#TDSU Episode 167:

⏱️ Timestamps:

00:00:00 - Intro

00:01:24 - The missing metric in customer success

00:02:27 - Rodney Dangerfield of departments

00:04:18 - Internal confusion and conflicting priorities

00:06:16 - Customer value versus internal metrics

00:08:02 - ARR, GRR, and the true mission of CS

00:10:26 - The ROI argument for headcount

00:11:51 - Tying retention to sales success

00:12:38 - Wrap it up

📺 Lifetime Value: Your Destination for GTM content

Website: https://www.lifetimevaluemedia.com

🤝 Connect with the hosts:

Dillon's LinkedIn: https://www.linkedin.com/in/dillonryoung

JP's LinkedIn: https://www.linkedin.com/in/jeanpierrefrost/

Rob's LinkedIn: https://www.linkedin.com/in/rob-zambito/

👋 Connect with Tim Concannon:

Tim's LinkedIn: https://www.linkedin.com/in/tim-concannon-a5832028/

[Dillon] (0:00 - 0:32)

I will disagree with you. You and I are just, we're too short passing the night here. In that I agree with everything you're saying, it's just a matter of who's doing that expansion motion.

Is it sales or is it sales? Absolutely, absolutely. I completely agree.

Fight, fight, fight! What's up lifers and welcome to The Daily Standup with Lifetime Value where we're giving you fresh new customer success ideas every single day. I got my man Rob here.

Rob, you want to say hi?

[Rob] (0:33 - 0:34)

Huzzah lifers!

[Dillon] (0:34 - 0:37)

And we have JP with us.

JP, can you say hi?

[JP] (0:37 - 0:39)

I'm ready for some turkey y'all, what's up?

[Dillon] (0:40 - 0:48)

I don't know what that means and don't date the podcast. I don't know how many times I got to say this. And we have Tim with us.

Tim, can you say hi please?

[Tim] (0:48 - 0:49)

Hey everybody, nice to see you.

[Dillon] (0:49 - 0:53)

And I'm your host, my name is Dillon Young. Tim, thank you so much for being here. Can you please introduce yourself?

[Tim] (0:54 - 1:10)

Sure, my name is Tim Concannon. I've been in customer success for a good amount of time now working my way as an individual contributor up through leadership. Right now, I am one of the many people looking for their next gig, but still trying to stay on task on what's new and what's going on with customer success as a whole.

[Dillon] (1:10 - 1:23)

Well, then you've got to tell us what's new. Hopefully it's something we haven't heard. So Tim, you know what we do here?

We ask one simple question of every single guest. That is, what is on your mind when it comes to customer success? And tell me something new.

[Tim] (1:24 - 1:58)

For me, you know, looking across what's going on in customer success, my topic is that I think we're all doing ourselves a disservice by not having one standard metric that the entire industry is looking for. You know, you look at sales, you look at support, you look at product, finance, it doesn't matter. They have that one topic that everyone's driving to, no matter the industry, no matter the company, no matter what.

And in customer success, sometimes it's onboarding, sometimes it's churn, sometimes it's upsell, sometimes it's support. And I think that we hurt ourselves in the global economic of the company and where it continues to be the junk drawer because of that. Oh, the junk drawer.

[JP] (1:59 - 2:01)

Here we go again.

[Dillon] (2:01 - 2:12)

Chicken or egg scenario, do we define what our North Star is first or our title? North Star. Okay.

All right. JP, what do you think?

[JP] (2:13 - 2:24)

I think that, so I feel like we were talking about this earlier when I was talking about the Rodney Dangerfield treatment that CS gets, right?

[Dillon] (2:24 - 2:26)

You get no respect. Get no respect.

[JP] (2:27 - 4:09)

And right, because it's this shifting vagary, like, you know, what are we going to hang our hat on? I'd like to add a caveat, a little asterisk, which is, you know, I've really only been doing this for a little while. But also, CS has only been doing this for a little while, comparatively speaking.

So I think I say that because I do think that context is important in terms of the frustrations I think that a lot of us have with wanting to come to more standardization. I think, I would hope that this is part of the, maybe the next frontier of CS. People are all out there talking about the next frontier of CS and what they think it is.

I do think that having some sort of standardization, some sort of understanding, will go a long way with CS being more respected. And I don't just mean respected in terms of, you know, does your grandma agree or does somebody think? I'm talking about respected in terms of when you want to go get revenue for your, like the real things, right?

