparent pay and growth opportunities benefits every single employee. Luckily, targeted, intentional changes to create a true meritocracy are achievable and will go a long way to supporting individuals from all backgrounds as you work to maintain top talent.
EVENT
Join Me at the CS100 Summit Conference Sept. 27-29
There’s 11 seats left for the CS100 Summit in Sundance, UT. Come check out Silicon Slopes and meet top Success thought leaders like Maranda Dziekonski, Eugene Lee, Aaron Thompson, Kristi Faltorusso, and more.
DIVERSITY
Why CS Has the Best Opportunity to Hire, Retain, and Promote More Black Leaders
Customer Success, especially at the leadership level, is predominantly White. This piece wasn’t written to highlight a problem, though. We wrote it in partnership with the CS community last year to share tactics that will result in better hiring, retaining, and promoting Black team members.
HIRING
Good Interviewer/Bad Interviewer
”Good interviewers understand that interviewing is as much about identifying talent as it is about attracting talent — they’re talent scouts and talent magnets.” Here’s a useful post for anyone who is part of the interviewing process (or wants to be). Because above all else, getting the right people to join your company and team is the most important thing you can do.
INDUSTRY
Customer Success in the Age of Uncertainty
In this piece, Peter Armaly, VP of Success at ESG, shares his clear-eyed perspective on what Customer Success teams face and how they should be thinking about their situation in this economic downturn. “Your customers are still invested in what your company offers. They still need your solutions and your help. All of what you need is in your control. You just have to start building and executing so that you can prove that what you do matters.”
For this week’s newsletter issue, we asked over 10 Customer Success leaders this question: “What’s one skill every CSM needs to learn to be eligible for a Customer Success leader position?”
Here’s what they had to say.
Rod Cherkas - Strategy Consultant and Advisor to CCOs at HelloCCO
CSMs need to demonstrate an ability to prioritize. For example, in their day-to-day roles, they need to prioritize how they invest their time and which clients to focus on. This is a critical skill to demonstrate you are ready for a leadership role.
In this position, you will be asked to optimize results across a wide number of levers. You will need to demonstrate that you can identify and focus on the most important areas, and be willing to let go or delegate others.
Shashi Aryal - Head of Customer Success at Prelude
Effective communication—it’s as simple as that. Everyone can communicate, but not everyone can communicate effectively. Customer Success is the voice of the customer and interacts with almost every department internally.
You also have to be bold, as you’ll continually have to challenge both the customer and the company to make positive impact; whether it be to drive adoption or innovation. Everyone has different communication styles and it’s important to be able to read a room and tailor your communication style accordingly. You want to resonate with your audience in your initial meeting, not the second or third. Your first impression matters.
Daniel Rose & Angela Hooper - Leading Customer Success at Alation
A CSM needs to up-level themselves from being the hero CSM that every salesperson wants to work with. They need to establish themselves as a process and Customer Success strategist that each CSM leans on when they begin to develop account plans and adoption strategies. They should become the CS team’s go-to growth advisor.
It is one thing to win one battle, but as a CSM, you need to establish the vision to win the hearts and minds of all the go-to-market teams. This will put you on the top of the list when your organization begins to look for its next CS leader.
“A CSM needs to up-level themselves from being the hero CSM that every salesperson wants to work with.”
Sara Khafaga - Trusted Advisor, Growth Seeker, & Sales Retention Expert
Be empathetic! I learned this during my leadership role with Gartner managing a Customer Experience program across Australia and New Zealand. Empathy was the key success factor in working cross-functionally with different local and global teams, while collaborating, influencing, coaching, and managing operations across remote teams in different time zones.
Empathy is the capacity to place oneself in another's position which helps you establish and build social connections with others. Why? It improves productivity, boosts organizational growth, makes collaboration easier, brings out the best with a diverse workforce, improves reputations/personal branding, and leads to reciprocity of empathy across an organization.
Craig Wahl - Sr. VP of Customer Success at Boast.AI
Decision Making - It’s essential to have the ability and willingness to make decisions and try new things, knowing failure is part of growth. Taking action and being accountable for those actions will help grow you into a strong leader.
Curiosity - CSMs need the ability to continually ask thought-provoking questions. They need to be open to always learning more about their customers, peers, and those that report to them, which will consistently highlight areas of growth.
“It’s essential to have the ability and willingness to make decisions and try new things, knowing failure is part of growth.”
Cindy Greeratiyuth - CG Consulting
There is no ONE skill that a CSM needs to master to be eligible for a CS leadership position. Instead, there are many. Let me expand on a few crucial skills that a CSM must hone to be ready to climb the career ladder of leadership.
#1 The best CSMs are astute “Students of the Customers.” They are curious and eager to learn about their customers, the business, and how to align solutions to help customers achieve their desired outcomes and ROI.
