#CustomerSuccess: My Chat with Allison Pickens, Gainsight Former COO

#CustomerSuccess: My Chat with Allison Pickens, Gainsight Former COO

I recently had the opportunity to speak to Allison Pickens, former COO at GainSight to learn more about her experiences with setting up customer success teams and how to create great customer journeys to help clients and your company success. It was a great conversation and you can just feel Allison's passion for this subject. Check out the video or see the transcript below.

A big Thank you! to Invest Ottawa and Sonya Shorey for offering me the opportunity to host this session as part of International Women's Week.


Sarah: Awesome, thank you so much Sonia and I'm super excited. I was really excited when Sonia came and said would you lead the fireside chat with Allison Pickens I said Oh my gosh, I know Allison Pickens. And of course, I said yes, and Alison, I've watched you through your career and admired from afar for many, many years. And of course, in different roles, I've had used Gainsight and attended the conferences so saw you as well and so I'm super excited about the session today and I know all of us joining will learn some great advice and some actionable tips and tricks that we can take back to help scale our company.

So, let's get started. And as we are going, I'll also manage and monitor the chat so if anyone has questions, please pop those in the chat and we'll start to weave those in as well and we'll leave a little bit of time at the end for live question and answer. And let's start with just a question about your career journey to date. So, I know you've had an interesting career journey and maybe tell us a little bit about how you ended up in technology influencing customer success, and then where you are today as an investor.

Allison: Well, first of all, thank you so much for hosting the Fireside Chat, Sarah, and I'm so excited to be here with all the founders today. So, in terms of my journey, I started from the beginning. I grew up on the East Coast and of the US and suburban Philadelphia, ended up finding my way to New York City that you know, the big Big city nearby where I started out my career in essentially business bootcamp. So, I was in management consulting at company called BCG. Learn a lot of generalist skills about how businesses are built and later followed some colleagues. I really respected to Bain Capital, whereas working in private equity, very different type of investing from what I do now, we're investing more in, you know, mature companies and these were leveraged buyouts. And although it wasn't my great passion in life, I did learn so much about how companies are valued. What are the key drivers from a financial standpoint? And was able to tie that back.

Given that we actually were pretty involved with the leadership teams, the companies we invested, and I was I was able to sort of see how the financial models that we would build would correspond to operational initiatives on the ground. And as a side note, I would say you know that was an extremely beneficial skill to build and you know, I notice a lot of leaders sometimes trying to build that you know, over the course of their career, so which I think is a great idea. I had an entrepreneurial itch. I didn't know anyone who did anything entrepreneurial. I didn't know anyone in tech. I was in Boston at the time when I was at Bain Capital, and I picked up this book that was written by a Stanford Professor about entrepreneurship and it really struck a chord with me emotionally. I just love the idea of thinking through innovative ways to improve society and being able to leverage my creativity to go make a difference for other people.

You know in college I had aspirations to go into sort of public service like in a government role in some capacity. But overtime realized that my creativity, at least that in that moment was best channeled through business and so I decided, well, all the entrepreneurial people seem to be in Silicon Valley, so I'm just going to go out there and Business School ended up being my like vehicle for going out there, and while I was in school, I experimented with a bunch of different company ideas. Nothing really stuck, but then after that I ended up getting in touch with the new CEO at Gainsight because Bain Capital's venture arm had led in a very early funding round in the company shortly after Nick, our new CEO, had taken over from the founder in kind of an unusual situation like which is very infrequent nowadays, but basically it was this new founding moment.

You know, we inherited 30 customers and like a pretty bare bones product and then scale that out over the time I was there in the north of 80 million in annual recurring revenue. I became COO, overtime built a lot of different teams and spent a lot of time on our content marketing. Since this is something we could talk about, you know Gainsight was deeply immersed in this category creation exercise and trying to you know, popularize best practices about customer success, which ultimately also would, you know, pave the way for our software sale.

So, because one of the teams I was building was the customer success organization I ended up being at this locus of incubation internally, hearing feedback from our customers, engaging with the community, and I'm trying to sort of gather a lot of the things that you know, we and people were learning about this very nice and at the time profession.

When I was leaving Gainsight I, was thinking how do I spend all my time with the kinds of B2B SaaS founders that I had advised while I was at Gainsight, since that was the market that we were selling to. And it's kind of through a winding path, realized that by investing in these founders, I could formalize relationships with people that I wanted to work with. So, I raised a venture capital fund, which I'm, the sole general partner, and really the only person working at it.

