In this episode, our host Anika Zubair chats with Jay Nathan, EVP and CCO at Higher Logic about how to manage churn in turbulent times.
If you’re currently looking for strategies to prevent and reduce customer churn - you’re not alone. With the gloomy outlook for the world economy, companies are preparing for the effects of an economic downturn. Hence increased focus on churn and how to handle it. But how do you decrease the risk of churn? How do you show ROI daily to your customers? And how are you working on expansion during renewals?
Podcast enquiries: sofia@planhat.com
In this episode, our host Anika Zubair chats with Jay Nathan, EVP and CCO at Higher Logic about how to manage churn in turbulent times.
If you’re currently looking for strategies to prevent and reduce customer churn - you’re not alone. With the gloomy outlook for the world economy, companies are preparing for the effects of an economic downturn. Hence increased focus on churn and how to handle it. But how do you decrease the risk of churn? How do you show ROI daily to your customers? And how are you working on expansion during renewals?
Podcast enquiries: sofia@planhat.com
Hello everyone, I'm your host Anika Zub and welcome back to the next episode of the Customer Success Channel podcast, brought to you by Plan Hat, the Modern Customer platform. This podcast is created for anyone working in or interested in the customer success field. On this podcast, we will speak to leaders in the industry about their experiences and their definitions of customer success and get their advice and best practices on how to run a c s organization. Today we are speaking to Jay Nathan who needs no introduction, but for the few people in the customer success world that do not know who Jay is, he is the Chief Customer Officer at Higher Logic and the founder of one of the largest online customer success communities, gain, grow, retain. During his career, he has had a number of functional executive roles in customer success, product services and account management. He has built, LED and scaled SaaS companies over the years and has worked at companies like Blackboard. People Matter and eventually founded Customer Imperative, which was sold to Higher Logic. He is also a father plays the guitar, and today we will be speaking to him about gross revenue retention, otherwise known as G R R and managing Churn during economically turbulent times. Welcome Jay to the podcast. I'm so excited to have you here today. Before we get into today's topic, for those people who don't know who you are, can you please tell our listeners a little bit more about yourself, how you started in customer success, what you're doing right now? Just give us a lowdown.
Speaker 2:Thanks for having me on. It's good to do this. Finally, Anika, you and I have known each other for a long time. I am currently the Chief Customer Officer at Higher Logic. Higher Logic is a community online community software platform company based out of on the east coast of the US based outta dc although we're all remote these days. I joined Higher Logic in July of 2020 when I sold my company to Higher Logic and part of that transaction was the gang brewer Retain community became part of Higher Logic at that point. And if folks don't know what that is, the world's largest community for customer success leaders. And we have been running that since really the early days, probably 2019 when we started the podcast and really got active on LinkedIn and meeting with the community and then really launched it in earnest during the pandemic. And so that's been a, that's been a fun part of the ride over the past few years that we've been on. But yeah, so that's it. I ha I live in South Carolina in, in the US I got three kids, one wife whose birthday is today.
Speaker 1:Oh, happy birthday<laugh>. If she's listening to this happy, belated birthday<laugh>.
Speaker 2:Yeah, she won't be listening to this. She doesn't listen to my podcasts.<laugh>,
Speaker 1:There's probably a lot for her to keep up with the number of things you share podcast wise, webinar wise, everything you're sharing. I can imagine she's overwhelmed and probably ignores half the big, she's
Speaker 2:Got better things to do. She's got better things to do. She's having customer success, but
Speaker 1:Awesome. Awesome. And you mentioned Ganger Retain, which is awesome. It's a massive community. I love the leadership office hours that are on Thursdays. Anyone who wants to learn more, we'll we'll put it in the show notes, but what kind of inspired you to start gain, grow, retain, and also start your own business and kind of focus in on the customer success? Cause I think your career has a number of different ways it's gone from product to account management. What made you focus in customer success in gain, grow, retain?
