Extendo-Ep: What is the purest definition of Customer Success? | Ep. 106

[Dillon] (0:00 - 1:01)

Okay, so you got rid of success and you made it outcomes, but at the end of the day, it's still success. Nobody would say they want their customer to be anything other than successful. I think customer success is a, it's like Six Sigma.

In any role, almost, you can employ certain Six Sigma ideas and philosophies and processes. It can apply in a million different ways, in the same way I think customer success can. And the things that have been bucketed in our domain for a really long time.

It's why I don't think customer success will exist in 10 years, because it's more of like a philosophy than it is any one person's job. You don't hire somebody and call them a Six Sigma person. What's up lifers and welcome to The Daily Standup with Lifetime Value, where we're giving you fresh new customer success ideas every single day.

I got my man, JP with us. JP, do you want to say hi?

[JP] (1:02 - 1:04)

It's pure, baby. It's pure.

[Dillon] (1:05 - 1:22)

And we've got Rob with us. Rob, do you want to say hi? What's up, pure CS people?

And I am your host. My name is Dillon Young. That's right.

It's just the three of us and we've got another noodler for you. JP, do you want to tell us what you're noodling on?

[JP] (1:23 - 3:17)

Oh, we got some fat noodles going today, baby. You better get ready for a whole lot of fettuccine this episode, baby. With some Yankee.

Okay, with some Yankee over there. I'm basically wondering, we talk about customer success and I was wondering, is it pure where you are? We talk about we say that customer success should be this, CS folks should be doing X.

But then when they actually in practice, due to typically leadership slash ownership slash investor pressure, right? I'm basically just going up there. I guess I'll use hybridization instead of bastardization.

But it seems like we end up taking on some things that sort of morph us from basically being pure CS. Maybe we can quickly go around and say what we think pure CS is. I'm going to say pure CS to me is basically like, I guess it just dropped the bomb.

You don't really own revenue in the same way that a lot of people are. You probably wouldn't own a quota. You would just really be responsible for some retention metrics, but you're not really doing any, a lot of sales activities.

You may not be doing a lot of like support activities. You would be purely focused on really value realization, driving the relationship with the customer and keeping them around so that I think what we would also want to see as a goal is that you have very satisfied customers who will word of mouth other people to your business, which really helps to lower the customer acquisition costs in the long run. I don't know what you guys think about your definitions of what pure CS is.

[Rob] (3:18 - 4:23)

Rob, you go first. Yeah, this is interesting. And I think it speaks to one of the biggest misalignments in our whole industry.

One of the most fundamental ones, because if you think pure customer success, it means we do anything and everything to make our customers successful. However, in practice, what most companies do, most C-level teams are like pure CS is preventing churn. And those are not the same thing.

Pure CS, like imagine a situation where you're owning two accounts. One customer is about to churn, the other customer hasn't been activated. Pure CS says, well, actually, most CS organizations say, focus on the customer that's going to churn, right?

Focus entirely there, even if they're like not the best fit, even if they're not being most successful, even if they'd be better with another platform. Pure CS in its purely philosophical form says, help your customer find the actual best solution for them on the market, whether or not it's you, which I think sounds crazy.

[JP] (4:25 - 4:28)

By the client, actually, it's really interesting.

[Rob] (4:28 - 5:00)

So they make an advertising platform for mental health, drug and alcohol rehabilitation centers. And their clients, these substance use centers, they'll advertise on multiple channels. They'll advertise on like, let's say Google and their platform.

Pure CS would say like, look, if they're having better results on Google, just push them to Google, churn that account, because it's better for the account in the long run. But doesn't that sound crazy for most of us in customer success to deliberately churn? No, no, not.

[Dillon] (5:01 - 8:17)

But look, again, I don't think it does. I think customer success, the view I take on it is very long term. And it's positioning your company best with the most customers as possible.

