Writer Tim Urban's blog, Wait But Why, is a popular one among people who love questioning everything in life. Urban posted a puzzle8 that continues to fascinate us to this day:
“It's the year 2045 and you and your partner are ready to have a child. So you head to the clinic so they can extract your gametes and prepare to conceive just the right child (then they grow the fetus in a machine with optimal conditions—only the biggest hippies still engage in old-school-style pregnancy).” In this hypothetical world, you can design your child to have different levels of three traits: IQ (classic intelligence), EQ (emotional intelligence), and grit (perseverance). Urban explains, “Each of these traits can be assigned to your future child on a human population percentile scale of 1–100. So an IQ of 100 would put your child in the top percent of all humans in IQ. An EQ score of 50 would give the child average emotional intelligence.” Then you're given 250 points in total. How will you distribute them across the three traits?
This question has sparked hours of conversation among our friends and family. Give it a try at dinner tonight or at your next cocktail party! In the meantime, let's redirect your mind from thinking about your future or current children, back to contemplating the world of Customer Success. You could just as aptly ask the question: “If you had 250 points to dole out for your ideal Customer Success Manager, how would you distribute them across IQ, EQ, and grit?”
Even though it's quite possible that folks are born with some initial level of IQ, EQ, and grit, we also are fervent believers that these qualities can be cultivated, including among CS folks, and that professional development programs should target them specifically. Although we could debate the split of points across the three capabilities, at minimum we believe that all three of these capabilities are critical ones for Customer Success folks to develop. Here's how we think about the types of skills pertaining to each of the three.
It can't be overstated: CSMs need to know the product well. “Product expertise is the backbone of the CSM role,” says John Gleeson, the head of several CS teams at KeepTruckin, the fleet management platform company. “No amount of training on communication or escalations will compensate for a CSM not truly understanding the ins and outs of the product. It's the foundation for building trust with your customer. So first and foremost, you want to start with building true product experts on your team.” Todd Massey, who has helped enable CSM teams at tech companies Mindbody and Delphix, emphasizes that product knowledge is not merely knowledge of features, but also of use cases. “You need to see how your customers use your product. Especially, find the customers who love your product and ask, what are they doing with it?”
The type of required product knowledge will vary depending on the particular nature of the CSM role. For example, the “CSM for Value Gaps” type will be hacking workarounds to compensate for gaps in the product, so they'll need to be quite technical. On the other end of the spectrum of CSM types, a “CSM for Value Capture,” focused on monetizing clients' success by booking renewals and driving expansion, will need to be primarily familiar with how the product can help the client get more value; they'll be selling by (1) playing back for the client how their feature usage resulted in ROI for them and (2) translating new product use cases into theoretical value that the client could achieve.
As a CSM, you're responsible for ensuring that the client achieves their desired Outcome. This requires a certain level of assertiveness. Gleeson at KeepTruckin says, “As a CSM, you need to ask the hard questions in a thought-provoking way, because you need to understand the deeper value that the client truly wants but maybe hasn't fully recognized on their own.” Once you're aligned with the client on the value that they truly want to achieve, you will need to be prescriptive—in other words, to proactively recommend certain courses of action for the client. That will sometimes entail pushing back (thoughtfully) when the client tries to go down a path that's not actually beneficial to them. As Gleeson says, “Great CSMs succeed in having those challenging conversations.”
A common example of prescriptive language is: “Client, I know you're planning to do action A, and I'm hearing from you that you believe that's the right decision because of X and Y. But, I've worked with many clients who decided to do something similar, resulting in meaningful harm to them, in the form of these specifics. On the other hand, clients that are similar to you and who have performed action B were able to generate the following outcomes. As a result, I'd strongly recommend action B, and look forward to your questions and feedback.” You'll see in that example that prescriptive persuasion requires strong abilities in asking questions and listening, as Gleeson pointed out. To effectively convince the client of a different course, a CSM will need to deeply understand the client's assumptions, beliefs, and goals.
