The third wave of CS | Christian Jakenfelds | Ep. 108

[Christian] (0:00 - 0:14)

If anyone likes what I'm about to say, or even hates and wants to know more, I even have like a 10-page manifesto I've written on this thing. I went down the rabbit hole, guys. Only terrorists and socialists write manifestos.

[JP] (0:17 - 0:22)

JD, come on, man. Go with it.

[Christian] (0:25 - 0:27)

I thought you were a lifer. This is crazy.

[Dillon] (0:30 - 0:32)

JP's out. Christian's in.

[Christian] (0:39 - 0:39)

I'm ready.

[Dillon] (0:43 - 1:02)

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 here. JP, do you want to say hi?

How's it going, good folks? Vita Valorem. He never washes that t-shirt, folks.

And we've got Rob here. Rob, do you want to say hi?

[Rob] (1:03 - 1:05)

Buenos dias, lifers.

[Dillon] (1:07 - 1:12)

And we have Christian with us. Christian, can you say hi, please? Hello, lifers.

[JP] (1:13 - 1:15)

Yes, yes.

[Dillon] (1:15 - 1:25)

He knew the assignment. And I am your host. My name is Dillon Young.

Christian, thank you so much for being here. A celebrity in our midst. Can you please introduce yourself?

[Christian] (1:26 - 1:56)

Very generous. Yeah, so Christian Jakenfelds. Lovely to be here.

Background, I'm an Englishman. I now live in Italy. My fiance got a job here a few years ago, and I could not say no to that opportunity, or to her, obviously.

Background was a CSM way back now at a company called Tessian. Was kind of employee 30. We scaled to 180.

Sequoia Investment managed all of our US customers as well. There was a Planhat, similar journey, 30 through 180 employees. So I'm well and truly bitten by the customer success bug.

[Dillon] (1:57 - 2:10)

Very cool. Very cool. Christian, you know what we're doing here?

We ask every guest one simple question, and that is, what is on your mind when it comes to customer success? And with that pedigree, I feel like you're going to have a good one.

[Christian] (2:11 - 2:26)

Love it. And if anyone likes what I'm about to say, or even hates and wants to know more, I even have like a 10-page manifesto I've written. I went down the rabbit hole, guys.

Only terrorists and socialists write manifestos.

[Dillon] (2:26 - 2:32)

And so Dave Jackson is the CS heretic. You can be the CS terrorist. There we go.

[JP] (2:32 - 2:42)

I'm tearing it down and starting again. JP, come on, man. Go with it.

I thought you were a lifer.

[Christian] (2:42 - 2:42)

This is crazy.

[JP] (2:46 - 2:46)

JP's out.

[Christian] (2:47 - 5:14)

Christian's in. Okay. So my whole thing, and I'm happy for this to have a better title, right?

So if someone's got a better title, come at me with it. I think there needs to be like a third wave of customer success, which comes after NRR. So my philosophy is first customer success was retention.

There's the apocryphal story of Salesforce realizing churn was going to kill them. So you had retention. Then we realized that actually we could expand our existing customers.

We got NRR. But I saw when the market turned, you could have a CS team that was hitting the NRR number and still got downsized, which to me means that metric is not the North star metric, because if I can hit it and I've still failed, it's not the metric I should be going for. The one for me that comes afterwards is where we actually are using our customers to generate new customers.

We talk about this because that's what NPS is meant to be, right? How likely are you to reference to refer us to a colleague or friend, but did you track whether they did? Do you know which of your customers generated five new customers?

Can you repeat that process? So I believe that we should be measuring customer success, not just on, did they expand the customer, but actually did they find customers that could be used to generate new customers? And we need to work with marketing because that's currently advocacy, but that's just too fluffy.

I want to be able to say, this is the process that we turned one customer into five. A CSM is rewarded for that growth because they are driving it. Equally job change, you could start to look at that as well.

Hey, this customer loved us. They've moved to a new business. The CSM restarts that conversation, passes it to the AE.

I believe this is way more of a North star metric. I believe ARR and NRR end up competing with each other because if I'm a sales rep, I want to do as big as possible a new deal because I most likely don't get to feed on the expansion. So I believe then when you're a CSM and you're managing 30 customers and you can only grow 10 of them, you start ignoring the other 20 or at least not giving them the same amount of time.

I remember being a CSM and one of the customers I gave the least amount of attention to was one of our best that had signed a three year contract. So when push came to shove in a busy quarter, they got less attention. So my hot take is I believe there is a metric that needs to come after NRR, which looks at not just expanding existing customers, but leveraging those customers to generate new customers.

[Dillon] (5:15 - 5:30)

Quick pushback. How does the example you just gave that sounded like this is what we don't want, where some customers get more attention, others don't? The customers who have more friends, so to speak, are still going to be the ones that get more attention than others.

Does this solve for that?

[Christian] (5:30 - 6:20)

Yeah. So we always have to remember we're running a business. We want everyone to be happy.

We want everyone to be successful, but we're running a business. At the moment, it means that if I'm a CSM, I'm going to focus more of my attention where there's either churn or expansion. That's what's going to get my attention.