Speaker 2:Yeah, I've been in the tech world for about 20 years a little over and I've had roles and services. I've had roles in product management, like you mentioned. In 2017 I left a company that we had sold to another business and decided that I wanted to try my hand at at at starting my own company. So I wanted to be an entrepreneur and we launched a consulting business as many people do in that situation. And we worked with B2B SaaS companies, predominantly both private equity, some VC backed, but a lot of private equity later stage, more mature equity backed companies. And the cool part about that was we got to see so many patterns, whether it's ha with the go-to-market, looks like for enterprise software with the customer experience was how that was constructed post-sale. And when you see it 50, a hundred, 200, 300 times, you really start to recognize patterns in in the world and how it works in the, in those areas. And so we did, and really back in 2018 and 2019 started just sharing what we were learning on LinkedIn. We didn't know anything about how to publish content on social media back in 2018. And when I say we, I'm talking about myself and Jeff, my co-founder of getting routine and my business part partner at the time. And we just, we just started sharing what we learned. We decided to set our aside our imposter syndrome and just start writing and sharing and it just took off And people were, I think, excited for maybe some new folks in the community who were speaking out on topics around customer success at sas. Fast forward, the pandemic strikes the beginning end of 2019, early 2020 as everybody knows. And um, actually we got the inspiration from Anthony Canata who you know yeah from Gainsight days. Anthony had put a post out on LinkedIn. He said, Hey, I'm gonna start a office hours for marketers. And Jeff and I were like, we've gotta do that but for customer success leaders. And so we did it and that's actually how the gang very retained community started was through the office hours that you mentioned. Yeah, yeah. Which we held every Thursday at 11 or 11:30 AM and we still run those today. It's every other week now, but tho those three years later are, are still running and people engage and learn from one another. And, but yeah, it's come a long way just in, in the past three or four years.
Speaker 1:Love those office hours. I still remember joining, I think it was either the first or the second one in March or April, 2020. I think it was monthly back then, if I remember correctly. Or maybe it went to weekly cuz everyone had the time to do it weekly as well back then. But I remember how valuable it was connecting the larger customer success leadership community because I think me being in London, there's a lot of people out in Silicon Valley, a lot of people all throughout the us all throughout the world that were able to come together and share collective ideas, which I, I loved back then. And again, like you said, it started as one post, one webinar of like let's see how many people we can just bring together now. I just think of it like you said, gang grow, retain is everywhere on LinkedIn. I don't go a day, maybe even an hour without saying you or Jeff post something on LinkedIn. So I absolutely appreciate all the thought leadership and the content you guys share around customer success growing into a CS leadership position and CS leadership in general. But now that you've, looking back on it, hindsight's 2020 and you guys have had a few years of growing this community. Are there any learnings or any secrets or anything you wanna share with our listeners?
Speaker 2:Yeah, sure. First of all, there are a lot of great customer success communities out there that you can learn from and they cater to different parts of the market so to speak. Some are more focused on individual contributors, some are more focused on directors in the mid-level manager role and then some are focused on executives and yeah and some are focused on ops, right? There's so many different areas and there's a community, almost like a niche community for everybody out there if you don't find what you're looking for on D G R. But I think the big thing for us always was whether it was on office hours or whether it's the online community or whether we're sending an email with content, it's how do we first provide as much value as we can to the members? We, we almost to a fault never ask, try not to ask for anything in. We don't wanna be seen as a marketer or as a marketing type of organ organization. This truly is for the benefit of the community. And yes, we would like everybody to know that ganger TA is associated with higher logic, but I think there's a precedent in the world right now for especially technology companies, they really get it to add sort of a media arm or a community arm to what they're doing from a marketing standpoint. Outreach bought a company called Sales Hacker, which we model our acquisition off of. Um, HubSpot bought the hustle and created the HubSpot podcast network. So there there's a, we're a very teeny tiny version of some of those acquisitions that have happened over the past few years. But e even salesforce.com now has a full-blown media arm. They're using media to educate their market and also to to associate with with the businesses that they're trying to sell too. So that that's number one provide value. I think the number two actually number two is ask for feedback a lot. We were just talking about the office hours calls after that first office hours call, we did a panel, I don't know if you were on the first one or not, but there was a panel of four like really cool guests and we asked for feedback after that and everybody was like, oh that was great but we'd like a chance to talk too. And Jeff and I were like Okay, we can facilitate a discussion instead of a panel. We did that the next week and it grew a little bit more. It went from 50 people to a hundred people and then we asked for feedback and people kept giving us like, okay, you could tweak this one thing and it'd be a little bit better. And we kept making those adjustments along the way, some of them subtle, some of'em not so subtle, but we iterated quickly based on feedback from the people to whom we were trying to provide value. And so I think that worked. And then the third thing I would say is we've really always tried to put other people on a pedestal and to hold them up. We have a really engaged early adopter founding member kind of group that's still today. There's hundreds of people with GR on their LinkedIn profiles as founding members and then even today people like Jeff and I don't run office hours anymore. Somebody from the community runs it every week. Yes.
