Preflight Conversations

Customer onboarding and CS during the economic downturn

Snippets from the conversations at Preflight Huddle - New York
October 4, 2022
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After the Preflight Huddle at San Francisco, we headed to the Big Apple!

The New York cohort of Preflight is the newest addition to our city cohorts around the world. Josh moderated a panel of CS and Onboarding leaders - Edward Chiu, Rachel Provan, Kristi Faltorusso, and Alan Ginsberg. They spoke about how onboarding and customer success teams and leaders should look at the current ecosystem in an economy that keeps dipping and global market indices have been falling. In a candid conversation, our incredible panel shared lessons from their journey so far, how they got here, what it will take to navigate the rough seas, and how they’re keeping their teams’ morale high during this time.

SaaS valuations are down, and companies are implementing layoffs and budget contractions. But at the same time, could this be an opportunity for customer success?

Edward Chiu, Co-founder, and CEO - Catalyst

From conversations with many CCOs and CEOs, I found out that their respective companies have missed their sales targets for the second quarter and will miss the subsequent quarters’ targets, too, given the circumstances. I distinctly remember talking to a CRO who said they’ve never missed a quarter since inception, but they have now, and they anticipate a dull few quarters ahead. 

CEOs are being told to shift the focus from acquisition to retention. It is a great time to be in CS because everyone is talking about taking care of customers. The market is shaping a narrative for all of us in Customer Success. The role of CS is being discussed in board rooms. This is a great opportunity to obtain raises! 

Alan Ginsberg, VP of CS @ ActivTrak

The next 12, 18, and 24 during these months of the economic downturn will be a different part of the economic cycle, but specific industries are hit with a different impact in a downturn. We had customers from the mortgage and banking sectors reaching out to tell us that they want to cut their expenses and so will not be able to renew their contract with us.
For the best outcomes in such situations, we need to engage with customers, listen, understand how their worlds have changed from six months ago, and create opportunities to work with them. It is time to reflect on how the value equation changes, especially during challenging times. It’s essential to form better relationships and partnerships to deliver more value. Customer success, at its core, is about delivering value to customers and understanding what value means to your customers.

Your CS team must understand:

  1. What is the impact we're creating? 
  2. Are you engaging with the right stakeholders and in the right way? 
  3. Do your customers recognize the value that they're getting?
  4. How can you help them along their path to value realization? 
  5. Do they attribute the value realized to working with you? 
  6. Do they see it as differentiated and that they can't get this value anywhere else? 

Answering these questions will help the CS team understand if the value your customers derive from your product or service is considerably more than the value they’re getting elsewhere. It will also help you set realistic expectations when it comes to renewals.  

Rachel Proven, Founder and VP of Customer Success - Proven Success

Uncertain times are an opportunity to transform and rise from the ashes. Challenging times force change, and change can be good. 

Teams should start looking at value realization. Ask yourself what your customers lose if they stop using your product. To get there, CS teams need to put their sales hats on. Although it might be uncomfortable for CS to sell, I’d highly recommend it.  This is not just about you losing your customers, it's also about asking the right questions so that the customer realizes their needs and how your CS team can help them.

Do you sense anxiety in your team? As the organization's leader, what do you say to the Onboarding, Implementation, and CS teams?

Edward Chu, CEO, Catalyst

We haven’t hit rock bottom yet. Macroeconomic phenomena are entirely out of our control. I have told my team, and I want to tell the broader market, that during the recession in 2007 and 2009, the companies that genuinely invested time in customer experience had double-digit growth compared to the S&P global index. The companies that didn’t invest had double-digit negative growth. The broader market had 56% negative growth. Many CEOs recognize this clear fundamental difference. This opportunity is different from ten years ago.