There are a lot of service providers that help me but really, it's just me essentially as an Angel investor, but with the additional capital sources and I invest in companies across stages, everything from precede to pre IPO, since Gainsight traversed those stages and I've worked with, you know, companies cost them and I also spend my time as a board director at DBT Labs, which is a data transformation company and a public company called Commvault which is making the transition to SaaS and recurring revenue. So, you know, in a way I I have a portfolio approach, but I I'd say actually the way I spend my time is a lot more consistent with that, which is kind of like I'm a fractional independent board director too, a lot of different companies. And still writing a lot, you know, speaking sometimes and you know excited to engage the founders in different ways.

Sarah: And I'm sure those companies really benefit from your experience, which we'll talk about next. And I do want to also get into talking about how Gainsight influenced that customer success, 'cause I think a lot of companies followed your great example of how successful that was.

But maybe let's jump into Gainsight a little bit because it's software and a company focused on customer success and the journey which I know a lot of people joining today are interested to learn about. Maybe tell me a bit about your time at Gainsight, how did you, what were some of the things that the company did? Or you and Nick did to scale the company from 1,000,000 to you know, billion and what change at challenges did you navigate to achieve success?

A lot of the founders and the leaders joining today, you know they're trying to scale their companies quickly as well, just like you and Nick did so many years ago.

Allison: Yeah, you know it's always a challenging question just summarize everything that worked and didn't work over a six-year period, but I've tried to put together some thoughts about things that that we did well. I'm also happy to talk about, you know mistakes that other folks can avoid. I'd say especially in the early stage we really nailed some key pillars of category creation, you know, as I mentioned, that category creation is essentially like how do you help define together with your customers a new type of software that is serving a specific pinpoint.

Essentially carve out a space for yourself in the broader tech stack that your companies that your customers have. And you know as part of that motion in the early days that there were few things in our favor. One was we had what we like to call people market fit, which meant that we had the kind of culture and personality that really resonated with the personalities of the people that we were selling to.

And if you think about the first of all, there's a whole variety of personalities in the customer success world, but especially in the early days, customer success people tended to be gregarious, social, really interested in helping, a little more extroverted, like to spend a lot of their time with other people and we were people like that too. Like the kind of people who were built, the people who were building Gainsight were like that and so initially when the market was pretty crowded actually with a number of different customer success providers, I think the fact that people liked us frankly was really important.

We also did a lot in terms of career empowerment for the customers that we were selling to and generally folks in our community. We you know, we saw software as being a tool that people would use to advance their careers and the career empowerment really was kind of one of the ultimate outcomes that customers would achieve in using our software. So, we took that angle pretty seriously and championed a profession. You know it through content through events but also through certifications that we produced on the courses. Helping to place people in jobs, I can't tell you how many people came to us and said hey, I'm looking for my next job or hey, I'm looking to hire someone, do you know anyone? And we literally had a Google sheet where we would like to match people we always.

Sarah: Amazing

Allison: Yeah, we often joked that if the software business didn't work out, we would just become head-hunters. You know I'll mention a couple other things, then turn it back to you Sarah, but two other things. One is we enabled identification with the community. A lot of people, especially in the early days of customer success, I think felt pretty lonely. You know, often they were only one of a couple people and customer success at their company and they might be sort of at the bottom of the totem pole, so to speak. Bottom of the ladder, you know, in terms of like hierarchy at their company.

You know people didn't really respect what they were doing and when you take people like that who feel disenfranchised, unempowered you bring them together, there's so many interesting conversations that happen all of a sudden. People are like wow; you experienced all the problems that I did. And you know bringing people together, I think made people identify the community and the movement with our software, which you know helps us grow the business.

And then finally, I'd say, you know. The product leadership in the early days was really important. We were able to, I think create links between the career empowerment that we were looking to generate, with the product. So, as I mentioned before, you know these were actually features that would help you do better in your job and ultimately grow your career.

Sarah: Yes, so two interesting things from that, I've never heard of people market fit so I love that and I can relate to the story you're talking about because I definitely knew the pulse conference which was the Gainsight conference before I knew Gainsight.

So we would come to the Pulse conference, and then of course Nick would host that and then, hey, voila Nick was the CEO of Gainsight, this cool tool. And I think a lot of companies and founders definitely in the industry today I see are following that lead focusing on community, the people, gathering a group of people that have a similar need and then talking about the SaaS or the solution later.

So it was definitely pioneering a great approach that is working today as well. So maybe we could switch to trends in the industry around customer success that you know thinking back to your time at Gainsight, but also now what trends did you see happening? You talked to some just a minute ago, but what were some main trends? And then how did Gainsight influence and shape really what customer success means to a lot of us in the industry today?

