THE STARTUP CHAT

Steli: Hey, everyone this is Steli Efti.

Hiten: And this is Hiten Shah.

Steli: And in today’s episode of The Startup Chat, we’re going to talk about customer success. What it is, how to think about it, but much more importantly how to make your customers successful, how to retain them, and how to grow your business with your current customers and why that – and how to do that technically. But even before we start jumping into things, I know that you are not the biggest fan of the term customer success. And I want to like kick us off with that controversy and let you comment on that. Why is that a terminology that you’re not a huge fan of?

Hiten: Yeah, I’m not a huge fan of that terminology because I’m either old school or grandpa in this case. And the reason I say that – or a curmudgeon – but it’s because I’m used to, in my first SAS business Crazy Egg would still exist, not having sales, or what we now call customer success sometimes. And I really believe it’s a made up category for sales to co-op to customer support. So that’s my sort of aggressive approach and thinking around it. And so my take is why don’t we just call it customer support.

And why do we have to call it customer success. Because there are also on sales teams, retention teams, and there’s account managers, and they should be doing the function of customer success. So my take is that we merged account management in some ways, retention teams and sales with customer support. And now we call it customer success. And there’s, you know, just like in many other terms, like you know this whole term of like account based marketing or whatever it’s called, or account based sales, I think that’s bullshit, too.

So it’s like we’re making up these terms. We have really good terms for this stuff, like sales, instead of account based sales or whatever, and customer support instead of customer success. And a lot of these terms are made up because some random SAS company wanted to create a new market, or resegment an existing market and become relevant. And I think the days of that kind of stuff happening are over. And I could say the same about inbound marketing, except that inbound marketing came out at a time when social wasn’t that hot.

And people were doing a lot more paid acquisition in SEO. And inbound marketing ended up combining a lot of these things. So I’m not trying to justify that terminology, but because of the success of some these terms from back in the day, people are making it up. So in my mind, I interchange customer success with customer support. I’m happy for you to argue with me on this Steli because I know you’re in – you know, whether you like it or not, or you probably like it, but you’re in sales.

You build sales tools. And you’re one of the best sales people I know, and probably the only one I can really have a legitimate conversation about with this, without getting mad.

Steli: There you go. So I think this is fascinating, so this is a good discussion. So my comments on this are twofold. So as you get more experience in life in general probably, this is where the grampaness comes into things. You kind of see through some of the bullshit that is happening in world. And a lot of the bullshit, or part of the bullshit that’s happening in the world, is that we rebrand and repackage old ideas and pretend they are brand new ones. And that can be for an experienced person something that triggers sinicism. Everybody is like: oh, my God, customer success is the biggest new thing.

Let’s buy these books about this and read about it. Let’s try to build a department around it. And all along they had an account management department and a sales team that was doing what you could call customer success. So why are we pretending this is something totally new? I have that myself in lots of different areas. Like, I think we talked about SDR, Sales Development Reps, being a bullshit term, right? And a position that is not brand new. And a career path – I think it’s a brilliant branding because being a prospector or qualifier always sounded really horrible, really low level, and nobody wanted to be that.

But being somebody that develops a sale, being a sales development person just sounded so much better. So I think it was – this was good rebranding, but it’s also like just repackaging something, a position that always existed. And it’s not a new position. It’s not a brand new thing. So I have the same responses to a degree in some areas. To me, to a certain degree I believe – I disagree with you that I think the days of this are over. I think, at least if I understood you correctly, my hypothesis right now is that this will never stop. Like, as long as humans are around we’re going to give things a new name and pretend we just invented them.

Hiten: So let me clarify. What I mean is the days of one of these terms becoming as massive as like inbound marketing, or even social media, are over, right? Like, these things are going to stay niche, unless they really really really matter to the world and you’re hitting on a trend that’s just that important.

And so what I’m saying is like, it’s usually you can because come back to any of these terms and say one company invented it, you know? And then the term and the success of it is all dependent on that company being successful. For example, I would say that the company Gainsight, really popularized customer success out of anybody else, right? And now there’s a few customer success tools, honestly some of them have gone out of business. Why? Because it doesn’t exist. Like, do we need a customer success tool when we have Zendesk, that’s my like bigger question about this whole category?

Steli: Yeah, so let’s talk about that.

Hiten: Yeah.

Steli: This is an awesome conversation. So the thing that I wanted to add before we talk about this specific topic, the way that I judge these things at least, is this wording or rebranding, is this helping us do the function of the thing better or not, or understanding it better, or communicate it better? And I would – putting words in your mouth, I would say you’re arguing that it isn’t, and I will agree with you on this, because the thing that I’ve realized, and the thing that I see when it comes to customer success, I think that most companies are confused what that means.