Now, I think that as I say it out loud, it sounds sort of backwards. But what I mean by that is that's not your ICP, then you shouldn't be trying to put a square ICP peg into the hole, a round hole that is your solutions that you offer that is only kicking the can down the road. And it actually makes your CSM less efficient, less capable of having the widest coverage for the customers that actually fit your ICP.

So I on its face, yes, I disagree that you don't just say, OK, bye. But if you somehow could control the experiment to understand what that customer costs you in time and effort from a CSM and from an organization, is it really the best use? What's the cost of maintaining that revenue?

It's probably not as good as if the not yet activated customer is your perfect ICP and is ready to hit the ground running and wants to utilize 90 plus percent of your system, then the answer is clear. Right. And so, you know, my definition of pure CS is it's actually not even any of that.

The definition is NRR, but in the most efficient way possible. Like how high can your NRR be with 10 CSMs? OK, well, what if you wanted to reduce that to five CSMs with the same portfolio of customers?

How high could your NRR be? That's really what we're getting at is how efficient can our book of business, our existing customer base be in terms of the revenue they deliver to us with the least amount of expenses on our end? I think that's the way to look at it.

I think the problem we have is that customer success, the definition like we've named the position in such a way that it kind of pigeonholes us. Now we've said, OK, well, it's about making the customer successful when in actuality that is in many cases not what customer success is meant to do. And so it's a hard conversation to have in that regard.

And I think, you know, to your point, JP, my definition was NRR, but that is obviously inherently revenue related. But I think if you look at the RACI chart, I think CS is often accountable, but not necessarily responsible. You think about a CSQL about surfacing opportunities and then throwing that shit over the fence and saying, hey, you figure it out.

I had the conversation. I teed them up. Now you've got to close that deal.

You've got to push them through the funnel, sales, account management, whatever you want to call them. I think that's still a I think that's a revenue activity, but it's not you know, I'm not sending them the contract. So what does that mean?

I don't know. That's why I think the conversation is so hard to have. And I was excited to have this.

[JP] (8:17 - 9:22)

I'm going to let me go ahead and pivot it a little bit, because what we were getting at, I think, was very much I mean, it did have some grounding in what we do, but we were very theoretical, right? Because that's what it was. Pure CS is inherently it's like the end of the opposite end of the spectrum.

Now let's talk about what we think people are doing in reality, right? So pure CS is like a hundred percent. It's like this ideal.

But can you think of places that you think of that are doing this really well, that you've seen? Maybe Rob has more insight because you do the consulting, but I'm wondering about places where there's been a feeling like what people are doing feels like what they got hired for. That can be a tricky conversation too, I know, because roles can evolve.

But we're just thinking about you're in customer success. You've been in multiple roles. You get hired for a new role.

How much sort of consistency is there? Everything else held the same.

[Rob] (9:23 - 9:56)

What's super interesting too is Dillon, what I liked about your definition or was intrigued by with your definition is you mentioned efficiency. So you mentioned doing like the same work with a five person team instead of a 10 person team, but that efficiency actually is JP. I think that's where we get this role scope creep.

And a lot of executive teams are taking bets on saying like, you know, maybe we can stretch this person to move from what we call pure CS to doing like some billing and invoicing work, right? Like maybe they could just do the customer billing and invoicing.

[Dillon] (9:56 - 10:01)

Except that's not efficient because that is not a part of the flywheel of CS activities.

[JP] (10:02 - 10:14)

True. But is that what people do? I think that's what Rob's saying, but is that what they do?

You're right, Dillon. I know what you're saying, but do they say, yeah, go do some billing?

[Dillon] (10:14 - 10:19)

I think that's why we're having the conversation is because you fucking know they do, but they shouldn't.

[Rob] (10:20 - 10:32)

Why is efficiency key to this, though, Dillon? That's a good question, right? Why not just throw more and more resources in the most inefficient way possible?

Well, maybe not the most inefficient way possible. I'm not thinking about margins when I think about customer success.

[Dillon] (10:32 - 10:40)

But you said you're not thinking about margins. Well, let me rephrase that. It's in your fucking LinkedIn headline, brother.