#2 Emotional Intelligence is essential as a leader. CSMs must be able to connect, influence, and inspire the internal team and customers to achieve their respective goals. One of the ways to effectively connect, starting with your team members, is to learn the art of Radical Candor (i.e. understanding how to “care personally and challenge directly.”) If done correctly, this will enable people around you to do their best work while building trusted relationships.
#3 Skilled CSMs poised to be CS leaders often have great active listening skills. They believe in the motto “Seek to understand before you can be understood.” Active listening means listening and responding to improve mutual understanding.
“Leaders don’t have to have big titles to be great leaders.”
#4 CS leaders have diverse experience and strong business acumen. These qualities allow them to challenge the status quo in a skillful manner, have the intuition to ask the right questions, and identify the right problems to solve. I’ve found that CSMs with solid Consultative Sales, Account Management, or Consulting backgrounds are adept at this as they are trained in objection handling and navigating tough conversations with all levels, particularly at the executive levels.
#5 Another leadership skill that CSMs need to develop is critical thinking and data-driven decision-making. There will be lots of data. Depending on where your company is in its journey of data management and reporting, the best CSMs take the initiative to learn and rally the right resources to provide relevant data to aid in decision making.
High-performing leadership skills often include effective communication, the ability to influence, decisiveness, problem-solving, relationship building, and the ability to coach and/or mentor. But one thing to keep in mind is that leaders don’t have to have big titles to be great leaders. Like John Quincy Adams said, "If your actions inspire others to dream more, learn more, do more, and become more, you are a leader."
Farzad Khosravi - Sales, Growth, & Customer Experience Consulting
The one skill every CSM needs to learn to be eligible for a CS leader position is to move beyond focusing on traditional CS metrics and instead work towards departmental alignment and company goals. Too many CS leaders obsess over downstream metrics like churn, retention, and upsells. But this is overrated.
All of these metrics are determined by a whole host of decisions made months or years ago by your Sales, Marketing, and Product teams. They are multivariate problems that can't be simplified into single variate problems. True Customer Success is a collective enterprise spanning the entire company. You must identify, collaborate, and align with your entire company if you really want to impact retention, churn, and upsells.
Harsh Shah - Customer Success Manager at Woliba
The most important skill required to be a great Customer Success leader is taking ownership of process optimization. This means solving the most important problems your team, and company, face.
Within every team and organization, there can be a seemingly endless number of moving parts at any moment each with a different impact on different parties. Due to this, CS teams can struggle with lots of challenges, which decreases a team's efficiency.
"Too often, there are mountains of challenges at a company, but no one steps up to fix them."
Here’s an example. Imagine you work at a company where customers continually share issues or enhancement requests, but the team only provides temporary solutions. No one actually works to resolve the core problem. To solve this, you have to set up a core process first to gather feedback from customers. At particular events or points of their journey, you can reach out to them to gather this data, and after cleaning and filtering the data, you can work on permanent solutions.
As a part of this solution, you can grow your knowledge base by adding answers to any repetitive questions, creating educational materials, product enhancements, etc. After every such sprint, your product and support will become stronger. As a result, questions or concerns will decrease and customers will begin to seamlessly use your solution.
But too often, there are mountains of challenges at a company, but no one steps up to fix them. Too often, people say “it’s not my job.”
CSMs who are ready to take on a leadership role have a history of identifying unsolved problems, raising their hand to help solve those problems, and oftentimes see it as an opportunity to better the entire organization. This requires a problem-solving mindset and the desire to learn new techniques and tools. That’s why the best Customer Success leaders help their company grow by taking on ownership of process optimization.
Ivette Muller - Enterprise CSM at Friendbuy
I think one critical skill is empathy. To be really successful in this role, you have to be a great business partner—one that understands the customer, knows their challenges, celebrates their accomplishments, and cheers them on when it's tough.
Having experience on the client side has been invaluable as a CS leader. I've been in their shoes and now I can share my experience with them to help navigate their current situation. Sometimes the most valuable lessons come from my past mistakes! My clients appreciate that I have a common history with them and know I have their best interests at heart. My success is their success.
Gary Allum - Customer Success Manager at PlexTrac
The most important skill every CSM needs to have, especially if they want to become a leader, is humility. While, yes, it is a personality trait, I believe it is also a skill set. Let me explain—whether you’re speaking with a client, or someone who reports to you, reigning in your pride and being transparent enough to say "I don't know", can go a very long way.
Leading by example and showing humility in your dealings with employees will have a trickle-down effect and lead to your clients being treated the same way!
ECONOMY
3 Ways Tech Companies Can Thrive in an Economic Downturn
"Best practices are not convenience, they're survival." Here’s a must-read piece by TSIA’s Thomas Lah that digs into where specific departments (from Partner Channels, to Support, to Product Management, to Customer Success) can cut back and where they can find new revenue.
HIRING
Why Now’s the Perfect Time to Retool Your Hiring Process and Get Creative
In this piece, the co-founders of Peoplism argue that even amidst these economically turbulent moments in history, right now is the best time to improve your hiring processes. Their step-by-step hiring outline is great right out of the gate with the first step being "Start with the job description — Don't just copy and paste."