Speaker 1:I love how it's become like super user community basically you've created people who buy into the belief of Gira as a community buy into being that founding member. I still remember when everyone announced I'm a founding member of Gain gro Retain and I was like, oh how awesome that this is becoming more lack of better words official and was just signing up or not only just signing up, people wanted to take ownership. Like you said, people wanted to run your newsletters or webinars or podcasts. They wanted to mess for the world that they were doing in customer success. And I think Gainer retain gave them that platform and that was awesome to see cuz there was a lot of people coming outta the woodwork that were keen but just didn't know how to do it. But then there was a platform like the online community that that helped them. So that's awesome and I totally can back you up on the feedback side cuz I have received a number of feedback forms from gain, go retain every time I attend an office hours or anything. And it's never done in the sense of give us feedback now it's more like we wanna improve things for you so please tell us how we can do it. So it's awesome to see that you guys really live and breathe the ethos that you say you're doing. So that's awesome and I wanna keep going on gang grow, retain, but I know we need to chat about this topic and I think it's a very topical discussion that we're gonna have today because there's tough times in the world right now when recording this Silicon Valley bank just went through everything that it's going through. We're still wondering what's gonna happen there. Tech companies are really feeling it and like equally so are the companies and customers that we are serving as sas, B2B tech companies. So I think my first kind of question to you is how is your team supporting your customers right now?
Speaker 2:Yeah, it's just crazy to see what's happened. The world today looks a little bit different than it did just last Thursday and part of it is for us we're just continuing to block and tackle and put our best foot forward. Every company right now should be focusing as much as they can on value back to what we talked about with G G R. Like how are you not only confirming that you're providing value but sharing that in a quantitative way. And a lot of people talk about roi. We are creating reports right now for our customers that help them understand like, hey, here's what the engagement has been in your communities over the past 12 months. Here's what that means to your business as far as we can tell. Let's have a conversation about this. So I think a lot of times our champions and our customers need support telling the story internally to their stakeholders, right? You're not always gonna get a chance to have that conversation directly as a vendor to the people who are making decisions or helping make decisions behind the scenes. And we're really focused on not only having those conversations but having content that backs that up in the form of, of a brief R o ROI email or a brief ROI presentation that we can actually provide and let them circulate and then we have a conversation with them and enable them to go have that conversation internally. So I think that's one key thing. We also are, from a renewal standpoint, we are working very, this is more of a balanced, like how do we win together kind of approach. But how do we present our customers with renewal options that give them some control over their pricing and their, the length of the term that they're signing up for at their renewal, their payment terms. How do we give them some of those options without, without breaking our own bank at the same time? So we've been working on the sort of the structure of our renewal plans so that our customers have the choice they can renew for a year or they can renew for three years and there are different parameters associated with that. So they can do what's best for their business but they have choice. There's a commercial side of it. Then there's the value, the true customer success side of it. And then there's the day-to-day we continue to provide great support, we continue to provide great implementation and onboarding services to our customers to help them get up and running and live on their online community. A lot of it is what we all should be doing anyway.
Speaker 1:Definitely. And I think there's a lot of learnings from a few years ago when this kind of happened all over again and I think back of when the pandemic first hit off and then we were all thinking how are we gonna manage churn in a time where we're not sure what's gonna come next? And I think that's a thought on the top of mind for all CS leaders but also Boes or your finance team are really concerned about gross revenue retention. How do we make sure we maintain the current amount of customers? Of course they wanna grow it, of course they want more revenue, but how are we gonna make sure that we just don't have a whole bunch of churn? So you mentioned two ways that you guys are managing the current situation. Is there anything that you guys are doing to really tackle or block churn actively as well?