You're thinking about margins.

[Rob] (10:41 - 10:52)

No, but pure customer success. In pure customer success, I'll spend an extra five, ten thousand dollars to make a customer successful. But in the way it's actually operationalized, it's like, no, we should cut that back.

[Dillon] (10:55 - 11:42)

Yeah, I don't understand the statement because if someone were to say to you, I've got a customer that's worth, you know, 12 grand ARR, 1000 MRR, and I've got a CSM that makes 100 grand and like they spend 5000 a year of their time. Right. So what is that?

Five percent of their time, something like that on this customer. If all of a sudden you say they have to spend 10 percent of their time on that customer, that customer's profitability has just gone from seven thousand dollars to two thousand dollars. Right.

And we're assuming there's no other overhead costs. Right. Let's keep the math really simple.

I like I don't know if I make that decision.

[JP] (11:44 - 12:04)

And what about a different what about a different one real quick? We talked about this in a previous episode. We were talking about how much training sales gets.

And you, Dillon, said that you tried to go get a training that was like relatively cheap for a CSM that would have probably made them more efficient. But what was the answer?

[Dillon] (12:05 - 13:04)

No, no. Go kick rocks. Well, it was use the resources you have at your disposal, your expertise, Dillon, and that of our VP of sales.

But what that misses is the amount of time and effort it's going to demand from me or from the VP of sales when we could have sent her to a fifteen hundred dollar course and gotten her all the basics. She would have had to come back with a certification, which in many ways, look, from a management perspective, part of the goal was, hey, there can't be any excuses if she says she doesn't know how to do something. And we've taken her through a certified program that taught her how to do it.

That allows us look, I don't love this nefarious activity, but that allows us to put the responsibility back on her and say, look, we've given you the tools and the resources to be as successful as possible within this role. You can't say that we didn't give you that.

[JP] (13:06 - 13:57)

We got a spicy meatball, y'all. We may have to have a part two of this. I think it is the topic.

It is the topic right now. This is the topic, right? What we're talking about was not, that was not simple.

That is not simple. This is why we're still hearing people like, should CSMs have a quota? Should they own revenue?

It's not because people out there I think are evil. I did make a statement. I mentioned, if you are more concerned with pleasing your investors than pleasing your customers, that you couldn't really implement customer success.

That was my hot take. But I think in an ideal world, everyone can be satisfied. It's just a matter of priority, I think.

[Dillon] (13:58 - 15:46)

I don't think that's true, though. I think at the end of the day, it is so dependent upon the organization on the product. It's also dependent upon the skill set of the people you have in seat.

And we often forget how many variables there are. And we often, I've seen this personally, try to apply the same idea of sales to customer success. And we give them quarterly goals, and we give them yearly goals, when there's so much of it is dependent upon then the landscape of your existing customer base.

And so those same goals can't apply because we have this very boxed in number of prospects that we can work with. We've got a ton of variables within those. You've got to look at the industry.

Is the industry even in a place where these opportunities make sense? That's why I believe you've got to build customer success, essentially, from the ground up for every organization. There's a ton of schools and frameworks.

Rob, there you go. Bingo. You can employ those often, just about every single time you can employ some piece of it.

But you've also got to have an eye towards how your company is different and how its target customer base, its TAM, is different. And we don't do that. Investors come in and they say, put CS in place, measure them on NPS and a quarterly revenue goal.

And if you don't, then we're never giving you any more money for any other funding rounds sort of shit. That is so often how it occurs. And it is not thought of cerebrally enough.

Sorry. It's my thought process.

[JP] (15:48 - 16:28)

We love to say it all depends. But I agree with what you say about the ground up. I do think that a lot of this, yeah, you can't just come in and say, well, I did customer success over here.

However, I think what we're arriving at is some sort of weird pressure that happens where if people don't get customer success from the top, I feel like whatever way you're going to do it is probably not going to come out quite like the leaders themselves want it to look like. Because they can't get the buy in for things.

