Professional Services for PLG Companies

In this episode of The Launch Station, we are joined by Brent Ludwig, Head of Professional Services, Celigo. Brent has spent over 10 years at PLG companies, honing his professional services leadership skills. He has immense experience in building professional services teams at companies like Oracle, Salesforce, Zendesk, and lastly at Gong. He has a degree in computer science and started his career in SaaS as a developer at Motorola.

Brent believes in building his network and investing in the right people for the team.

In this episode, Brent talks about:

1. His journey of setting up PS teams at PLG companies
2. The need for a PS team
3. The impact of having a formal PS team in the organization
4. Tackling the challenges that come up in the process of setting up a PS team

… and more. Tune in!

Here's how our conversation transpired.

Sri: Today, we will discuss professional services in product-led growth companies (PLG), an interesting topic. Joining us is Brent Ludwig, who has extensive experience building professional services teams at companies like Salesforce, Zendesk, and Gong, all notable players in the PLG motion. Brent holds a computer science degree and began his career as an engineer at Motorola. He later transitioned into the SaaS industry, working for Oracle and Salesforce. With over a decade of experience as a PS leader at Salesforce, Zendesk, and his most recent role at Gong, Brent has honed his skills in PS leadership within the PLG field. We are delighted to have you on the show, Brent, and we would love to hear more about your career journey.

‍Brent Ludwig: Thank you, Sri, for the introduction. I'm excited to be here. It's amazing how time flies in a career. It has been 25 years since I graduated with a degree in computer science from Montana State University. I had no idea back then that I would end up where I am today. After graduating, I moved to Chicago and worked as a developer at Motorola. That's when I started getting involved in project management and contact centers. Over the past ten years, I have honed my skills and gained valuable experience working at Zendesk, Salesforce, and, most recently, Gong in professional services. Understanding Product-Led Growth (PLG) has been crucial in my last few roles, and I'm eager to share my insights with the audience.

‍Sri: Before we break into questions, tell us about your interests and hobbies.

‍Brent Ludwig: I believe in balancing our digital lives and the real world. While I enjoy working with computers and creating software, I also appreciate the importance of disconnecting and spending time outdoors with my loved ones. Some might find it strange that I prefer running or exercising without music. But it allows me to clear my mind, reflect on my thoughts, and be more present for my family and coaching responsibilities.   

Taking breaks from technology is vital. I recently had the opportunity to do so this fall when I took a career break after leaving Gong. It helped me focus on spending time with my children and helping my aging father downsize. It was a valuable experience that gave me back three months of my life. As I prepare to start a new job, I'm excited to dive back into the professional world, refreshed and ready to hustle.

‍Sri: That's awesome! Yesterday, I came across a post on LinkedIn that discussed how our thought process differs when we are in low lighting, like turning off the lights or being in candlelight. We are not preoccupied with meetings or what's coming next in such situations. Unlike our usual settings, we are constantly engaged with our phones, calendars, and emails, which occupy our minds.

‍Brent Ludwig: Even when you block out an hour or two for critical thinking, you'll find that the best ideas often come to you when you're out and about, like taking a walk or running. It's during these moments that you unexpectedly solve challenges or problems. It's incredibly enjoyable. In my journey, I've learned the importance of occasionally disconnecting from music, podcasts, and blogs and embracing silence. This is how I've grown over the years after working with multiple companies. It has helped me identify what truly matters to me.

‍Sri: Today's topic is quite interesting as it delves into the importance of Product-Led Growth (PLG) for every company. Many individuals starting their businesses now focus on PLG strategies to drive growth and encourage users to adopt their products independently. However, it's worth noting that professional services can still benefit PLG companies. When does this realization occur? When do companies recognize the need for professional services, even though they are PLG?

‍Brent Ludwig: Yes, it's fascinating. Recently, I've spoken with several leaders in the product-led growth (PLG) industry. They are all searching for professional services leaders as they aim to expand their PLG efforts. Typically, PLG companies reluctantly develop professional services teams as they transition from a self-service, try-buy model to direct sales. When they venture into the enterprise market and hire salespeople, they find that their clients expect implementation support.

In these cases, the clients require more than just a customer success manager to train and onboard them. This expectation gradually emerges over time. While most companies refer to it as a customer onboarding process rather than professional services, it's crucial to consider how customers perceive it. Customers often use "professional services" when requesting support instead of "customer onboarding team." Companies must embrace the term "professional services" as it demonstrates maturity, experience, and a willingness to help accelerate the sales cycle during pre-sales engagements. It is truly intriguing to explore companies that emphasize their onboarding approaches and successfully cross the chasm.