Allison: Yeah. Yes, it's difficult to distinguish between trends that are happening outside you and then trends that you are directly generating or influencing. I think ideally, as a software company, especially, you're kind of nurturing waves that already exist as opposed to trying to, you know, force the wave yourself. I'd say we were doing a mix of that, you know, I think one trend that was certainly happening was that more and more companies were starting to hire customer success people and the reason was because founders were starting to realize partly from the influence from their investors and their board members, that net dollar retention and actually the early days. It was more usually referred to as gross dollar retention.

These were metrics that matter, and you know what would often happen is company would take off, you know, sell to a bunch of customers, raise a ton of money and then in the boardroom they would have to report. Oh well, we brought in you know, 20 new customers but we lost 10 and you know at first, like VCs might give them credit for the growth, but then there would be like, well, it's a lot more costly to replace the 10 that you just lost than to just renew them and so you know they're start to be concerning conversations about something that became known as the leaky bucket and kind of the harmfulness churn.

So a lot of discussion about, you know, turn as the culprit. We even actually right before I joined, Gainsight had written a children's book about Sally and the churn bot. It's the churn bot being this kind of like evil robot that was, you know, going to destroy the city. It was actually by the way, in terms of category creation, this is an effective tactic because it meant that people who often had ill defined jobs could go home and explain to their kids what they did at work. And you know, that was, I think impactful for them emotionally anyway.

So that you know there was this trend of companies and their boards and founders carrying a lot about this leaky bucket of churn. We, besides facilitating dialogue about that and finding ways to help companies prevent churn. We did a few more deliberate things like we popularize the executive roles related to customer success, beginning customer success managers often reported into sales people, or like some other generalist leader. We said we believe that customer success should have a seat at the executive table, there should be a VP role. And over time we talked about the chief customer officer role which would oversee an organization consisting of customer success management, pro services, and support. And we also popularized the role of customer success operations.

We said that in, you know, just like sales teams have sales apps, customer success teams have customer success OPS and you, you know, as a VP you need that person to help you instrument processes across your team that are scalable, identify you, know data that helps you understand your customers, help you forecast, help you staff customer success managers. With accounts and generally, you know run your team and you know the CS OPS role, besides, I think helping teams manage themselves better and help, especially being an enabling function for the VP.

These OPS people ended up also being the administrators of our software, so in a way we created a role that was required in order to have our software be like adopted and implemented. So, you know those were, I think, seeing like the evolution of the function was that was probably one of the biggest trends that we saw. And also, you know, influenced in you know, especially in the early days. I'd say like at this point customer success is really taken on a life of its own and there are a lot of different things happening which I'm sure we'll get to over the course of our conversation.

Sarah: Yes, yeah, and definitely you mentioned the chief customer officer role that that really did come through the influence of Gainsight and you and Nick, where today, this is a common role in many companies. In many companies that I work with, you know even early stage and scale up are asking the question is it time do we need customer success managers? And I think back you know, even ten years ago that wasn't a common question, so I certainly saw the evolution of that throughout the last 10 years.

Awesome okay, so then flash forward to today, you know Gainsight happened and there's a couple other questions I have around, you know your book and some other things related to Gainsight, but flash forward today. Today you invest in companies you sit on boards, you know you're in the boardroom asking those tough questions and I love the Sally and the bucket analogy. I can't imagine sitting around the dinner table. Explain to the kids about you know, net customer retention, but Sally in the bucket is great, but now you're in the boardroom asking those questions and helping companies grow. So what are some lessons learned that you shared with them? Maybe on a broader sense, you know around the customer success and retention rates? But also just how to scale and grow.

Allison: Yeah, so there are a few things that I tend to emphasize a lot within by the companies I work with are usually like venture backed SAAS companies that are growing very quickly. And one thing that we tend to talk a lot about is the importance of OKR’s, which are objectives and key results.

Essentially, it's a methodology for setting goals that tends to be the best methodology I've noticed for generating alignment across the company. And if you've worked in customer success, especially for awhile, you'd know that one of the biggest challenges to achieving great outcomes for your customers, great experiences for your customers is misalignment across functions.

There's a disjointed customer journey, sales, and customer success marketing product manager all on different pages about what customers need, what we should be doing for them. OKR’s are a way to get everyone on the same page. Here's what our you know here is high level what our company goals are and here is the piece of those that's owned by your function, so you can start to have you know, OKR’s focused on product releases, and explain okay, how is each function contributing to that?

The success of that product release you can have OKR’s around, you know net dollar retention and likewise have different teams who are owning different components or different drivers of net dollar retention. So I'd say you know companies, especially upon my prodding, but I'd say in general companies are building OKR’s into the way they work much earlier than they used to. I mean, I see start-ups with 10 or 15 people that have an OKR process, and I think it's important not to over orchestrate it too early on because you're learning, you're experimenting, but it's still important to have a mechanism for alignment.

