One of the chapters I am covering in a trend report I am working on (As a Service Trend) will focus on technology ecosystems. Technology is fundamental to all of the solutions in the new As a Service sphere because of the connection it provides to data, between customer and provider, to physical things, etc. From an ecosystem point of view, I will also be touching on technology platforms as well as looking at the organisation as a platform – a view being explored by many.Continue reading “As a Service trend research – technology ecosystems”
I attended Pulse Europe (the 4th) on the 8-9th November, an event run by Gainsight, a Customer Success (CS) technology vendor. They run the larger, main event in the US and I had the pleasure of attending last year where I captured the State of Customer Success 2017. So this is a timely update with a local, regional flavour.
Below are some general observations, main takeaways and then I captured notes from the sessions I attended (including my spin on things).
Chatting to the GM of the European office of Gainsight, Dan Steinman, I concluded that not only were Gainsight in the CS technology business but also in education. He agreed.
By that we didn’t mean the services part of Gainsight where they do offer education in support of their technology (see Gainsight University). I mean the education of an industry, a nascent one that needs it. It’s in their interest of course, to grow the category and also the industry within which it operates, mostly Enterprise Software [as a Service].
We also discussed how other industries could benefit from learning about the CS business, like car manufactures which I have written about before: The connected car vision is missing a few connections
I digress, the point is Gainsight take a leading role in informal education and for helping grow and share learning between individuals, companies, for the category and beyond. In this respect they are very successful and the event achieved that aim too.
Main take aways:
1. Tighter integration between product and CS, the move to self service and broader alignment
This was a theme driven not just by Gainsight on the back of their acquisition of Aptrinsic (more here). I’ve been seeing this more and more and driving it in my work and it is definitely a growing trend.
It encompasses two elements:
(1) greater collaboration between product and CS teams on high touch interactions with and insights from customers and,
(2) the built in onboarding, help and product adoption features in products that drive end user self service.
This trend is possibly the most evident but there is also the need, oft talked about, of greater alignment within customer service oriented teams and with sales and marketing teams.
2. Lack of innovation
I found at this event and on the whole that there are no real innovations being driven or presented other than in company products themselves (point above). I am writing an eBook / trend report about this and in the work I do mentoring startups and it is a main pillar I stress.
I think in an industry or category often struggling to find its way (see next point) we will have to do more to innovate and increase the impact of customer success activities. There is so much scope since the customer is at the forefront of everything and technology is changing so much and so fast. But innovation needs to come to business models, processes and people too.
3. Hype Cycle
The chart below was presented by Nick Mehta, CEO of Gainsight in one of his keynotes. Billed as a maturity chart, you could also easily see this as a hype cycle. I’ve been through the early curve twice in companies and seen it happen in others. I’ve also seen it happen with many technologies which the cycle most often refers to. I got an impression that as an industry we are in a trough of disillusionment.
Perhaps I’ve been in CS too long and lack the starry eyed optimism of a newbie but I’m saying this from the perspective of what I hear. I hear too much justification, disagreement on the function and its impact, arguments on who owns the customer, fights with other disciplines like customer experience, etc.
It just feels like the conversations are typically of the kind you find in the trough of disillusionment. It’s also a period characterised by lack of innovation as mentioned. That’s not a bad thing. If I’m right, I’m looking forward to the slope of enlightenment for the industry as a whole because on this, I’m a true believer 🦄 🚀
Day 1 – 8 November ’18
Keynote – CS trends
This is a list that Nick Mehta, CEO of Gainsight ran through:
- CS drives sales. Prospects talk to customers and advocacy is key. So if you ensure customers are successful, they will act as willing reference points and that will help close deals. I totally agree with this and think it’s an undervalued KPI (from the vendor point of view).
- Company-wide priority. Top down involvement, endorsement and integration into operations is critical for CS success. Having been a part of two reorganisations because this was not done right from the start, I absolutely concur. Where CS fits is still being debated though and the dust has yet to settle on that. More on this later.
- Career success. CS is one of the twenty most promising jobs of 2018. Growth in Chief Customer Officer’s was talked about and the fact they are primed to be the next CEO’s with some early examples quoted.
- Prescriptive. There’s a greater drive to commonality, standardisation and bench-marking. The periodic table by Gainsight below is an attempt to define this. With this lacking in many of the organisations I’ve worked in and with, it’s going to be a challenge to define for an industry but I agree it’s critically needed.
- CS movement. The growing attendance at Pulse conferences and book sales was pointed to as evidence of a growing CS movement. A little self serving perhaps but I can definitely feel an uptick in tempo over the years. The jobs market is also an obvious indicator and aside from CS being a most promising job, the number of openings I’m seeing is rising almost exponentially.
CS in EU
- Pockets of activity mentioned like London, Berlin, etc. For me they echo the startup centres in EU where often the bigger, better SaaS companies reside and thus CS naturally follows.
- EU is learning and following fast and a couple of stand out companies were quoted as evidence of that – see next point (in brackets is what they are excelling in):
- Slido (Voice of Customer); Intelliflo (ROI); ReviewPro (tech touch + human, e.g. 3 mails following sign up – if no open, human contacts); Signavio (customer health); Attraqt (exec alignment/sponsorship – internal); Response Tap (success planning); Workfront (risk management); Gainsight (stakeholder alignment – external).
CS and Product
This was presented by Travis Kaufman, VP Product Growth, Aptrinsic on the back of Gainsight’s acquisition of Aptrinsic. Ultimately its a reflection of the strategic direction Gainsight believes they need to take to grow the market and no doubt themselves. There are some compelling arguements.
- Sales and Marketing have done it (quotes about Salesforce’s acquisition and integration of several marketing platforms into their offering), now CS and product need to. Hardly compelling evidence but some other drivers were mentioned which do make sense.
