We could do it _______
In the meeting, we could focus on ________
[something either wildly different or adding to the existing options]
A couple years ago I read an article called Shields Down describing how people don’t quit the day they resign, they resigned their post a long time ago. It’s when they became vulnerable, when their shields went down that they were open to something new, something different—perhaps where the grass appeared greener.
I was caught juxtaposing that against Customer Success. The concept of Shields Down is true with customers, too. Our customers don’t quit the day they call to cancel, they already decided they were done a long, long time ago.
It’s sometimes really hard to know when someone may be canceling. Heck, they may even be in the product every single day—but that may be just to export all the data. We tend to forget the customer’s story in which:
- They weren’t using your product
- Found your product/service
- Got excited
- Dove in—sort of
- Got lost, confused, or delayed
- Slowed toward ambivalence
- Told themselves they would work on it next week, and
- Finally decided to cut the cord
Let’s abbreviate that to four steps:
- Found your product or service
- Got excited
- Didn’t engage
Why? Because we don’t see where they stopped caring or became apathetic. Think about this: our CRM tell us when we get a new lead, when we’ve determined them as a qualified lead, when we have great conversations to assign a probability of closing, expected close date, sign up date, and onboarding period. But really we lack the apathy-meter. This is for two reasons, 1) there’s much less money in this process than sales and 2) it’s really, really, really difficult to measure this stuff.
The former is changing quickly. So is the second, but to a lesser degree (I invite challenges and arguments. I would love to hear your thoughts!). See, there are health scores. There are ways to quantitatively measure how much a person is using your SaaS product. Heck, that’s often a proxy for delight. Many times these approaches give us a slight early warning system on someone about to pull the ripcord. However, all of those fail because we’re looking at the psychology of people. People make decisions and many times what looks one way for one person will be similar to another. Even if we can get to the point of solving 80-90% of this for our customers there is still one unaddressed piece.
If I want to keep people on my team, I must think about what to do today to ensure they want to stay here. The decisions teammates make today are not what I may have said earlier this morning or yesterday afternoon, but a cumulation of things from months ago, weeks ago, days ago, and yesterday.
This is cultivation. I love metaphors so let us look through a farmer’s lens.
Like a garden, vineyard, or orchard, we perform actions today not to pick fruit tomorrow, but in an entirely different season. Two years ago I planted two apple trees, two peach trees, and a pomegranate tree. I may get fruit next year. But I expect five full years of growing, nurturing, water, and feeding (compost & fertilizing) before I get a return on my investment. What if I didn’t water a tree today? It would probably survive. At least, for now. But when I forget it for a few weeks (let’s say I was “busy”) I may find it either dead or severely drought-inflicted. There’s a chance I can revive it and bring it back to life, but it’ll still be scared and stunted. I’ll have to be extra careful for the next while to make sure it has plenty of water, and that it hasn’t been afflicted by disease or attacked by vermin or insects. Since it’s especially weak, it’s quite prone to attacks. In effect, shields down.
There are many parallels between cultivating plants and cultivating teammates. But one nice thing about plants and trees is that while they may wilt, they can’t exactly get up and leave. But people can. So whether you’re leading a team or in a team, keep in mind that the actions of today often bear fruit somewhere down the road. Sure, something radical may cause someone to leave today, but people have some level of patience and forgiveness. But after a while, they’ll say “enough is enough.”
Some of our favorite ways of learning about our teammates are through are one-on-ones, performance reviews, and making sure we have an environment that promotes communication, sharing, aligned goals, and a desire and ability to achieve and tackle challenges. No matter what: listen. And not the fake listen, but truly listen—we know when you’re faking it. You’re only fooling yourself.
I hope we can watch our own shields, but also remember to make time to ask about our teammates’ shields. Because otherwise we will be surprised when we get that resignation letter—from the customer or teammate—and neither is fun.
Anti-discounts, Bad Fit Customers, and Not Doing Whatever It Takes to Retain Them
Something in the product goes haywire for the customer
They’re “going to cancel” because we don’t have such and such feature
We don’t have X feature and “they really really want it”
We don’t have X feature yet
Our competitor has a feature we don’t have, so we need to consider discounting our pricing
Devaluing of our product
Lost ARR (Annual Recurring Revenue)
Enabling the team to kick the metaphorical can down the road
Converting customers into missing feature bounty hunters
If we’re a pushover here, do we draw the line anywhere?
Not being proud of our product
Budgeting and forecasting
“We will build such and such feature by _____”
They’re a bad fit customer / Solving for the wrong problem
Does the discount hit the company, or the sales rep who sold them?
Roadmap based on discounts
I often forget this is a legitimate question, but all I need to do is talk to people entering SaaS and this is completely revolutionary. This approach does not always work in a non-subscription economy. However, in a subscription economy it’s vital. So here goes.
Most everyone understands Customer Success owns Gross Retention. But beyond that, does it own anything else? If so, why? Here are the bare minimum that seem to be agreed on across the spectrum:
- Onboarding experience
- Renewals (thus, Gross Retention)
- Cancellation/retention calls (see above)
- Some content
- Partial ownership of the Help Center
- Perhaps video production
I think we’re missing a lot here.
Sometimes Customer Success is it’s own division or department, sometimes it’s under Marketing, Sales, or Product…But usually it is its own. It’s not just a subteam. The resources and focus leadership gives to Customers Success is directly correlated to the impact to your bottom line. It’s an investment.
Next, Gross Retention and Net Retention are inexplicably connected at the hip. The happiest of customers are the ones upgrading, adding seats, and sending you referrals. You want to turn customers into fans and fans into raving fans.