ONBOARDING
Duplicate This Onboarding Process and Best Practices to Create Raving Fans
The art of customer onboarding is ever-evolving. Scan Gong's tips to ensure your team is providing a customer onboarding experience designed to create raving fans.
EVENT
What the &%^! Is Customer-Led Growth?
Pulse 2022 is in a few weeks! Join me live in SF on August 18th at 2pm PDT to learn about why CLG is the only path forward in a hard economy. (Get 20% off with this code: PULSE22_SPEAKER20)
Shreesha Ramdas, 7+ year CEO of the Customer Success platform Strikedeck (acquired by Medallia in 2019), is passionate about customer onboarding.
We sat down with him recently to get a better understanding of how he thinks companies can elevate their onboarding experience to the next level. This newsletter includes an excerpt from our interview with Shreesha.
CHRIS: Should onboarding be treated separately from the rest of the customer journey?
SHREESHA: I believe it should be treated as separate because of the immense impact that onboarding has on the customer and the rest of the phases of the customer journey.
If you are not onboarded well, the chances are zero that you will have good adoption. Onboarding is where first impressions are formed, so your customer will assume that their experience during onboarding is a reflection of the experience they’ll have as a customer of your company.
Onboarding sets the tone of the relationship, so it's incredibly important during this phase to convince a customer that they did the right thing by buying your product.
Even when your product has flaws, if you onboard customers well, and if you get them to understand how they can get the most value from the product, they may overlook the flaws. That's the reason why you have to pay very special attention to onboarding.
CHRIS: React to this statement—Time To Value doesn't matter.
SHREESHA: I'm on the middle here because value is subjective. Having said that, you need to measure the benefits customers are getting from the product or service as a part of the onboarding journey.
I like the ‘aha’ metric better than TTV. The ‘aha’ metric is when a customer finally understands how a product serves them and you can measure it by looking at a customer’s usage behavior. Before ‘aha’ their usage will be unpredictable. But once they figure out how to use and leverage your product, you will see a consistent, predictable behavior and frequency of use.
I'm also a big fan of having a uniform measure by looking at the time it takes for the customer to use a particular feature. Let's take email automation, like Marketo or MailChimp, for example.
You might say, ‘When my customer is able to use the email campaign with the scheduling feature, that's when I know they're completely onboarded.’ By measuring time to use a feature rather (an objective measurement), rather than the subjective TTV metric, it ensures your features are tied to benefits and that you have a uniform way of measuring milestones for your customers.
CHRIS: Measuring Time To Value as an average is problematic because a few customers who onboard quickly could mask customers who take much longer to onboard. Or the opposite—you could have a single customer that takes nine months to onboard, which throws off your TTV metric for all the other ones that onboard correctly.
SHREESHA: You're right. Using the mean just wouldn't work. A better measure of TTV would be frequency. This is why patterns are important. One thing is very clear—the worst punishment for a SaaS company is being condemned to being a ‘shelfware’.
(For all the confused readers out there, software used to be sold and installed via a physical CD, so ‘shelfware’ could be defined as unused CD software that has been relegated to a dusty old shelf.)
If customers are not using your product frequently, then it's as good as shelfware because you know they will give up on it.
Now if you work at an early-stage SaaS software company, then you should not care about the average or any single metric. Instead, put all of your focus on the customers who struggle to get onboarded. Because especially early on, that reason is very important.
Now, let's say you've been around for a long time and you have a deep understanding of why customers don't onboard well, then outliers actually don't matter as much. There will always be outliers or customers who for their own intrinsic reasons will not be able to use the product.
You should not care as much about those outliers because the majority of your customers will be in their own swim lane.
CHRIS: So in that case, why does Time To Value matter?
SHREESHA: What matters is that there is a predictable pattern. Basically, the TTV metric ends up being a steady-state metric, and only when that metric moves out of the boundaries of normal, should you start paying attention.
CHRIS: What's your take on the new emergence of onboarding tools?
SHREESHA: In the past, I was used to seeing numerous companies function for the different aspects of the onboarding experience. Asana managed the milestones and key dates with the customer. Google Drive was used for customer collaboration and document sharing. Customer interaction happened on Slack. And training took place via Loom videos.
But now I see a benefit in unifying all of those steps into a single place with a comprehensive onboarding tool where the 5 core areas of onboarding are covered.
The 5 core areas of onboarding include:
#1 Project management
This includes timelines, milestones, and activity reporting to track the progress of customer onboarding.
#2 Artifacts management
A repository of documents, data, and collaterals that need to be shared.
#3 Customer collaboration
Enabling real-time collaboration between the customer and vendor to ensure everyone is on the same page.
#4 Education
Planning the customer's education and training needs helps to ensure ramp-up and the transition to the adoption phase.