Another thing that I noticed a lot, which I'd say I advise on a bit, but more it's kind of just a fact of life. The CRO role has become much more prevalent than it was when I we started out at Gainsight. I fact I, I'm not sure I had heard the chief Revenue Officer role when I was starting out there, but CRO has become a very common profession, partly because of the rise of product like growth companies which is often the same as companies that have a self serve model where users can buy software on their own through their credit card through the company's website.

What tends to happen in companies like that is because there's such a scaled approach and an automated approach to working with customers, you need like a perfect alignment between all the different customer facing functions and therefore it makes sense for those functions to report into one person who, you know tends to have the chief Revenue Officer title, sometimes the COO title. I think product like growth is one thing that spawned that title.

Another thing I've another reason why that title I think is more popular is because founders are much more technical than they used to be. I think, especially with the rise of dev tools as an acad developer tools as a category data infrastructure as a category, security, you see a lot of very technical founders, you're coming from engineering or product management backgrounds. They don't have to go to market experience, but they're incredible product visionaries and so they tend to bring on someone who you know is typically, sometimes they might be cofounder. Typically, they're not. Usually they're you know, an operational operationally minded person that's running, you know, all customer facing functions, so that's, I think, been a really big trend in one that although it's replacing in some way the title of chief customer officer, I think it's very beneficial to the customer experience, to customers achieving outcomes driving that dollar attention because it enables such strong alignment across customer facing functions.

Sarah: I'm going ad hawk with a question, but do you see customers reacting to that Chief Revenue Officer title versus Chief Customer Officer title?

Allison: It's a great question. To be totally honest with you in along the lines of your question, I don't like the title because it's so inward focused, right? I mean, if you're chief revenue officer meeting with a customer, that customer is upset trying to get value like it doesn't feel good to know that like the senior most person you're talking to is someone who's just concerned with or seems to be just concerned with revenue.

I think the practical reality nowadays is that CRO’s know that having incredible product experiences is the route to greater revenue. So there there's much and that linkage is, I think it's much more embedded into the way that companies operate now, so I think that's beneficial. But you know, would it make sense for that title to be Chief customer officer? And just expand the role of CCO to include sales and marketing. Yeah, I mean, maybe. I remember. They're actually Yamini Rangan who used to be in a kind of COO type role at drop box. She chose the title, chief customer officer, even though she was running marketing, sales, partnerships and other sort of go to market functions instead of Chief revenue Officer or COO because she wanted customers to know that she is was focused on them and now she's CEO at HubSpot. So you know, shows that actually embracing that title could be good for your career path.

Sarah: Yeah, yeah, I've often thought about that because this the CCO like you were saying came about in the industry and then CRO has probably only been the last five years. I think that it's become popular in an effort I think to help the sales leaders have a seat title and then you know then there's the CCO and the CRO and companies are trying to make the decision on what is the best title to reflect what those roles actually need to impact and how they need to present to the customer. So yeah, it'll be interesting. I think in in the next five years to see what happens. There may be a whole new C title. A category will come in and include both.

Allison: It's a great question and you know what? One more thought on that like I think what was great and still is great about the chief customer Officer title is that customer is in the title, and it gives the impression that there is at least a team that really cares about customers. But as I think we've talked about before us there as well, and I know it's like sort of in your train of thought and like designing these questions, customers need to be thought of by all functions, right?

And I remember, even when I was CCO at Gainsight, which is a role that I held at one point. You know, I had my customer success managers, I had my pro services folks, I had customer support and but the whole organization was called customer success. That was sort of the name of the overall cross functional team and we talked a lot about how it was sort of unfortunate that the Pro services folks couldn't have customer success in their title because like we wanted them to care about customer success too. Same thing with support and you know overtime other functions, especially product management, have also taken on the mantle of ensuring success for customers.

So in a way I almost feel like it's a fulfillment of the customer success movement that there are in more and more companies. We're seeing fewer people with customer in their title because it's become broadly known as being a companywide imperative, not just something that one department owns. So maybe it's a contrarian perspective, but I think probably a good thing overall.

Sarah: Yeah, maybe I'll jump to that question next and then we'll get to your book, because I'd love to hear about that, too and where we can get it? But how like I think, I think the thought process around everyone should be a customer champion in the organization is starting to take hold partly I think because of the influence of Gainsight and the thinking around a customer journey.

So that's another term I think over the last 10 years that has become a lot more used by companies. Certainly as I again meet with scaling companies, in an advisory role, often they'll say I think I need to create a customer journey. I don't know how to do that.