Speaker 2:Yeah, it truly is. It's an account by account, I call it hand hand combat, right? It's really having a plan for every single customer. Especially if you look at your top customers, you have to segment and I think we'll talk a little bit more about segmentation later, but you have to segment your customers. And so my push and what we're doing with our team here is we're looking at who are our most, who are the customers that it's gonna hurt the worst if we lose it, right? I won't say the most valuable because all of our customers are valuable to us, but which are the ones that we cannot afford to lose? What is your budget for churn for the year? Everybody's got one, right? Every finance team knows or has a projection for how much churn. I would encourage customer success leaders to really try to understand and internalize what that number is. Help manage to it, right? Be a business leader, not just a customer leader. And say, okay, if you've got a budget for x million dollars of churn this year, hopefully you won't have that much, but depending on the size of your business you will. Here's how we can reduce that by 10%. If you can make a just a one or 2% difference in churn in the course of a year, it's actually a really powerful result for your business. So it's hand in hand combat having a plan for every single one of your larger accounts, having backup with an executive sponsor or someone else to flank the customer success manager. And then making sure that value story gets told to every single one of those customers. Just super critical. Right now we're also implementing in the middle of implementing a strategy that I'm talking about a lot right now, which is just scale customer success. And what that means is we're building programs that sit around the customer success program that provide enablement, they provide networking opportunities for your customers and they provide lots of content and training resources so that customers can do more self-serve if that's the way they wanna get help from your company. So there's a combination of things that we're working on to make sure that today our customers are well taken care of, but that also that that that will be our strategy going forward as well.
Speaker 1:Definitely. And I can completely agree about the being heard or understanding your churn or attrition number. I think that's super important right now and always I think that's something that you should have top of mind as a CS leader. But one thing I'm, I would add to that is ensuring that you have transparency with your teams as well. Because I think we all say hey, we wanna reduce churn by that one to 2%, like you just mentioned, it'll make a huge business difference. But I think a lot of people during these times, they wanna find a way to support and that includes your customer success managers. They wanna know how they can help the business overall as well. And if you're transparent about, hey, if we have a million, let's say million cuz we were using that number a million in churn this year, this is what we can do to lessen that one to 2% and also keep a tracker going of how much you've actually gone to that churn marker. So everyone is very clear, transparent, aware of times are tough, but we are making every change we can or handling each account individually to really see success and reduce that churn. I wanna come back to your renewals part because we talked a little bit about that. You mentioned you have options now to your customers, which is great. I think that you're still putting the customer in the driver's seat of how they choose to work with you as a software vendor. But how are you implementing that? Tell me a little bit more about it. What are like the strategic changes that you're doing internally to be able to have that renewals program with multiple options there?