#5 Customer satisfaction
This includes measuring the customer's pulse on the activities completed and collecting feedback on a continual basis.
I believe that ‘well begun is a job half done’ meaning that if a customer has a good start with you, you are already halfway to your goal. People should place a separate focus on onboarding from the rest of the customer journey. That's why I'm a big advocate of using a best-in-breed, all-in-one tool to focus on elevating the onboarding experience.
CHRIS: What factors help decide the right onboarding program for your company?
SHREESHA: I’m an advocate for CS leaders evaluating their need for onboarding specialists rather than general purpose CSMs. Leaders should especially consider employing onboarding specialists if their product requires a highly technical integration process or if onboarding is typically very time-consuming.
The benefit of having onboarding specialists is that they understand the product implementation process really well, they’re meticulously data-oriented, and they’re experts at deploying specific onboarding dates, documents, and deliverables that customers need to meet.
CHRIS: What tips would you like to share with folks about improving the Sales to CS handoff?
SHREESHA: There are a lot of opinions on the internet about what constitutes as the best Sales <> CS handoff. But the point I would like to emphasize is the importance of Sales passing on two things to CS teams during the handoff.
#1 Attributes of stakeholders and influencers.
Once a prospect buys a product, Sales usually has had ample time to become familiar with the buyers’ needs, wants, environment, and style of communication. Unfortunately, it’s rare when a salesperson passes along intricate persona details to the CS team.
Maybe a customer is meticulous about the details, or likes responses to come back within two hours, or is hardcore when it comes to negotiation. Those kinds of attributes, if passed to CS, will save CSMs an incredible amount of time. Otherwise, CSMs tend to spend three to four months getting to know customers better when the knowledge was held all along by the salesperson.
#2 Company dynamics at play.
What I mean by that is, what is the culture of the organization that purchased your product? Are they fast in decision-making? Are they slow? For all the important decisions, do they look up to the CIO? Or someone else? Does the IT organization come into the picture every time you have to talk about integrating with another system?
Again, if Sales can document and pass those details on to the CS team, it’ll make their job much easier and allows the CS team to provide a better experience right from the start of the customer relationship.
—
Connect with Shreesha on LinkedIn.
PROCESS
Deliberately Underselling as Sales Strategy
Tomasz Tunguz tells “a tale of two software sales processes”—1) overselling by accident, and 2) deliberately underselling. You can guess which leads to “better unit economics, healthier customer relationships, and more expansion.”
LEADERSHIP
What to Do When Your Feedback Doesn’t Land
Here’s leadership coach, Lara Hogan, on how to best handle the situation where you’re unsure of whether a direct report has internalized your feedback or plans to make any changes. She outlines some useful steps to take and shares this good reminder: “after you’ve made a statement or asked a question, be sure to create a long pause and not say anything at all. This will give your teammate time to process and respond.”
CUSTOMER EXPERIENCE
Customers Hate These 3 Things (And How to Avoid Them)
In this post, Lincoln Murphy takes a deeper look at the 3 things most despised by customers:
CUSTOMER-LED GROWTH
Measure Value to Customers
Check out the chart below. Most of us agree that we must maximize value delivered to customers, but if we're being honest, we're barely scratching the surface. Where is your company now and where do you need to be in 12 months?
If you read any recent article about creating a great onboarding experience for customers, you will undoubtedly hear about the importance of measuring Time To Value (TTV).
Measuring & reporting TTV is a status quo activity in Customer Success, and once something is a status quo, you know that ‘nuffsaid will question it!
In this week’s newsletter issue, we’re highlighting a variety of opinions from around the Customer Success space on the topic of whether TTV is just a vanity metric or gives us a valuable signal to track.
The following excerpt was copied from my recent LinkedIn post about TTV.
"Time to value" doesn't matter.
Hear me out. When a customer doesn't adopt your product right away it's probably because:
Time to implement is NOT the problem. It's a problem with Ideal Customer Profile (ICP), customer maturity, buy in, etc.
Instead, here's what you could measure that will actually impact your company:
Count the # of customers and contract value that didn't adopt within XX days.
And throw out the time to value number which doesn't help you actually understand why customers don't adopt the product.
The following content was copied from Ed Power’s LinkedIn post about his upcoming course on “Data-Driven Decision Making for CS”.
What we believe is true isn’t always.
I had assumed, like most working in Customer Success, that faster Time-to-Value would always produce lower churn. It’s intuitively obvious.
But data from one of my clients surprisingly said the opposite. While obtaining initial value was indeed predictive of renewals (increasing the odds by a factor of 5), the TIME it took for their customers to achieve it wasn’t. In fact, customers canceling actually met their goals a little sooner, on average, than those who renewed.
Why wasn’t time a factor? It’s unclear, but the finding raised interesting questions. Further study is warranted.
The lesson? Sometimes the truth is counter-intuitive. Testing your assumptions by analyzing data can lead to new insights.
