Higher interest rates. Higher costs. A tighter job market and looming economic uncertainty. With all these macroeconomic headwinds, knowing how to scale customer success organizations is now a competitive advantage.
That’s why we sat down to chat with Jay Nathan in a recent episode of our podcast, Subscription Heroes. Jay is one of the foremost customer success experts in the world and a major thought leader in the CS space. As the EVP and CCO at Higher Logic and the co-founder of Gain Grow Retain, Jay knows a lot about building scalable customer success programs.
Here are the key takeaways and biggest revelations from our conversation with Jay.
What do you think needs to happen within SaaS companies to maintain deep customer relationships while being efficient?
SaaS companies are customer success machines, right? You have to make your customers successful if you want to win as a business. There's no separating the two because the cost of acquisition is so high for customers, and if they only stay for a year or 18 months or 24 months, you're probably going to be upside down as you continue to grow. And what I found is that even customer success teams have sort of just thrown a lot of spaghetti at the wall to see what sticks, and it's not been very efficient.
Customer success, as it's sort of grown and evolved over the past 10 or 15 years, has really come from a place of very high touch. If you've got big enterprise customers, you’re going to have account management calls with your customers every week. You can't avoid that. But there's a lot of companies out there that serve hundreds or thousands or tens of thousands of very small businesses. So what does customer success look like there?
It's completely different, but some of the same technologies and techniques that you use to engage large audiences also work in enterprise. Because guess what? Enterprise companies don't necessarily want to be on the phone talking to you every day. They just want to know it’s working. They want to know that, if they have a problem, they can submit an issue to the company through the support channel, and it's going to get resolved correctly and quickly. And then they want strategic guidance.
When you're advising companies, your question is “how can I convince you to not create a customer success team?” Why is that?
A CSM team is a high-cost blunt force instrument that's only going to give you so much reach across your customer base because it's so high touch. To me, it's all about looking at what's working today. How do you leverage that without creating something brand new? If you don't already have a CSM team, why create it?
Instead, you can start layering in things that give you leverage and scale on what’s already working. So maybe it's billing inquiries, maybe it's a support team, or maybe it's an onboarding function that just specializes in that single thing. I think about the world in terms of creating specialist roles that handle very specific moments in the customer journey along the way.
How do you view customer success within a SaaS company?
A: So when I think about customer success, I think about it in terms of that being the outcome that we're trying to drive. It's not renewals, it's not upselling, it's not advocacy, it's not even adoption. Is the customer getting what they thought they were buying? Are they getting that result and that outcome? Now, how we help the customer get that is what we call customer success.
It comes back to this community concept. Every company, I think, should have an online community. It's a way of letting customers connect with one another, right, and learn from one another. Oftentimes customers have better insights because they sit in the exact same role as your other customers versus you. Your CSMS don't necessarily have that direct, hands on, been-in-the-seat experience. So communities are really important for helping drive just the overall feeling that “I'm part of something bigger”. That’s powerful.
What are your top few practical, achievable examples of scaling customer success?
A: So when you’re in the early days of a company, you may have a team of what people might refer to today as a full stack CSN. Essentially, it's a person who handles the support requests. If a renewal is coming up, they might have a conversation with the customer. They're doing it all. They're a Jack or Jill of all trades.
Oftentimes, the first functional roles that need to be scaled inside of a SaaS company are going to be your support team, your support function, because it's very specific. When a customer reaches out to you, you want to be able to respond to them and solve that issue as quickly as possible. Another one is onboarding or implementation. If you have enough new users coming in, it's a little bit like support. When a new customer comes on board, you have to react to that. You have to go do the work to get them implemented. Now, in a product-led growth model, your product may guide them through that process. But for anything else onboarding is super critical in SaaS, which means it should be specialized pretty early on.
In a lot of enterprise SaaS B2B, you're actually signing annual agreements for things. It may be a one, two, or three year contract, but when those contracts start coming up for renewal, you need to be able to reliably renew those contracts. And, to do that, one of the roles that I've had a lot of success creating in my career is a renewal manager role, which basically takes all the commercial negotiation of a renewal off the plate of a CSM or a sales team. It allows you to centralize the process into a specialist kind of role.
What companies do you admire that are customer-centric and that are doing really innovative things with customer success?
So I've been reading "Invent And Wonder" by Jeff Bezos, and which is basically the collective writings of Jeff Bezos. And what I love about Amazon, why I consider them one of the most customer centric companies in the world, is because their innovation is based on customer centricity. They built Amazon Marketplace to show third-party seller products next to products that they sell. And many people, including many members of their board, thought it was crazy. Why would you do that? Cannibalize your own sales? They did it because they know that it's not about maximizing the value of any single transaction. It's about maximizing the lifetime value of that customer.
Another very customer-centric company is Southwest Airlines. But they start by being very clear about who they are and who they are not. They'll tell you — if you want a first class seat on an airplane, don't fly Southwest because we're not doing that. They know who their customer is, and they serve them relentlessly.
How did you come to love customer success? What drew you in and what keeps you interested there?
I grew up working for my parents. When I was young, they were entrepreneurs, they had retail stores. At the time, it was shopping malls. I learned a few things from them.
One is that you’ve just got to show up every day. You’ve got to work. Another thing I learned from them is that the customer isn't always right, but they believe their perspective is always right, and you have to be empathetic to that. And then the third piece is quality. My mom used to do artwork on these products that we would sell. She would actually hand draw this stuff. And if there was the slightest mistake in any one of those things, she'd toss the product out and start over. She believed in making sure that the customer got what they paid for and that it was valuable to them.
It wasn't rocket science. It was just good, basic, straightforward business. You serve the customers, and you do in a high quality way. And it worked. I mean, customers came back, and you could really see the value of the repeat business. Even if you sell a product, not on subscription, you still need repeat business. That's how business grows. Word of mouth, repeat business. And so I've carried those lessons with me over time.
So in terms of reading, watching, listening, is there anything lately that's had an effect on you?
The thing that I am binging right now is a podcast called Founders by David Senra. He goes through and he reads biographies of great entrepreneurs, so all the usual suspects — Charlie Munger, Warren Buffett, Steve Jobs. It’s great because you can consume basically the equivalent of a book in an hour, as opposed to the 12 hours it would probably take me to read some of those books that he's summarizing for me.
One of the things he says in there, which I really like, is history doesn't repeat itself. Human nature does. And when you think about the kind of determination and grit and beliefs that you have to have to get a company off the ground — they’re just good reminders to have in your ear every day.