Masha
I guess my context, but also for the benefit of the blog, could you talk a little bit about sort of your role, your path to Customer Success and within it, I would love to hear a little bit about that.
Georges
Yeah, sure. So prior to my current role, or prior to my current company, I was in Customer Success, though we did not call it Customer Success at the time. It was Client Solutions. What we were doing is really achieving desired outcomes for customers, which really is the definition of Customer Success. But really, in my current role, which is at CloudHealth technologies, now acquired by VMware, now called CloudHealth by VMware. I joined as the first Customer Success person, you know, talking seven years ago. I have helped define Customer Success and the company hired the first CS folks there, grew the team etc. Today, we are about 130 FTEs between professional services, technical account management, CS, Support, and Education and Training. Quite a journey, of course. So I'm happy to share as we go over our conversation today, I'm happy to share the different lessons learned as well.
Masha
Yes, that would be fantastic. And actually, maybe, so you mentioned, there's about 130 folks in Customer Success, which sounds amazing. And you've got all these sorts of teams kind of under that umbrella, how is Customer Success organized at CloudHealth? Who reports into you? And where do you report into, which may be my first provocative question.
Georges
Yeah, an easy way to ask it, is to tell you how it was pre-acquisition. VMware is a very matrixed organization. So there's a lot of dotted line. And so I'll tell you at CloudHealth, our model was to have a CRO and have a VP of Sales and a VP of CS report up to this person, and the idea being is that we always viewed that Sales and CS are equal. They're both revenue generating functions. And the way we as CS generate revenue is by three ways. One is retaining customers, the obvious one. Two is expansion, which is upsell and cross-sell. And three is advocacy, which is we reference our customers, feed those CSQLs back to the sales pipeline.
Masha
CSQLs, very cool. This is the first time I hear that. [Laughs] Tell me a little bit more about, you mentioned, you kind of alluded to this earlier. But if we sort of step back, what does Customer Success mean to you? And how do you know that it's working?
Georges
Yeah, it's great question. Customer Success, for me is defined internally and externally. Internally, the goal is to make it a company wide mindset. It's not just a team that is trying to save customers from churning. It's really a team that is accountable for elevating the customer IQ within the whole company, to Finance, to Engineering, to Product Marketing, to Sales, to everyone—that's internally. And how do we do that, is by being the voice of the customer, and making sure we're educating everyone. Externally is, you know, I think there's a broad agreement on this definition is customer experience and customer outcome. Really achieve the desired outcome for the customers and wowing them with the experience while doing that.
Masha
I guess, how would you measure ‘wowing'?
Georges
Yeah, that's great. So for the outcomes piece, you have the classic APIs, net retention, gross churn. If these are trending in the right direction, you're doing something right. But these are not enough, right? Because you can literally be lucky and still achieve them if you're in the right space at the right timing of the market. So the other one is, how was the experience? So the experience is, you know, you have NPS, you have CSAT. But also you have customer advocacy, which is, I have an MBO for my team, every quarter, they have to provide a number of references about case studies, referenceable customers. So if the customer is stuck with you, they will never speak on your behalf or they will never write a case study. But if they really enjoy working with you, they'll do it any day. For some political reasons in their company, they can't go public with the story, they could at least internally. That's the experience part. And back to the outcome part, I'm a huge fan of measuring net dollar retention, because customers may be stuck with you because maybe you're the only solution in the market. But if you're doing the right thing, and if your solution really matters, the customer should also be growing thanks to you and that is when net retention starts to go above 120%. And that's a really good sign.
Masha
120%, wow, that's impressive. What is an MBO?
Georges
Managed by objectives. So, same as goals, we have the KPIs and we have goals. And the idea is that, you know, goals, they don't always have to be quantitative. They can be just, we call them MBOs, they can just be qualitative or quantitative.