Speaker 2:Yeah, absolutely. So this is, uh, so actually I would say this is probably the, one of the, one of the most impactful projects or programs that a customer success leader could work on with their finance team is really to define the renewal. Maybe like renewal go to market is how you think about it depending on the pricing plan. So every many companies increase their prices every year, both like their list prices for new customers and even your day-to-day contracts will have nominal price increases every year. When you look at across your entire program, you can make some pretty significant changes that drive retention. If you can get a customer to retain, or I'm sorry to renew for two to three years, then that's a renewal. You don't have to actually facilitate next year. A lot of auto, a lot of renewals, autorenew, right? So that, that's a job number one. But if you give a customer to do a three year, if you give them an option to do a three year agreement, then that's two years you can go without having to drive a renewal. You will get automatic lift in your retention by having longer term contracts. That's something that the math just works on. And so that's a big focus of ours. And so if that's the case, then what we wanna do is we wanna have our customers have the choice of going to that longer term contract and they get basically pricing breaks for doing that. And so we're putting options in front of them that give them that choice. If a customer comes to us and says, Hey, we've been on an annual payment plan and we're hitting hard times, maybe we're part of the Silicon Valley bank situation and we are unsure about our cash flow for the next six months, we'd like to be on a quarterly plan, then we'll entertain that. One of the things, maybe a lesser used tool that I think customer success teams could leverage more and renewal teams if they're separate, is just an early renewal. So if a customer comes to you and says, Hey, we're in financial trouble and I need to cut back and you're like, we could either lose the customer or we could stick to our guns, right? And stick to our original pricing strategy. And a lot of times finance teams don't want to do a lot of customization, right? Because they've got scale issues to deal with themselves. But if you go to them and say, Hey, well we'd be happy to renew if you need a quarterly payment, let's do an early renewal, okay? And if we can get you to commit to the next two to three years, I have a lot more sway in what I can get done for you with my finance team and the other business leaders within my company because you've made a longer term commitment to me. So I can make more commitments to you in exchange for that. Does that make sense? It
Speaker 1:Makes complete sense. And I wanna play a little bit of devil's advocate here cuz we just talked about proving value earlier and you said a lot of your renewal programs and this entire strategy is to drive long-term retention, which is again critical. The multi-year contract is something that not only vendors love because you don't have to work on the renewal next year, but I think customers enjoy that too. Cuz again, you don't have to go through procurement every year or don't have to go through the cycle of reviewing a contract. But I think in times like this, customers are hesitant to commit to two to three year contracts because like you just said, where is cashflow coming from? Are we burning too much? Should we reduce software costs, et cetera? So how are you providing that r o I piece that we talked about earlier every day or every however often you're speaking to your customers and making sure that they fully understand that hey, if I'm committing to to higher logic for the next two, three years, I'm seeing value today and now Yeah
Speaker 2:That that's the precursor everything, right? You, there's no way to sign a longer term agreement if you don't feel like you're getting or you don't see the value in the product that you're utilizing. So yeah, it's part of, that's why customer success managers don't need to be doing support. I talk about this all the time, right? Because if a CSM is getting drawn into handling support issues or even doing the implementation, I believe those are two separate things in most companies, not all, but most then you know you're not gonna have the time to tell the value story and to ensure that you've enabled your sta your champions and your stakeholders to, to tell that value story. If you're feeling support issues, then you also don't have time to strategize with your customer on how to use the product better to, to me it, it all begins with the value conversation, like we said. But the multi-year renewal is just a, is just an, it's an outcome of that value being realized. Not every customer is gonna take you up on it and that's okay. But it's good to give them those options because some will come back and say, hey, we need a different pricing structure. And then you have an option to automatically go back and say, I can do that for you. However, it just requires you to make a longer term commitment to us, then I can work that out for you. That's a much different conversation than saying now we just do one year renewals and sorry, but the price uplift is what the price uplift is.
Speaker 1:Yeah, fair. Those options make complete sense. And speaking tactically or something that someone can take away to their own organization, I think you mentioned it earlier in our conversation about different ways that you're providing value. You mentioned a one pager or something you're doing with a tactical tip. Is there anything you can share with our listeners that you guys are doing to prove value even now when times are tough as well?
Speaker 2:Yeah, the they using data to tell an ROI story is job number one and with your larger customers, you either have to do that for them or given the data and the tools that they need to do it for themselves. If they need to tailor and customize that. So that, that's job number one. Job number two is back to this idea of scale Customer success programs part of the value that we provide as vendors, almost every SaaS company is a specialist in some way, whether you're a horizontal or a vertical type of solution. We're a vertical solution for B2B tech companies, for online community that integrates with their L M S and events and everything else. So we know a lot about that. We've been doing it for a long time. We interact with a bunch of different organizations who are all the same or similar organizations to one another doing the same type of thing with our products every week, every month, every quarter. So when we talk about scaled programs and our own customer community, that's also a way of providing value and it's value outside of the product. Some of it's inside, right? You're gonna learn how to use the product better, but some of it is, hey, I'm gonna connect you with a network of people who sit in a similar seat to what you sit in and you can learn from them, you can exchange notes with them, you can see the benchmarks and understand how you're performing relative to your peers in the same industry because we've helped facilitate that. So there there's value to be provided on a one-to-one basis and then there's a lot of value to be private provided on a one to mini basis as well. Like we did when we first started gang grow, retain, right? We brought everybody together, let everybody learn from one another. We were just the facilitators. And I think that concept works in a B2B SaaS company as well
Speaker 1:For sure. And I think what you just said should be remembered or hopefully resonates really well with our listeners is around make the math make sense for your customer. Because I think it's that simple and I think that sometimes we really get caught up in the use case and the best practice and everything that we always keep sharing all the time and not saying don't stop doing that. You definitely should. That should be a part of your, your toolbox of tricks that you're presenting to your customers. But I sometimes really find it amazing that we don't think about the math. If we do the math for the businesses that work with us, it almost makes sense and it also makes sense for us to even have upsell conversations possibly because the math makes complete sense. And that's what I wanted to ask you a little bit about as well. I know we've been talking about maintaining and gross revenue retention and just trying to make sure we're managing churn. We don't live in a stagnant world and businesses are always trying to grow. Have you guys thought about expansions during renewals at this time? Everyone's watching every spend right now and every business. So I know that it's a tough question to ask, but how are you guys thinking about that while in those renewal discussions?