- Driven by
— Data. Drive new opportunities based on usage data.
— Scale onboarding by extending the journey into the app.
— Influence product roadmap based on data not opinions
- Product is way to scale CS engagement for high volume, low touch accounts. I’ve written about this multiple times here and here.
- Feature / user feedback built into the product and covering onboarding as well as ongoing use will expand.
- Sales and marketing consolidation will be followed in the CS / product world is the firm prediction – I’m rooting for this outcome.
A talk on why CS is the new growth mantra which is based on the main C-Suite challenge around delivering profitable growth. 500 executives were surveyed for the insights amongst 10 brands: Microsoft Azure/O365, Tableau, Symantec, Adobe, Salesforce, SAP, Cisco, Workday, Dell-EMC, Marketo.
- A customer’s level of trust in a brand is the single most important
factor in a renewal decision (55% said so). Trust is the #1 influencer and counts no matter how long a customer has been buying a product or service.
- First impressions count – deployment (installation, activation and setup) is the most important CS activity. It is 2 times more significant in determining whether a customer will renew. A bit of confusion on their part here. As pointed out in various other presentations over the two days, I would separate out CS management from deployment activities and for me its much more about how you launch to end users: Launch like a boss – bringing consumer startup practice to your enterprise technology platform.
- Longer term customers value access to self service tools and the ease of renewal – 73% think its important and it can have a 20% influence on renewal decisions. I love this since it validates a lot of my thinking: Role of Self Service in Customer Success.
Must win moments for a CS team
By the author of The Three Value Conversations: How to Create, Elevate, and Capture Customer Value at Every Stage of the Long-Lead Sale. This presentation was about a messaging approach for customer renewals, price increases and upsells. It was part based on a quote referenced by Nick Mehta (see screenshot) that renewals are really resells. It also emphasised the need to tell a better story. Great example of Malcom Gladwell’s Tipping Point book success – he wasn’t the originator of the theory, Morton Grodzins was. But Gladwell popularised the theory through better story telling. Other points:
- Selling (acquisition) stories need to be different to staying (retention) stories because the latter reinforces preference stability as opposed to disrupting change / status quo bias.
- At point of renewal, there is no sense selling on new features/functions which many sales people do, but rather on reinforcement.
- Some really good scientific and evidence based reasoning (neuro science, behavioural economics, social psychology and decision science) on why good storytelling works. Totally get this having done several sessions on storytelling before – key CS skill I would say.
- Focused around the customer retention path post sales (why stay), but also answering questions around why the customer should pay more and evolve (expand).
ResponseTap and Micro Focus went through some of their common approaches.
- No common view of desired customer outcomes between sales, deployment, onboarding, etc.
- Single source of truth needed – one document
- 3 time lines created for a plan (short, medium, long)
- Everyone agrees on common outcomes before plan is approved – sales, CS, support, etc,
— Having a common customer journey between departments
— Tracking NPS at different stages is useful and should cover various journey phases: sales, onboarding, then service/support and CSM
— CS should review internally feeding progress back to the organisation
— Improved cross team collaboration and decision making
— Better renewal rates after implementing
This applies mostly to the support function and was presented by someone from Insided.
- Most customers don’t want to contact companies for support (72%, Forrester) so important to address well from a self service point of view.
- Free trials and freemium customers also need support
- Automation is not the answer for everything. 7 out of 10 interactions with chat bots fail.
- Including community responses in help centre search responses is good practice – Google quoted as example.
- Peer to peer answers are viewed as more trustworthy. Best is for the company to focus on company and FAQ material and the community, the long tail of other queries. Coincidentally I just came across another research based post that bears this out: Why Online Communities Are The New B2B Superpower
— From the post: online communities are the third most common digital engagement channel for post-purchase customer feedback or support (after email and website).
- Support or help in product is best and voice queries are rising (digital assistants).
Scaling user onboarding but keeping a personal touch
Again this was presented by Travis Kaufman, VP Product Growth, Aptrinsic. I agree with this approach from a scale, tech touch point of view. The only problem I see with it is the potential over emphasis on features. This can be a distraction from the all important emphasis on business outcomes which should never be forgotten.
- Most of the user experience happens within the product and so it’s a good reason to focus on this which I totally agree with.
- Onboard users to aha moments – key features you want to emphasise.
- Onboard to new features as they release
- Re-engage users to complete critical tasks
- Product teams need to know what feature adoption rates are and also what the qualitative feedback behind that use is. Work with CSM’s to leverage this and drive or accentuate further use.
- Derive personas for specific use cases. Ask in qualitative surveys or deduce from the use of a feature and who you intended it for.
The quest to be LAER efficient
From the President and CEO of TSIA (Technology Services Industry Association) J.B. Wood, a great overview of the industry as a whole. Also touching on the broader opportunity with XaaS (Everything as a Service). The TSIA is an association that works with the top 400 tech companies to understand what they are doing and what impact that has.
- LAER: Land Adopt Expand Renew. Where XaaS meets profitability – see operating framework in slide below.
- 5 key markers on the path to LAIR effectiveness which is comprised of 4 stages – see this also in slides below
- Monetisation of CS falls in the effective phase. Allows for investment in better CS activities
- Point made that Cost of Sales and Marketing (COSM) is too high in cloud companies because customer acquisition costs (CAC), customer expansion costs (CEC) and customer retention costs (CRC) are based on activities being driven by traditional sales and marketing teams.
- If the CS org were to manage activities covering the latter two it would drive down COSM. Fair point and this lead to a lot of discussion around the CS org owning renewals, upsells and expansions – the standard discussion that always comes up and was covered in other talks/discussions. On this topic I feel like the verdict is still out even after years of discussion. See also Nick Mehta’s point on this from his keynote on Day 2.