Masha
Gotcha. Okay, sorry. Like I said, we're new to this space. [Laughs] And I guess maybe back to the way that you were previously organized, but also what have you seen in this space? Organizationally, what in your mind is the best way to setup Customer Success? And what is the worst?
Georges
Yeah, we've experimented quite a lot with this. We've been doing Customer Success for quite some time. And initially, we really didn't know how to organize the team. So for example, I started as a Technical Account Manager, and eventually my role became CSM + TAM, and we started learning that, you know, Support will do better under CS, PS will do better on their CS. And so we played around with it. The best way, in my experience, and my humble opinion, is that CS, all customer facing roles, or post-sales customer facing roles, should be under CS. And that's to truly make it a revenue generating function. So Sales does the pre-sale stuff, and CS does the post-sales stuff, and there should be great alignment between the two. And the best way to do it is to roll that team under a CCO, someone equivalent to a CRO. That's ideal. If this role did not exist, a CRO is okay. Never—and that's the worst part to do CS—never put CS as a function under a VP of Sales. In my opinion, that is (1) one way to not give CS the value it deserves. And two, there's a benefit to having CS and Sales working side by side together to achieving additional revenue, right? So really, if you put it under Sales, you pretty much admitted that CS is just for retaining customers, which makes it really reactive, which is not quite what it should be doing.
Masha
Right. Okay, that makes a ton of sense. Thank you for sharing that, Georges. I guess, if we look back, or if I asked you to look back over the last couple years, how have you seen the role of Customer Success evolve?
Georges
Yeah, it's quite amazing, actually, to see, even if I go back a little bit from the last five years, I still recall going to the Gainsight Conference, where the most of the presentations were around Customer Success identity, and really did not have a clear identity. It was about how to have a seat at the table, how to get budget for it, how can we show that it matters. And if you fast forward to the last two years, no one talks about that anymore. And now it's all about how to leverage and be included in a a product led growth design, how to really leverage data analytics to drive the right outcome. And it really, really has scaled, evolved quite rapidly. So in the last two years, I've been seeing a lot of those conversations shift to data analytics, not just more practical, but more predictive? How can we leverage the data that we have, and aggregate it to really come up with an insight that will help us make our customers more successful? Which is really interesting. And actually, Scale Venture Capital had a really interesting article just a few days ago, on the different themes they're seeing in the Customer Success software. So we're starting to see—or the way they described it, they're seeing CS software go under four different themes. One is, software that just aggregate the data, like Gainsight, like ChurnZero. This is what we use, we use Gainsight, and aggregate the data and just make sense of it. You started to see another set of software focused on AI. And I know this is a very interesting topic to you.
Masha
Yup! [Laughs]
Georges
The new key names in that field leverage AI Like Retain.ai and involve.ai I have this data, make sense of it, provide me insights, and based it on AI. And three, you have the software that are focusing on product feedback and product support—
Masha
Pendo...
Georges
Exactly, exactly. Pendo is the big name there. Based on the behavior of the customer, the platform tells me what they're doing. And even Zendesk, I mean, they roll out of support into kind of, how can I gather that feedback and provide something that our product managers can use to make the product better? And finally, tools that are really focusing on product lead mentality. If I want to scale, how can I really leverage a product to really guide the customers into their journey, instead of growing my Customer Success team linearly with my number of customers, So you really start to see these different players come into this and really evolve the industry altogether, which I find fascinating.
Masha
Yeah, well, so maybe to follow that on, and I'd love to chat more about that particular thing. But if you can send me the link, I'll be just oogling for this or whatever. But how do you see it changing over the next five years? Where do you see the early signals of trends if I were to hand you a crystal ball? What do you see?
Georges
I see that there's definitely going to be a lot of consolidation in this space from the software perspective. That's really the software side of things. And CS in general, I just see becoming more predictive. It's no longer about relying on on humans to just do what's right. We are always going to need to use CS, but a lot more automation will be involved. The b2c companies will do really well in that space, by leveraging the automation, for the b2b and enterprise segment, in particular, you'll always, always need a high-touch element to it. But again, even those folks will leverage the predictive data analytics and the predictive side of things to really do a better job there. So I can really see a lot of consolidations with the tools, and really have a few players that are providing the whole lifecycle of the customer, leveraging data analytics, leveraging insights from that to really provide the CSMs the right tools to become really predictive.
