By: Kia Puhm, Founder & CEO, DesiredPath
April 14, 2019
(Republished by permission)
The Customer Success Association (CSA) hosted their 7th annual Customer SuccessCon Boston event this past week. In attendance were senior leaders of Customer Success representing more than 50 companies. The theme for this year’s conference was The Profitability Blueprint which looked at the return on investment of operating a Customer Success group and its role in generating profitability for a company.
The intimate afternoon event consisted of the opening keynote, The Profitability Blueprint, along with a panel discussion on the topic of Customer Success revenue ownership, followed by three Case Study presentations and three best practices sessions each covering various aspects of proving the value of Customer Success both externally to customers, and internally to the executive team.
Customer Success Trends
During the keynote, Mikael Blaisdell, Executive Director of the CSA reviewed the results of this year’s Customer Success Standards Initiative Research, the findings of which continue to demonstrate the upward trend of Customer Success connecting their efforts directly to revenue and profitability. Mikael highlighted that whereas just five years ago no one in the survey (i.e. 100% of the participants) reported any connection to revenue, this year only 20% reported that they had no ties to owned or shared revenue responsibility. The direction is very clear, Customer Success is increasingly expected to own some level of responsibility for revenue within their organization.
During the panel Q&A session, of which I was a panelist, we were asked the following questions:
Do you agree that the trend seems to be moving towards Customer Success having revenue & profitability responsibilities? And how do you feel about that?
I do think there is a trend moving this way as I see more and more Chief Revenue Officers (CROs) getting excited, for the first time, about owning post-sales functions.
I take a customer-centric approach to business and the revenue aspect is no different. If customers can be perfectly successful with CS owning revenue then I favour this model. When it does not make sense for the customer (for various reasons) that CS own revenue, then I consider layering Account Management/Sales to post-sales working in collaboration with the Customer Success Manager.
Customer Success and Revenue seems to be a sensitive subject for some of our community. Do you agree? Why are CS people reluctant to talk about money? What do you think we should do to overcome that reluctance?
I do think it is a sensitive subject and have written about this extensively on the DesiredPath blog. See “Why does CS Fear Revenue?”, “CS Naturally Owns Revenue” and “Why the CS Executive Wants to Own Revenue”.
I think there’s a misguided opinion that CS cannot be a trusted advisor if they are talking about money and only trusted advisors can make customers successful. I think this thinking is naïve. Unless you’re working at a not-for-profit company your company needs to be successful in order to make your customers successful. And regardless of whether CS owns revenue or not, your objectives from top down will tie to revenue ultimately.
I received really good advice as Head of Customer Satisfaction in the early 2000’s (the term Customer Success did not yet exist) from our CEO – his point was that both the company and the customer need to be successful for the customer to ultimately receive value. If your company is not getting fairly compensated for the value they provide then they will go out of business and the customer will not be able to benefit any longer. Presuming a company is providing a lot of value to its customers, then this is a very valid point. I therefore think about how best to align the interests of the vendor, customer and employee to achieve a triple win, and then use that to determine who best should own revenue.
If you were the VP of CS at a company where CS had no connection to Revenue, what would you do first? Why?
First off, I would be checking in the interview where revenue ownership lies and look to join a company where I did own revenue. However, if I was already there, I would start to build a framework that measures the value the CS org is generating and tie results to revenue myself to demonstrate the connection.
Do you agree that “Logo Retention Rate” is a poor metric for measuring the performance of a CS Group?
Yes. I think metrics for the performance of a CS group need to be tied to the performance of customers. When these interests align, then we know a CS group is performing.
Case Studies and Best Practices
Conference participants were then treated to three different case studies demonstrating how Fastly, Mentor Collective and Oracle are building and scaling Customer Success practices that have direct connection to revenue and are proving value to their customers.
Emily Garza shared a wonderfully comprehensive overview of how Fastly restructured their CS practice to own revenue and how critical a driver it has been for driving the company’s growth. She left the audience with two questions to ponder, specifically asking leaders to challenge the assumptions they have about driving efficiencies by looking at what setup and metrics they currently have in place, and to consider whether they are shying away from revenue and therefore inadvertently inhibiting the respect that the CS team could otherwise be deserving of if they did own revenue.
George Boyar at Mentor Collective reviewed how his company has gone through three stages of growth and evolution with their Customer Success function. George shared a number of insights that the company learned along the way by making mistakes and trying new things. He left the audience with some final thoughts on ideas to consider and recommended that companies really focus on renewals; that the majority of business should come from renewals and therefore the company should prioritize its efforts accordingly.
Peter Armaly shared how Oracle has re-built the Customer Success organization to monetize CS and prove value to the customer. Peter reviewed the journey Oracle took in building out the model and how executive alignment from the top down was key in establishing the practice. He reviewed the various functions and roles that make up the practice and how customers were involved in the process through the company’s Voice of the Customer program to help inform how CS would be established.
To complete the second half of the programming, there were three best practice sessions to help participants Position their Resource Requests in Terms of ROI to get the headcount they need, gain Executive Support for Building a Profitable CS Practice, and How to Turn Customers Into Bigger Customers.
The Bottom Line
Customer Success continues to evolve from “Random Acts of Customer Success” towards a more disciplined, repeatable practice of driving customer success and therefore profitability.
As an industry we need to continue employing more standardized approaches to the work we do to ensure our efforts of driving successful customers is aligned to also increasing profitability for the companies we serve.
Kia Puhm: CEO/Founder: DesiredPath
A frontierswoman in the Software-as-a-Service Customer Success industry, Kia Puhm has extensive experience building world-class practices that accelerate business growth. Prior to founding DesiredPath, Kia held chief positions at Oracle, Eloqua, Day Software (Adobe), Intelex Technologies, and Blueprint Software Systems.
Based on over 24 years of expertise, Kia developed the Intelligent Framework™ (driven by industry first metrics and benchmarks) to provide clients with a disciplined, sustainable and scalable approach to increasing customer value and long term loyalty.
In 2005, while working with enterprise content management firm Day Software, Kia was named one of Switzerland’s top 50 highest ranking women in business by Swiss publication Basler Zeitung. She is also a former member of the Canadian National Swim Team, national record-holder in the women’s 200-metre backstroke and world top 10 ranked swimmer. Kia holds a Bachelor of Applied Science in Computer Engineering from the University of Toronto.