And so, thinking about that customer journey, it starts mapping all the different intersections with the customer and what they need, the knowledge that they need, the success criteria. But what advice would you give to founders and leaders? Executives of companies that are joining this call today to really influence that paradigm shift or that mind shift that everyone should care about the customer. The whole reason we have a company is for the customer.

Allison: Yeah, definitely. So, you know, I think that there's been huge progress in companies caring about customers throughout. As you noted, I think there have been a few reasons for that. I think one is that companies have become much more mission driven or purpose driven where you know, founder presents themselves as saying, you know, I created this company in order to see this particular change happening in the world and the reality is that if you're a software company, the way that change happens in the world is by your customers evolving in a particular way.

So like literally, the mission of your company is tied up with the impact that you're making on customers. And so I think that articulating your purpose also articulating how your company values pertain to your purpose, how you're going to like, essentially, embed your purpose in a way and as well as you know, ensure you're interacting well together as a team and with your customers that. That becomes, you know, I think very impactful and ensures that everyone in the company is customer oriented.

I think also to your point, like there's been a greater focus on designing thoughtful customer journeys. I think in part because of this trend towards self serve and product led growth businesses, I'm seeing really interesting evolutions in the journey there where there's a combination of automated interactions with customers and then human led interactions with customers you know, to give you an example, I was talking with the dev Tools developer Tools company recently and they you know they started out in open source commercialized product and when people sign up for their product initially by you know, signing up for a free trial that that that user gets an email that is automated but addressed from the customer from a customer success manager at the company saying Hi so excited you signed up.

I know that as a developer especially you probably just want to try out the product yourself without my interference, but should you have any questions, feel free to respond to this email and we can set up a call. So it's someone who's available and presenting themselves as a CSM, but you know, it's putting the customers preferences up front, which is, you know, developers usually want to just try the product and then you know over the course of the two week trial, you'll get a small number of other emails.

You know one that explains case studies of other successful customers who have tried the product. How exactly they use the product the system will kind of notice at some point if you haven't completed a particular action during your free trial, which tends to correlate with the conversion from free trial to paid, and there'll be an automated email saying, hey, we noticed you didn't do XYZ. If you need instructions on how to do that, click here. You can also set up time with us, you know, and then once the person graduates to being paid, there are ways that the company detects you know masses of users that aggregate at particular companies so that there can be a corporate level contract formalized.

Now this company in particular actually was able to get to 600 K plus AR relationships with really large up companies purely through these self serve mechanisms like not even having to form a corporate level contract. Now they're thinking about forming corporate level contracts with some of these customers, which will probably sort of unleash even more available budget for them to tap into at these companies.

And the founders, saying, you know, like I, I'm not sure I really want to have a sales team because really the success of our company today, their $10 million rapidly growing company is entirely from just having an incredible product with like, you know, strong customer journey. Maybe we should just have customer success people, who like formalize these corporate level contracts and ensure that these companies are continuing to have great outcomes and experiences with us. You know, through the sort of you know, self led behaviors of these individual users as well as through, you know, more corporate level relationship.

Sarah: That's interesting, yeah it, it's really neat. What we can do today with SAAS based products. So on the cloud you can see you know what is the user doing. Certainly how this company's leverage that in their sales process is interesting. But also, you know, maybe the buying habits of customers are changing too you know. Perhaps just like you know, we don't like marketing calls on our phone anymore, perhaps? Well, you know. Perhaps the industry is changing a bit in terms of how they want to engage as well with the sales process. So be interesting to see if that changes as well.

And just a reminder questions if anyone has questions, put them in the chat and there is one question here. Which I think is asking, I hope I get it right. Are there you know one or two things? Or some things that the board can do to move the needle more for it to help companies really put a focus on the customer to drive net revenue retention?

Allison: Yeah, I think first of all, making that dollar retention a primary metric that's looked at in the overall dashboard of the company is really important and I was actually just reading sort of year end update from one company that I work with and they you know they have not just net dollar retention as a high level metric but also Net Promoter score as a high level metric on their on their board dashboard. So making it a priority I think is very important. I think that you know this is, you know, a bit of a contrarian perspective, but my thought is that if you emphasize the building of incredible product experiences, you invest in hiring amazing product people, amazing engineers in the beginning, you're building great process among them you will end up with a company that's very customer focused, so you know this is a different.

I think perspective than what I had when I started out at Gainsight, and especially at the time there was just this feeling that like the customer success profession specifically was carrying the, that or I should call it carrying the torch. Like you know the Olympics opening ceremony for like the customer success movement and I think that that was really true for many years. But what I actually found in working with our customers and our community was that their biggest obstacle to carrying that torch was that their product team sometimes were not particularly strong.