Follow Monique on LinkedIn.
Chris Hicken posted on LinkedIn last week on the subject of why Time to Value (TTV) doesn't matter — it struck a chord with me because I have experienced some of the very things that Chris provoked us to think about.
He mentioned reasons why a product or service wouldn't be adopted immediately by a customer. My response was related to the TTV metric and how it would or would not influence adoption. I high-fived his thought by agreeing that TTV doesn’t matter when:
Now I'm responding from an individual contributor's point of view. Put yourself in my shoes for a second. Say I'm responsible for retaining and managing the implementation and adoption of the company's 1st ever major product purchase. When there's no champion or desire to promote success, it's insane. If you don't have buy-in from customers you sold the product to and no ownership for the lack of internal ICP vetting, you’ve got a major problem.
I don't believe that Sales is solely to blame, though that's where a CSM would most likely take the baton. Conversations between Sales and CS about TTV and ICP are imperative to have, but again, TTV doesn't matter if your customer didn't see the value before you even got started.
The following content was copied from Niclas’ recent LinkedIn post.
Time to value (TTV) is a very powerful metric. But it can also be a vanity metric if used incorrectly.
The reason why it’s often used incorrectly is that the definition of customer value, along with how value is being verified with customers, is not including customer voice - at all.
Customer value is rarely (never):
→ The tool has been activated/implemented
→ The customer got their user(s) setup
→ The customer logged in to the tool
→ The customer used [Feature_X]
Real customer value needs to be tied to real customer outcomes.
To verify these, a company must not just survey customers every now and then, but establish a seamless dialogue with them - throughout the entire customer journey.
After all, what value looks like the first 1-3 months of a partnership is usually very different from what value looks like after 12+ months of working together.
The following excerpt was copied from Arrows’ “Happy Customers Newsletter”.
Why Time To Value (TTV) Can Be a Deadly Onboarding Metric
Most onboarding teams measure their success based on the average Time To Value (TTV) of their customers. Some use onboarding completions. A handful explore the relationship between onboarding and specific product adoption metrics. Few however take into account this uncomfortable reality.
Your onboarding might fail before customers reach the average for any of those metrics.
Here’s the problem with using any simple measure of TTV, onboarding completion percentage, or time to adoption.
You could very well be solving the wrong problems and spending your time in the wrong place by looking at the average Time To Value. TTV is like trying to improve your lap time on a racetrack without knowing if you need to go faster in the corners or get a whole new car entirely.
For TTV to be actionable, you need to know how quickly different customers are making progress towards your definition of value. You can’t wait until months down the line — nor a tenth of that time. In onboarding, momentum is king.
Here’s the secret: Know the actual time it takes customers to complete each step on their journey through onboarding. Only then can you identify the blockers and strategically intervene at the right moment to improve your metrics. To do this you need a granular cohort based metric in place of TTV.
Why granular? Because understanding which specific steps in the journey are blocking and how blocking they are relative to others is the best way to prioritize effort.
Why cohort based? Because looking at onboarding performance by cohort allows us to establish a baseline and track our impact on that baseline over time. We can also create cohorts based on different parameters to deepen our understanding.
Cohort based measurement can do a lot for your onboarding. On the surface your new metric might look similar to TTV when looking at the aggregate data. But unlike TTV you can tailor it to explore questions about onboarding performance specific to your business.
A granular cohort metric lets you ask (and answer!) thorny cause-and-effect questions, about your onboarding like:
Follow Jan on LinkedIn.
Time to Value (TTV) is an important metric because it is the one your customer uses to evaluate your company and your product.
They may not have expressed it or shared their expectations with you. That will not stop them from judging your company and product.
Many companies confuse their customers’ goals with their own and assume that a customer perceives value at certain milestones. Those companies may assume that by communicating to the customer that they have achieved the company’s defined value milestone, it will convince them that they have received value.
Instead, to ensure that you are aligned with your customers’ expectations of value, discuss their goals that they expressed during the Sales process at your kickoff meeting.
When you follow up with the executive stakeholders, update them on the progress and any challenges to achieving their goals and expected value.
Next Steps:
Time to Value is probably not the most important metric to share with your board. Time To Value will not be the only indicator of an at risk or successful account.
But—if you assume that the customer has adopted your definition of Time To Value, or if you assume that the customer is not judging your company and your product based on their perception of value, you are exposing yourself to risk that could be easily avoided.
INDUSTRY
Your Guide to Growth Amid Uncertainty
“In the old world of… just a few months ago… software companies had plentiful access to cheap capital and were seeing extremely strong demand for their products [...] Well, things have changed.” In this piece Kyle Poyar, Partner at OpenView, shares 7 expert tips every leader should consider in the current climate.
VOICE OF CUSTOMER
Box’s Jeff Justice Williams on Building a VOC Program at Scale
If you haven’t heard, we’re running a podcast series focusing on how companies can mature their Voice of the Customer programs. In our latest episode, I sat down with Jeff Justice Williams, the Sr. Executive Director of Enterprise CS at Box, to learn about how VOC should operate at scale.