CEO’s view of CS
A panel discussion between CEO’s of Futrli, Precursive and TaskRay facilitated by the CCO of Box, Jon Herstein. All had robust CS functions so naturally the input was mostly positive.
- What can you do to make CS successful? Spend time with the team. Understand the problems customers and CS org experiences. Get quantitative/qualitative feedback on ideal CS function then build it. Get people to think like customers – spend time there.
- How to avoid silo’d CS function and ensure cross company accountability? Success hacks across functions. Have hypothesis that will achieve CS outcome then try prove. Non traditional customer facing roles spending time with customers, e.g. engineers. Love the hacking idea – I’ve written about this before: Success Hacking
- Where will you invest? Automation of tasks so CS can focus on value work. Love it – say no more.
- Any questions from VC’s around CS? A resounding YES around what is being done and how. They want insights into CS like scope of effort, ration of CS individual to customers, on what, etc.
Day 2 – 9 November ’18
Keynote, Nick Mehta, CEO Gainsight
Rumination on the raison d’etre of the CS org and where and how in the organisation it works best based on Gainsight experience. All makes total sense and as it should be for now.
- Started on the debate over CS being a role or strategy. If not solved there’s a danger we lose the initiative. It should and can be both.
- The CS charter: CS (Customer Success) = CX (Customer Experience) + CO (Customer Outcomes). CS > CSM (Customer Success Manager), in other words, Customer Success encompasses CSM’s and many other areas besides.
- Lessons from Gainsight:
— CS and Renewals separated at Gainsight. Different skills and tasks and difficult to do both well.
— CS and Account Management also separated. Expansion happens off the back of adoption, outcomes and different audience relationships that CS build.
— CS and Services. Handover opportunities and knowledge for skilled teams from CS to Services to implement deep work and methodology (project management).
— CS and Marketing. Building the right outcomes and thus advocates happens in CS, formal references and stories developed further by marketing.
— CS and Support. Strategic, exec stakeholder and impact work is for CS. Technical skills, process and speedy results should be covered by Support.
— CS and Product. They have so much common ground: adoption breadth and depth; customer feedback, etc. Too often they have different ways to measure and silo’d thinking. Again example of sales and marketing and need to combine CS and Product which Gainsight are doing.
— Exec team and CS. CS provides insights to customers, execs can amplify, drive resources, decisions and problem solving, etc.
Sirius Decisions: B2B alignment and impact on business performance
Sirius Decision are a research and advisory company focused on demand generation and performance measurement. They presented findings from various bits of research.
- B2B Revenue Engine expectations have been increasing, challenging organisations to drive stronger alignment across customer success, sales, marketing and product teams.
- The historical view of alignment predominantly around the buyer is no longer sufficient to drive growth and profitability rates ahead of the market and the competition.
- Customer engagement is one of the six critical areas of alignment that B2B revenue leaders must focus on.
- Achieving and maintaining alignment within customer engagement initiatives requires a roadmap to realise the business impact it can deliver to the organisation.
- Engagement scoring (for all the various customer interactions) highly sought after by CMO’s
Customer Success at Cisco
Alistair Wildman, Head of customer experience EMEA was interviewed on stage. This is what he shared after being there and in his position for 6 months.
- They call it customer experience which includes CS. Covers other functions: support, service, etc. So it’s the whole post sales experience.
- Hardware has been wrapped up into services subscriptions model
- 80% of post sales efforts happen through partners – they are key in strategy. Not like Microsoft apparently although not true. Good analogy of a pit stop, one tyre is changed by Cisco, the other three by partners.
- They have account based CS which is a direct engagement model and technical CS which will work with partners on customer challenges.
- Data is key. They are still in the process of building dashboards to understand usage which they think will take 2-3 years.
- Lessons from Salesforce (where Alistair worked previously): Hire for skill not for count. Senior people that know how to do the job. Develop skills through customer engagement simulations with product for training.
Data science at Gainsight
I attended this session thinking I was going to get insights into the cutting edge practices adopted by Gainsight but it was more like a basic intro to data science. Here are my brief notes before I left the session.
- We are heading into the age of predictability which is where we want to be – anticipating trends, heading off negative ones, leveraging positive ones.
- Tasks to consider are: identify the nature of your data sources; quantify and get a score for your data outputs, understand and plot maturity stages, move up the scale.
- Prescriptive analytics understands causes for outcomes and prescribes solutions upfront. Needs AB testing of playbooks. This is the kind of deep level insight I was hoping for but we merely skimmed the surface.
How do VCs see CS
Joyce Liu (Dawn Capital), Paul Morrisey (Battery Ventures) and Stephen Millard (Notion Capital) were interviewed by Igor Beckerman (CFO Gainsight).
- Usage and adoption is a clear priority early on. Value comes later. Customer advocates seen as important and so too Customer Advisory Board’s (CAB).
- Metrics in the boardroom. Predictability and causality key. What are targets likely to be and why are they what they are.
- How much to spend on CS. Depends on whether the company has big end customer’s vs small end customer’s. Onboarding should be a big investment. Where early value is seen with correlation on outcomes, investment goes up. CS can be a cost centre in the early days but profitability is important later.
- CS leaders. Some of the best were waiters in the past – they all have a love for service. For larger companies, those that can have quality conversations across a broad range (multi functional). Systems thinkers and those that can take multiple perspectives (customer, industry, vendor)
- CCO to CEO. If former responsible for 90% of long term profit that stands to reason it will happen.
- Decision factors for investment. Talking to customers to get their views on the company. Tools and processes in place are also a key decision factor.