Masha
And from a role perspective, how do you see kind of the CS manager's role but also maybe the CS leadership role, how do you see that evolving? You mentioned five years ago, we were talking about, do we get a seat at the table? Two years ago, we were talking about, okay, this is how we get budget and those kinds of things. What do we do about it? What are the best practices? What's kind of the next conversation there?
Georges
Well, there's something we've already seen, which is the agreement, the violent agreement of the necessity of CSMs and CSM leader role, right. To some degree, CS is one of the hottest jobs on the market today. But today, this is still very much focused on tech companies. And again, very much focused on the subscription based companies. Many people will tell you CS is synonymous with subscriptions. I don't see that staying like that for a long time. If you look at other industries, think banking, for example, it's crazy how bad their customer service could be, right? I get random calls from a Relationship Manager from the bank just to check in on me and I have never spoken with this person, I have no idea what they're calling me for. So there's definitely a lot of room in the other industries. Think construction, think agriculture, think banking, to really leverage Customer Success concepts and really leverage the data that they do have to make the customer experience and the outcome better, right? So I can see this role evolving beyond technology, and other industries as well to become just like Sales, it's part of the equation of starting a company, you just have to have a CS department.
Masha
Yep, makes a ton of sense. Very cool. Thank you for sharing that. If I could ask you this, what's the most controversial opinion that you hold about Customer Success that you wish other folks in other companies, would hurry up and catch up to already?
Georges
Sure. This is my own opinion, so I have to have that legal language. [Laughs] Because it is controversial. But I don't believe that the customer is always right. And this is maybe a cliche to say, but I would go maybe one step further. And I would say, don't put the customer above your team. Don't just expect the customer is right on at the expense of your team. I'm a huge fan of a customer obsessed mentality. This is how I always run my team. But I also believe that ENPS is more important than NPS and in fact, ENPS—and there are studies that back this up—but ENPS is proportional to NPS. So if you really invest in your team ENPS, it will really drive the NPS higher. Just hire the right people. Embrace a fail fast, fail forward mentality, let them do what they are good at. And you will see the magic happen. Don't just take the customer's side against your team if you don't have to. So that's always been my mentality. And the result has been happy customers.
Masha
Yeah, wow. That is a really cool perspective. We talked a lot about Customer Success being kind of a sister revenue generating function to Sales, in a sense. Let me ask you this, value mean the same thing as revenue to you?
Georges
Value and revenue, they are different, but they are definitely correlated. If you look at our engagement model, we follow the LAER engagement model, which is land, adopt, expand renew. What we focus on is value realization. And you do that through a proper handoff from Sales, to the right onboarding slash implementation and ensuring adoption through value realization. And I believe if you get this part, the adoption piece, if you get it right, which means you have to get the onboarding right. But if you get it right, if the customers are getting value out of your solution, renewal becomes a non-event. And you're really just focusing at this point on expansion. So if you have sticky customers that can't live without your solution, but also really enjoy working with you, renewal becomes a non-event, and then you're focusing on expansion. So it does tie up to additional revenue. So value does equate to generating additional revenue. But I would still put them in separate buckets.
Masha
Yeah, that makes a ton of sense. And maybe if you could just dig a little bit more on, we sort of touched on this at the very beginning of our conversation, but is there a right time to start thinking about as a company—and let's assume, you know, b2b SaaS, for now. But is there a right time to be starting to think about Customer Success? Is there a way to think about Customer Success at the same time as Sales? Or is it always kind of a follow on function? Is there a point to have a Customer Success function, or at least mentality before you've secured your first customers? Or as your security your first customers? And this is, we can say like, this can be off the record if you want, because I'm genuinely curious about this as I build the company. [Laughs]
Georges
You know, when people ask me this question, I always follow up with another question, which is, when is the right time to hire your first salesperson? For me, it is equal. And the idea is you don't have to have—so look, there are multiple studies and benchmarks around having a certain amount of ARR ratio to CSMs, right, and they're accurate. In fact, when I do my hiring, I rely on those studies.