WISDOM
103 Bits of Advice I Wish I Had Known
Here’s a list of learnings from legendary founding executive editor of Wired magazine, Kevin Kelly. It’s an interesting 5 minute scan.
EVENT
Customer-Led Growth: From Buzzword to a Blossoming Business Strategy
I’m joining Lauren Costella, VP of CS for GoodTime, and Mark Pecoraro, CCO at Owl, on June 23rd for a deep dive conversation about Customer-Led Growth and why it’s a business strategy that’s here to stay.
Final Note
Join me and countless other Customer Success super fans at this year’s Gainsight Pulse Conference where I’ll be presenting “Customer-Led Growth: Why I should give a #&^%”.
Discounted tickets are still available!
When Nick Chang joined Palo Alto Networks in September 2021 as Global Head of Network Security CS, he saw a fast-moving company with an expanding employee base and growing product complexity.
Nick responded by building a highly-sophisticated Customer Success Enablement program which we’ll review in this newsletter issue including:
I’m tied to two facets of enablement at my company.
The Global Enablement & Training team (90 people):
Customer Success Employee Enablement Lead (1 person):
Two notes:
1) I see Enablement and training as two different things. If training is like learning how to turn the steering wheel of a car, Enablement is knowing how to drive from A to B.
2) At Palo Alto Networks, we chose to keep CS Ops and Enablement separate. We made this decision because it was important to create a distinct line between the responsibilities of CS Ops (like financials & analytics) and Enablement (the practical application of training).
There are five main qualities we wanted to be included in our CS Enablement program at Palo Alto Networks.
“Historically, Enablement has been about, ‘Hey, we're going to get together once a year, spend a week in class, and then run away.’ This never works.”
“CS Enablement means ensuring that each person at Palo Alto Networks feels that they are not only just doing a job but that they are on a career path that they can follow to improve themselves personally and professionally.”
Every CS employee at our company follows an Enablement framework that consists of seven universal CS knowledge areas they need to be skilled in.
1) Business-led outcome-driven approach
This capability covers how to translate business requirements and pain points in to a set of use cases that are measurable by the customer.
2) Industry and technology awareness
Our world is cybersecurity. To be trusted advisors to our customers, CSMs have to be in the know about what is occurring around the cybersecurity space.
3) Product knowledge
CSMs & CSEs need to be thoroughly trained on the products and solutions we sell. The more educated our teams are, the more skilled they are at relaying that knowledge to customers. And when customers have a deep understanding of our platform of products, it leads to a higher likelihood of adoption, more use cases, and better chances of renewal, expansion, cross-sell, and upsell opportunities.
4) Customer Surround
At our company, “Customer Surround” entails how CS team members can work effectively with other parts of the organization including Sales, Systems Engineering, Marketing, Product Management, Engineering, Partners, etc.
5) Customer behavior analytics
We want our CS team to have the ability to look at customer product usage data and tell a story based on those numbers. They should be able to determine customer use cases based on product usage and determine the most efficient approach to accelerate their adoption and value
6) Account management skills
It’s a requirement that every CSM has a handle on baseline account management skills. The best CSMs know how to listen, work through escalations, defuse situations, be a trusted advisor, etc.
7) Customer journey orchestration
This skill is about CSMs understanding every activity that occurs along the customer journey from onboarding, adoption, renewals, expansions, success planning, etc.
Beyond this universal CS Enablement program, as described above, we wanted to ensure each CSM and CSE were provided with a custom blueprint for success at Palo Alto Networks.
To launch this blueprint initiative, our Enablement team member meets with every key member of my delivery staff to ensure managers in the field created an employee-tailored Enablement plan for all of their team members. All CSMs/CSEs have different needs. At our company, those needs are evaluated between the manager and the employee, and then together they create a customized learning progress plan.
We call it our Customer Success Academy and like to think of it as a university. We provide the content, courses, and training, while each employee follows a certain ‘major’ (or career path). CS team members can take certain courses, become a mentor, do technical labs, teach classes, and so much more to level up personally and professionally.
—
To learn more about building a world-class Customer Success team, connect with Nick Chang on LinkedIn.
CUSTOMER-LED GROWTH
A CS Leader's Impact on Company Valuation
Recently on the Success League Radio, I spoke about how CS leaders can use the Rule of 40 to better understand their impact on valuation. In this piece, Bill Cushard, GM of Partner & Commercial Success at Dragonboat, breaks down this metric even further. I love his final thought. If every CS leader presented their strategy in terms of the valuation impact they'll have on the business, we'd see way more CS departments with increased funding (compared to what we see most of the time today which is the CFO rally cry of "make CS more efficient".)
REMOTE WORK
Returning to the Office? Not So Fast.