Speaker 2:Yeah, it's at renewal and it's throughout the year as well. You, we have add-on services that you can add into your subscription anytime and you hit the nail on the head. It's really about additional value. It's not, yes, it is probably going to result in an additional booking for your company, but it's really about the additional value that the customer is getting. So if you stick with that as you're north star, then you're in good shape. Customers that are buying, selling into your customer base is a great retention strategy. Customers that are buying more from you are not leaving you anytime soon. Okay. So really if you have additional services to offer, then you should be having those conversations with your customer all the time in a consultative way, just like selling should be in my opinion period. And that's not detracting from the relationship at all. That's actually enhancing the relationship cuz you're looking for ways to provide new value. For
Speaker 1:Sure. And you mentioned in our prep call for this that you think selling is a retention strategy. And you just said that selling should be consultative as well. So can you expand on this? What do you mean by selling is consult consultative as well as a retention STR strategy?
Speaker 2:Even so I, I run our sales team for the part of the business that I ever oversee here at Higher Logic as well. And one of my daily pushes to our team is you need to be a consultant here, not a salesperson. You need to be a consultant, you need to help teach what is it that this customer is trying to figure out? What are they trying to learn? Because even in a sales role, and not to diminish it, but sales people have a unique purview, right? They have a unique vantage point in that they get to see a lot of different companies trying to do the same thing. We should never forget that whether you're in sales, whether you're in customer success, even it's the customer you're talking to only really, it's probably looking at their own environment, right? And what they know.
Speaker 1:Very fair.
Speaker 2:We are all looking at the landscape, we're seeing all the trees in the forest, right? And how people do things differently and what works best and what doesn't work at all. And it doesn't matter who you are. If you're a customer facing in any way, you have valued offer a customer. That's a soapbox moment there.<laugh>.
Speaker 1:I was like, where are we going with this Jay? But I hear you go, I hear you on the consultative side because I think what, no matter what part of the business you are in, you need to be that person that is there to advise based on everything, but also hone in on what that customer needs at that exact moment. Which is I think where you're going with this.
Speaker 2:Absolutely. That's right. And sometimes your are, your customers are gonna have options to buy more for you that fill, that fit their needs. Even now there, there's a, I heard somebody talking the other day and I'm sure this is public information somewhere, so I don't mind saying it out loud, but HubSpot, right? Massive company. They're a majority of their sales this year will probably come from their base, maybe not a majority, but a significant portion may be more significant than in years past because they have tons of value to provide, they have multiple products, right? That could help their customers become more efficient and more effective right now. And if you could do that and you could prove that out during these consultative or sailing kind of discussions, then you have an opportunity to expand with your customer and it's a, and once you do then you know, you rest assured they're probably gonna stick around for a little while. While, while they try that. So it, I think selling is a great retention strategy more so than support.
