Defense vs offense: Driving growth through proactive customer success

This article was transcribed from Harini Gokul’s presentation at June 2021’s Customer Success Festival.

I'm Harini Gokul, and I’m looking forward to sharing with you what I've learned about our favorite topic, customer success.

Specifically, I’m going to look at how customer success can accelerate value realization and growth for you and your customers. Over the course of this article, we’re going to examine how to move customer success from defense to offense.

When I started working in customer success, we were generally only called in when something had gone wrong or it had broken. We were the ‘fixers’. Think about churn and escalations – customer success was a reactive lever, something you brought in when things were not working; the folks that took the phone calls and emails that nobody else wanted to take.

Worse, our success was measured in metrics of failure. How many escalations did you address? How quickly did you resolve them? How little churn did you have? It was all a defense play. It was like building a moat to prevent bad things from happening. I want to change that narrative.

The good news is that a lot of progress has been made. Organizations are starting to understand the proactive growth potential of customer success, and of leveraging customer success as a strategic priority.

This is something we all need to set up, so we'll talk a little bit about customer success as a growth lever, and dive deep into what good CS looks like in the modern world.

Customer success as a growth lever for the modern economy

Let me start by stating the business case for why we should think of customer success as a growth lever in today’s economy. We’re in the age of the customer; customers and consumers have more power than ever to disrupt industries and make or break brands.

Just think about these past couple of years, when many of us have spent more time than we want sitting at home. We've completely disrupted the way hospitality works, turning brands like DoorDash, Instacart, Deliveroo, and Swiggy (if you're in India) into household names.

If you take the financial sector, Robinhood has been on the front pages of all our newspapers because of its disruption to the traditional investment model. We've disrupted the way transportation works too.

A few years ago, I was starting to look into what customer success looked like for scaling startups, and I came across an article called The Millennial Disruption Index. Some interesting stats came out of it, and I want to share a couple with you.

The first one was that 73% of millennials would rather go to Amazon or Google for their financial affairs than to a traditional bank. That makes sense, right? The trend manifests itself in things like Robinhood, and Stripe. But what made me laugh out loud is that more than 70% of millennials would rather go to a dentist – the dentist! – then go to a bank.

That tells us everything we need to know about why we’re seeing this disruption, why the customer experience is key as we evolve in this modern economy, and why the consumerization of businesses is becoming such an important force multiplier.

We have consumers who are thinking about their own personal journeys in everything they do. They want their experience reflected across every product and service, and they're voting with their feet, so to speak, because there are so many options out there.

Growth

The options available to us are not just the traditional ones anymore. That’s the growth that we’re excited about – the ‘Airbnb-ification’ of new markets and opportunities has got investors, board directors, and all of us excited. The key to this growth is the customer experience, and that’s what makes our profession so critical in this modern economy.

Alignment

Alignment within companies is shifting too. Think about the way we would talk about teams and functions just a few years ago. We would basically silo them, right? We’d say this is the pre-sales team, that’s the post-sales team, and those are the people that pick up the phone when something bad happens.

Think about life today. From where I sit, the lines are blurring. The traditional pre-sales motions and post-sales motions are all converging, and converging very rapidly. That’s because we’re moving from once-and-done adoption to monthly adoption and use-case adoption.

As digital transformation accelerates, as we move more and more to subscription-based models, and as B2B customers increasingly expect experiences like those offered by DoorDash and Peloton, organizations with a customer-focused culture are going to excel. This is another reason why our profession is critical to success in the new economy.

Impact

It gets even better because as we grow and continue to put the customer at the center of our journey, there’s an incredible impact. I pulled up a Walker study as I was doing my homework for this article, and I saw that customer experience has now overtaken price and product as the number one brand differentiator.

Thanks to all the options available, pricing has become a race to the bottom – that’s not a winning game. Product teams used to be core, and it still is to an extent. After all, when you found a startup, you start with the product and then you talk about the product-market fit.

By taking our deep product knowledge and complementing it with an understanding of what our customers want and the ability to communicate and engage with customers, we create success. CSMs are instrumental in bringing all this together and driving impact.

I saw in a report that SaaS companies that invest in improving the customer experience can increase their revenue by a billion dollars or more. That is a real dollar impact. We're no longer focused purely on the fuzzies of satisfaction – we're adding on this very powerful, tangible quantitative financial impact.

When you invest in customer experience, which is one of your top three brand differentiators, you improve your valuation, you improve your bottom line, and CS ends up becoming a part of the cost of revenue rather than the cost of goods sold. This, to me, is an incredible step up and the right way to progress the customer success journey.

For all of these reasons, I think customer success is the growth engine for the new economy.

