Upholding tradition | Dr. Mike Lee

[JP] (0:00 - 0:09)

Wow, I got this target on my back and I have to try to hit this number and that comes in and I think that disrupts everything and you lose some trust.

[Dillon] (0:16 - 0:30)

Cool, all right, here we go. 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?

[JP] (0:31 - 0:32)

What's going on y'all?

[Dillon] (0:33 - 0:36)

And we've got Rob with us. Rob, can you say hi?

[Rob] (0:36 - 0:37)

What up doc?

[Dillon] (0:38 - 0:42)

And we have Mike with us. Mike, can you say hi please?

[Dr. Mike] (0:43 - 0:44)

Hello everybody.

[Dillon] (0:45 - 0:58)

And I hesitated because I don't know if we... Dr. Mike, I feel like you deserve it. I feel like I've got to say it.

Anyway, I am your host. My name is Dillon Young. Dr. Mike, thank you so much for being here. Please introduce yourself.

[Dr. Mike] (0:58 - 1:37)

All right, my name is Dr. Mike Lee. Mike is fine, but people at work call me Dr. Mike to separate. I think it's my brand now.

I'm working on that as my brand. That's cool. I work at Avalara right now.

It's a fairly large sales tax software as a service tool. I lead a team of 11 CSMs in an organization of about 44 CSMs. My book of business, my portfolio for my team is about 360 million. And we have a little over 13,000 customers and we work hard.

We make it happen. And I'm a customer success traditionalist. I really focus on some of the newer things as well.

So I'm really happy to be here.

[Dillon] (1:38 - 1:59)

Okay. Now you introduced a term here that we are going to have to dig into. I hope that this is part of your topic.

Please, Dr. Mike. Now you know what we do here. We ask every single guest one simple question, and that is, what is on your mind when it comes to customer success?

So can you please tell us what that is for you?

[Dr. Mike] (2:00 - 4:31)

So I've been tossing around this idea about revenue and customer success. I know it's a hot topic. I know it's a really big thing, but I think what we're experiencing right now is a little bit of an overcorrection in revenue and customer success.

I think it's a little bit of overcorrection. Let me explain what I mean by that. I started in customer success in BC.

All right. I say BC before COVID, because customer success was a little bit different before COVID. Right.

And we traveled a lot. We went around, we really worked on relationships we built. And the reason why customer success was such a rising function in organizations, is because that's what we focused on.

We focused on those relationships. We focused on retention, almost exclusively. Now, obviously, opportunities would come around.

We'd upsells, cross-sells, all those kinds of things would actually happen. That's just part of the job. But after COVID, it seems like there was a tact towards everybody has to be salespeople.

When you hear people say, we're all salespeople, which I don't necessarily disagree. But in the move to where it's so much pressure on CSMs and CS professionals to bring in new revenue, as far as growth from current customers, it's a zero-sum game. If you move more into sales, you're losing more relationships.

That's the whole purpose of customer success in the first place. That was the whole purpose of it itself. You're starting to see more CS organizations move under chief revenue officers or revenue groups.

When you say a revenue group, it's essentially a sales. It's a sales team, a sales function. But just like with a hammer, everything is a nail.

For someone in revenue, everything is a sale. And so when you have those revenue-aligned CSM organizations, it's all about the revenue. And I think we've overcorrected based on some fear somewhere down the line that everybody has to be hyper-focused on revenue.

And we're going back to the place where CS was founded to where we're starting to let relationships go because we have to focus so much on sales. But that's really what my thoughts are right now.

[Dillon] (4:31 - 4:55)

I just have one clarifying question, and it could be as simple as a yes or no, if you like, or you can expound a little bit. Do you believe that there is a happy medium where CS can live under a CRO, can have a revenue responsibility while maintaining a focus on relationships? Or do you believe that there needs to be a firewall?

[Dr. Mike] (4:56 - 6:01)

So that's a complicated question to answer because I believe there is a happy medium, but how long that medium lasts can change. And the reason I say that is if you're in that happy medium where, yeah, we're focusing on relationships, we're focusing on low revenue, but as soon as new revenue starts to not look like it's meeting their goals, the relationship part goes out of the window and it's focused on the revenue. Now, I don't want anyone to think that I'm bashing anybody in sales because I'm not.

I believe in sales. It's what keeps us in business. It's what signs our checks.

But I also believe that retention in the relationships does the same and is equally as important. So I'm not saying it can't work in a revenue function or an organization. I just think the priorities are different when things get a little tight that you move from relationships.

[Dillon] (6:03 - 6:08)

Rob, I want to come to you first. Tell us what you think about what Dr. Mike said.

[Rob] (6:09 - 6:30)

I want to think through a question, which is, have you guys ever been in a situation where a relationship was enhanced by selling, either whether you were selling something or you were on the receiving end of a sale, and you actually enhanced your relationship because of the sale? The answer could very well be no, but I'm just curious about your experiences.

[Dr. Mike] (6:32 - 6:48)

I don't know that a sale enhanced an experience, a relationship, but I think a relationship hasn't enhanced a sale. If I've gotten a good relationship, I've been more apt to buy more.

[Rob] (6:49 - 8:00)

For me, this was the turning point where I realized that the act of selling could enhance my relationships with clients. It could not only provide me more structure, but actually clients respected me more by buying things from me, which was interesting. This could be that medium, the happy middle that you were describing, Dillon, and it changed my whole paradigm around customer success.