You know, and that has changed tremendously, like especially in the past five years. You know there are, I think there's a much better understanding as to how to build incredible products, how to start with the user in mind, as opposed to a senior level buyer that may not care about you know how you know products are being used by their team, but you know the concept of shelfware, which was a risk you know for a lot of companies and early in the customer success movement doesn't really exist anymore because companies just refuse to pay for products they aren't using. And I think that's partly a result of people getting more accustomed to incredible products.

Sarah: Absolutely. I think metrics is a great way that the board can ask for metrics which drives accountability with the company, but also ensures that the company is defining what metrics drive their success and reporting on that, and certainly from my own experience and I had shared this with you at one of the companies I worked at where I was the Chief customer officer. We put in a new road map. We called it the customer journey, but a road map for what the customer experience is all the way from, you know.

First, learning about what the company saw, what problem they solve all the way to support to renewal. And in implementing Gainsight, we were able to actually track those things and then get analytics on them and we were able to build a house score and metrics around the health of the customer and then we communicated that through the organization so that people were aware that we had customers that were red and needed help and we had customers that were green and we could identify and help the ones that needed help and it really impacted the health score, quite significantly, just in six months and then that impacted intern the reoccurring revenue in the renewals.

So metrics I think is a really key place to start. Okay, one more question, coming up from Sonia, what do you think is the single most important action a founder can take during the early stages of development to drive customer success and why?

Allison: Well, in the very early stages of a company, typically there are couple things that happen, so team will spend like a few months building a product and they're you know, working with design partners you know really closely.

By the way, just the fact that they have early design partners that they're working with to like improve the product is an act of customer success, so you know, I think that the fact that, like most startups, do that nowadays very customer oriented and then you know as they start to mask more design partners, they develop a wait list of other companies that are looking to use their product, they tend to start gearing up for some kind of public launch. And usually there's like a big announcement around that, maybe a tech crunch article that's also announcing their C round. And you know, there's a lot of like marketing, communications, energy, focus around that launch.

After that you know there tends to be assuming the communications went well. A lot of signups. For the product and you know it's important to be prepared for that. I often see companies that do this well. You know, the founder is budgeting a fair bit of their time to themselves onboarding new customers, even if they have a self serve product because they want to make sure they understand like first hand what the customer is going through when they first experience the product and that in turn helps them design a more scalable on boarding process that might be automated.

I noticed that more and more startups are bringing on customer success managers as like their first non technical hire because they want to make sure that like they have enough people who are, you know, dedicated onboarding. And often you know those initial people are kind of hybrid product managers, customer success folks because especially at that stage what's most important for long term customer success is ensuring that the customer feedback that you're hearing the behaviors or noticing that that you're baking what you want, you know in into the product very early.

Sarah: Great, OK, let's switch to your book and then there's another question. I'll come back to you that's in the chat. Okay, so in 2020 so recently just through the pandemic, no problem, you published a book with Nick Meta called the Customer success economic.

Why every aspect of your business model needs a paradigm shift. And if anyone is looking for the title, it's in the chat, I saw a sign you put it there. And in that book, you shared some simple formulas and we talked about that as well earlier in the week. But how would you recommend, Perhaps, you know, companies. Think about these simple formulas, you know what are they? Or I think you mentioned, even some of those simple formulas shift overtime, so maybe elaborate more?

Allison: Yeah, I'll mention actually two frameworks that were in the book. And then if I were writing a new book now how would I alter them. So, one framework in the book, something we talked about a lot at Gainsight which is CS equals CO plus CX, meaning customer success equals customer outcomes plus customer experiences.

The thinking there was, you know people were often trying to define what does it mean to like, you know have customer success and what we said was that look you have to do two things. You have to generate outcomes for your customers from using the software meaning they have to have ROI from their purchase of the product and then two, the experience of getting to that outcome has to be pleasant. And you know that means like being delighted along the way, ease of use not having a lot of friction and working with your team. It's important to have both, not one or the other, because you know in particularly a top down model, if you are generating let's say you're generating great ROI from your customer for your customers but working with you is painful.

They will probably renew their contract with you, but they probably won't expand for that new use case because they won't push it on whatever team is like looking for a new product. They might open it up to, you know, RFP. On the other hand, if people have a great experience working with you, they like you a lot, it's easy, your support team is great, but they're not achieving outcomes when using your product, they may not renew at all. This is the kind of conversation that you end up having with customers where they're like, hey, so sorry, we can't renew, but you guys are great. We love you so much. We really, we still want to stay friends and you're like you're still breaking up with me like don't tell me I'm a great person, you're breaking up with me and so you know so you so you need both you need to generate outcomes and have great experiences.