Segmentation plays an essential role in helping companies drive upsell and expansion opportunities. In an economy where it is increasingly difficult to acquire customers, customer segmentation will be the holy grail of a company’s financial health. We can access customer data to be diligent in segmenting our customers. Here’s how to do some top-level segmentation : 

  1. Segment 1- A list of your customers that demonstrate and use your product the way that you want it to
  2. Segment 2 - A list of customers who are the customers that are churning no matter what you do. Your team is probably still spending 20 to 30% of the time on them that they could be using to focus elsewhere.
  3. Segment 3 - The middle ground between the customers that use your product as you want them to and the customers that are churning no matter what, is your perfect ICP. But they're not adopting and moving through your defined customer journey as quickly as possible.

I advise CCOs and CSMs to start small, look at the data points you can access, and formulate quick opinions because the health of your upcoming reports is all about survival for many companies. Companies that can move quickly and have data-driven decisions at the core of these moves will win. It is a selling point for us at Catalyst, but your CS team needs to be proactive even without tools. They need to have the ability to call for a meeting when they see that the efforts they’ve put into a particular customer aren’t reaping the benefits. Simply put, we've spent this entire week just blocking and tapping and having limited list meetings with customers that aren't doing anything. We should look at what the data says as a team. And this should be the way forward even if all you have is Salesforce, even if all you have is an internal tool. 

Edward Chiu writes about how Customer Success will lead the way out of the market downturn. You can read him here.

When it comes to data, it can start looking like an abyss pretty quickly. Start with at least two data points:

  • What are your three best functionalities? 
  • At what point of the customer journey are they using them, and are those customers healthy?

The key is to control what you can and know what you can't. In a moment of the downward market, budgets are freezing up, and everything else requires more seriousness to detail than ever before. It's about focus and precision. It's all about doing less but doing the right things. Teams are worried about where they are scrambling and how they can cover so much ground. As a leader, I think that's when it is your responsibility to say “No.” It is not about doing everything. Leaders should look at all the things the org or team is doing and choose the two that will make the most significant impact and do them well.

Could you tell us about areas where onboarding, implementation, and CS teams should double down to make sure the customer experience is seamless?

Alan Ginsberg, Vice President, Customer Success - ActivTrak

Keeping it simple helps the team be laser-focused and less anxious. We use our customer health tracker and an NRR tracker. It's a straightforward framework where we look at a handful of crucial criteria like:

  1. Engagement: How engaged are we?
  2. Adoption: Are they using the product? Are they using it the right way?
  3. Value and ROI: Do we know what kind of value and ROI they're getting? 

On one tracker, we look at health and go down the list of customers. In our NRR and retention tracker, everybody is laser-focused. I'm looking at it, and every CSM has it for their book. This tracker has information about the following:

  1. Who's up for renewal this quarter? And you can filter and sort for the specific quarter.
  2. Where are we at right now? Are we closing out those renewals for this quarter?
  3. What expansion do we have with those potential renewals, what's closed, and what's in the process? 
  4. What stand-alone expansion do we have?

These trackers allow us to look at renewal bookings completed or planning to be completed, plus the expansion divided by the ATR (Available to Renew) at any given point in the customer journey. We track them by the customer, CSM, and customer segment.

Our job is to improve how we engage with our customers—making sure that they adopt our product and service offering, improve customer health, and increase the adoption of our product. That’s when you know they’re on the path to value realization.

Another critical aspect of building successful CS teams is advocacy. We should be advocates every chance we get. You can measure your advocacy impacts by looking at how many customers you have become advocates. 

Rachel Proven, Founder and VP of Customer Success - Proven Success

It is essential to be as transparent as possible during challenging times. It is hard to be completely honest, but not speaking about it will only make the team more anxious. A couple of things you could start doing:

  • Keep your team as up-to-date as you possibly can
  • Asking your team to contribute with suggestions backed by data, adding more value to your team meetings by talking about the measures the management is taking to keep the company safe, and helping your team prioritize their work

There are two trends in the CS orgs. One is led at scale to reach more customers. The other is high touch and engagement. How is your company picking up on these trends? 

How should an org approach customer segmentation post sale?

