In one of our favourite episodes from Season 2, joining Jonathan was Dave Jackson, author and CEO at TheCustomer.Co, a consulting organization which helps B2B SaaS CEOs build company-wide customer led growth capabilities. Let’s take a look at some of the key talking points and takeaways.
Take a look below at points that will be discussed:
THE EVOLVING WORLD OF CUSTOMER SUCCESS
Compared to many of the day-to-day efforts of an organization, customer success is relatively late to the party. It is increasingly becoming more important as businesses rely on customer experience to differentiate themselves in markets with heavy competition. Customer success is vital as the focus of it is on the customer's needs and examines how you can help them achieve their goals. It is an entity that is constantly growing, and Jonathan and Dave discuss how it is evolving and in which direction they see it heading.
Jonathan: In your leadership roles, I would imagine you've seen and you've had, I guess the exciting thing would be to see how the importance of customers has risen and continues to grow, certainly in the world of SaaS with the evolution of customer success. Like you said, you started a SaaS company before there was something known as SaaS. So how have you seen customer success evolve and where do you see it moving to, do you think?
Dave: Well, if you look at its origins, I think the phrase first came along in the late 90s. The people that probably took it to prominence were Salesforce. Salesforce was doing really well, growing well, but then they had an offsite meeting and there was an Irish man, I think it was John Murphy. He basically said, look, it's great that we're growing all this revenue, but we're actually screwing the business because we're losing it all. So we're getting all these new customers and then losing them. And that's what led Mark Benio to say, okay, we're going to create a ‘customers for life’ group. We're going to create this role called Customer Success Managers. I think they did that around the April of 2005.
So we thought, well, if Salesforce are doing it, we think customers are really important. Okay, we'll do it. So we appointed our first CSM in October 2005. And back then, it was the reason that Salesforce created it. The focus was about stopping churn. Customer success equaled preventing churn. And that's where it really started from a SaaS perspective. That evolved and it became much more of a growth vehicle. So then it started to be, well, if we get the renewal and naturally, if we're delivering success, there's an opportunity to sell more. As a SaaS CEO, you learn about things like cost of acquisition and you realize that actually selling to an existing customer is far less expensive than selling to a new customer, and there's benchmark data that proves that to be the case. It took on this focus around growth, and I think that's still where a lot of companies are. I think the better ones are starting to move in, I think, two directions.
One is there's a greater understanding now of what CS as a company-wide capability is, but there are very few companies that I see really practicing that. I think the other is because customer success is not just anymore about what you do to prevent churn and to grow revenue, I'm writing a book at the moment and the whole thesis of the book is that customer success, delivering value to customers is the core thread that runs right through any SaaS company. Understanding it as a company-wide capability, something that you build in right from the start and you maintain all through the life of the company is one thing. So I think the next evolution or the current evolution of customer success is it's a company-wide capability and it's actually what you build the product around.
EXAMINING THE ORGANIZATIONAL STRUCTURE
Having a well thought out organizational structure lays the foundations for efficient business practice. It helps organizations implement effective decision-making processes and lets everyone in the organization know what they are responsible for. Get this wrong, and organizational silos are common, where information is not properly communicated throughout the business.
Jonathan: And so as you think about this, going back to this idea of we want to design our organization, we want to get rid of this silo thinking, this let's create a department for everything. Is part of the next book going to be about this?
Dave: Yeah, the next book is the working title, and it is a working title, is customer success is B2B SaaS. And the whole concept of it is this, how do you build this company-wide capability? A lot of the book, by the way, I have to say, is based on mistakes I've made. Quite often is where you get some really good lessons from. It is losing out on a lot of money because we've got lines in our PNL called customer support and customer success and services, which when I was talking to Dave Goldberg, the Chief Executive, said, I understand why they're there. Recognize what impact they're having on your PNL and therefore your growth and therefore your valuation. I don't want to pay the same amount of money for your services revenue as I do for your product revenue because it's not scalable. I understand that you need support and success, but if you look at what it looks like in our PNL, very different to what it looks like in your PNL in terms of scale. Why? Because we've thought about what are the people that we serve, what their needs are, and how we can do more of that in the product.
The other thing is, you then just start to think that if you've got this red thread, you've got to start with understanding what that red thread looks like. I think there are probably four or five lessons around organization. One is there are probably four fundamental frameworks you've got to figure out. One is, what are the characteristics of your chosen customers? Target companies are a piece of it, the most important thing are the roles, the individuals that you serve. What are their jobs to be done? What are their challenges? What do they stay awake at night? How are they measured? What does good look like in their eyes? We do far too little in building a deep understanding of the needs of the individuals we serve.
I think the second is you have to start to build your organization from the outside in. Back in, I think it's about 2010, we did an exercise at ClickTools. We got the head of marketing, sales, CS, product, me, a couple of other people, and some people out of their teams. We basically said if we were to design an experience for our customers which met their needs, what would it look like?
We built at a very high level, a single, fire stroke customer journey, end-to-end. Every step of that journey was written in words and phrases that the customer said. Did we add on to that what we needed to do to help them achieve that? Yeah. We figured out what their challenges were every part of this journey.
THE REAL VALUE DRIVER OF BUSINESS
Some businesses ultimately fail to get off the ground because they can't spot what actually drives the value. Once an organization understands the meaning of value and how they can create it, then a more measured approach can be taken, with all teams focused on the same goal. Without this communication then each team could be pulling in a different direction with no actual progress being made. Dave is here to dispel some myths about driving value.
Jonathan: Tell us more about this idea of customer value as the foundation for the design of all elements of a B2C SaaS company.
Dave: When you were talking about it, Jonathan, and you talk about customer value, you said they rather than it. Why did you say that? Do you know why you said that?
Jonathan: Yeah, because it's people, isn't it? It's humans. People who work in companies.
Dave: And I think that's one of the big mistakes we make, and actually why sometimes value gets overcomplicated. Because we think of the customer as a singular thing. The book I'm writing at the moment is, I've got one of the chapters headings, working title, business success is not about customers, it's about people. So if you want to understand value, it's not about understanding value from a company perspective. People bat on about ROI. I would suspect that 95% of people that our types of companies deal with don't give a toss about ROI. A few do. Most of them, all they want to do is they want to do their job better. They want to be more successful. They want to be easier. They want to achieve their goals in less time at a better level. I think until we start to think about value to individuals, we'll lose sight of what customer success is because it's about value. What you want out of products and services that you use, that the customers have used is very different to what your CSMs want out of it very different to what your people and product want out of it.
We've got to get away from this concept of a singular outcome. It's not about singular outcome. It's about what's right for Jonathan. It's about what's right for David at that point in time. Our understanding the key roles that we are serving and the context in which they're currently operating drives value. What we do effectively say rather than aim for this big thing called the outcome, let's atomise it. Let's bring it down to elemental, level. I call them value elements. Let's say, right, when the data or the information we've got says Jonathan is at this point in time, this point in context, that's what we're advising. We focus on that little bit. Now, when you do that, a number of things happen. One is you're playing to the individual. Two is you're making them look good and there's a lot of psychology around little steps rather than big steps. Three is it becomes iterative, repetitive, so you can actually point to adding value constantly. The other thing is it becomes very quick. My model for value delivery is the App Store. If you have that many people go and download an app from Apple or Google? The first thing they do is say, I'm going to give you a call from a CSN and it'll be next week and it'll take you a month to get this set up and it'll probably be another year before you can see some measurable value from it.
Jonathan: It doesn't happen.
Dave: It doesn't happen.
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