Speaker 1:Being consultative can never hurt neither yourself nor the customer. Being consultative means being curious and asking the right questions at the right time. But also it's again, presenting your customer with options based on the value that they're seeing within your product. Rather than just going in with that one tunnel vision mindset of, Hey, I'm gonna present you what I think is best, rather than coming to the table with let's discuss what makes best sense for you. So I think that's a great way to look at things in general, like you said, across multiple different departments in the business, but especially in customer success. And that's what we're talking about here today. You mentioned earlier around segmentation, which I do wanna touch upon as well. And I think times when times get difficult or tricky, segmentation is extremely important cuz you really have to decide where's fight or flight when it comes to certain customers. And every customer is valuable, like you said, and everyone is important to every business. But you really do have to figure out what makes sense for your business when it comes to segmentation and churn. So how are you guys segmenting customers right now? Is it any different to other times? Are you guys doing something different right now and how are you dealing with potential bad fit customers?
Speaker 2:Oh, interesting. So no, our segmentation strategy really hasn't changed all that much just for this point in time. We, our core segmentation is a combination of the size of the business and how much they spend with us. I am not a big believer in segmenting only by a r r, in fact, I don't like that at
Speaker 1:All. I think there's so many different verticals that you can segment on and it should AR is the easy way, but it shouldn't be the only way
Speaker 2:That, that's exactly right and that's why most people do, it's because they have the data. But what I've found to be specially effective in my years of doing this is that number one, you align with the segmentation that the sales and go-to-market teams use. So that's important because then everybody is speaking the same language. So if I say enterprise, my sales team knows what that is, my customer team knows what that is, we're all talking about the same thing, right? Then you can have different segmentations within their, in enterprise, commercial, mid-market, smb, whatever monikers you use, they actually describe the size of the organization that you're trying to work with.
Speaker 1:Yeah. That's like an external, almost external segmentation, just understanding cross-functionally what kind a customer this is,
Speaker 2:What kind of business it is. Exactly. And then secondarily, yeah, you have to look at the ARR too, right? Because the, you've gotta prioritize those accounts that are the better, really the biggest weights in your a r pool, you've gotta keep them satisfied. Increasingly, we are looking for ways to bring programs that scale to our customers because what we've learned is that you can have a high-touch customer success program for any portion of your customer base, right? Usually for the enterprise accounts is how folks do it or the higher end of the mid-market, but it doesn't mean it's higher quality if a, if the customer is only getting their information from one person A C S M, right? As to how to use the product, how to get better at it, what the best practices are, what the benchmarks are, that person only has what they've seen. And if you have somebody, God forbid, that's not performing well, then that actually throws the relationship at risk with your, with those, with the customers that they manage. So increasingly what we're learning is that if you build scaled programs for new user onboarding, for best practices, for um, for even the value kind of workshop type thing where you could say, Hey, here's our methodology. We're gonna teach it to everybody at the same time and we're gonna let 25 customers be on one call and talk about it together, how they're making the case internally using our template, right? So if you're doing things like that, what we're seeing is that enterprise customers will participate in that just as much as mid-market or smb, your smaller customer tiers. And the benefit there is that it, it removes a little bit of a burden from the CSM to have to do every single one of those conversations. And it also increases the quality because if I'm running a new user onboarding session once every two weeks, I'm honing that in, I'm sorry, for multiple customers at a time, like a webinar style thing, that that program is getting better and better over time. It's getting tuned it, we know how to run it, we can measure the quality of it cuz it's only one program, it's one session that we're monitoring rather than a leader having to keep track of what 40 or 50 or 60 CSMs are doing individually with their accounts.
Speaker 1:That makes sense though. Having programs overarching that are the same, that are applied to multiple CSMs. So you're looking at the results of the program rather than the results of individual csm. So you can tweak the program, like you said, the scaled program that you're building. So that makes complete sense
Speaker 2:Now. Now you were talking about segmentation though. Yeah,
Speaker 1:Yeah. I wanna know more about how you're handling that when it comes to churn as well.