For me, everything I've written on customer success says customer success is a revenue function. That's not to say that's truth, and that's not to say it's not debatable. We're probably each correct in our own rights, but if I reflect on why did I come to that conclusion, a lot of it has to do with the origin story that I have found that I build trusting relationships through a sales process, including when other people are selling things to me.

LegalZoom sold me something, and I loved the rep there. It was actually a support rep, believe it or not. I called in for support on something.

He upsold me on something else, and I loved this person because of just his method of understanding my needs and my business, and it enhanced my relationship with LegalZoom overall. It's interesting. I can see both cases.

[Dr. Mike] (8:00 - 9:14)

Can I ask you a question about that, Rob? Sure, of course. All right.

Your example that you gave with LegalZoom, did the selling enhance your relationship or the relationship enhance the opportunity for you to buy more? Because you solved your issue, you felt trust, you felt good about it, and then you were open to buying more. It sounds to me that came first.

Your premise there, I'm not saying it's wrong. Totally. I'm just asking a question.

Your premise is the sales helps relationship, but if a customer does not have a good relationship with you, trusting your product or fees of value, they're not going to buy more. The sales process isn't going to help that. We're talking about post-sales, essentially post-sales because it's growth.

My question is, which one comes first? Is it the trust that you have to build in order to sell? Or is you saying, hey, you going through your sales pitch, does that increase the trust or the relationship, and then they buy it?

I think something positive has to happen first before you grow. Can both be true?

[Dillon] (9:15 - 9:32)

Can both be true? Where the relationship helps the sale and then you experience the sale, the new product, the new service, whatever, and you're like, oh, wow, I love that we got to a point where they convinced me to buy this because this has enhanced my experience so much.

[Dr. Mike] (9:33 - 9:39)

I don't know that you could tie that at the sale because you don't experience until after you purchased it.

[Dillon] (9:39 - 9:50)

That's what I mean. That's why I think both are true. The relationship got you to the sale, but then you experience the sale and you're like, oh, wow, the result of that is that my life has become much better.

My experience is that much better.

[Dr. Mike] (9:51 - 10:12)

That's right. Because you see value in it. I think both can be true.

The question was about the premise of that is, is it when the legal Zoom situation, if the issue that you were having wasn't solved, it didn't work out the way you needed it to work out. Then they said, hey, but you can buy something else.

[Dillon] (10:14 - 10:26)

How would you feel about that? That doesn't work. That doesn't work.

JP, you and I just had this conversation, and I think you lean more towards traditionalist. I want to hear what you have to say.

[JP] (10:26 - 12:26)

I never thought that I would identify as more of a traditionalist, but I do see a way that I'm navigating this Scylla and Charybdis, as it were, that legendary tale of those two monsters of the sea. How do we navigate this strain? Because there's pressure coming from both sides.

How do we navigate it? To me, I think what the main difference is, of course, it's great to sell. Of course, all this, it's the pressure.

It's the target. To me, that is the difference. If you have a CSM and they're focused on building that relationship and talking through the use case and doing all that, there's a version of post-sales discovery where I think you naturally find those opportunities to sell.

It's different if I've been given a quota of where I need to hit in terms of revenue expansion, because now it's influencing the way that I talk to the customer. No longer is the priority, okay, I'm trying to talk to you about this and discover this through the relationship. I'm saying, wow, I got this target on my back and I have to try to hit this number.

That comes in and I think that disrupts everything and you lose some trust. I think that it's really important that customers do see that we are different than sales. I think that is part of the trust factor.

They can't think that we're just a wolf in sheep's clothing, that we're ultimately there to talk to them in order to sell them stuff. They need to feel like CS is different. That's why I think that it's not that the upselling is not good, that we shouldn't do it, because we were just talking about this in terms of, I think it is a good thing if we can tie like, hey, we did such a good job with this customer, they referred someone else.

I think we were just talking about this new net promoter type of, or a step beyond NRR. I think that to me, that makes a lot of sense, but it's the target on my back that really makes the difference. You need to do X in this amount of time and I think that's what screws things up.

[Dillon] (12:28 - 14:02)

Yeah. Dr. Mike, I fundamentally agree with you, but I asked the question about the happy medium because I do believe there's a happy medium. I think CS can live under revenue, the CRO.

I don't think that matters. I think the rubber meets the road if your CS team is being treated like an extension of the sales team, just on the other side of the signature, when fundamentally the way we do business is just so different. The limitations we have, the governors we have on what we can do are so very different than sales, so we can't be measured the same way.

To JP's point, I always say, I love when CS has a commission aspect, where they can be paid on deals that they bring through the door, whether they drive them from discovery to closure or if it's just a CSQL sort of thing where they identify the opportunity and give it away, but always the commission should be limited or only unlocked if you have retention at a certain figure and or customer satisfaction at a certain figure. If you neglect those to the pursuit of new revenue, then you do not get rewarded for it.

You've got to have that balance. That's always the way I've done it, designed it, and I think that's where we can live in harmony is if we can strike that balance. Anyway, Dr. Mike, this is an awesome topic. Thank you so much. We are out of time, but I would love to have you back in the future and discuss this further, but for now, we've got to say goodbye.

[Dr. Mike] (14:02 - 14:07)

Dr. Mike Gould Please do. I'd love to talk about commissions. I have big issues.

[Dillon] (14:08 - 14:19)

We'll leave that for another day because that's a teaser. I like it. I like it.

That's awesome. Thank you so much, Mike. Thanks.

I appreciate it.

[Voiceover] (14:23 - 14:54)

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