Nils Vinje, founder and CEO of Glide Consulting, advises many growing companies on their CS strategy. He believes that strong planning is essential to the art of prescriptive persuasion. “A reactive CSM will bounce from one thing to the next. They end every day knowing that they were incredibly busy. But if they take a look back, they're not totally sure what they got done. But an effective CSM has a success plan that they built with the client that shows, this is what the next three months and six months look like.” Forming that plan with the client requires the CSM to be assertive, but also inversely, having a possible plan in mind helps the CSM persuade the client of the right next steps to get them to an outcome. A planful mindset goes hand in hand with persuasive communication.
Every role has a “hustle” aspect to it. Learning and executing on playbooks is the hustle that's most common in the CSM role. To give a few examples, CSMs will need to learn their company's methodology for getting clients to value, the process for handling an escalation, and the best practice for ensuring a renewal closes (whether they're doing it themselves or working with Sales). Executing playbooks consistently requires self-discipline, a high degree of organization, and respect for the thought leaders within the company who created the playbooks. Even while CSMs are following the playbooks, it's equally important for them to give feedback on those to their manager or the CS Operations team that maintains them. They should be attuned to the results that these playbooks generate and in the mindset of learning what works and what doesn't and suggesting improvements that can optimize the playbooks. That kind of rigorous learning is also a form of hustle.
When an escalation or unique scenario comes up, the situation sometimes falls outside the set that the playbooks were intended to address, so the CSM will usually go to their manager for help. As a result, a director needs to be skilled in helping the CSM think through the problem. The ideal director will ask the CSM questions to probe deeply into the situation, leveraging a series of why questions to get to the root of the problem—not in an accusatory way, but in a way that conveys intellectual interest and a desire to coach the team member.
Once the director and CSM have together arrived at the root causes of the problem, they can begin to brainstorm solutions. This requires creativity on the director's part. They may throw out ideas with the CSM and see what sticks, and also encourage the CSM to think outside the box about the right solution.
Vinje from Glide Consulting encourages directors to coach their CSMs to think through these questions in advance of bringing the situation to their managers. He explains, “This trains the CSM to think critically about the situation first so that they can come to the table with ideas. Ultimately, I have found this to be an effective way to reduce the amount of time that a manager needs to handle escalations and teach the CSM to think strategically. The added bonus is that there are many situations where the CSM comes up with a great solution after thinking critically about the situation, runs it by the manager, and the manager replies simply with ‘I agree.’” In summary, directors need to be highly skilled in situational problem-solving as well as skilled in coaching their CSMs on that same behavior.
Because the director is often a beacon for discussions of challenging, emotionally charged situations, they will need to help their team members cope with their own emotions. This involves recognizing their team members' emotions in the first place as well as expressing empathy for them. This in turn requires the director to regulate their own emotions. If the director is stressed out by all the escalations that are coming their way, they may react impulsively to the team member, perhaps with frustration or anger. Especially since CSMs may not have the same ability to regulate their own emotions (depending on their level of seniority), the director needs to carry that burden of managing the group's emotions. This can make the management role challenging, but also highly fulfilling, since the director's success in helping the group can make the CSMs feel understood and appreciated. The CSMs also learn by watching the director role-model this emotional self-regulation.
Directors should have a thirst for translating day-to-day actions—the execution of playbooks and other activity—into the achievement of goals. They may not yet have developed a deep intellectual understanding of that link between activities and results (see the capabilities required for VPs ahead), but they're not satisfied if the team's hustle doesn't result in the achievement of goals. They'll drive conversations with their teams about what it takes to make the number and whether it's a target for Gross Retention, Net Retention, or another metric. If they don't make their number at the end of the quarter, they're disappointed and want to do better next quarter.
Once that director becomes a VP, they'll need to have a deep understanding of how customers contribute to revenue. This requires “immersing themselves in the numbers,” according to Andrea Lagan, the former COO at the professional services automation company FinancialForce and current chief customer officer at HR software company BetterWorks. Lagan notes that CS executives “need to be able to have a deep conversation with a CFO and the board about the metrics that explain how Customer Success contributes to the go-to-market framework.” Specifically, we think that VPs should be able to analyze the linkages along the following chain:
Here are some common questions that a VP should be able to answer about the linkages between these:
The VP may work with an analyst on their CS Operations team to answer these questions, but they'll need to own the knowledge of these linkages themselves. These are the types of questions that a capable CCO, CEO, and CFO will ask them during an executive meeting or when preparing for a board of directors meeting.