So already there could be 80% of my portfolio I'm not giving as much attention to. With this, we're adding another post, which is churn, expansion, and expansion via new customers. So while you can't make sure every customer is getting all the same attention, you are giving more customers more attention than you were before.

So it's not perfect in terms of everyone getting equal love, but it is a step towards more people getting attention, and it's attached to the business outcome, which is grow the business. Rob, this holds a special place in your heart.

[JP] (6:20 - 6:42)

I've got to have a question, actually. Yeah, yeah. Because this was related.

You talked about it from the CSM side, but what about measuring? It seems like, and you touched upon it, how are you going to be able to measure this? It seemed like that was one of the big challenges people had.

How do you measure the impact and that connection tied to CSMs?

[Christian] (6:42 - 7:46)

Yeah. And I write about this in the manifesto, so happy to talk more. My thing is, you've got to be super harsh here.

You've got to be, unless we can directly show that this was via a customer introduction, or we can directly show that, hey, it was a super happy customer that left and bought us again within X days, then CS doesn't get to claim credit. Because we're all trying to grow the business. Attribution is already a beast.

So don't try and get muddled in the, well, we should get 20% of that. It should be super black and white. And it should therefore lead CSMs to say, okay, well, how do I make sure that I can show I was involved in this?

They should be going to customers and saying, look, I can see these four people really well. I've been speaking with my sales rep and we think they would be good customers. Do you feel comfortable making that introduction?

Now the CSM is the one opening that new business deal. So you don't just get to claim, oh yeah, but you know, we're CS because of the customer success. They bought more.

Yeah. Because of marketing, they knew about us because of sales, they bought us in the first place. If you want to claim credit, you have to have such a thick line between the action and the outcome.

I'm going to jump in here, Rob.

[Dillon] (7:47 - 7:56)

I want you to only because this is how you and I originally met this idea of advocacy being the most valuable piece of the puzzle. Right. Tell us how you feel about it.

[Rob] (7:57 - 9:54)

I do agree. I'm very intrigued by this manifesto, pesto manifesto. I have long said, as you mentioned, Dillon, that advocacy and marketing initiatives, the initiatives that drive down customer acquisition costs are the third leg of customer success.

I haven't described it as the third wave. I've described it as the third leg of the stool. Basically, I like the way it better, though.

And as recently as this morning, I was meeting with Margo. It's not as intriguing. Stools are not as interesting.

Stool samples and manifestos. Anyway. But as recently as this morning, I was having this conversation with the head of marketing of one of my clients, and we both aligned that the current company, this company, they're seeing marketing and customer success as different ends of the spectrum.

And we were like, it's on us to tie those ends together and make the circle, not a spectrum. And the conversation always comes up like, why does this get disregarded? Why does this third wave get pushed to the wayside?

And my hunch is that it's because the KPIs that are pertinent when it comes to referrals are often not seen under the same umbrella, the NR umbrella, right? So I think your first wave and your second wave, they are under the same umbrella, retention, expansion, they fall under the NR umbrella. But this customer acquisition cost KPI around that referrals drives, it's under this separate bucket where referrals, testimonials, case studies, they're easy to push to the side.

And they're easy to just shrug off to some other department, whether it's sales or whether it's marketing, and ends up being the case that nobody owns it. So it's funny, I thought you were going to actually say, when you said third wave, I thought you were going to say margins. I thought you were going to say company margins as being like the next thing.

How do you drive the most NRR with the lowest costs associated? And so I feel like if I have a counter hypothesis as to what this third wave might be, it might be something with regard to this efficiency metrics and customer success. But we'll see.

[Dillon] (9:54 - 10:00)

We'll see where that is margin. This is all margin. It's it's revenue acquisition at the cheapest cost possible.

[Christian] (10:01 - 10:36)

Right. But it's true. But I agree with Robin that like that wouldn't be the metric for me, it wouldn't be margin.

But it could be, I suppose my, and this isn't so much a counter, it's just it depends where you are maturing as a company. Now, there's not as much like free money as they used to be from VC. So margin becomes a priority much earlier.

But for a lot of companies, growth is king, and then we're going to figure out margin later. So I think it could be like there's a metric which is around monetized advocacy that then actually starts to transition into margin because the business starts to focus more on margin as it gets bigger.

[Dillon] (10:37 - 10:46)

We're out of time. But Christian, I just have to ask you who's going to win F1 this year? Is it for Stappen or Norris?

Uh, this you're tearing my house apart right now.

[Christian] (10:46 - 10:54)

My fiance. So I have to say it's it's for Stappen. It's definitely for Stappen.

[Dillon] (10:54 - 10:55)

Yeah.

[Christian] (10:55 - 10:57)

In the other room. So it's definitely for Stappen.

[Dillon] (10:57 - 10:59)

You think he pulls it out.

[Christian] (10:59 - 10:59)

All right.

[Dillon] (11:00 - 11:09)

All right. Fair enough. This is an awesome topic.

Come back and we'll we'll start on page two of the manifesto. We'll make this a 10 part series. What do you think?

[Christian] (11:09 - 11:13)

I love it. Guys, this is great fun. Great concept.

Great people. I appreciate you having me on.

[Voiceover] (11:17 - 11:48)

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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