The rule of three for the modern economy

Now let’s look at how we make all of this real. Talk is great, but what you're really looking for is what you can do with this information. How can you work with teams, investors, and customers to bring a modern CS function to life?

I'm often asked, “Harini, do you have a formula for customer success? Do you have a playbook?” No, I don't. I don't believe in formulas, I don't believe in playbooks, and neither should you. There is no one size fits all. But I do know this: it's important to ask questions, so I’m going to share with you the questions you should be asking yourselves and your customers.

I start by aiming to understand what drives my customer, and I believe in getting to that by asking some very intentional questions. I map those questions to my guiding framework, which I call the rule of three.

Before I share the rule of three with you, I’d like to remind you not to go to customers with a laundry list of questions and issues. Go in with an open mind; just think of these as guiding principles.

Value realization

The first part of the rule of three is value realization for our customers. We start with our customers and work backward from there to understand what they think of as success. That is what we want to accomplish for them: helping our customers find value and get the outcomes that they want for their businesses. There are five questions I ask to help me understand what is important to my customers and what value looks like for them.

Who are your customers’ customers?

If you take just one thing away from this article, make it this question: who are your customers’ customers? Its importance cannot be overstated.

I work with Fortune 500 companies, I work with small and medium businesses, I work with hyper-scale startups, and I work with platform providers. Across all of them, regardless of whether they’re B2B, B2B2C, or B2C, everybody has a customer. That customer is what your customer cares about most.

If you don't know what problem your customer is solving for, you will not be able to deliver the value they need. So start with your customer’s customer, and understand who they are trying to serve.

What are their priorities?

Next, you want to ask yourself what are your customers' priorities? Perhaps your customer is in series D and going through an equity event. Maybe it’s an enterprise that is trying to reinvent itself. It could be a small business trying to keep up with growth. Their priorities will all be different, and you need to tune into them.

How do they scale?

That brings us to our next question: how do they scale? You need to look at how your customer sustains their growth and makes it scalable. Are they looking to expand geographically? Are they looking to expand into adjacent use cases? Are they looking to automate so they can serve multiple different customers? Those are all important considerations.

Who are the influencers?

The next question is about influencers, and I don't mean Instagram influencers. Your customers’ stakeholders are not just those who are listed on their company's website. Yes, it's their board of directors; yes, it's their C-level leadership, but it's also their investors.

We're seeing a lot of activity from private equity and venture capital firms in technology, and they are influencers because they too have objectives and outcomes they want to accomplish. While you may not be engaging with them every day, understanding their motivations is important. Without that, your path to success is going to be a lot bumpier.

What does good look like?

All of this gets you to our fifth and final question for value realization: what does good look like? For that, I use another rule of three; this one’s called 10-10-10.

The first 10 is for 10 weeks. Think about what good would look like in 10 weeks, whether it's having a conversation with someone you don't know, starting a proof of concept, or launching a workshop. It's important to have quick wins – they build trust and credibility.

Then think about 10 months – that's the second 10. What progress on a product roadmap would you want to make? What progress in an executive conversation would you like to make? What progress would a customer want to make on their churn, retention, or attrition? Pick a metric they care about.

The final 10 is where we get truly strategic. It's 10 years. Ask your customer the question, where do you want to be on Gartner’s Magic Quadrant? Where do you want to be in X years? That helps your customer know that you’re working with them not just to put out immediate fires, but for the long haul.

Customer-obsessed culture

Now that we've started with the customer to create value realization, it’s time to look internally. You want to be supported in everything you do to understand your customer; you want your efforts to be replicated. You’re going to need air cover, sponsorship, and resources. For that, you need a culture that is as customer-obsessed as you are.

The term ‘customer-obsessed’ feels very overused, right? Everyone I know has a purpose and a mission and claims to be customer-obsessed. But how do you know if your company is really customer-obsessed? Here are the five questions to get there.

Is customer success a company-wide responsibility?

First, is the customer success team the only one that is tasked with satisfaction and success, or is it truly a company-wide responsibility? If it’s a company-wide responsibility, you’ll hear about it from the top down. You’ll see it in strategic documents and external public conversations, and you’ll hear your CEO, board members, and leadership team talking about it.

Another tell is how people spend their time. To me, this is the biggest indicator of what somebody’s priorities are. If you see your leadership making time for customer meetings when they travel, and asking about customer stories to share, that's a very positive sign.

Is there a snout-to-tail understanding of the customer experience?

I'm a big foodie; I love thinking about things in terms of food, so my second question is about whether there’s a snout-to-tail understanding of the customer experience. Another way to think about it is in terms of the 360 experience.