Brain Cox came and spoke on astronomy and the result was 🤯 Some excellent perspective after two days of intense CS overloading.
This is about a recent customer experience I had with Avis which has cost them my loyalty.
This is not just a rant, annoyed as I am. I’m capturing this kind of story as a way of illustrating what good or bad customer experiences look like for my new eBook / trend report. Its unfortunate I had to be the one experiencing it but I’ll put it down to research costs :)
The ironic thing is I am a Preferred member (to their loyalty scheme) and have given them my loyalty for many years. No longer. You could see this as an outcome of my experience – impact on customer loyalty. Another is the fact I’m so incensed I’m writing about and sharing this.
I used to hire cars at least every other month for work purposes over a period of 1-2 years about 4 years ago. Thats when I signed up to the Avis Preferred scheme. I’ve been using it less since then but at least a few times a year (work and personal) and had stuck with Avis throughout.
I went on holiday to Italy for a week on the 26th of August this year with my daughter.
I rented with Avis as I do countless other times – I use their online booking platform. I’ve often had problems with it functioning as expected but not this time which anyway is not the point of this story.
I had to book to return the car at a time when the returns office was not open as my flight back was too early.
I picked up the car in Venice. It was busy. The wait was really long and my Preferred status was of no use. When I eventually got to the counter to process check-in, I asked about dropping the car off at such an early hour. I was assured it would be no problem and I could pop the keys off in a box outside the office.
I scanned the car before setting off as I always do and could see no untoward damage apart from some standard scuff marks as I had often found. I had waived additional insurance as I typically do so always check on these things.
I had a great holiday. My daughter and I arrived early on the 2nd of September and dropped the car off. Again I walked around the car with my daughter and the car looked exactly as I had found it. I dropped the keys in a box outside the closed door of the office where there was someone inside cleaning – he noted me and carried on cleaning.
The picture below was taken from the business class lounge and you can see how early it was.
We landed and while waiting for baggage I checked various messages. Two were emails from Avis. One apologised for my wait on first picking up my car and offering me an upgrade the next time I hired a car.
The other told me they had found a scuff on the car that allegedly was not there before they had given me the car and that they would be charging me €293.02 for the damage. Below is the evidence they produced which I struggled then and now to make head or tail of – check alternating positions between zoomed out and close up.
I immediately (still waiting for luggage) tried to call them but the various options all said they were only available during weekly working hours. I then replied to the first mail apologising for the wait saying I had no problem with the delays but I did with the accusation of damage and the charge. I strenuously denied I had caused any damage AND refused to accept the unreasonable charge.
Moments later I received a response from the same person that had apologised saying he would look into it for me.
On the 26th of September after getting back to work and a busy period where I forgot about the issue I received an email to say that the amount had been charged to me. I confirmed that after looking at my bank statement online.
I immediately called up and after an interminable wait got through to someone. I questioned why I had been charged without being given the chance to go through a due process and after not hearing back at all on my first mail.
They asked me to mail through my initial mail which I did and that they would come back to me within sixteen days with an answer.
Sixteen days came and went and still nothing. On the 21st of October I called again and after another very long wait I got through to someone. They acknowledged they had failed to reply within their stipulated time and again apologised for this and that I had to call them. They promised a response within 48 hours.
I received an email within that time and the response was basically that they would not refund me the amount and that was it.
Why I have such an issue and this is a bad experience:
- Their lack of due process which presumes me guilty and takes my money before I’ve been able to resolve the matter – I have still not been able to discuss and dispute this properly. I’ve not been able to speak to anyone other than a call agent who did not deal with my case. And I was only ever pointed to email as a means of communication.
- Their disjointed response management – I communicated with the hiring office in Italy, the UK call centre and the damages department. There was no single thread of communication between Avis and I and these three entities which is what they point to for delays and lack of response on my first dispute. This is their problem not mine yet I suffered the impact.
- The time it took to get to an answer.
- The fact I had to chase them.
- The unreasonable cost. If I concluded the fault was mine which I have still not, surely Avis must be able to get this repaired at far lower cost? I assume they have many of these cases and cars needing to be repaired at once so must be able to get better rates – why have they passed this exorbitant cost onto the customer?
I remember when I did my Masters in Marketing we studied Avis as an example of masterful positioning – their “We Try Harder” campaign which they still use. Its a pity they no longer live up to that claim, if they ever did. Well at least they won’t have to try harder for this person who is no longer a customer.
After several months of wrangling and back and forth, Avis decided to refund me half the €293.02 they were charging me. At least half a solution but not enough to get rid of the bad taste completely.
The Subscription Economy
Advances in technology, economic pressures and shifting cultural norms mean new models of ownership are gaining attention in many industries. People are increasingly interested in consuming and paying for temporary or limited access to goods and services, rather than purchasing them outright.
Subscription-based models in which companies offer ongoing access to a product or service for a periodic fee; rental models that give consumers temporary use of a product or service; and sharing models that allow groups of people to jointly share ownership of a product or service are among the preferred options.
It helps that there are major success stories where companies have proven the economic model. Netflix where consumers don’t feel the need to own movies and Spotify where they don’t need to own the songs, to name just a few.
It has been more prevalent with consumer software. Enterprise software has lagged somewhat as it always does, but it has caught up fast.
Behemoths like Microsoft, Adobe and Oracle are transforming their businesses and turning them around to pivot on these new business models. Some would say Salesforce, who was born in the cloud, popularised the movement.
These enterprise software companies have given rise to a category of business called SaaS, or Software as a Service. For a good explainer of a SaaS business see this article from Salesforce. A fundamental premise of a SaaS business is that the software is not owned by customers and paid for on a subscription basis.