Speaker 2:Yeah. Okay. So the more interesting way I think to segment customers, you have to have that baseline segmentation. So the market that they sit in and the how much they spend with you today, that's our core segmentation. Outside of that, we use other segments, we call'em cohorts, but what we do is we look at customers based on their usage pattern, based on the market that they're in, based on their situation that would qualify for an expansion of some sort. So do they need to go from our corporate plan to our enterprise plan or do they, are they a good candidate to buy or add-on services that we do some of the work for them to manage and operate their community? So those are different segments that we utilize for different purposes. The cool thing about that is that not only does it help keep you focused, if you have a strategy to go expand, you really wanna be spinning your energy where that expansion is really likely as opposed to just spreading and spraying and praying across everybody. And then you can also report on those strategies very clearly and simply to your board. So if we think 10% of our customer base could buy this additional solution, then we can actually say, okay, there are a thousand customers in that segment and here's how many we've, here's the approach we're gonna go use to tackle them. Here's how many we've talked to. You can almost treat it like a sales, like a funnel at that point. That way your stakeholders don't think there's 10,000 customers that can buy that. They know that there's just a thousand and you can use'em. Uh, you can methodically go after that segment report on your success rate, your failure rate, what the phenomenon are, they're that are either helping you be successful or, or where you're not being successful. It becomes very clear, right? So these sub-segments, based on where you go next from a product standpoint are important after you get the main segmentation down, which assign, which helps you assign resources to your accounts.
Speaker 1:Jay, we could keep talking about this probably for hours, and I wanna be mindful that we need to wrap up with the quickfire discussion part. So I want to ask you these next few questions. And my challenge to you is to make sure that you try to answer them in one sentence or less. Are you ready?
Speaker 2:I'm ready. Okay,
Speaker 1:Let's do it. First question is, what do you think is next for the CS industry?
Speaker 2:The CS industry is going to have to scale better than it has in the past.
Speaker 1:The next question is, what is it your favorite app on your phone or your laptop that you cannot live without?
Speaker 2:Oh my gosh, I didn't do my homework on this question. Let's come back. You know what, I'm just gonna say LinkedIn just because I probably use LinkedIn app more than anything else on my phone. So
Speaker 1:Yeah, I could see that<laugh>,<laugh>. The next question is, which SaaS product could you not live without as a CS professional?
Speaker 2:One of my favorite products is Gong. I always talk about Gong and it's just because I have ready access to every conversation, almost every conversation that my team is having. And I learned so much by listening to those.
Speaker 1:And my next question is, what sort of compensation should A C S M get? Should it be just a base salary or a base salary? What's some sort of variable commission part?
Speaker 2:Oh, one sentence really on that question, Anika, you
Speaker 1:Gotta try. Not everyone's successful, but you gotta try. Okay,
Speaker 2:Here we go. I think if you don't have some kind of direct selling responsibility in a quota, then you should potentially be only on a base salary. If you do have a quota, then I like base plus commission.
Speaker 1:Interesting. You're the first one to bring in just base salary of my recent guests. So interesting that you said that. And final question for today is, what is your favorite part of customer success?
Speaker 2:It's customer success is really not a function as much as it is an outcome, right? And that outcome is the, it's the nation of doing a lot of different things, right? From providing a great product, providing great onboarding, providing great support, and then giving your customers best practices, benchmarks in other ways of getting better at what they do, not just using your product.
Speaker 1:Thank you so much, Shay, for sharing all your tips and tricks around how to manage gross revenue, retention, churn, and I think the main takeaway for me at least, was providing value at all times to your customers and make the ROI clear as often as possible. If our listeners have any other questions or wanna continue the conversation, where's the best place to get ahold of you?
Speaker 2:Sure. You can check me out on LinkedIn, of course. Jay Nathan, and then I have a newsletter as well. You can check that out. Customer success.io is where you can find that.
Speaker 1:Ooh, I'll have to, I have, I didn't know that. I'll have to check that out. But thank you Jay, so much for your time. I really appreciate it.
Speaker 2:Thank you, Anika.
Speaker 1:Thank you for listening to the Customer Success Channel podcast today. We hope you learned something new to take back to your team and your company. If you found value in our podcast, please make sure to give us a positive review and make sure you subscribe to our channel as we release new podcasts every month. Also, if you have any topics that you would like me to discuss in the future or you would like to be a guest on the podcast, please feel free to reach out. All my contact details are in this show notes. Thanks again for listening and tune in next time for more on customer success.