Gong ran a study at the beginning of this year with 300+ Sales reps about the amount of time they’ve spent in an office over the past six months and their preferences moving forward. I found the following data enlightening:
BUSINESS ANALYSIS
The Impact of Contract Term on Customer Success
Fellow Customer-Led Growth champion, Dave Jackson, digs into how ARR vs. MRR impacts the Customer Success delivery model—a topic not talked about often enough.
1:1 MEETINGS
As a Manager, I Always Ask My Team This Unique Question
Anna Burgess Yang, former 15-year Director of CS/Product Manager at Suntell, shares the most constructive question she asks during 1:1s — “The generic question ‘How are things going?’ doesn’t always elicit forthright responses. Some employees would gloss over their struggles or respond in the same generic fashion with ‘Things are fine.’ Asking ‘Has anything weird come up?’ gave me so many insights.”
LEADERSHIP
7 Tips for a New CCO
This quick read is tailored to the CCO role, but the 7 pieces of advice Rod Cherkas shares in this article apply to most people kicking off a new role in Customer Success leadership. I suggested adding in an 8th tip: Define how you'll collect and distribute customer data to the executive team and Board. At a minimum, ask customers how much value they receive from the product.
Ethan Beute has spent the last three years hosting The Customer Experience Podcast and the last ten years of his career at BombBomb helping people to implement simple, personal videos for clearer communication, human connection, and higher conversion.
These experiences helped shape the ideas presented in his new book, co-authored with Stephen Pacinelli, called Human-Centered Communication: A Business Case Against Digital Pollution. In this newsletter, we’re highlighting an excerpt from the book featuring Winning by Design founder Jacco van der Kooij and the bow tie funnel he created.
This excerpt focuses on why we should cast aside the traditional funnel where the final step and goal is a customer transaction. Ethan and Jacco propose that we replace it with the bow tie framework which allows us to “devote our effort and expense to what matters most: creating recurring impact for people.”
You’re likely familiar with the traditional sales and marketing funnel like in the figure below. The language changes depending on whose funnel it is, but it typically follows the AIDA structure (Awareness, Interest, Desire, Action). The final step, Action, is a purchase, commitment, sale, conversion, or another form of transaction.
Its flaws have been identified before, but we’ll do so quickly again here. And we’ll start with the fact that the physics are all wrong; people don’t get into the top of your funnel and just slide down the side into a purchase. More importantly, the goal, perspective, and mindset are broken. Among the potential costs of adhering to its flawed simplicity are digital pollution, lost opportunities, transactional culture, and burned reputation.
The Goal Is Broken
The goal of the traditional funnel is to close the sale. However, this transaction is the goal line only in a transactional culture. A funnel that ends with a purchase says: We got what we wanted. But most businesses are relationship-based. The purchase isn’t the end of a process; it’s the start of a long-term relationship. Tacking on the word “Retention” or “Advocacy” underneath “Action” or “Purchase” is a move in the right direction but doesn’t get us where we need to be.
In a subscription model, a purchase may not even be profitable for you. Instead, you must renew or upgrade a subscription over many months to reach profitability. Even if you’re not in a subscription-based business, you rely on recurring revenue in the form of repeat purchasing, expanded purchasing, and customer referrals. No matter the model, a healthy business grows with and through current customers, not by creating a costly parade of one-time transactions. You want to grow the lifetime value of each customer, not just close deals.
The Perspective Is Broken
The traditional funnel is created from the seller’s perspective. When it gets operationalized, we tally up the people and potential revenue at each stage, track conversion rates by stage, measure pace through each stage, and so on. Its purpose is accurate revenue forecasting. Its bias is toward getting the deal closed, not on developing the deal. For example, in five common stages of a sales funnel (contacted, qualified, demo, proposal, closed), four stages are dedicated to getting the deal done, but only one (qualified) is dedicated to discovery. And that’s assuming qualification comes through a curiosity-based conversation. Regardless, the seller’s needs and wants overshadow the buyer’s.
The Mindset Is Broken
In Jacco’s example earlier in the chapter, our default plan to double revenue from $80,000 to $160,000 is to double the top of the funnel. Double the calls. Double the emails. Double the connection requests. Double everything. This volume-based approach is driven by an alpha culture demanding that people and machines crank out activities, rely on size and force, and ignore counter impacts.
“That whole mindset is deeply ingrained into the typical sales culture,” observes Jacco. But “there is scientific proof that shows that twice the volume does not bring in twice the results.”
To illustrate, Jacco shares the story of the elusive four-minute mile. For years, it was thought to be an unbreakable barrier for runners. Most contenders had the mindset of running more and more, training more miles into their bodies. A doctor working in a hospital lab, Roger Bannister didn’t have time for volume. Instead, he focused on interval training—shorter bursts to increase speed. One of his favorite track sessions consisted of three 1.5-mile runs at a swift pace.
“What he learned is that running less made him go faster,” explains Jacco. He was the first to break the four-minute mile barrier in 1954.