Businesses not traditionally in technology are eying the models too and trying them on (highly recommended while software eats the world). The best example is probably Amazon Prime. Amazon Prime is an undisputed success and not just because its latest Prime day has broken all records. From this article, “what sets Amazon apart is its undivided focus on improving the customer experience, something Bezos has talked about at length”. Amazon Prime plays a leading role in driving that customer experience.
Subscription business are far from new but how technology is utilised to improve customer experience is (especially in utilising data about customers needs and preferences) and it is making all the difference.
At least one of the reasons for Unilever’s acquisition of razor subscription service Dollar Shave Club for $1B was that it was a subscription business with recurring revenues. Another was that it used technology to build incredible relationships with customers based on its understanding of how they used the product
Another interesting business expanding into subscriptions is Nespresso.
NOTE: I am using the term subscription economy as a pretty broad, catch-all term to cover many types of business. As mentioned subscription businesses are not new and so I don’t want to cover only the new types of SaaS business I’ve already mentioned. And it does not just have to be about a subscription. Wherever there is recurring revenue, some kind of consumption based payment model, even pay as you go, I’m bundling them all under the term.
Trusty Wikipedia has one of the better and most succinct definitions of customer experience I thought I’d share:
In commerce, customer experience (CX) is the product of an interaction between an organization and a customer over the duration of their relationship. This interaction is made up of three parts: the customer journey, the brand touchpoints the customer interacts with, and the environments the customer experiences (including digital environment) during their experience.
On the three part distinction made in the definition above, this Harvard Business Review article has a good explainer: Understanding Customer Experience.
It should probably be a given but I will emphasise it that when you run a subscription business, you have unparalleled access to customer interactions and the data it creates because of the ongoing and recurring nature of the relationship.
Insofar as the subscription economy is concerned there is one major reason why customer experience is so very important. In a subscription business where the economic value a customer provides is not based on a one off payment but recurring payments over time, the imperative is for the provider to keep those payments coming in for as long as possible.
As long as the customers experience is positive, the fundamental presumption is customers will continue with the subscription. If not, the subscription can be stopped (notwithstanding the longer term contracts that enterprise customers frequently sign up to but at some point they are still able to).
The three fundamental elements of customer experience management are:
- Being able to map the journey your customer takes
- Track their progress on the journey through data collected while on it
- Take remediating action where necessary or constantly improve the journey and experience
The data should help decide how well the journey is going at any one point. The first is done through a mapping exercise and there are many approaches to this – one of my favourite is Adaptive Path’s approach which has its own site: http://mappingexperiences.com/
All is not well in customer experience land:
A positive customer experience is deemed important but only 3 out of 10 organisations match customer expectations and yet 8 in 10 are willing to pay more for a better experience. 75% of organisations believe themselves to be customer-centric but only 30% of consumers agree to this.
The source of those statistics is a report from Cap Gemini – The Disconnected Customer: What digital customer experience leaders teach us about reconnecting with customers. But you don’t have to look much further to find similar statistics and as alarming as they may sound (similar to to the “80% of change efforts fail” that some discredit), you have to admit where there is smoke there is often fire. So much work is still needed.
The role of customer success
I’m not suggesting a customer success team should be the single custodians of the customer experience and drivers of the subscription economy. The whole journey has many touchpoint that go beyond the success teams remit and the business drivers too broad for that. In the past I’ve mapped where I think a success team can and should play a prominent role and where it supports efforts.
Here at left is how I tried to position the role of the CSM in an organisation based on my experience at Microsoft helping to run first Yammer then O365 Customer Success practices.
SaaS companies in particular, where subscription models drive recurring revenue, know that a good experience is critical. You’ll most often find a team of dedicated customer success managers, supported by automated and data-driven processes and scalable methodologies in a SaaS startup. It is a relatively new practice after all. As the world moves to subscriptions where experience is key, learning from the best in customer success is what a lot of this report will cover. I will also make the case that it should be expanded to other relevant organisations that have an interest in driving recurring revenue and great customer experiences as a means of doing that.
When I attended the Pulse 2017 customer success event I found out a lot about the latest best practices. I wrote about them here: State of Customer Success – Learnings from Pulse 2017. That includes links to customer success explainers but this one I wrote is probably the most succinct if you want to know what a CSM does: Role of the customer success manager.
In particular at Pulse 2017, McKinsey spoke and made the connection between customer success and customer experience in research they are currently undertaking. Take a look at the deck of slides they presented (thats a pdf and the audio is here) that covers the latest status and findings of the research. They make a clear link between customer success and customer experience and this is the essence of my hypothesis. Which is, that customer success activities can and should be studied to understand the potential they have to be key drivers of customer experience in the new subscription economy.
More will be touched on in the eBook but for now an outline of the 10 areas I will explore further are below.
10 ways customer success will make you win
These are just high level titles and descriptions – for the detail you will have to wait for and read the eBook :) They cover elements of a good customer success practice that you can apply in order to drive a good customer experience in a subscription economy business and achieve the success you envision.
1. Mindset and Culture
As mentioned in the Cap Gemini report, many companies think they are customer centric. The main problem is that customers don’t agree. The difference between saying you are and being it is often based on mindset that translates into action and ultimately experience. When you think a certain way, you act accordingly and this permeates the experience people have of you. Its no different with organisations and the employees that create experiences with customers. So you need to live and breathe customer centricity at the very core of your company culture – that is easier said than done.
Success is also a mindset game. Successful people often start out by defining some parameters of success and then set out to achieve them. They are goal and outcomes oriented. This is generally true of all businesses but has to be even more so for a success oriented part of the organisation.
Customer success teams have it not just in title but also in their marrow to focus on the customer and the success they achieve using the organisations products and/or services.