‍Sri: Sure, I understand. When discussing the benefits, it is particularly important for people who are listening, especially those in CS teams in the early stages of implementation or in early-stage companies who believe they are highly productive. So, what does an enterprise professional services package entail? For instance, taking Gong as an example, I installed it on my Zoom account and enabled a few notifications as an SMB customer. However, for an enterprise customer, what kind of expectations would they have?

‍Brent Ludwig: Creating a succinct customer journey consistent for all customer segments is necessary. Within this journey, different levels of depth should be tailored for SMBs, mid-markets, and enterprises. However, it is crucial not to overlook the onboarding package offered to every customer, whether directly sold or through product-led growth (PLG).

These packages, called value chain services, range from a basic 5k Quickstart to a more comprehensive 20k package where the company assists with project management and handles most of the workload. Custom options are also available. It is important to communicate and offer these options to SMBs and enterprises. So they know they can handle it themselves or be guided by the company. While companies like Gong, Zendesk, and Salesforce were able to activate their products independently in their early days, it is always beneficial for customers to know they have alternative assistance available. This understanding of choice is particularly important for SMBs and mid-market customers.

‍Sri: I completely understand and agree with what you said. It's clear now that even though the actions may be similar, there can be varying levels of involvement from both the customer and the enterprise. Companies might prefer someone to quickly handle the task rather than relying solely on their staff.

‍Brent Ludwig: Right. And Sri, this doesn't only talk about this but also your professional services pitch in a sales cycle. I always like to say this is your success pitch. This is your success offering, right? Because it covers not only professional services, it covers customer support, what kind of training needs do you have? And then, what level of customer success engagement do you get as a different customer?nIt is important for professional services teams to align themselves by sales segments, such as having separate teams for enterprise and SMB implementations.

But the reality is it should be structured based on your packages and the structure of what you're delivering. And I also think when you're positioning your customer journey, or your success packages to prospects, it also has to be based on, let's say, deal size, or ARR or something like that, and not based on, Oh,  I'm working with the strategic sales team or the SMB sales team, I think it's based on the deal complexity and the deal size of what the customer or the prospect is buying, that that delineates the journey or your approach and how you're positioning your success offerings. That's really like that can't be underscored enough is that that's important.

‍Sri: Have you ever witnessed leaders or founders suggesting, "Hey, I believe adding this layer will give the impression that we are more intricate than we are?" This could potentially discourage individuals from approaching us, as they perceive us to be straightforward and quick to set up.

‍Brent Ludwig: Indeed, Sri, this is not just about presenting your professional services pitch during a sales cycle; viewing it as your success pitch is more accurate, encompassing both professional services and customer support and training requirements. Additionally, it varies based on the level of customer success engagement. Rather than aligning teams by sales segments such as enterprise or SMB, it is more effective to structure them according to the packages and services provided. Furthermore, when presenting your customer journey or success packages to prospects, it is essential to consider factors like deal size or ARR rather than solely focusing on the sales team involved. The complexity and size of the deal should determine the approach and positioning of your success offerings. 

This cannot be emphasized enough; it is crucial for success. During the early days at Zendesk, we referred to it as the professional services affinity model. If professional services are used to implement the customer, their growth rate becomes twice as fast, and the deal size increases fourfold compared to those who haven't utilized professional services. This significantly boosts the technology's performance. From an MDR perspective, without professional services, the customer may have already expanded and purchased ten additional seats in 60 days. However, with professional services, their expansion happens in just 30 days, and they acquire 20 more seats. This leads to an acceleration of your Annual Recurring Revenue (ARR) and the overall growth of your revenue engine. When it comes to sales enablement, these metrics are crucial to explain why positioning success is essential for the sales team.

‍Sri: That's great. What impacts do you think having a PS team has on these companies?

‍Brent Ludwig: There are several intriguing points to consider. Firstly, what is the mission of professional services in a product company? I have not fabricated this information but acquired it through online reading and following interesting blogs related to professional services. The primary goal of professional services in any product company is to maximize ARR without incurring losses. It is not about increasing bookings and revenue at the expense of margins. It's important to note that professional services differs from consultancies such as Accenture, Deloitte, CGI, Tata, etc. Our objective is to support sales and customer success and enable partners. Speaking of partners, it may seem peculiar, but they play a crucial role.   