The VP should be able to substitute for the CCO or CEO in an important meeting with senior people at the most strategic clients, whether it's a meeting to address an escalation or a regularly occurring review of the partnership. (Note: We do believe that the CEO and CCO should be meeting with many clients, especially the more strategic ones. At the same time, the CEO and CCO can't be in all of those meetings. They need to be able to rely on their VP.) This means the ideal VP can help the internal team set a vision for the meeting in advance and prepare an agenda and content that will likely achieve that vision; create the right tone during the meeting; listen carefully and read between the lines, surfacing topics that need to be elevated; orchestrate the interactions of client and internal stakeholders during the conversation; and drive the meeting to the right next steps.
Even though a culture of accountability should exist at all levels of the organization, the VP demonstrates through their actions what accountability means. They should be thoughtful about communicating what happens when a CSM does or doesn't make their target for leading indicators or lagging outcomes, and likewise when the team does or doesn't make their targets. They should be clear about the importance of following playbooks. The VP answers to the CCO and CEO for achieving the Gross or Net Retention number, which means they take responsibility when the target is and isn't met and they are disciplined in learning the root causes of that achievement.
A company that's customer-centric will resemble a symphony, where every function is playing a different instrument but everyone is playing according to the same sheet music. While it's not the CCO's job to run the company, the CEO should be deeply familiar with the sheet music, design a significant section of it (for the functions that report to the CCO), and recommend improvements to the rest of it. This requires an ability to see a company's engagement with its clients as a system, as opposed to a loose collection of unique situations that aren't related to each other. Systems thinking involves detecting patterns and also imagining how alterations to those patterns could result in a system that generates better results for clients and for the company.
In our high-grit CS organization, everyone is hustling to execute their playbooks and improve them, achieve goals, and ensure accountability. But even people with unusually high grit need inspiration to fuel their hustle. They're not always inspired by the numbers, by operational initiatives, or by short-term wins. They want to feel they are contributing to a broader purpose. It's the job of the CCO to illuminate that purpose.
Here's how Allison thought about it in her former role as CCO at Gainsight.
Team members don't just want a purpose to follow; they also want to see that their leaders are motivated by a broader purpose. We've spent a lot of time thinking about our purpose in our work, particularly since we each spend a lot of time (too much time?) reflecting on more existential questions. Last year, Prakash Raman, an executive coach, joined an offsite that Allison was hosting for her extended leadership team. He posed a question: “When you're on your deathbed, what do you want your legacy to be?” For Allison, it's pretty simple:
If we as leaders can be open in sharing with our teams what we hope our legacy will be, and helping them define their own desired legacies, our teams will feel a whole new level of inspiration in their work.
For some CCOs, helping teams see the purpose in their work is the fun part of the role. But like everyone else on their team, CCOs need to hustle. Their hustle is in mobilizing their peers—the head of Sales, Marketing, Product Management, Engineering, Finance, and others—to factor customer-centric thinking into their decisions. It's the job of the CEO to manage the leadership team, but CCOs can provide an irreplicable source of information to those other executives about the Experiences and Outcomes that clients have. The ideal CCO doesn't merely share that information. Over the course of likely many conversations—with steps forward and steps back—they discuss, debate, and negotiate with other functions about how they might act on that information.
Obviously, we'd all love to have a world where every function was customer-centric in the ways we described in Part II of this book. But the CS movement hasn't fulfilled its mission yet, which means the CCO needs to act as a torchbearer for customer-centricity in the company. Evangelizing on behalf of clients is hard work. We've seen CCOs experience disillusionment, frustration, despair, and burnout. This is why our events for CCOs often turn into group therapy sessions. We highly recommend that CCOs demonstrate self-compassion, a willingness to express vulnerability to others who may be going through the same thing, and support for others who are struggling along the journey.
Many of us are familiar with the tactics for developing team members. Those may include enrolling them in internal training sessions on the product, bringing in an instructor to train on communication skills, paying for them to attend conferences, offering them online courses on a subject of interest, or delivering management training. So we won't beat the drum on those here, but we will suggest a few training mechanisms that you may not have thought of.