And there’s not – if you take ten startups right now that all have customer success teams, I would venture to say that all these ten customer success teams do very different things. They’re not all doing the same job. So customer success, some companies will do more support and call it customer success, some customer success teams will do more sales up selling, contract selling, reselling type of job and will call it success, some teams will do more account management, you know, visiting customers, building relationships with them, some will do more training and education, just giving webinars, teaching users how to use the product and will call it success.

There’s a wide variety of things you could do under the umbrellas of quote-unquote success. And I think because it’s a nebulous, a lot of companies struggle with hiring the right people, managing them the right way, and doing that job really really successfully because it’s become this like, it’s the thing everybody does, we should do it too, but what is it really that we want to do there? Well, we don’t really know. It’s a lot of things. Making sure our customers who are staying with us are now successful, making sure that they don’t turn.

And we have an episode on turn, it’s episode 106, a hundred and six, how to deal with turn in SAS. But it is a nebulous term, and I think it does it make difficult for companies to execute on it really clearly with clarity and know how to do it and do it well.

Hiten: I’m glad we agree. It’s nice when we agree. But like, we usually agree about these things, right?

Steli: Yes. It’s also nice when we disagree at times, right?

Hiten: Oh, why not, yeah.

Steli: So let’s talk about the underlying thing though is that you need to make sure that you’re close to your customer, that you understand your customer really well, and that you are doing anything possible as a business to make that customer get the maximum amount of value out of your product and service. And that the customer is aware of the value they are gaining from that service, and that therefore they stay with you for as long as possible and keep expanding their relationship with your business.

That’s a function today that I would say is equally as important as acquiring new customers, and at some points it’s even much more important than acquiring new customers is keeping your customers.

Hiten: Yeah, I whole heartily agree that keep your customers is much much more important, yeah.

Steli: Let’s talk about – sorry to interrupt you, but let’s talk a little bit about the software tools that are being released around customer success. Because I think a lot of people think they need to buy these tools to do success, so maybe we want to talk about that. And these customer success tools, usually there’s a variety of them, but usually what they do in essence, or what they’re trying to do is monitor your customer’s usage of your product, and predict the quote, un-quote health of that account, or the likelihood that these people will cancel, and hopefully give you the tools to prevent that from happening. That’s kind of – that’s at least how I would summarize kind of all the customer success software that’s out there.

Hiten: Yeah, I mean, to me, like if you set up the proper rules, whether – I mean, in our case, like some of it’s like using some of the emailing systems we built around drip emails, and emailing people when they haven’t done something.

And trying to understand either why, we’re helping them do the thing we want them to do, or using customer support with the proper rule sand triggers to do the same thing.

Those things might be a little fancier, it might take a little more effort, but I strongly believe that if you are using a tool and it can do what you need done, why would you use another tool?

Steli: You wouldn’t.

Hiten: Right. Like, well, you shouldn’t, right?

Steli: You shouldn’t.

Hiten: And I think people are definitely not thinking about it that way. Partly because some of these vendors are doing a good job of sales, but then when you look at their turn rates, and look at like how impactful their products are, and then look at like the fact that you’re playing for all these SAS tools all of a sudden. You know, I’ve seen so many companies contract and say we actually don’t need that customer success thing because we already have a customer support team, we’re already able to create the right rules in there, and let the right agents in that tool that might not be customer support, it might sales people, or it might be account managers.

And so I think we’re just seeing this world where there are so many tools out there, the tools have gotten super robust as to what they can let you do, and just because you’re using a customer support tool, doesn’t mean you can’t use it for customer success. And we don’t need to be sold more tools. We need to start using the tools we already have better. And you could argue that the onerous there is on the tools themselves and the companies that are behind them.

Steli: Yeah. I think it’s like back to basics. Just like with a lot other things in life, you have this, a lot of times people are looking for the next workout machine or diet concept. They’re looking for this next thing that’s going to make them feel excited and motivated to let’s say finally lose weight. But you don’t need whatever, a new tracking device. You don’t necessarily need a new book and a new type of diet after you’ve gone through hundreds of diets before. You don’t need some kind of workout device that you’ve seen on shopping television to lose weight.

You know what you need to do to lose weight, just move your body and eat broccoli, just do the basics and eat healthy and move around. But these are the things we don’t want to do, so we’re excited about like this secret thing that you’re going to be doing this crazy diet and only eating whatever, like I don’t know, only eating carrots for three days and then boom, you’re losing all this weight and your life is different. And I think the same thing in business a lot of times; we’re looking for these magical solutions.

