CS in Conversation: Focus on Adoption to Demonstrate the Need for Customer Success

November 25, 2014 Pam McBride

CS in Conversation: Focus on Adoption to Demonstrate the Need for Customer Success

Amity had the good fortune of sitting down with a pioneer in Customer Success, Paul Teshima the original SVP of Customer Success (circa 2005) at Eloqua – now the Founder and CEO of Nudge Software, to talk about demonstrating the need for Customer Success. Here are the “aha!” moments we experienced during the conversation.

Pioneer [pahy-uh-neer]: One who is first or among the earliest in any field of inquiry, enterprise, or progress.

Fifty-eight years ago, from 1956 to 1961, the Journal of Marketing published a series of short biographical profiles under the heading “Pioneers in Marketing”. Is this an indication of how long something has been a discipline before you can identify pioneers? We don’t think so. Perhaps it just took the industry longer to catch up to the discipline or the term, than the role or function being performed. This could explain a lot about Customer Success and the scramble to define it, staff it and fulfill it.

But the truth is, there have been individuals paving the way since the early 2000’s – ok so it isn’t 58 years yet, but it is more time than perhaps we realize. And like the pioneers in marketing, there is a lot we can learn by revisiting how the pioneers in Customer Success, like Paul Teshima, realized why helping customers succeed was integral to SaaS success and in doing so, shaped this discipline.

Amity: You were a pioneer in the Customer Success – how did you break ground?

PT:  In September 2000, we were all in sales at Eloqua. By early 2001, we had enough customers that we realized we needed someone to help manage the customer base. We were in an emerging market and our customers weren’t really sure what to do with the product that was put in front of them. I recognized that in SaaS you had to have a more pervasive accountability to the customer. Since they are paying you on a monthly basis, you have to be sure they are actually using the product. With SaaS, there is no such thing as shelf-ware. So I took the role.

Amity: So you took the role and?

PT: Honestly, I meandered through several years of trying to get this right. Over three or four years of working in the cloud – in the “early days” – I recognized a need for a role that wasn’t sales (selling) or support (technical issues) but focused on best practices in using your product to help their business (and yours). So if you need to state your case for Customer Success, I think the focus should be on product adoption first.

Amity: There are a number of stages in the customer lifecycle, but you felt that the focus should be on Adoption. Sounds reasonable – why?

PT: You need to focus not just on adoption but how you drive the right product adoption and what financial levers that pushes. The number one driver of customer satisfaction in the cloud is strong product adoption in the right way – with best practices. We all believe that having customers use our product is good and more is better but how scientific you get can range from just logging in to building a product adoption ladder. And when you need more product adoption, it’s important to look at the key drivers to product adoption:

  1. UX and the product itself
  2. Strong implementation and good customer service arm
  3. The individual(s) who work with the customer to ensure they are using the product to achieve their goals – this is beyond the person responsible for ticket resolution

Once you take a look at product adoption and the customers you are targeting, it should become evident that there is a need to staff a department to achieve this. A business case of sorts focused on adoption factors.

We found adoption increase by a magnitude of two to three times with customers who had engaged with a Customer Success Manager (CSM). And not only did adoption increase, but most often this created a champion power user in that particular account and the CSM drove a 15-20% renewal rate increase on accounts that they were heavily engaged in compared to those they were not. This alone should substantiate the need for a customer success role within the organization.

Amity: This is a case study in situation/solution/impact and experience that you can leverage having been there and of course we can all learn from. However, how do you go from A to B in your scenario, when you don’t have the funding for B – that being a CSM or team?

PT: There are two ways you can approach this:

  1. Request one person to just focus on new customers for a defined time period – 5 to 10 customers at a time for the first 10 weeks. We found that the success of the customer was greatly improved if they used the product well in the first 10 weeks. You’ll need to segment your customer base to determine the specific set of customers to assign this person to – for the lower price point customers you won’t be able to afford to allocate this person to those accounts. After the success results realized after those first 10 weeks, you’ll be able to justify a full time headcount.
  2. Have them carry a quota to pay for their role. For example, using variable compensation of 1/3 upsell, 1/3 renewal, 1/3 CSAT – and based on the idea that most upsells were smaller maxing out at 30-40% of the initial sale allows you to grow the revenue to fund the role.

Amity: That is one innovative way to skin that cat! So you and at least one CSM is securely in place – now how to do you get a seat at the table with the big boys?

PT: If a Chief Customer Officer doesn’t have a quota under them, then they aren’t true customer success. I always had a quota under me. Realistically at the time being, the person who runs “customer” may have customer success in it but they should also have a quota to up-sell and cross-sell. I don’t know if you’ll get there alone with just “customer” – you’ll likely get marginalized as Tier 2 support.

Amity: How do you demonstrate the ongoing business value of the Customer Success team?

PT: There are two views on this – quantitative and qualitative. Quantitative demonstrates the impact on the numbers, adoption rates, tracking the class of the customer – doing a classic financial analysis of different classes of customers.

The qualitative is just talking to customer and decision makers and find out whom they are talking about. It should be you – because through the CSM you’ve created advocates. We would create advocacy programs and our top advocates would be invited to an offsite. And we would hear things at the offsite like the sole reason I am an advocate is because of this person and they were referring to the CSM.

Tip: If salespeople ask for them to assist in pre-sales you’ve hit on the value. Our sales team wanted to use the CSM as part of the value proposition for the product. I had to eventually put managers over the CSMs so they could work with pre-sales.

Amity: Is there ever a need to revisit and/or reiterate your case to management?

PT:  All of the time. We experimented a bit by revising the quota, also by splitting the roles into a CSM and an AM on one account. Even today the science of customer success isn’t perfected – it’s just as much art as it is a science today. But the real reason customer success will stay is that the customer is the one who is really in control of whether they will stay or go, so you can’t afford not to invest in ensuring the use of your product, ensuring they get value from it and influencing their overall customer satisfaction.

Amity: This question has been asked a number of times and answered by several people in the social sphere, in blogs and articles. In your opinion when should you introduce Customer Success?

PT: In my opinion you need to introduce Customer Success when you are aren’t seeing adoption or traction that you were projecting or expecting with your first 20 paying customers. If you are, then the honest truth is you can wait a little. You can make the call at 10 customers and if you are at 20 then you are really in trouble and you need to put resources there to make sure the customers are adopting your product.

Amity: So the bottom line is?

PT:  Don’t make it hard on yourself by trying to justify the role first. Justify product adoption first – if I focused on the role first the questions would be does the role drive X? You aren’t sales and you don’t take support calls so you want to make sure the question would be “does the role drive adoption?” Prove that product adoption is important and the financial metrics it will drive. When it comes time to show the value of Customer Success, you point to the large portion of adoption they are driving – the dollars will follow.

How have you approached the need for Customer Success in your company? What made you successful?

If you have any additional questions for Paul or Amity, we would love to field them!

And we’re all in luck! Paul Teshima is the next presenter at the Customer Success Meetup in Toronto on December 2nd. This is definitely one you won’t want to miss – so make sure you save your spot today!

Our ongoing interview series, CS in Conversation, provides insights from Customer Success professionals and practitioners on topics relevant to the Customer Success industry.  CS in Conversation recently spoke to Dana Lacey, Customer Success Team Lead at ScribbleLive on Creating a Success Plan for your New CSM, and Daniella Degrace, former EVP of Customer Success at radian 6 and Salesforce.com about The Ideal Customer Success Platform.

CS in Conversation: Focus on Adoption to Demonstrate the Need for #CustomerSuccess
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