We discussed earlier the importance of prescriptive communication—listening deeply to the clients' needs and then being assertive in recommending a course of action that's in their best interest. Interestingly, this type of communication has been taught for many years—not to CSMs, but to salespeople. Sales training often helps people learn to fine-tune their awareness of clients' deeper pain points, challenge clients to reframe assumptions that are holding them back, and navigate the power structures of a client organization—skills that CSMs should have, too. Therefore, methodologies like the Challenger Sale, Corporate Visions, Sandler, and ProActive Selling are relevant for CSMs as well.
Trading notes with other people in the field is arguably more important in the CS profession than in any other one, because that profession is evolving so quickly. “We're still settling in on best practices,” says Gleeson at KeepTruckin. “So it's important to have a large network, to keep up to speed on the latest trends. You need to make it one of your personal KPIs to get out of the office, even if it's just 30 minutes a week, to meet another person in Customer Success. Ask them all sorts of questions about their business and learn why they did the things that they did. That's the best way to educate yourself.” Managers can encourage their team members to do this by making it culturally acceptable to leave the office for networking meetings, by proactively connecting their team members with others in their community, and by assigning networking KPIs to their team members. You might worry about losing your team members if they get recruited by one of those contacts—but honestly, the job market is so hot right now, they're probably already getting contacted by those hiring managers on LinkedIn. The benefits outweigh the costs when your team members are taking charge of their own professional development by learning from others.
As we've discussed, CS leadership roles are emotionally challenging. You're often receiving emotions from your board, CEO, and peers (as other leadership roles do) but also your clients, and your team is often more stressed than other teams, since they're inheriting your clients' emotions, too. CS leaders can benefit from having a thought partner to work through situations that are not only intellectually challenging but emotionally challenging as well. An executive coach can serve this role. Sometimes they're expensive, but the better results you'll get from your CS leader will more than cover the cost.
CEOs don't typically have much time to invest in coaching their CCOs. But they do have time to ask thoughtful questions—during executive team meetings, in one-on-one meetings, and in preparation for board meetings—that help the CCO focus on the right objectives and think more deeply about the initiatives that will help them achieve those objectives. Consequently, those questions can be an effective tool for coaching. We'll turn to a specific list of questions you can ask your CCO in the next section.
If you're a CEO, you know that your entire company is looking to you for answers. You probably spend a good part of your day responding to emails asking, “What should I do next?” or “What's the plan here?” As important as it is to have those answers, good leaders know that it's just as vital, if not more so, to ask the right questions. Nick's whole team knows that when they meet with him, they'd better be ready to answer some difficult questions. If you're an experienced CEO:
But how do you helpfully question your chief customer officer or VP of Customer Success? Because Customer Success is such a relatively new discipline, a number of CEOs have asked me, “What questions should I be asking my CCO or VP Customer Success on a regular basis?” So Nick put together this top-10 list. If your leader can't answer these questions with conviction, they might not be right for the role.
Many Customer Success leaders transitioned out of Customer Support or Services roles. In those positions, success equals “case closed” or success equals “project launched.” But if you're a CSM, success isn't so much about what you accomplish, but what your client accomplishes. Your success depends on their success. And for a client, success is based upon a business outcome (more revenue, happier employees, etc.) and your product is just a tool for achieving that outcome. Their endgame isn't to renew or expand, though ideally both of those things are functions of it. Your CSM leader's job is to ensure they are. To do that, he or she needs to know the core goals of your clients.
In many companies, part of the CSM role is to be Smokey the Bear—prevent fires before they happen. To do that, your Customer Success leader needs a clear vision of the drivers of risk for every account. These are things like sponsor change, support issues, technical issues, low adoption, long onboarding, and so forth. The best CSM leaders have a strong framework of risk so you can talk about risk in a consistent and quantitative way.
Orthogonal to risk, a CSM leader should have a view on what makes a client sticky so that they are likely to stay long-term. In the subscription economy, a six-month or one-year client is quite potentially a net loss for you when you factor in all the costs of acquiring it and onboarding it. Lifetime Value is the definitive measurement of a client's worth to your company. That being the case, your CSM team needs to be on top of the factors that increase your clients' LTV. How intrinsic is your product to the success of your client? Measuring that stickiness could involve assessing deep workflow usage, API integration, levels of data integration, or other factors.