Now in terms of how I would adapt that framework for, you know, two years later. As I mentioned, many times product like growth has really taken off during that time and so you know. When you're in a self serve model, outcomes and experiences are the same because you have an individual user that's just trying to get value. They're trying to make their lives more productive and productivity is a ratio, it's like outcomes to how much effort do I have to put in? That's what productivity is.

And so it's literally CO and CX, like baked into the same thing. It's a, it's just a ratio, which is a productivity ratio. And so, I maybe I would call it like a you know CS equals like CO divided by you know effort expended. That that's kind of like the new framework for the self serve model. I'll mention one other framework that I mentioned in the book and how I would change that. In the book I described three types of CSM’s that I noticed in the industry.

The first is something I call CSM for the gaps, which meant the kind of CSM that is working with customers in order to essentially like band aid over issues in the product. They're filling the gaps in terms of value delivery that the product isn't able to achieve.

And I described this role as usually counting as COGS cost of goods sold on your PNL, which is generally not a good cost leverage drive. You rather be driving like sales and marketing 'cause there's some impact on future revenue. And also I pointed out that this role becomes necessary because the product is deficient, which is as I have noted many times is not a good thing. And so, I kind of, you know, I pooh poohed that type of CSM a little bit, because ideally you don't have to have them, that's what I said.

And then I said, you know, see CSM number two is CSM for value delivery. They are like just prescribing a new way of working and kind of helping customers go across this customer journeys that they can adopt best practices and transform how they're working. That's sort of taking for granted that the product is good, and so the CSM can focus on more transformative activities leading to renewal for your company as well. And then there's a third type of CSM which was focused on value capture.

CSMS who actually own an upsell target and so maybe the product is so good and value delivery have happened so seamlessly that the CSM can focus all their time on upsell. Now I think this framework made sense a few years ago and it made sense in the context of a top down model, but there have been a couple categories of software that have challenged my thinking on this.

One of them is like very technical products which might be data infrastructure tools, developer tools in situations like this, what makes a lot more sense and, and particularly because most of these companies have to some degree of product life model, is you have two people working side by side with the customers across the entire customer journey. There's no handoff. You have a sales person that's owning revenue throughout, and then you have a customer. You have a customer success person that actually probably has the title solution architect, and their job is to be really deep in the product. They might have even been like former engineers themselves. They don't own revenue, they don't own a renewal target, they don't own expansion, but their job is to really be, you know, a deep expert, which ultimately is what helps customers be successful. Is having you know deep technical expert.

Where previously I I kind of challenged the value and necessity of having someone who's like CSM for the gaps. You know now I see the product oriented CSM as being critical, you know, for many companies with sales owning revenue throughout.

Sarah: Yeah, that's really interesting, because I know, you know, sometimes the CSM feels like I keep checking in with the customer you know, do you need help with anything you know? Kind of walking through that checklist of, you know? Is this working networking? I'll connect you there almost like the connector back to the organization, but the customer may not be feeling that there's a lot of value there, but definitely a deep expert coming in and helping them really get value from the solution. I can see that makes a lot of sense and now you have a topic for your next book, kind of like. The formula is revised. Maybe the title of the book can be the new formula.

Allison: There you go.

Sarah: Where can people get your book? If they're interested,

Allison: You can get it on Amazon. Just search for the customer success economy, it'll come out. Or maybe we could, you know, insert the link here and also you know one thing that I can do is while I do, if you want to see more of my recent content, I do publish a lot on my sub stack. A couple times being podcasts newsletters. Awesome, did you just put that in the chat? Yeah, oh, I think the I sent it to the wrong group. Here we go sending it to everyone now. Okay.

Sarah: Awesome okay we just have 8 minutes left. The hour is flying by, as Sonia said we probably could have had three hours. Another question that came in, with Gainsight focusing on category creation, how did you navigate with customers where you were looking to influence change to the internal processes that they had been used to for a long time? I know a lot of SAAS companies, especially as they're inventing new ways of doing things in the industry, are faced with this challenge.

Allison: Yeah, this was this is, I think, the hardest part of building Gainsight was that you know often I think. The vision that people had that we had for where customer success could go, felt sometimes light years ahead of where we all were in the sense that you know, often people who didn't have any customer success experience were coming into the industry for the first time because they saw the rise of this profession. So, they might be coming from a different role and we're trying to learn a new job. Also, often the leaders of these functions were taking on that role for the first time. Some of them may not have ever been in a leadership role, but and others might have just come from a different, functional leadership role.

