This post is by David Sudbey from Openview Labs
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Editor’s Note: This article is part one of a two-part series that discusses the need for product success in SaaS organizations. I joined a B2B startup in the mid-nineties and was part of the organization for over 20 years as the revenue went from ~$10M to ~$1.5B. When I joined, the company was ramping up its go-to-market efforts, launching a direct salesforce and creating marketing, professional services and customer support for the first time. Sound familiar? Joining at this critical junction enabled me to not just move vertically up the organization, quickly taking on senior roles, but also shift horizontally across the company, working across every go-to-market function after my start in sales engineering. Now, as I reflect on my roles and experiences over the years, I think about where there was friction as we hit each critical stage of growth and what growth companies can learn from as
move forward. It’s quite easy to see all of this in the rearview mirror. My favorite part of the job, regardless of any specific position, has always been maximizing the customer experience. This often puts a spotlight on any gaps in processes and misalignments between strategy and execution. Eventually, I led programs to formally track and improve end-to-end customer experience–I evolved from customer-centric to customer-obsessed, constantly brainstorming and strategizing about how to delight our customers. As a result, I took on a new role: Chief Customer Officer. In this role, with a great team, we worked cross-functionally to amplify the critical voice of the customer through both high-level strategy and gritty transactional tips, habitually monitoring metrics and sharing insights across the company. Having spent over two decades focused on customer success, culminating in the role as Chief Customer Officer, I’ve honed a tremendous amount of intuition about fostering an exceptional GTM strategy. One specific insight that I’ve learned during my career is the need for a product success function. Growth stage companies require product success in addition to customer success in order to effectively and efficiently scale over the long term; two roles I fully expect to blur over time.
Mind the Gap: The Evolution of Customer SuccessLooking in the rearview mirror, organizations focused on marketing and sales and used tunnel vision to scale and brute force to solve problems. Once sales closed a deal, a services function would onboard that client as quickly as possible. The risk in time to value, however, was primarily on the customer as the company already had the product revenue and first-year maintenance. The tables started to turn as companies pivoted from providing on-premise perpetual licenses (CapEx spend) and annual support contracts to offering more subscription models (OpEx). Their customers often wouldn’t renew if they weren’t able to receive the promised value in a year. This created churn where the company needed to be adding new logos at a rapid pace, not only to take market share, but to make up for the clients (and revenue) they lost and drove up the cost of sales. As a result, the customer success function evolved as the accountable entity that enabled companies to consistently listen to their customers after the initial sale, helping them not just troubleshoot but to drive adoption and ensure the value the company claims to deliver is indeed received by the customer (and thus improve the likelihood of a renewal). Contemporary companies have now fully embraced the customer success function, building out teams of Customer Success Managers who are nimble and agile problem solvers, rigorously focused on improving the customer experience. They host daily, weekly and monthly calls with their customers, leading up to intensive quarterly business reviews (QBR’s). When customer success teams operate in this manner (aiming to not just renew but expand and upsell their customers), companies are able to systematically bolster revenue and significantly scale. Customer success is great for both the company and clients, but it has also driven up the cost to serve.
Close the Gap: Product SuccessWhile most companies have embraced customer success functions, very few have created complementary product success teams situated between customer success and product. While they are nurturing customers through their CSM’s, companies are still letting product off the hook. Tech companies are essentially product companies, so any problem, change or insights must be incorporated into the product roadmap. The need to institutionalize product success especially holds true for product led growth (PLG) companies that rely on the strength of the product rather than resource-intensive sales, marketing and customer success efforts to scale. The product success team should be comprised of Product Success Managers (PSM’s) that transition from customer success, but work on the product team in a more nuanced role than the traditional Product Manager. The challenge here is to do all of this without creating another silo or expense–it’s all about leverage. CSM’s typically have a finite set of clients they are assigned to and thus can affect. Product “owns” them all and can affect more with that leverage.
How Product Success Managers OperateProduct Success Managers work very closely with Customer Success Managers to improve customer success through the product itself. For example, if CSM’s recommend new features to the product based on feedback from clients, PSM’s would predict how much these features would increase usage, renewals, upsells and revenue, thus helping the product team more confidently incorporate them and create leverage across the entire universe of customers. PSM’s should always be asking things like:
- How can product success track customer success?
- How can product success create visibility and metrics through dashboards for the customer success team to drive intimacy and empathy to increase trust in the brand?
- Are we delivering the contracted service level?
- What percentage of the product are customers using and how can Product Success maximize usage?
- How can product success recognize an upsell opportunity?
- How can product success help customer success cross-sell and upsell?
- What insights on usage can we gain to improve the product for all of our customers?
- Is the product roadmap aligned with the needs of the customer?
- How can we proactively push best practices to the customer?
- Is there a clear need for training on certain aspects of the product?