Alan Ginsberg, Vice President, Customer Success - ActivTrak

We devised a new segmentation approach, and two teams handled these customers. One team takes care of our high-touch strategic accounts, our largest customers. The digital CSM team is implementing and helping our smaller customers. The latter led to scaling to serve the many more customers to come. We're working towards the same objectives and outcomes: adoption, value, potential, and growth. We have been building advocacy along the way. 

In the digitally-led approach, we have about 100 to 140 accounts managed by one CSM. We’re always after efficiency in digitally driven customer success.  We work closely with our marketing team on deploying specific marketing campaigns weekly to work the numbers. 

Edward Chiu, Co-founder, and CEO - Catalyst

We should never be under the impression that sending the right messages will make the customers stick with or spend more on your product or service.

I cannot stress enough on segmentation! Be diligent with segmenting your customers, identifying what profiles genuinely make the perfect fit, and figuring out how your ideal customer profile can have better customer health scores with the right adoption levers. You should consider automating the outreach when you have a thousand to ten thousand customers. No matter how low-touch it gets, your priorities should skew towards creating the best experience for your customers. 

Rachel Proven, Founder and VP of Customer Success - Proven Success

I'm a massive fan of the digitally led approach, but it's iteration upon iteration. You never know that the first time, because your data is never perfect. Understanding and tailoring the success experience for your high-value clients is a strategy that works. If someone makes up a chunk of your net revenue, develop a custom plan with all the data supporting or justifying our focus on this high-value client. 

This understanding will help you set processes across your customer segments. After a point, when your team has gained experience and understanding, this becomes a repeatable motion. 

With my lower-value clients, I’d have less elaborate customer journeys while ensuring we deliver the best customer experience. I’m not going to focus on 30 verticals and draw out tailored customer onboarding and success plans for each. 

People in the onboarding, implementation, and CS functions come from different backgrounds. When there is more pressure on teams with budgets and layoffs, are there too many CSMs, or is this an opportunity to train CSMs better because we need to galvanize all the forces we have? 

How are successful onboarding and customer success teams built? 

Rachel Proven, Founder and VP of Customer Success - Proven Success

Customer Success is not rocket science.  It is unfair that we bring somebody in from a different background and not train them! When you are in a leadership role, responsible for building or developing emerging leaders for my organization. In that case, I’ll let them shadow me, ask them questions, have them ask me questions, and be prepared for inadequate and imperfect responses. Leadership skills are not intuitive. It takes a patient leader to make a great emerging leader. 

Edward Chiu, Co-founder, and CEO - Catalyst

Early in my career, I had the opportunity to build a customer success function. I was the first CS hire. My peers in other functions in that organization didn’t know what I was doing. All that changed as we grew and when managing expectations eventually, customer experience came to play! I see that CS orgs have matured ever since, and it will only improve.

One piece of advice I’d give to many senior managers is that they need to figure out how to immediately replicate and translate their skill sets to the broader team if they have some fantastic talent. 

Build playbooks around all the things that qualify as repetitive motions. It could be meeting cadences where each customer segment should be dealt with differently. Document each variation so that it can be translated to a broader group.  

Alan Ginsberg, Vice President, Customer Success - ActivTrak

A good CSM is kind, empathetic, patient, has a high emotional quotient, and is an excellent listener who asks good questions. In my experience, working alongside my star CSMs has turned early career CSMs into well-prepared new leaders. 

What is one thing the larger customer onboarding-implementation-CS community should be doing?

The speakers unanimously agree that we should all put our learnings out there, write, make a video about them, or make a post on Linkedin; if 280 characters suit you well, tweet about it! But share your learnings because the onboarding, implementation, and customer success categories are evolving, and an audience is waiting to learn about your experiences. 

More resources

  1. Implementation Stories from Preflight
  2. Preflight Conversations
  3. Customer onboarding resources from Rocketlane
  4. The Launch Station - a podcast for all things customer onboarding

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Usha Kalva
Community & Partnerships @ Rocketlane

Usha is a Community Manager at Preflight. She's been an EIR, runs a successful restaurant, and is inclined toward the social sciences. In a parallel universe, she'd have been a wildlife photographer.

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