You have to start somewhere and these are the foundational building blocks of a good customer success practice – outside of building the right culture and mindset referred to in the intro. These building blocks provide the foundation to expand and scale your practice and need to be in place for overall success.
This means a robust approach to planning for and executing on the right strategy for success. It most often focuses on usage being made of and value being derived from the product or service, by the customer. It should also include a robust view of the customers experience journey and how to influence it at every point.
3. Data, Metrics and Tech
This will tie in with the methodology because you cannot manage what you don’t measure. One of the most important metrics is Net Retention. What Net Retention means is, if you never sold to another customer, is your customer-base a growing entity (quote from Dan Steinman, Chief Customer Evangelist, EMEA at Gainsight)? How you measure (meaning the data source and the reporting tools you use) are equally important. Then there is the platform or tech stack you use to manage activities, workflows and processes for you success team.
4. Practice and Leadership
Leadership is not so much about looking to a single leader but leading customer success practitioners doing excellent work with customers. After all nothing succeeds like success and seeing colleagues succeed and how they share that is often a core part of a customer success practice. But building a practice does mean having the right intent for customer success and experience activities and senior executives driving that and appointing someone on the board ideally to drive it is critical. The Chief Customer Officer is a new kind of CxO that seems to be and indeed should become more prevalent.
The subscription and experience business is such an iterative one by its very nature. Experiences vary so much by customer and continue to evolve and subscription models can be constantly tweaked as the data provides feedback and evidence of what works and doesn’t. Responding to this is key.
5. Segmenting Customers
Not all customers are equal, at least insofar as they contribute to net revenue retention. Some are deserving of different treatment. Those that account for greater returns are naturally the ones you will tend to focus on more but that shouldn’t be the only approach. There are many ways to segment customers and target different activities for each of them and I’ll cover that all in the eBook.
6. Scaling the Team
When you are a startup and have fewer customers you can afford to do things with them at a deeper level and piecemeal. At some point though, as your organisation and customer base grows, you have to start getting organised. Putting in place processes to make repeatable work easier to manage and execute is one area of effort. Understanding scale models like revenue per employee mapped to customer book size is another.
7. Scaling the Customer
As mentioned, nothing succeeds like success, especially when your customers play a hand. If customers are successful in the use of your product and/or service (i.e. they gain value from it) there is nothing better than enabling them to share that onwards with other customers. I’m talking about creating and nurturing influencers or champions of your customers. Not only will this bring other customers on board (think testimonials or references) but it provides evidence of great customer experience that spurs on further great experiences.
By definition there will be less evidence of organisations doing things in this space, especially where success teams are set up (at least when they are called that). The fact is you cannot be standing still and although we are at an early stage in many of the practices covered, you can and should constantly be looking at ways to innovate how you deliver value to customers through use of data, technology and new business models.
8. Automation and AI
To some degree this is about scale too. Automation refers to the automation of interactions the organisation or product has with customers. It can cover marketing, service/support interactions and/or educational interactions. It takes interactions away from humans which is where scale comes into it. Things are at an early stage but many companies are experimenting already and doing some very interesting things which I will document. AI is playing an increasing role in this too.
9. As a Service
As subscription models expand in use and favour as a viable business model for more than just technology companies, traditional companies are experimenting and innovating how they incorporate this into their offering. I’ve already mentioned a few that are doing things in this space but I will do a thorough review and share examples of what companies are doing in this space to adopt the practices and innovate themselves.
10. SaaS 2.0
These are the companies and success teams you would expect to be taking the practices to the next level. Teams here are combining and innovating various factors to drive truly exceptional customer experiences. These kinds of teams operate in organisations that understand the role of customer success in driving great experiences and leading to increased revenue and profitability for their subscription business. It’s a two way street as teams innovate and achieve great results and organisations give them a greater role to do so.
You’ve all heard the news. Jobs will come under fire if not already so. Machines, robots and Artificial Intelligence (AI), are going to take over. The Matrix, Terminator, could all those movie scenarios have had it right?
What happens if it’s all true but the ending is not a tragic one. Can we find a happy coexistence with machines? In an alternative scenario, machines would be our servants and tackle the hard tasks they are brilliant at. Retaining, processing and repeating rule-based information. Complex calculations in milliseconds. Massive infrastructure and mechanical jobs that require strength, are dangerous and may even need to happen on other planets and atmospheres.
And whither humans? With land, capital, and labour safely being managed on our behalf, might humans be able to realise their full potential? Creative powerhouses constantly renewing and improving, stimulated by human interaction and fired by endless imagination. With time to put that strength to work.
All questions I have pondered leading to this post.
It’s important to start somewhere. A diagram is one of my favourite ways to synthesise thinking. So I drew some lines.
An explanation of the diagram
I hope it’s straightforward enough. I struggled with this for a while and am still not sure I have the right angles. I’m not referring to the arrows :)
I grappled with how to characterise the trajectories of the three arrows. I mean what did they constitute. I concluded that they were learning priorities. Whether by humans or machines, they were directions of learning intent.
By machines I mean AI for the most part. In the case of super AI even more so. By definition it is self learning and its intent is to become super intelligent.
Robots are something that are going to take over physical work. They have mechanical capability more than intelligence. Their intelligence will come from computers that drive AI.
Together you could see them as a whole – machines.
If all projections on AI are correct, then its trajectory is due for a massive jump soon. Capacity to learn as well as intelligence will rise exponentially.
Human learning is different. Learning directions and priorities are often imposed. By schools that teach who are often lead by organisations that hire based on skills taught.
I have distinguished between STEM based learning directions and creativity based.
STEM stands for science, technology, engineering, and mathematics (as an educational category). This has dominated learning priorities for at least the last fifty years. As mentioned, institutions of all kinds impose it.