[Dillon] (16:29 - 17:06)

Well, and if they think customer success is a cost center and it's not generating revenue, well, then you're not going to sink money into, I think that's at the core of why customer success doesn't get a lot of the same support as sales. Because we're stuck in this transitional period. I fundamentally disagree that customer success should not touch revenue.

And the reason is because, first of all, I think we are well positioned to do it if it's done properly. But the second piece is because we're never going to have a seat at the table, so to speak, or get the investment dollars we want, unless we can show that we're still too much of a redheaded stepchild.

[JP] (17:07 - 17:14)

What we're looking at is the growing pains of a young discipline, basically.

[Dillon] (17:14 - 17:14)

I think so.

[JP] (17:14 - 17:25)

Customer success is, how long has it been around, like 20? I mean, it might have existed in some form before it was called customer success, but we're saying about 20 plus years, perhaps?

[Dillon] (17:25 - 17:27)

Something like that. 30 at this point.

[JP] (17:27 - 18:00)

Maybe 30. Okay. Well, still, that's very new.

All these other forms have been around, sales, marketing. So what is it this whole thing with the market? It wasn't a market sensitivity thing.

In other words, CS really changed when the money was no longer cheap. We've said, Dale, we thought the layoffs were over, but we're still hearing about people getting these mass layoffs. So were those mass layoffs?

I mean, I think that it was more than customer success, Steve.

[Dillon] (18:01 - 18:06)

Yeah, no, I think layoffs now are occurring. And Rob, you're getting iced out here, buddy, but feel free to jump in. I'm just listening.

[JP] (18:07 - 18:08)

Well, jump in.

[Dillon] (18:08 - 19:15)

I think layoffs are occurring now. I think we're at the tail of layoff periods, but I think layoffs now are occurring if you just have a shitty product. I think the impact of a depressed market, quote unquote, whatever that means, even though we're at all-time highs for stock indexes, that started a snowball effect.

And the first thing it did was everybody had to rethink how they're spending their money. So a lot of what were considered ancillary services, people started cutting. So product marketing went and customer marketing were some of the first ones to go because they're really nice to haves and they do have an added benefit, but you can also survive without them.

When I lost my job, I got rid of my cleaning service because I can still live without my cleaning service. It's a nice to have. And so I think now what you're seeing is, okay, well, everybody had to deal with having less money, less productivity.

And so now the first thing they did was fire people. And now the next thing you're going to see is they're getting rid of systems.

[Rob] (19:17 - 19:23)

I would say they're perceived as nice to haves for our listeners who are in those domains, by the way.

[JP] (19:23 - 19:27)

Yeah. No. Yeah.

Okay. Yeah. Clean it up, bro.

Okay.

[Rob] (19:28 - 20:03)

You know what's interesting too, Dillon? I think you're right. Bad products, products that lack product market fit is how I would say it.

I've seen the opposite. Where actually really good products can justify downsizing the team because a company invests heavily in a really strong product led onboarding motion, product led growth motions. Sure.

And they don't need people actually to support that motion that are, at least that are, they don't need as many people. Obviously they have people behind the scenes who do that work, but they look more like product managers than they do customer success managers.

[JP] (20:04 - 20:04)

Whoa.

[Dillon] (20:05 - 21:02)

But I think then you start to get into this philosophical debate about where do the, like a product manager who their work is in effort of a PLG motion, strengthening PLG. I would say they are at least part customer success manager because their goal is to make onboarding really easy, to make retention that much easier. And those are things that customer success is meant to do, but typically in complex enterprise, quote unquote, sort of softwares.

And so that's where, that's why I think the term customer success, the title is sort of like wonky nowadays. I think it speaks more to is someone in a certain type of company with a certain type of product than it does actual outcomes.

[Rob] (21:02 - 21:09)

Yeah. Question for you. If you could rephrase the whole industry as customer outcomes, would you do that?