That somehow this will, standardization may help reduce this sort of like uphill battle that I feel like we're always facing. Again, I could be wrong. I'm a baby in this.

I'm a toddler. So, you know, it could be wrong. I could be at the peak of not stupid.

But I do think that this is an important topic. I just, it's just, you know, I don't know, Rob, what do you think? Drop some turkey on me, baby.

[Dillon] (4:09 - 4:17)

Rob, I will give you some sort of bonus that I don't have designed yet. If you can avoid using any psychological references here.

[Rob] (4:18 - 5:41)

I think I can avoid it. But I'm going to hit you with something you're familiar with at some point. But no, Tim, this is good.

This is really intriguing. Because you know what I'm thinking about? It's like, it's not even just industry-wide that we're not aligned on a metric.

Sometimes it's internal within our own companies. And how much does that suck, right? Because if your CFO is thinking that you're driving NRR and your core focus is time to launch and first response time on tickets, like, well, geez, that could be a problem.

So this has really got my mind going. And in particular, you know, one thing I've been talking about a lot lately is this five personas of CS concept. And I realized that each of those personas has a different north star metric.

If you look at like the administrative functions and the support functions, it's all about first response time, resolution time. If you look at the purely customer health focused CS orgs, it's all about whatever metric makes the customer successful. And that's not even a company metric.

That's not your internal metric. That's the customer's metric, which can vary a ton from model to model. And then you look at the more commercial CS functions, where it's all about NRR as the north star metric.

For me, that has usually been the case. And then everything else has trickled by extension from that. Like, for example, the reason you care about first response time is because it promotes NRR.

The reason you care about customer outcomes, as bad as this sounds, is because it promotes NRR.

[Dillon] (5:42 - 5:44)

Why does it sound bad?

[Rob] (5:44 - 5:45)

Because it sounds...

[Dillon] (5:45 - 5:46)

That's why we were created.

[Rob] (5:47 - 5:54)

Well, so while I agree with you, but it doesn't sound like this noble philosopher style...

[JP] (5:56 - 6:00)

You just hit ding, ding, ding, ding, ding, ding, ding! There you go, you just hit it.

[Rob] (6:01 - 6:05)

You guys know I agree with you, but not all of our audience may agree.

[JP] (6:05 - 6:07)

I just love an open conversation. That's a different conversation.

[Dillon] (6:08 - 6:14)

If I didn't get paid, I'd still be a CSM, because I just love laughing at people. I like relationships.

[Tim] (6:16 - 6:53)

That's when it all goes down the drain, though. If it's all about customer outcome, that's great. Money's tight.

How are you bringing money in? Now, as an individual contributor, I'm pivoting. I'm no longer showing how frequently I'm bringing my customers to value on time.

Now, I have to change my entire annual review, my entire internal QBR, whatever it is, pivots on a dime, and I have no training. I don't understand why. And I'm being looked at more as a sales rep without having the sales rep background or the training that every sales rep gets at an annual kickoff.

And you're just stuck standing there wondering what you're supposed to do. And it's hard.

[Dillon] (6:53 - 8:02)

It's confusing. Yeah, well, I think a lot of this, and I want you to keep going, Tim, because I want you to get in this commiseration echo chamber with me. Don't worry, I'm there.

There are so many overlapping issues that we talk about. So, Tim, you started with an identity shift within CS, but then we talked about how oftentimes with that comes a lack of training. Well, one of those is just straight up your company isn't supportive, right?

They don't know how to run an organization. They have a product and they hired people to do jobs, but there's no connective tissue. There's no higher level thinking.

That's completely different. And that's going to apply to everybody and everything at different times versus what you originally talked about, which is, you know, maybe outcomes was the original goal. And then they realized that that was a leading indicator of the lagging indicator they actually want, which is that NRR.

So I want to talk more about that. And do you think NRR is the North Star? Do you think that that's is that the metric we should land on for customer success?

[Tim] (8:02 - 8:38)

I think it should be ARR or GRR. I think that everyone should be working towards that retention goal. And as your company grows, shrinks, whatever it may be, becomes more efficient within the sales cycle, you may take on NRR as a secondary metric.

The reason customer success was created was because it was cheaper to keep customers than it was to get new customers. And that is ARR. And that's what customer success was born to do and needs to go back to doing.