We need to subcontract partners to work as a professional services team, so they can eventually transition to direct implementation. It is undesirable to have channel conflict where our professional services team competes against partners for new business deals. Ideally, partners should eventually go direct, and our professional services team should focus solely on the largest and most strategic implementations. As professional services tend to exert a drag on gross operating margins, it is advisable to maintain a smaller team, like a group of specialized ninjas, Navy SEALs, or Green Berets.   

They should concentrate exclusively on the most significant customers our strategic or enterprise sales team identified as requiring professional services. For smaller businesses and mid-market clients, we prefer partners to go direct or subcontract them under our oversight eventually. Therefore, empowering partners and ensuring they are respected within the ecosystem is of utmost importance. As such, I am a strong advocate for partners.

‍Sri: It's interesting to learn how this complements all the other things that must come together for the company's success. Do you think PS companies need to go enterprise at all?

‍Brent Ludwig: As your company grows, transitioning from a startup may seem more effortless. Instead of managing numerous smaller deals, there is potential to close a significant deal. However, this approach still requires considerable effort, such as implementing flow, tech touch, or digital customer journeys to tackle customer support tickets, customer success, and sales. Some companies may never have to target enterprise clients if they have a strong partner channel like Atlassian. Companies must understand their true north and stay committed to the strategies that have brought them success.

I vividly recall an off-site event at Zendesk, where Mikkel and eight salespeople, me, and professional services discussed the need to sell bigger deals. The sales team believed that selling fewer, larger deals would help them meet their quotas and earn incentives. However, Mikkel proposed selling smaller deals and allowing customers to expand and grow independently, regardless of whether they were in enterprise or SMB. This suggestion was met with resistance from the sales team, as it would make it difficult for them to reach their targets. This disconnect highlights how the founder's perspective sometimes differs from the sales team's. Amazingly, Zendesk had 30,000 customers by 2007, all acquired without a dedicated salesperson. Every customer struggled to cross the chasm between needing enterprise clients and selling directly.

‍Sri: This makes a lot of sense. When you enter into building a product for enterprise customers, there is pressure to ensure that the product is flexible enough to support the necessary integrations for the customer. It needs to work seamlessly with its existing ecosystem to deliver the reporting they require, among other things. So, what are some common challenges you encounter when transitioning from a product-focused approach to an enterprise-focused one? And how does the Professional Services team come into play in helping these customers succeed? They require additional APIs or some other solutions, right?

‍Brent Ludwig: The importance of catering to both large enterprises and smaller businesses becomes evident. However, the product team must strike a balance when considering features such as sandboxing and disaster recovery that are vital to enterprises but not necessarily to SMBs. They shouldn't focus solely on one feature request from an enterprise customer but consider the needs of the masses, including SMBs and mid-markets.  

A strategy employed by Salesforce, as well as other notable companies, is creating a points board. This board allows customers to upvote or downvote features, giving everyone an equal say. The product company then prioritizes retiring points every quarter, which is publicly marketed, demonstrating its commitment to democratizing enterprise software. This approach is especially important for product-led growth (PLG) companies to ensure they don't lose sight of their Northstar while still considering the desires of their strategic customers. I would have imagined the enterprise customer getting a few more votes, at least on points. They do. Large enterprises often experience internal friction between their successful organization and product team. This can be attributed to the "squeaky wheel gets the grease" phenomenon, where urgent customer requests take precedence. The customer success manager is often bombarded with demands from these enterprises, resulting in frequent feature requests for the product team. As a result, the product team faces difficulties prioritizing these requests, as they change weekly. This dynamic creates challenges and distractions for the team.

‍Sri: So, referring to our earlier discussion, when you mentioned the implementation of direct sales, do the teams recognize the importance of having processes in place to meet the specific demands of enterprise customers? Do you ever need to advocate for the involvement of professional services with the founder or executive team? Or do they typically involve you once they have already identified the need? And is it usually the customer success team that realizes the need for it?

‍Brent Ludwig: Typically, the process starts with salespeople realizing that the executive team has expressed a need for professional services. However, the inefficiencies caused by the customer success or support team taking on additional responsibilities become apparent. This was the case at Gong when they identified the need for a specialized professional services or customer onboarding team. By having a dedicated team, they can set clear expectations with customers. It becomes clear that the customer success team should focus on retaining, expanding, and renewing customers, while the customer support team should handle product issues. This gap in specialization is usually recognized by leaders, sales teams, or account teams, who eventually understand the importance of having specialized teams in that space.