We’re going to install this customer success software, and that will help us fix the problem for why our customers leave, instead of asking ourselves: well, why are customers really leaving? They’re leaving because our products is not delivering value. A customer success software will not fix that. That’s not going to solve your problems. They’re leaving us because our competition is out competing us. Well, a customer success software will not fix this problem for us. At the end of the day, you can pick up your – a phone can be a customer success tool; an email is a customer success tool.

There’s a lot – you know, you showing up in person and meeting your customers and seeing how they use the tool and trying to understand how to serve them better. But the ultimate customer success tool will always be the quality of your product or service. If you deliver insane value through your product, your customers are going to be successful and they’re going to want to stick around.

Hiten: Yeah, I couldn’t agree more. I think that we should be focused, you know, to summarize what you’re saying, to me it’s like when you’re thinking about support success, and just in general making your customer successful, I do believe in that. And it’s not because I don’t believe in a category, but I do believe in making your customer successful, obviously. We need to focus on the outcome. And then we need to focus on the fastest way to get to that outcome, not the tool required to get to that outcome. And I think that’s where people get it wrong.

They’re like: oh, I want to make my customers more successful, so I should go find a tool to do that. It’s more like: I want to make my customers more successful, what are the things that are preventing me from doing it today, and how can I get to those fast instead of worrying about tools?

Steli: Here’s something I actually like about the term success. One way I think it can broaden the way we think about things – oh, I’m at least curious how you think about this, or if you think it’s bullshit? There’s people – you know, I heard somebody once define customer success as like, you know, trying to make it so that any interaction with – it’s not just succeeding with a product, but it’s actually understanding what I sour customer trying to do to succeed in general? And trying to do anything and wt possible for our company to be enabling of that.

So to push that thought to the extreme, if some of your customers turned because they’re going out of business. If you really kind of push the idea of success to the extreme, you could say: well, what could we have done to help prevent them going out of business? Like, how could a little software tool have helped more, or our marketing, or a blog post, the way we interacted with them whatever it was? In an ideal world, we would make such a big impact that our customers would not go out of business because they’re interacting with our company.

I mean, this is pushing the idea obviously to an extreme that is not probably attainable, but it is interesting because it’s broadening the spectrum to not just let them succeed with our software, in using the software in the best possible way, but what does our customer – what are they trying to accomplish overall and how can we help them in all kinds of ways possible? What do you think about that? Do you think that’s bullshit or do you think that is allowing companies to think more creatively on how to serve their customers?

Hiten: Yeah. I think it was like I was saying before. I get caught up in the fact that customers exist because of a bunch of tools out there. Instead I would like to reframe that and say every business, SAS or otherwise, needs to help their customers be successful once the customer is onboard with their product, doesn’t matter if it’s a product like a nest, or a product like Clothes.io, or Crazy Egg, or whatever. So total agreement that customer success as something that every company needs to be thinking about exists, not in agreement with the industry that we need specialized tools for it.

Steli: So what do you think about the monitoring of usage? So there’s enough tools already out there that weren’t called customer success tools that monitor product usage, right?

Hiten: Yeah.

Steli: And there’s drip email tools that allow you to connect these dots and saying if somebody doesn’t do these, or does these things, or encounters these kind of situations in our product, we should reach out with this type of messaging and helpful information, right? But I don’t know, what about the quote, un-quote predictive nature of these customer success tools on like telling you with some predictability what kind of turn you’re going to get. And not just emailing these people with more information, but whatever, like enabling your account management team to know these people are going turn really really soon and do something about it.

You see I’m struggling here try to take, like the – trying to explain why this is good. But how do you feel about – do you feel like an analytics tool, like let’s say Mixpanel, and a Kissmetrics, and a drip email tool, and a support tool is all you probably already have an need to do a lot of the things that customer success software is doing today?

Hiten: If you look into these tools, and you kind of look at the rules and the funny stuff and all that that they create, they hit this very classic problem. So number one, the rules that these tools are using are very simplistic, even though they would like to share with you or tell you that they’re fancy. And there are a few use cases where doing a bunch of machine learning, and data science stuff, and algorithms or whatever, will lead to better results, but that’s only when you have such high volume and such high ability to predict that it matters.

So I think they’re putting a lot of venire around very simple rules like let me know when someone hasn’t logged in for three days. Okay, well, that can be created in Mixpanel or Kissmetrics damn easily, right?

Steli: Yes.