Ask yourself if your company is being intentional about creating an integrated customer journey across the lifecycle and across functions. Do you tend to think of the journey from the customer’s perspective, or do you think about it from your perspective, in terms of silos and functions? That's another strong indicator.

Are you integrated with your sales and engineering teams?

Customer success is a team sport. In any organization that is truly customer-obsessed, you’ll see the different parts of the puzzle consistently working hand in hand. You can’t pick and choose opportunities; when you show up as a team, you show up as a team all the time, whether it's onboarding, experiments, implementation, or beyond.

Whatever the size or maturity of your company, one connection you always need is your product service and engineering team. Being closely connected to them allows you to surface requests upstream quickly and close the feedback loop.

It’s similar to your sales teams. Whether or not you’re sitting in a pod with your account manager, your solutions architect, and the customer success manager for every account is something to think about.

You should be making sure that you’re working well with your sales manager and advocating for the customer. Sharing things about the customer experience that your sales manager might not know about is also critical.

Are you hiring for the future?

It’s an incredibly tough hiring market, right? Skilled customer success professionals are hard to find, so making sure that you're bringing in the right resources and then setting them up for success is important.

Hiring smart, talented people and not putting them in an org that's aligned with the rest of the company is a disservice to everyone involved. And as you hire, know that your customers are going to evolve and disruptions are going to continue to happen. So hire for aptitude, hire for the non-tangible skills that you cannot teach, and hire for the future.

As an example, one of the things I look for is the ability to deal with ambiguity. We’re in a constant state of flux, and you need CSMs who are unfazed by it. They should have the intellectual curiosity and capability to translate all this change into patterns, insights, and action.

The ability to handle change and ambiguity is something you cannot coach people on. It's either there or it's not there. So when you hire, think about the things you can coach and the non-negotiables that they have to bring with them.

Is the CS function viewed as a cost of revenue or a cost of goods sold?

When we do all of these things, it should manifest an impact, which is being seen as a cost of revenue. Are we a part of the sales-marketing investment in the customer, or a cost of goods sold? That’s our fifth question and the final piece of the customer-obsessed puzzle.

Data and insights

Let's see what it looks like to have solid data and insights practices, the final element of our rule of three. It comes down to five things you can do to make sure that you're using your data the right way – to solve customer problems.

How do you measure customer health?

Making sure that you have a comprehensive way to think about health that's not just reactive, but proactive is important. Your metrics should involve a mix of leading indicators, lagging indicators, and intangibles.

Are you measuring metrics of failure or metrics of success?

As you measure individual performance or the performance of your organization, think about what you're measuring. Are you focused only on metrics of failure? Perhaps you’re only measuring churn, escalation, and time-to-resolution, for example.

When my customer success managers experiment, when we run workshops, when we do innovation sessions, it’s easy to start from a place of failure because that's what creates the noise. You do absolutely have to address the noise, but that shouldn’t be your only focus.

When we look only at the metrics of failure, we can easily get caught off guard. We need to think proactively about growth and upcoming renewals and bake them into our metrics of success so we can enable CSMs to innovate and build positive relationships with our customers.

Do you pay attention to signals and anecdotes?

Sometimes your data doesn't tell you the whole story, so pay attention to signals and anecdotes. Your customer might tell you, “Everything is great, but there was this one thing…”

Even if there is no sign of what your customer is telling you about on your dashboard, pay attention because that could be the first indication of a bigger trend that you later wish you had gotten ahead of.

The way to build this proactive muscle is by paying attention to signals and anecdotes and then working backward to see if you should be getting data on the issues that come to light. Even if there is no data, this could be a valuable signal that it’s time to think about things differently.

Are you making the news or reporting the news?

One of the most important distinctions between a good CSM and a great CSM is whether you’re making the news or reporting the news. So what’s the difference? Let me show you.

We’ll start with three data points.

1. Your company got a private equity investment.

2. The project you’ve been running with the director of engineering is slowing down.

3. Fewer people are showing up for your weekly stand-ups.

That's reporting the news – talking about those three items separately.

But what if you step back and connect the dots? Maybe that new investor is looking to take the company in a different direction, which is resulting in some stakeholder changes and a lack of funding. That’s then translating into a loss of interest in this project, which is why no one's coming to the standups anymore. Now you’re making the news.

This is how you should be treating all your data and insights. Taking this way of thinking one step further and using it to anticipate future needs will take you from reactive CS, which is always on the defense, to proactive CS, on the offense.

How does the data drive meaningful actions?

Finally, don’t forget that data is only as useful as the actions it drives. Make sure that you translate your data into meaningful actions for your organization and, above all, your customer.