How do CFOs typically respond to this situation? Are they of the opinion that my revenues will become more complicated? What is the appropriate percentage of professional services revenue for the overall SaaS company? So, there is a cost associated with headcount. It's not about non-recurring revenue, like professional services, but rather about maximizing ARR. CFOs reluctantly acknowledge the need for professional services in a product company. Therefore, the CRO and CFO need to agree on the appropriate margins and investment for the professional services team, ideally aiming to break even. When considering new business logos, it is crucial to determine the attach rate for professional services.  

This could involve offering value chain services, small, medium, or large packages, or customization options. By multiplying this rate by the estimated number of hours, the CRO can identify the potential value of professional services. It's important to note that it's not the Chief Customer Officer negotiating the professional services, but rather the CFO and CRO discussing the value of the customer onboarding team and the necessary investment to maximize ARR. Those handling discounting may face challenges as they are caught between the priorities of both teams. And this happens at every company.

‍Sri: We're going to move into the next interesting segment of rapid-fire questions. What's the habit you picked up in 2022 that you will continue in 2023?

‍Brent Ludwig: This is not a habit, but I want to talk about my experience taking a career break and how it has positively impacted my family and me. It was the best decision I could have made. During this break, I took long walks and discovered a newfound appreciation for spending time with my family. It's worth mentioning that, as the dad, I was initially opposed to getting a dog due to the responsibilities involved in taking care of it. However, my perspective changed when we adopted a dog during the pandemic. I became the dad who went from hating dogs to loving them. I enjoy taking quiet walks with my dog, which has become essential to my routine. 

‍Sri: What's a book that you read and would recommend to others?

‍Brent Ludwig: I've avoided discussing business books in these conversations, but I found some books interesting. One is called "The Teenage Brain" by Daniel Siegel. It explores the changes in the adolescent brain, which is particularly relevant to me as I have a teenage son. It's fascinating to learn about what's going on in his 14-year-old brain during this development time. Another book I found valuable is "Atomic Habits" by James Clear. One concept that stuck with me is that improving by just 1% daily can lead to significant growth over time. It's a thought-provoking book with practical insights. So those are my recommendations.

‍Sri: The last question of this round. What does customer-centric mean to you?

‍Brent Ludwig: Many companies claim to prioritize customers and emphasize their importance. After all, customers are the ones who contribute to our income and sustain our business. I agree with this sentiment. However, often these claims are merely empty talk. Customers may take advantage of the company without a mutual sense of accountability and a genuine commitment to customer-centricity. Being customer-centric entails both holding the customer accountable and establishing trust. This may involve charging a fee for premium support or premium success to foster a balanced relationship. It is crucial to acknowledge that being customer-centric is a two-way street.

‍Sri: We also have a question from our community Preflight. What are some key learnings from your previous journeys that will serve you? 

‍Brent Ludwig: When it comes to your future hires, investing in experienced individuals is always a wise decision. Regardless of the additional cost, it is crucial as it can be a worthwhile investment in the long run. This is especially true if you are in the early stages of a project or hiring your first project manager or developer. The value of an experienced person is immeasurable, considering the potential challenges that can arise from hiring someone inexperienced. Additionally, it is important to continually interview and network, even when you do not have any immediate job openings. This ensures you can swiftly and accurately hire the right person when needed. Maintaining a pool of potential candidates is essential for efficient and effective hiring.

‍Sri: I completely agree. It's essential to take ownership and responsibility for our actions. This applies not only to selling but also to hiring new employees. It's important to constantly be on top of our game, even during interviews. I have one final question: What advice would you give a new PS leader?

‍Brent Ludwig: As a new PS leader entering a company, I often get asked about my playbook. However, I don't have a playbook but rather a toolbox. Just like a carpenter uses different tools based on the blueprints, I adjust my approach depending on what needs to be built. There is no one-size-fits-all solution. Instead, it's important to adapt your strategy to the specific situation of the company you're joining. This could be a startup, a turnaround where the professional services team is underperforming, or a realignment where the team has lost its way. You need to evaluate the portfolio and talent of the company and have key conversations to gain insights. Ultimately, it's crucial to understand the situation and develop a 30-60-90 day plan accordingly.

‍Sri: That was an interesting way to think about it. Playbook versus toolbox. Great!

‍Brent Ludwig: Thank you for all these wonderful questions.

‍Sri: Thank you so much for joining us and sharing many interesting things.