Hiten: And I would say that none of those tools do the best job of telling you that: hey, you can use those for that. but the best people that I know that are building their businesses and are worried about making customers successful are either using their own in-house database, unfortunately to like figure this out, or fortunately because all the data is already sitting in there, or they’re using the analytics tool they use, whether it’s Mixpanel, Kissmetrics, Amplitude, or whatever it is that they’re using. Even like certain things in the messaging tools, like intercom or drift, or even to some extent MailChimp and their marketing automation. You can tell when people aren’t opening your emails.

You can tell when people aren’t logging in. you can tell when people aren’t clicking on these emails. And those kinds of rules and that kind of integration doesn’t even exist in the customer success tools. What they’re telling you is we’re going to take all your users, and we’re going to score all of them and tell you which ones you need to reach out to. Well, you could to do that on your own without getting all fancy. I mean, this even goes back to the idea that in marketing automation there’s thing called lead score, right?

Steli: Yes.

Hiten: Okay, Steli, how useful is lead scoring?

Steli: For most cps not useful at all. It’s such a huge waste of time.

Hiten: There’s your answer. This is basically customer success coming out with a metric and saying: oh, this is what’s going to determine within about your customers and what you should be proactive, and reactive, and etc., too. You know what I’ve found, the most important thing, the number one most important thing, and this is what I don’t think that customer success tools are willing to tell you, is that the thing that will predict whether there’s usage or not – I’m sorry.

The thing that will predict whether someone’s going to turn or not is how often they login, what’s the last time they logged in, and how long has it been? So everything boils down to logins, right?

Steli: Yep.

Hiten: And that’s one metric, the easiest metric to track in most of these tools. In fact you know where that metric should be. It should be in your database. Go talk to an engineer on your team. In one hour they can produce a report about logins, and you’re probably going to get 80, 90 percent of the value compared to the success tools.

Steli: Yep. Well, amen brother. I’m glad that we’re having this discussion. It seems like we’re shitting on customer success software, which we are. Right, I mean that is what it is?

Hiten: I am not happy with more software that doesn’t help you.

Steli: Yes.

Hiten: So if anyone’s listening and they’re getting value from their customer success tool, please prove us wrong, like it’s okay. Like, I want to be wrong. I want to believe that software can solve this problem. I have never seen that happen in this category yet.

Steli: Yeah. And I think one of the things that we’re trying to be big advocates in, and we’re doing this in our lives separately, and in our blog posts in our companies, and the conversations we have with founders, but particularly and combine don this podcast, is we want to be honest and straight and tell people, and founders and entrepreneurs, how to be successful, and how to cut the bullshit that we all want to participate in because it’s comfortable and sexy and fun, but it’s not necessarily helping us serve our customers and build our business.

And on my end, I don’t want people to be chasing – just like I said, I don’t want people to be like working on the fucking website, and logo, and the block design for weeks and weeks before they’ve gone out to try to do some customer development and figure out if anybody wants to buy this shit. I don’t want people to be like spending months and months and months finding the right customer success software vendor, implementing it, working with engineering setting up these dashboards, these lead scores, and all this shit, and then figuring out that they could have done – during the time where they spent fucking around with all of this, and spending a ton of money, and resource, and time, they could have just been looking at who’s not logging into our tool, who needs more help, reach out and talk to these people and help them every single day.

And that would have probably made a much bigger impact on their turn, and on their business, and on knowing what to build and how to serve the customer really well, then implementing all this fancy software and dashboards and all these shenanigans. So I think that’s what it boils down to, do the basics, do the work that’s in front of you that will serve your customer. And sometimes software can help with that, but often times we’re just looking for a software solution because that’s an easier thing to do, and a more fun thing to do, then to do the work.

Hiten: Yeah, I agree, whole heartedly.

Steli: Alright. I think that’s it. Do we have any tips to add on that? I’m not sure.

Hiten: Yeah, do the basic stuff before you consider too many tools on this one, that’s my tip. Just a quick one, which is like I just hear too much language about tools, not enough language about actual customers and what’s going on with them.

Steli: Yeah. Don’t get fancy too early, right?

Hiten: Yeah.

Steli: Don’t get fancy too early. If you don’t have a ton of customers, and a ton of revenue, and a ton of things already going on, investing weeks and months into really sophisticated software solutions and processes, and implementing all kinds of craziness is the wrong thing to do because it’s the wrong time. Do the basics, be unsophisticated, be messy, be imperfect, but serve your customer, be close to them and you’re going to be fine. You’re going to figure out all the fancy shit down the line as you grow in scale. Alright, that’s it from us for this week.

Hiten: Bye.

[End of Audio]

Duration: 24 minutes