Bannister’s counterintuitive approach opened the door. Though three times as many humans have summited Mount Everest than have run a sub-four-minute mile (approximately 5,000 versus fewer than 1,500), most major college track teams now have a sub-four-minute miler.
This story sets up the third of three of nonnegotiable principles of sales that Jacco shares with us. Each principle demands a better funnel with better processes and better communication:
Each of these principles helps fix the broken funnel.
A better funnel is The Bow Tie Funnel, which Steve and I learned from Jacco’s books and videos. As you can see in the figure below, it’s shaped like a bow tie. This funnel views the transaction, purchase, or commitment not as the end, but as the start of an ongoing impact journey. In this way, it involves your entire organization and starts from a more customer-centric perspective.
As we co-create with our customers their journey across the funnel into a positive growth loop, we work to deliver emotional impact (how it benefi ts the individual) and rational impact (how it benefits their organization). Impacts are problems solved, opportunities gained, and value delivered. The more we understand our customers and build trusting relationships with them, the more impact we can deliver. The delivery of impact earns us the right to revenue.
For a quick orientation to The Bow Tie Funnel, the three main stages are Acquisition, Commitment, and Expansion.
On the Acquisition side, which is typically the domain of marketing and sales, prospective customers become aware of their problem or opportunity, get educated on solutions, and select one of the providers competing for their business.
On that path, they’re qualified by marketing (MQL) and then by sales (SQL), who work to earn a commitment. When customers Commit, they’re onboarded into the product or service and guided to initial impact. Helping them achieve that desired outcome generates monthly recurring revenue (MRR). As we continue to provide impact for customers, they grow and expand with us, increasing lifetime value (LTV) over a long-term relationship.
Even if you don’t use this language to describe your business, you can use The Bow Tie Funnel. No matter the size of your team or your customer base, this model applies. Whatever your product or service may be, you can view relationship building, value delivery, and revenue generation through this lens.
The Goal Is Better
With this funnel, the sale isn’t the goal—customer impact is. It doesn’t end with a purchase; it looks to an ongoing growth loop. It is inherently customer centric.
This bears out Jacco’s first principle: Recurring revenue is a result of recurring impact.
The Perspective Is Better
The Bow Tie Funnel takes the customer’s perspective. Their benefit (impact) is a necessary precursor to our benefit (revenue). It demands we stop selling and start helping. It demands we think first about their needs, not our own.
This reinforces his second principle: People love to buy, but they don’t like to be sold to.
The Mindset Is Better
The path to doubling revenue isn’t to double the top of the funnel, it’s to create more impact for your customers.
Math fact: 10% to the power of seven is 1.8. Therefore, creating a 10% improvement in each of the seven main stages across The Bow Tie Funnel will nearly double revenue. Improving a conversion rate from 4.7% to 5.17% is a 10% improvement. An incremental, human-first approach builds trust, minimizes counter impacts, and grows revenue.
This exemplifies the third principle he shares with us: The impact of marginal gain is better than volume.
“What we’re looking for now is authenticity,” Jacco declares. “I believe that ultimately, this is what we want. People want transparency.”
For too long, we’ve been trained to create the appearance of perfection. The shine and gloss. The impression and illusion. The effort and expense. The call for authenticity is a call for substance over style.
When we drop the facade, we can devote our effort and expense to what matters most: creating recurring impact for people.
Our sales calls and our recruiting interviews start long before we ever meet inperson. Our reputations precede us now more than ever. Our first impression is often made virtually. Word of mouth has been with us for millennia, but its effects are wider and deeper digitally. Now is the time to get intentional about authenticity, transparency, and human centricity.
EVENT
Gainsight’s Pulse Conference
“Venus and Serena. Jordan and Nike. Peter Parker and MJ. Some pairs are just easy to root for. Our favorite? Pulse and You.” Join me and thousands of other Customer Success leaders at Moscone Center for Gainsight’s Pulse Conference on August 17-18.
HIRING
"Take Control of Your Desk" And Other Career Tips
Former Sr. Dir. of Talent Acquisition for Splunk, Shreya Iyer, shares an abundance of career advice including a great section for hiring managers on how to find people looking to grow in their career (and then how to support them along that path). She says, “I think it’s a mistake when people assume job-hopping is a red flag. It’s a yellow flag — you need to dig in deeper. Are they job-hopping because their role and their career is growing, or are they job-hopping because of a lack of focus?”
FRAMEWORK
The Three-Legged Stool
Here’s Rav Dhaliwal with a piece on why Customer Success needs to serve as the third leg on a stool to close the buyer-deployer gap by conducting “deployment discovery” during the sales cycle.
OPINION
Why NRR is Probably The Wrong Core Metric for Your CS Team
Jason Lemkin, founder of SaaStr, says CSMs are the laziest Individual Contributors. What say you?
TheySaid recommends questions, delivers via your existing channels, engages your audience, and summarizes results through AI surveys and interviews.
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