We'd see a lot of like former salespeople trying to run customer success teams, former support leaders trying to run customer success teams, sometimes product leaders. And then you know, so everyone was kind of learning about how to do this new job, and it meant that people frankly got fired a lot. I mean, we would see a lot of customer success teams being like disbanded, reorganized, leaders leaving after 18 months.

It might have been like the CS leader was frustrated that the CEO didn't understand customer success, or it might have been that the CS leader was failing and maybe not, maybe it wasn't their fault, it's just a really hard thing to do and. People were really, you know, frustrated with you know the founders were really, they might have been really frustrated by kind of the lack of support that they were receiving internally.

So I think the sort of volatility among these teams was challenging for us. We were often in roles where we were coaching people on, you know how to do the profession in addition to how to use, in order to help them figure out how to use the software. And we became very prescriptive overtime in a more methodical way to help people learn how to do the job and also adopt software.

And by the way we were learning at the same time. So that was also difficult. It’s not like we were like made experts on this topic, we had to learn too. So yeah, lots going on. We ultimately created something that we called the elements of customer success which was sort of a reference to the periodic table of elements in a chemistry context.

We had this grid that had you know each box was a different outcome, that or different goal that customer success teams would typically have. It might like it might be lifecycle management, renewal management, product experience, things like that, and then for each element we would have certain processes that we would recommend and sometimes they would vary depending on the type of company.

But we like to have you know, pretty specific general best practices that could then be instrumented easily in our software. This actually gets, I talked about people market fit before. I think there's another sort of variant of product market fit, which is the more well known term, and that's outcomes, or I would I call it, product outcomes fit. How are you mapping your product to the outcomes that you're helping your customers achieve?

It's kind of like taking a challenge or sales approach to your customers, where you're helping to, in a thoughtful way, like challenge your customers about the assumptions they have about how they should be doing their jobs and then guide them along to a certain outcome.

Final thing on this topic was that it was pretty motivating for customers to use elements because one it was much easier than trying to reinvent the wheel. But two, we did a benchmarking study where we were able to show that as you adopted the elements overtime in three different stages, companies would achieve it was a 13 percentage point improvement in gross dollar retention. And a 33 percentage point improvement in net dollar retention. So you know if you if you present a customer success leader in a CEO with those improvements, they'll say like you know, sign me up great motivator to be to be on this more prescriptive path.

Sarah: Absolutely sign me up 100%. Okay so we are nearing the end. I'm going to end with the last question and then I know Sonia you have a few last conclusions so maybe just what would be you know, the top one or two things that you would leave the founders and the executives who have attended today with.

Allison: Let's see so you know, I, I think the final topic that would be fun to cover is something that I call customer lead selling. I started sort of blocking a little bit about this back in like 2017 where the notion was, it's kind of fascinating how much cold calling there is still in our industry where you know salesperson reaches out to someone cold, probably all of us have received messages like this on LinkedIn in particular.

And you know often you just ignore message, but I think one of the reasons is because first of all you may not trust this person, but also when someones pitching you a hypothetical value that they theoretically could deliver, it just doesn't sound convincing as a recipient of one of these emails, I'd so much rather hear: here are a few companies like literally or maybe even people that you know that have used our product and achieved a lot of value and hears them talking about it, right? Like that's actually that would be interesting. Be like oh, you know, I didn't know that Sarah was a customer of XYZ product and oh, here's like a video clip of her talking about why she loved this product so much, I trust Sarah’s judgment. Maybe this could be appropriate for me too.

So, you know, I started kind of blogging about this five years ago and then last year I tweeted again about it or I post on LinkedIn, and I ended up getting connected with the founder of a company who is enabling this. And it was like it was this.

We ended up having this total mind meld about it. He actually had a much better way of orchestrating this than I'd even envisioned, which is usually the case with like founders and their investors. And but I'm going to make a shameless plug for this because it took me years to find it.

Now that it's here, I'm like all about it. Vouch is the name of the product. And they make it easy for customer facing people, whether you're in customer success or marketing or sales to solicit short testimonials via video, from your customers. And often these people, they're like using their iPhone to take a video of themselves in their kitchen, talking about an amazing product.

And then, you know, as a vendor, you can easily like, take that video clip, share it on your website, you know, share it with prospects that are similar to the person in the video and share it with customers that are trying to get motivated to get more value. So, I'd say like if I had one type it would be orchestrate customer advocacy.

Sarah: I love that I'm going to experiment with that myself. I love it. Okay, well, thank you so much, Allison. This hour for me was incredibly fun and of course talking about things I'm passionate about as well is always fun. And I learned more from you in the last hour again. So thank you for that and I'll hand it over to Sonia.

Sarah Sedgman

CEO, LearnExperts