Creativity, if seen beyond the narrow confines of education in the arts, has lagged. That in my view, should change and I’m not the only one. I’m suggesting we will need to see a massive increase in learning emphasis, both at school and at work.
Creativity is as important as literacy. Sir Ken Robinson
I assume there is going to be a need for humans to take care of the machines. Even if humans will not remain on a par, they will have to maintain their STEM focus. They will need it to maintain the machines – at least in the near term. So the STEM based learning trajectory continues roughly on par with past trends.
As for my vertical axis, here too I grappled. I was thinking what is the point of all this activity. For the moment I have couched it in the familiar. Innovation and productivity are after all the holy grail that many organisations aspire to achieve.
So that will do for now on my current standpoint. My hypothesis in essence is as follows:
Machines are self learning and will become super intelligent. There will soon be an exponential rise in their capability. They will outstrip our current STEM based capabilities. We will no longer need the capabilities as much since we can rely on machines. Mastering our creative capabilities is the next frontier. We will use them to put ourselves and machines to work and solve the biggest challenges humanity face. We need to start preparing now.
Below I describe some of the main influences on my thinking so far.
Main influences on my thinking so far
Tim Urban: The Road to Superintelligence
He makes compelling arguments simple, as he is know for doing. A couple of things stood out for me. That we are at the cusp of exponential growth in AI’s capability for self learning. And the distinctions between standard and super intelligence blew me away.
The latter especially lead me to believe we are not thinking big enough about AI. In essence he showed me the limits of my imagination.
He didn’t project futuristic outcomes, he only shed a light on the possibilities. Extrapolate from only recent progress and a super intelligent future is hard to deny.
Don’t want a robot to steal your job? Be creative
The title is not mine – here is the article: Don’t want a robot to steal your job? Be creative. The title alone is what nailed it for me. Then on reading it several points jumped out. The first was this one:
Cheap computing power and rapidly advancing AI mean that machines already outperform us on tasks that involve retaining, processing, and repeating rule-based information.
Then their point about STEM learning which I incorporated into my diagram and thesis.
There was also the link to the NESTA report (pdf). This provided rich, research based evidence. The results confirm that “creative occupations are more future proof to computerisation”.
They also define a far broader concept of creativity than common perception holds. That it’s more than the arts. It encompasses “the use of imagination or original ideas to create something”.
The part in italics is what stood out for me .
That lead me to Richard Florida’s paper: The Creative Class and Economic Development (pdf).
Modern Organisations Hierarchy of Needs
Independent of all this, I wrote a post some time ago that seemed to resonate with many from all the likes and shares it received (in the thousands).
Based on Maslow’s model I positioned the Modern Organisation’s Hierarchy of Needs. Creativity and innovation were at the pinnacle of organisational actualisation.
What I left out was the AI and robots element. I’m convinced I should include it. I propose to remodel the hierarchy and include these considerations. I’ll make this a core part of my trend report. I’ll use it to advocate how organisations should change to refocus their efforts.
Any feedback at all on my initial thinking would be great. Please add a comment.
Lots going on recently so this is a big update with an excellent selection of articles and activities.
- The Barriers Big Companies Face When They Try to Act Like Lean Startups
- Corporate accelerators A growing number of innovation-hungry companies are taking inspiration from Silicon Valley: They are setting up accelerators that nurture start-ups. From Deloitte University Press.
- ‘Corporate innovation does not work,’ says Accenture Accenture’s Narry Singh tells WIRED2016 that startups and corporates should collaborate for the best results.
- Here’s why Microsoft is giving nearly a third of its New York employees memberships at WeWork
- This company helps HSBC, Santander, and Visa decide on startups to partner with or invest in — here’s what it looks for
- Gigaom Q&A with Howard Love: What large organizations can learn from startups
- You Don’t Need To Work At A Startup To Be An Entrepreneur
- Startup Engagement in Corporate Innovation Match-Maker Ventures and Arthur D. Little have released an interesting report, titled “The Age of Collaboration“ which this post covers.
- Can Hackathons Give Big Banks The Fintech Edge? Banks and other financial institutions are taking on some surprising partners in an effort to keep pace with innovation.
- The Lean Startup Is Doing More Than Transforming Business, It’s Changing The World
- Why CPG Giants Are Buying Eco-Friendly Startups
- Why This 22-Year-Old Company Thinks Like a Startup Trading Technologies is a global provider of technology solutions for the capital markets industry. In this video, CEO Rick Lane talks about how his 22-year-old company manages to stay nimble like a startup.
- Partnerships between startups and large companies key to ‘smart disruption’: Optus An Optus report concludes that big established companies and startups should form mutually-beneficial relationships in order to thrive in the digital realm.
- The Accelerator As A Source Of External Innovation + Startupbootcamp Targets Global Corporates
- 3 Ways Professional Organizations Can Benefit Any Startup
- Film Review: ‘Generation Startup’ A documentary looks at six young on-line entrepreneurs and celebrates their Internet idealism — maybe a little too much.
- The art of the Side Hustle When your out-of-office hours are consumed by some sort of side-project, whether that’s writing a book, developing a new product, contributing to some philanthropic cause or some other, etc.
- What Corporations Can Learn from Startups And…Cattle
- The Value Of Corporate Venture Arms Tracking the rise in corporate venture capital (CVC) that has created a new dynamic in the investment ecosystem.
- You Don’t Need To Act Like A Startup To Innovate Some contrarian views to all this startup goo goo, ga ga
- Unilever Ventures pours more cash into Discuss.io, a consumer market research platform
- Iceland: A Small Country With an Outsized Startup Culture
- A Dedicated Team of Problem Solvers Can Help Big Companies Act Like Lean Startups Experian DataLabs actively seeks out unresolved problems its customers are having and uses them as a launchpad to seek out new opportunities and create new products.