[JP] (21:09 - 21:12)

No, he's quick.

[Rob] (21:13 - 21:18)

He's like, no, no, because that's probably pure customer success, right?

[Dillon] (21:18 - 22:14)

No, no. Because I think you're just, okay. So you got rid of success and you outcomes.

So, but at the end of the day, it's still success. Nobody would say they want their customer to be anything other than successful. What I think it actually is, is, you know, we've talked about this.

I think customer success is a, is a, it's like six Sigma, right? Like you don't hire somebody and call them a six Sigma person, right? In any role, almost you can employ certain six Sigma ideas and philosophies and processes, but it can apply in a million different ways in the same way I think customer success can.

And the things that have been bucketed in our domain for a really long time, it's part, it's why I don't think customer success will exist in 10 years because it is, it's more of like a, a philosophy than it is any one person's job,

[JP] (22:14 - 22:22)

which we talk about, but yeah, there's a lot to, there's a lot to, to nosh on, as you would say,

[Dillon] (22:22 - 22:37)

but that is our time in this, our first extended episode of the daily standup. You guys got any last words, Rob? Come on, man.

You're the thought leader here.

[JP] (22:38 - 22:42)

Why don't you put a period on it?

[Rob] (22:42 - 22:52)

I tried so hard to not interrupt. And then I get criticized for being too quiet. Oh my God.

You guys can't win with, you know what?

[Dillon] (22:52 - 22:53)

You can have your flowers.

[Rob] (23:00 - 23:11)

No, I want to actually, Dillon, I'm just, I just want to hear your last final thought. Let's imagine that what you said transpires. Customer success doesn't exist.

What takes its place?

[Dillon] (23:14 - 24:58)

I mean, we've talked about this. I think, so again, like I have trouble even answering this question because you want to, you ask the question in terms of customer success and it's like, okay, well, what takes its place? I just think that the role, the responsibilities and the motions that's, that most often customer success is responsible for are going to be divvied up and given to other positions or job titles.

And I think primarily it's going to be account management. And what I mean by that is people who manage accounts. It's not account acquisition.

So that's sales or it's whatever the hell else. I don't care, but it's people who manage accounts and who are responsible for generating additional revenue from them. But I think it's also marketing and I think it's also product.

And I think it's also engineering when you talk about creating like data feeds that allow you to see the behavior of a customer set. And then I do believe that there's still a place for somebody like in a lot of larger organizations, there is a Six Sigma SME, a guy whose job it is to make sure that when you're creating projects, you're running projects, whatever, you're using Six Sigma best practices because it is just the industry standard for making sure projects are done correctly, successfully and iterated upon. And for the future, that's a big thing for Six Sigma is the ability to continue to monitor.

And so I do believe that customer success will turn into an SME sort of role, like a program manager whose job is to liaise with sales and marketing and product to make sure that they are doing the best practice version of these customer success motions.

[JP] (24:59 - 25:01)

Yeah, that's interesting.

[Rob] (25:01 - 25:14)

And I know we had a conversation before, but I like you on your soapbox here. Yeah, yeah. The audience needs to hear it.

Yeah, the audience does need to hear you more. It's been a while since we've heard the Dillon forecast.

[JP] (25:15 - 25:20)

Well, yeah, you're so you're so used to hosting the stuff. It's like you don't get your... There's a lot.

There's a lot.

[Dillon] (25:21 - 25:22)

Whatever.

[JP] (25:22 - 25:23)

Get out there.

[Dillon] (25:25 - 25:38)

Appreciate you. This is going to take a lot of editing. That is our time.

Can't wait to talk about this next time. But for now, boys, we got to say goodbye. Peace.

[Voiceover] (25:44 - 26:14)

You've been listening to The Daily Standup by Lifetime Value. Please note that the views expressed in these conversations are attributed only to those individuals on this recording and do not necessarily reflect the views and opinions of their respective employers. For all inquiries, please reach out via email to Dillon at LifetimeValueMedia.com.

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