Masha
Do you use this sort of like 2 million ARR per CSM benchmark?
Georges
You know, not exactly because you have to calibrate it a little bit based on your company and industry and engagement model. So you may be wondering, well, if I only have five customers, do I really need CS? Well, yes, because when I talked about CS at the beginning, again, it's job is not just to retain those customers, the job is to create the processes, the programs, the the mindset of the company to really make it customer first. And if you are writing code that is not designed for the customers, then the customer IQ of that code is going to be low. If you're selling without setting the right expectations, you're probably selling to non ICP customers, which will eventually churn. So that's the idea. And for me, it's equally important and should be hired from the first day.
Masha
That makes a ton of sense. What is the one story that you wanted to share about Customer Success life that I haven't asked you about?
Georges
That's a good question. I was going to tell you about how it should be really brought into different industries. I'll share another story. I would say Customer Success post-COVID and what it's going to look. Because Customer Success, especially for CSMs, is a very customer facing role. And we set a significant amount of our budget to be there with the customers. And I think an interesting topic we need to look at is how's it going to look like post-COVID? I don't believe that now we're gonna just turn the page and we're never going to see our customers in person, everything is going to be via Zoom. I don't think that's going to be the case. But I do believe the number of business travels, the teams, the CS teams will be doing is going to be significantly less. And from experience, I used to travel, probably 60, 70% of my time, just being with the customers. And many meetings were just literally to go attend the QBR and go back just for an hour. I would fly four or five hours, stay the night, just for literally one or two meetings. And I think those days are gone. I really think they are. And we're going to see meeting consolidations and only important or urgent meetings, kind of being prioritized over just traveling to do a handshake. It's gonna be interesting to watch that and see how it changes.
Masha
Yeah, I wonder how that changes the dynamic because like you said, right, a lot of the work of a CSM or even a CS leader, it's about the relationship. And we've definitely over millennia evolved to do that face to face. So that's really great. And maybe one last cheeky question that I have for you is, we've heard Customer Success folks talk a lot about how they love to be superheroes for their customers, kind of saving the day. Or alternatively, we've seen people talk about how they love making their customers feel like superheroes in their work. If you had one Customer Success related superpower, what would yours be?
Georges
Not hiring superheroes, but building super teams. I believe superheroes are good for the first stage of the company where you're inherently reactive when there's nothing you can do but fight fire drills. I don't think superheroes are great for the culture later on. So I've intentionally focused on building super teams, where we embrace failure, and we laugh about it, and we enjoy what we do. So I would say if I had a superpower, it would be building super teams, teams that really enjoy what they do, and not just hire the top talent but also retain the top talent.
Masha
Right. That sounds great. Maybe one thing I'll ask before I also turn it over to you, because we've got a couple more minutes. And I want to leave that space, if you want to take it. But once we sort of cleaned this up, and I run it by you in terms of content, we would love to while we're sharing, if you have any questions for folks or asks of people, like if you're hiring or doing whatever, like, how can we help? Because really, the whole purpose of this is one, obviously, selfishly, we're learning a ton through these conversations. But the other part of this is that we've noticed, and maybe this is a little bit biasing your answers, so don't let it. But we've noticed that folks in Customer Success are kind of under-recognized. There's not a huge ton of celebration here. Maybe not in the same way that when the Sales guys go run that hill and whatever. So we've seen a little bit less of the recognition here. So we'd love to just kind of elevate those voices. So when we share, what would you like us to share on your behalf in terms of whether you have a question for people or an ask or words of wisdom, whatever. And I can leave that also with you, right? I don't have to put you on the spot.