And it's spiderwebbed out into 10,000 different things. And that is the difficult part to me. What do you think are the primary?

[JP] (8:38 - 8:48)

Let me hijack this for a second. So, Tim, in your next role that you're looking for, what kind of organization are you hoping to go to?

[Tim] (8:49 - 10:26)

You know, I want to go to an organization that is looking at that retention piece, is trying to figure out that. Let's hope that it's 15% of customers that are churning. How do we keep them?

What is that goal? And I want to put that strategy into place. How do I make sure that we reduce that from 15 to 8%?

That's the focus. To me, that's what is fun and exciting. I think as a customer success manager, either that's actual management or as an individual contributor, that's what we should get up in the morning and be excited to do.

How do I find these customers and show them that value to renew? And that's where those other metrics that you mentioned, Rob, come into play. That time to value.

How do I know what your value is? That I can go into another tangent for. But that's all secondary.

That's how I show the customer value. My gripe is, how do I show the internal value? Customer value and internal value are two very, very different things.

No one in support is saying, I got you to your value point by closing X amount of cases for you. Nope, I followed through and solved that one thing for you. Sales isn't going, look at you.

I hit my quota, so you must really like the product. No, there's always two different numbers. And we broke that in some way.

It became, I got to measure my outcomes. I got to show that time to value. Yes, externally.

Internally, how do I get a bigger headcount? How do I make sure that my budget grows? And how do I make sure that it's my budget and not somebody else's budget?

It's by showing that that churn rate is going down by the work that the team has done. And that is how we grow those teams. And it's how we grow that organization.

[Dillon] (10:26 - 11:51)

So to close this out, I will disagree with you by citing, I forget where I read this or saw this or whether it was even on the daily standup, that we had a leader on who basically was like the only way, like the only real argument for additional headcount is the ROI argument. This is the one that Rob loves to say is, if you put $1 in the Rob machine, do you get $2 out? Retention doesn't do that.

NRR does that. So if you say to your leadership, if you allow me to hire more headcount, my ROI machine gets better. That's how you increase headcount.

What I'll say, the caveat there is that you mentioned this idea of like, OK, you start with GRR and then you someday end up at NRR. And that's all about the ability to sell additional products off of your or additional things off of your product, whether it's modules, additional seats, it's entirely different systems. So yes, up until that point, I mean, every CS org is just retention.

And before that, it's satisfaction, right? If you're one year or less in and you're on annual contracts, you can't measure retention. There's none to measure.

So what do you do in the meantime? It's probably going to be all of those leading indicators. So yes, of course, as an organization matures, that's going to change.

That would be my only disagreement with what you said. I think we're all kind of saying the same thing.

[Tim] (11:51 - 12:27)

So if you go into a CFO's office, they care about profitability of that organization. And that is the entire customer facing team's role. And to my point, in my mind, that profitability has to start with a strong ARR or GRR.

If it's lower, then that means that the sales reps have to pick up more slack. So in reality, if you have a strong ARR, GRR number, you are taking some of that pressure off the sales team or you're giving a bigger runway for a more successful year. Hopefully, you're giving them more runway for a more successful year.

So they're not starting at 60%. They're starting at 95%.

[Dillon] (12:27 - 12:36)

I think you and I are just, we're too short passing in the night here. In that I agree with everything you're saying. It's just a matter of who's doing that expansion motion.

Is it sales or is it CEOs?

[Tim] (12:36 - 12:38)

Absolutely. I completely agree.

[Dillon] (12:38 - 13:07)

Fight, fight, fight. Again, it's so dependent on the organization and the leaders, blah, blah, blah. Anyway, Tim, that is our time.

So we cannot fight. It kind of looks like you would beat me. So this is convenient for me.

Tim, come back soon. Keep us updated on the job search, where you end up and what sort of conversations it took to get there. And can't wait to hear more.

But for now, we've got to say goodbye.

[Tim] (13:07 - 13:08)

Awesome. Thank you all. I enjoyed the time.

[VO] (13:10 - 13:45)

You've been listening to The Daily Standup by Lifetime Value. Please note that the views expressed in these conversations are attributed only to those individuals on this recording and do not necessarily reflect the views and opinions of their respective employers. For all inquiries, please reach out via email to Dillon at lifetimevaluemedia.com.

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