This sounds like an easy question. Segment your clients by revenue, right? It's not so simple. Sophisticated leaders think hard about the unique needs of clusters of clients and their short-term/long-term economic value. We talked about lifetime value. Your CSM leader needs to project which low-revenue clients have high-growth potential and segment accordingly. And what about new verticals? Let's say all your clients are US-based B2B tech companies and you're looking to expand overseas or into B2C or healthcare. Your first clients in those verticals need a higher level of touch to set the tone for your entire expansion. They may have lower revenue right now, but they still belong in a higher tier. Does your CCO or VP Customer Success think in terms of big-picture strategy?
Once you have a segmentation, you need to be strategic about whom we choose to serve, but equally important is whom we choose not to serve. No company has unlimited resources. Every company has a spectrum of capabilities with hard limits at both ends. Past that limit at the top end of the spectrum are high-value clients who, unfortunately, need more than you can offer, at least right now. Under the limit at the low end are clients who will take up way too much of your resources without returning enough value to justify the costs. Obviously there are always exceptions, and it's your CCO's job to recognize where the limits and exceptions are. Great leaders can tell you where you're not delivering on your promise and where the economics don't work out.
Great leaders also know how to play to the strengths of their team. A big part of your CSM leader's job will be strategizing how to vary CSM workloads by segment, revenue, and account-based loading. It's all about using the right tool for the job—and tools become essential for organizing your CSM touch levels. Your CCO or VP Marketing will definitely be incorporating pure or partial automation for many clients. They will need to make the call on which clients get which level of touch.
When you talk to your head of Sales, you don't just ask about revenues, you ask about costs. Just like you make sure to have a target gross margin, CSM leaders should have a perspective on target Customer Retention Cost, both today and long-term. The best Customer Success executives have thought through an overall model of the total annual cost to retain a given amount of revenue. Customer Success is rightfully concerned with the total LTV of customers, but the immediate day-to-day costs need to factor into your equations.
When your Sales team consistently misses goals, it's a pretty cut-and-dried situation. A VP Sales knows that his or her value is intrinsically tied to revenues. But how is your VP Customer or CCO measured? Churn? Renewals? Upsells? All of those events are heavily influenced by every other customer-facing department. However they do it, top leaders put a dollar value on their work. Get your CSM leader to turn health scores, renewal rates, Net Promoter surveys, and other data points into an ROI for their team and their job—then hold him or her to those standards.
As we said, every interaction a customer has with your company and your product is a potential hinge-point for their success. Their overall health is going to depend on your CSM team, yes, but also on your Product team, your Sales team, Services and Support, and others. World-class VPs of Customer Success build processes to feed customer input to Product teams and qualification criteria and messaging to Sales teams. As a CEO, it's your job to make sure that your whole company is aligned on Customer Success. In the subscription economy, it quite literally is your bottom line.
You don't become a CEO by being insular to the culture of your company. When you read stories about failed startups and burned-out executives, they always have a huge cultural component. The only way to lead in this area is to constantly be in touch with your executive team and your employees. Specifically to Customer Success, you want a CSM leader who is pushing you to put the customer at the center of your strategy. When you make a decision, your VP Customer or CCO had better be convinced it has the best interest of your client base at heart. The strongest executives challenge their CEO on his or her calendar, messaging, and priorities to always keep customers' success top of mind.
Of course, this is all a moot point if you don't have a CCO or VP Customer Success. We know there are some companies out there that are still waiting to hire an executive. If that's you, you're behind the curve. If you've already hired an executive, continue to challenge them with questions like these to make them the best they can be.
We discussed in this chapter the importance of IQ, EQ, and grit to the CS profession and how CS folks can improve their skills in each area as they progress in their career. We also discussed how CEOs can ensure they're cultivating the right behaviors in their CCO by asking them questions that matter. Now that we've defined what “amazing skills” look like in this chapter, in the next chapter we'll turn to the best practices for creating an inclusive environment that encourages every team member to bring their “A Game.”