Ask yourself who interacts the most with your customers and has the best opportunity to upgrade a happy customer? The focus on the renewal, while necessary, should be the bare minimum. Great Customer Success teams are not only playing defense trying to assist customers. They have direct insights to customer needs and are the number one resource to share upgrades or new products (free or paid). They allow your company to add offense beyond a sales team.
If CSMs are only compensated on the renewal, they won’t help the Sales team or focus on expansion because there’s no incentive. Some will help, and others will try. However, as soon as we inevitably get slammed with tasks, the things we want to do will often fall to the side. Instead, ensure these are included in your CSM job description and comp package.
A CSM’s role is to grow the customer, not keep them stagnant. A CSM should heavily influence:
- Renewal (Gross Retention)
- Expansion (Net Retention)
- Referral (Net Retention? Or as a CS qualified lead?)
So using these three metrics as guiding principles, here’s a better list of what Customer Success should/could own and be responsible for:
- Onboarding experience
- Renewals/ongoing relationship (Gross Retention)
- Cancellation/retention calls (again, Gross Retention)
- Customer content
- Voice of the customer
- Optional: Average Revenue Per User (ARPU)
For one, because we should center our roles around what the customer needs. The customer doesn’t want to talk to one person about renewing, another about expanding, and another about product enhancements. We hate being bounced around with our vendors, why should we treat our customers any different? Let’s own their question and get them their solution—whether a downgrade, upgrade, answer, or creative method of using our software.
Second, because it’s aligning CS with the entire company.
Sales and CS are often at odds with one another. Why? Because their incentives are misaligned. Make them both responsible for account expansion and you may find they want to talk to each other instead of avoiding each other like the plague. Churn already creates enough friction. No need to make it worse. They should be aligned on Net Retention. CS is as responsible for net retention as Sales, if not more.
How often does a customer call their sales rep 2 years later to upgrade? Okay, maybe sometimes. Most of the time they’re going to reach out to Support or their CSM for the upgrade. When their CSM is reaching out to them to check in on their renewal, that’s when they’ll bring up the recently launched features. If there are no Net Retention incentives, why should the CSM bother talking about paid upgrades? It’s more time and energy than it’s worth and the CSM has a million things on their plate, just like everyone else. Align their interests to create collaboration, not conflict.
Marketing and Product
Same is true with Marketing and Product. With new product marketing and product rollouts—CSMs should want to share new features and upgrades. And not just the free ones. If your Marketing and/or Product team(s) are responsible for increasing user engagement in new features, tools, and apps, you better get Customer Success involved. There will be many CSMs who will do it because they care, but if you want 100% adoption across your company now and forever, you’d best align your department’s goals.
Who knows more about your product than the people you hired to help your customers use it? Whether it’s best practices, FAQs, or small tips and tricks, your CS team knows about it. Also, customers like seeing the people they speak with in videos, reading their ideas in blog posts, and talking with them at conferences. Customers build strong relationships with their CS teams and enjoy seeing their success.
Or take the onboarding experience. A trained Onboarding Manager should absolutely focus on the renewal first, but to make that renewal even surer, they need to show them the full ecosystem. First, how many times have we heard, “I wish you had ______ feature” when you already do, but it’s in a higher tier?
Second, Imagine if a CSM for Apple never tried to upsell a customer who only has an iPhone. That customer is more likely to leave than if they have the iPhone, iPad, and Mac. The magic of ecosystems like Apple is that each additional device enhances the experience of all the other devices.
The reason this is important is that the onboarding experience, training calls, content we create, and Knowledge Base should all be optimized for the growth of customers, not just keeping what we have.
No matter the area (content, renewal, training call, QBR), Customer Success Management is at its best when they influence renewals, expansion, and referrals. Otherwise, the company will miss out on terrific reference customers, marketing success stories for prospective customers, and expansion. The focal point for a CS Manager is not retention, but the customer. A proper CS team has the perspective of whatever the customer wants and needs, not just one aspect (renewals).
It’s true that every department should think about the customer’s success and how they can help the customer achieve that. CSMs play a major role in quarterbacking the needs of the customer. Without this explicit ownership, dysfunction easily sets in with all of us touching our noses and saying “not it.”
CSMs are there to be the voice for the customer and be their main connection for the company. Empower them, give them incentives, let them serve the customer and they will serve you and your company. Empower them and they will strengthen your bottom line.
Masters of Scale recently interviewed Ariana Huffington. It was a fantastic episode.
Ariana made a statement about bad hiring:
I can trace back all my hiring mistakes to being tired, which has the impact not just of impairing your cognitive abilities to make the right decisions but also subconsciously of making you want to say, “Yes.” When you are running on empty, you’re overwhelmed by your to-do list. What we are doing now at Thrive, having learned from my mistakes, we have this rule that nobody should interview while tired.
This is not just a tried and true recipe for disastrous hiring outcomes, but anything and everything.
Last year my friend, Mike, gave me a brief history lesson on the Latin phrase Festina Lente which was used frequently by Caesars. It was particularly beloved by Marcus Aurelius. Festina Lente translates to “make haste slowly.”
What this should mean in our lives is that in order to go fast, you must first go slow. You can’t build an awe-inducing skyscraper without a solid foundation. Those foundations seem to take forever, but they ensure the skyscraper that we’re amazed by still stands.
There are no shortcuts to life. You need sleep, rest, rejuvenation. You can’t keep slapping together a foundation and expect it to work. You’re building up technical debt to get it done, you burn up social capital to get that thing approved, or you use your authority power with your direct reports one too many times.
You’ve likely read every blog post and article on hacks, tips, and tricks and already know all this. The difference is acting on it. I was that person. I kept speeding down the road faster and faster until the wheels started coming off. Slow down.
Our weekend is not to get ahead, allow yourself to “fall behind” so that you can be fast the next week. Make haste, slowly. Or, as Marcus Aurelius would have said it, festina lente.