By Evan Rich
Earlier this year, I met with The Success League team and some of the other contributing writers to come up with potential topics for future blog entries. When someone suggested “graduation” as a theme for June, I raised my (virtual) hand to get on the calendar. This graduation season has been especially meaningful for me, as it marks the completion of a two-year journey earning an MBA while simultaneously working full-time as the Operations and Customer Success leader at a growth stage technology company. I entered the program feeling intimidated because I lacked experience in many of the fundamentals of running a business (financial accounting, corporate finance, economics). I arrived deeply skeptical that someone with my background could add value to class discussion. The last two years helped me appreciate the value of my CS experience, and so I wanted to share some of the important lessons I learned in the hopes that it will help other Customer Success professionals build confidence in their skills.
Customer Success is among the best places to learn how to run a business.
Though Sales and Product get most of the attention, Customer Success offers a unique window into how the overall business operates. Along with Finance and other operations-focused departments, CS teams have the opportunity to engage frequently with both constituencies and formulate a more holistic view of how the business is performing. In order to do their jobs effectively, CS professionals must build relationships with account executives and product managers alike. These regular touchpoints help members of the CS team see things from different angles and piece together their own perspective. There should be more CEOs coming up through Customer Success and other operations functions.
The best companies are customer obsessed.
What makes a company great? After reading far too many strategy cases (from market behemoths like Amazon, Apple, and Disney to startups that never made it), one consistent theme I’ve observed across the success stories is a maniacal focus on becoming a fixture in the customer’s daily life. These companies’ strategies are driven by an extreme desire to capture more of your time. For example, Amazon launched its food delivery service (Amazon Fresh) back in 2007 and allowed the business to continue operating without a clear path to profitability for years, a far longer runway than had been given to any other business unit. Why? Amazon recognized that grocery captured a significant share of its customers’ time and attention and could not risk having customers stolen away by competitors. The steep $13.4B paid for Whole Foods grocery speaks to this obsession with owning the customer. Conversely, there are countless cases of startups that thought they solved a big problem for a large group of potential customers, only to find out the problem wasn’t all that painful and/or there weren’t that many people experiencing this pain. There are of course many reasons why a business might succeed or fail but chief among them is the company’s ability to cut through the noise and have a major impact on the lives of its customers.
Nothing else matters if you can’t retain your customers.
Sometimes overlooked due to the market’s obsession over growth is the importance of a business retaining existing customers. Key metrics like Customer Lifetime Value (CLV or LTV), Customer Acquisition Cost (CAC) and Net Dollar Retention (NDR or NRR) tell an important story about the value of Customer Success to an organization’s financial performance. The company that spends massively on Sales and Marketing (high CAC) but has a leaky bucket (low CLV) and cannot retain customers long enough to sell additional products (low NDR) is far less likely to have a successful exit than the company that has an airtight onboarding process, consistently drives adoption and renewal, and seamlessly introduces new products or features that enhance the value of the initial purchase. The second company looks very different along these key metrics. CLV is high because the customer never leaves. CAC is low because it is more efficient to sell new products to existing customers. NDR is high because the business is earning a greater share of wallet from the same cohort of customers. In the current economic climate, these metrics are more valuable than ever as indicators of a stable, sustainable business.
Thinking proactively helps accelerate innovation.
Customer Success is all about being proactive and anticipating a problem before the customer realizes they have one. I often share this example with new hires to illustrate how a great CS team can make a huge difference: Earlier in our company history, we would often have customers reach out frustrated because their finance department had brought to their attention unexpected overage charges from using our service. We were constantly playing defense with our customers and it put our CSMs in an uncomfortable position. We leveraged data to flip that narrative on its head, collaborating with multiple engineering teams to design a report that would identify the root cause of the overage and integrating the data into Salesforce and Slack so that CSMs would be notified proactively well before an invoice would be sent off to the customer’s finance team. This change has identified numerous upsell opportunities and driven up net dollar retention. I love this story because it highlights how Customer Success teams can leverage their proximity to the customer and cross-functional relationships to be a catalyst for growth in a business. The best companies see customer problems and attack them with innovations that have a meaningful impact on the end user experience.
Do you need help progressing your career in customer success? The Success League is a customer success consulting firm that offers both a CS Leadership Certification program and one-on-one coaching. Let us help you learn and grow as a success professional and leader. Please visit our website for more information. TheSuccessLeague.io
Evan Rich - Evan formed the Customer Success team at NS1, an infrastructure technology company that is changing how internet applications are delivered. As VP of Global Services, he is responsible for account management, support and professional services. Evan holds a BS from Cornell University and an MBA from Columbia. He resides in New York City.