Georges
Yeah, I'm sure I'll come up with something. But I think you kind of see where I'm going with all of this, which is, I really do view CS and Sales as equals. And you see a lot of CEOs out there say it to hire the best VP or CCO out there. But I don't say just because it's cool and it's a buzzword, I really do view them as equal. And I think we're not there yet. And it's not viewed as equal today, Sales is still king. And I think, over time, we're gonna realize that really it's just another function that is equally important and if you can help you amplify this message, I'm all for it.
Masha
Yes! And I noticed actually, while I was creeping your LinkedIn, that you were a founding member of the Breakout CS community, is there anything that you want to sort of share? Maybe just even how is that going?
Georges
Yeah, it's a CS community where people can literally do anything from asking questions, sharing tips and tricks, or even you know, using it as a job board for their CS jobs out there. I'm not as active as I would like to be, to be honest. But I think it's one of many very good platforms out there that are just sharing all these best practices, tips and tricks, and really adding a lot of IQ to the industry itself.
Masha
Yeah, that's great. In the last two minutes that we have left, do you have any questions for me before I let you go?
Georges
I would love to know more about Ampersand. You're gathering a lot of research, you're marketing it as as AI combined with research. I would love to know more about this.
Masha
Yeah. It's a great question. So in a nutshell, I guess this is what we talk about when we say we want to give Customer Success teams research superpower. So my background being in human AI interaction, but also in user research. I've realized that a lot of the conversations that the Customer Success Managers are having with their customers are extremely rich in customer insights. And they're in fact talking to at least existing customers more than even Product Managers and even user researchers just from experience, because that's their job. The interesting thing about that and we've seen this kind of validated, we'd love to get your take on this, through the Customer Success leader conversations that we've been having, is that that conversation to move it towards the strategic questions, for example, like, where do you see value of this today? But also, where do you see value tomorrow, whether it's product-lead, or even additional services, right, whatever it might be, but just how do we work together to make this even more valuable to you and to us, are really difficult for CSMs to have for a variety of reasons, one of them being the fact that these are kind of high pressure situations. In a sense, you might even be sort of measured, your performance might be measured on whether a customer stays or leaves or whatever, right? So coming right out and saying things like, where does our product suck? It's scary for people. So we're trying to see if there's an opportunity for us to actually create sort of a tool that allows the CS leadership and maybe the executive leadership to set up and sort of approve, in some sense, the kinds of questions that they want, asked on a kind of particular cadence, and then have that come through in, you know, the Zoom conversations that they're having these conversations on, and just have them very quickly, sort of ask them, structure the conversation a little bit, but also transcribe the answers and then analyze the insights out the other end, which allows the CSM themselves to feel a little bit safer in the conversations, actually extract the insights from what they're having a little bit more automatically, instead of them having to go back over it, and then have an opportunity to share with the teams internally that they're working with their management, but also product, sales, marketing, and potentially with the customers right to actually create that sort of like mutually valuable relationship. So that's kind of where we're at. We're still very early days. This is on a concept level. But yeah, I would love to get your take on that.
Georges
It's very interesting. And I will actually, if you go to my LinkedIn, I just shared the article from Scale Ventures on the active network. It's really interesting to seehow you have all these different players. And they have a nice matrix that shows you where it is. And the idea under the AI bucket. But definitely there is a lot of opportunities and a huge ever growing tab for really leveraging AI to do something like that. It's pretty interesting. I'm definitely looking forward to see what you do with it.
Masha
That's awesome. Thank you for taking the time. I really appreciate it. And yeah, we'd love to kind of keep in touch as we evolve, but in particular, for sure, the next thing you'll hear from me is our cleaned up transcript and see how we move forward with that. Think about what you want us to sort of be able to put forth to the community that can help you and have a great rest of your day. Enjoy fraternity!