- The lessons from Telstra’s startup stumbles Investing in start-ups is hard enough, and even more so for big companies.
- Disrupted businesses are struggling in the valley of death Corporate leaders are facing the same valley of death faced by many startups, judging by the latest round of financial results.
You can see other updates like this by checking out posts with the #innerventuresupdate tag as well as the original posts I curated under the #research tag which I then used in the InnerVentures trend report that you can find here: Trend Reports
In this post I’m changing the format slightly by tagging the title with a different hashtag (which was partly for Twitter but had other purposes too). Instead of intrapreneurtrends that I used before, its now the new name of this site, its URL, the new hashtag I’m tracking on Twitter (see sidebar) and my new book/trend report which I’m about to publish – more on that soon. This is also the last of the research tags I’ll be using on this site that tagged all the new articles and reports I found to include in the book and started with this post.
Here are the more prominent, recent articles below – these and others have all been included in the trend report. Once the trend report is published I’ll keep tracking new articles and the like differently. For anyone interested, I curate content first on Flipboard in the INNERVENTURES magazine there which has a slightly broader set of articles – you can subscribe to the magazine if interested.
- Intrapreneurship: Bacardi’s New Plan For Winning Over Millennials
- This Tech Team Is Untangling, Rewiring and Redesigning U.S. Government Like a Startup
- Banishing The Bosses Brings Out Zappos’ Hidden Entrepreneurs
- SAP wants ideas to drive business, be it from its employees or from startups outside
- Lean Innovation: Design Thinking Meets Lean Startup For The Enterprise
- A €750 billion bank is using Facebook and Apple’s tactics to stop startups eating its lunch
- What Does It Take to Be an Intrapreneur? This Exec Did It.
- How GE Exorcised the Ghost of Jack Welch to Become a 124-Year-Old Startup
- How Intuit Built a Better Support System for Intrapreneurs
SEOUL (By Se Young Lee, Reuters) — Samsung Electronics Co Ltd, the world’s biggest maker of smartphones and memory chips, announced on Thursday that it plans to adopt a corporate culture akin to a startup, seeking to become more nimble as growth slows.
I just found an announcement that JetBlue has formed an in-house venture capital program that will invest in startups “at the intersection of technology, travel and hospitality.”
More here: http://www.jetblueventures.com/
From an article on the Harvard Business Rreview, the authors carried out a systematic analysis of the 146 unicorns identified by The Wall Street Journal. Thanks to this analysis, we identified four features that are common to pretty much all the unicorns and which we believe helps explain why they have been so successful. Unicorns are:
- Small in size
- Led by serial entrepreneurs
- Financed by VC firms
- Narrowly focused
They call this unique approach adopted by unicorns lightning innovation. How can companies achieve the same success:
To realize this potential, established companies will need to fundamentally revisit their business models and cultures. Some of the big players do seem to recognize this — it may be one of Google’s motivations for creating its Alphabet structure, in 2015, splitting itself into smaller and more agile units. In a digital world, learning to fail fast is the key to getting big fast, and we can expect the big, structured companies of today to take a leaf from Google’s book and start to turn themselves into portfolios of unicorns.
- How to partner with a larger company when you’re a startup
- Why investors love spin-off startups
- The struggle with adapting the lean startup to the corporate environment
- Big Companies Must Embrace Intrapreneurship To Survive
- Big Companies Should Collaborate with Startups
- Driving a culture of innovation with entrepreneurial thinking now being pushed at University
- How Large Companies Can Act Like Startups
- European tech startups are well advised to get closer to corporate giants in the pursuit of growth
The blurb for the report says it all:
The life of an S&P 500 company is rapidly declining and increasingly, the risks to these companies comes from an armada of startups and not a giant incumbent competitor. We dig into how corporations can use startups to innovate faster and how to make the important build, buy or partner decision.
Here it is. #research
From this article on the Financial Times (you may find its behind a paywall): Axa chief excited by technological change
The chief executive of Europe’s second-biggest insurer by market capitalisation says that the industry is dealing with technological change unevenly. “That is great news,” he adds, explaining that it allows more nimble operators to win business from those slower to embrace change. “Everyone is threatened . . . and it creates more fluidity in market shares.”
He wants to put Axa at the forefront of the change. A bewildering array of initiatives is already under way — research labs in Silicon Valley and Shanghai, a €200m venture capital fund to invest in external start-ups, a new internal incubator fund called Kamet with €100m to invest, partnerships with LinkedIn and internal data analysis competitions to name just a few.
Some very interesting articles over the last few weeks – here they are:
- MasterCard Announces Start Path Global Program – an accelerator to support Fintech startups. Like this statement on their site – very intrapreneurial: “Like a startup, we are always looking for ways to evolve. That’s why we have created a new partnership model for startups – Start Path Global.”
- Samsung Lab funds 100 startups in quest to increase innovation. Samsung also gets in the game and “encourages its employees to innovate, marking a shift from its earlier work culture”.
- Singtel Innov8’s New Program Seeks Startups Tackling Business Problems. Asian telecom giant Singtel has introduced a new program aimed at increasing its interaction with tech startups worldwide.
- This 230-year-old Japanese drugmaker is trying to transform itself into ‘a 33,000 person startup’. Love this approach from Takeda, a Japanese pharmaceutical company.
- The Intrapreneur’s Dilemma is a great case study from an intrapreneur who has been there and done it.
- Intrapreneurs Get Their Stripes at SAP who run their first Intrapreneurship Boot Camp and give employees the chance to create new business opportunities and work like start-ups. Video below: