Dan Martell - August 03, 2020


Top 5 Activities of a Great SaaS Customer Success Manager

Hosted by
Dan Martell
Mentioned
Z. People
Why SaaS Founders Sell with Kevin, CEO and co-founder @ SureSwift.com - Escape Velocity Show #33 The Perfect Weekly SaaS Sales Meeting Agenda

Episode Stats


Length

12 minutes

Words per minute

175.45

Word count

2,238

Sentence count

105

Harmful content

Misogyny

1

sentences flagged

Hate speech

1

sentences flagged


Summary

Summaries generated with gmurro/bart-large-finetuned-filtered-spotify-podcast-summ .

In this episode, Dan Martell talks about what a customer success manager (CSM) should be doing for you in your SaaS business. He talks about the 5 things a CSM should be focusing on to make sure that your customers are engaged in your product, and that they are achieving the outcomes you want them to achieve.

Transcript

Transcript generated with Whisper (turbo).
Misogyny classifications generated with MilaNLProc/bert-base-uncased-ear-misogyny .
Hate speech classifications generated with facebook/roberta-hate-speech-dynabench-r4-target .
Hosts, guests, and mentioned names generated with spaCy (en_core_web_sm), reconciled against Wikidata.
00:00:00.080 Hey there, Dan Martell here,
00:00:01.080 serial entrepreneur, investor, and creator of SaaScademy.
00:00:03.480 And in this video, I'm gonna share with you
00:00:05.120 the five things that a customer success manager,
00:00:08.440 also known as a CSM, should be doing for you
00:00:11.000 in your SaaS business.
00:00:12.880 Be sure to stay to the end
00:00:14.040 because I'm gonna share with you
00:00:15.280 how to get access to my EBR Flow Planner,
00:00:17.960 also known as the Executive Business Review.
00:00:20.360 Sometimes I call it the QBR, Quarterly Business Review.
00:00:24.440 Step-by-step process to have a meeting
00:00:26.800 that allows you to increase the engagement
00:00:29.000 and also revenue from your customer.
00:00:31.300 Let's get into it.
00:00:44.980 So here's the deal, maybe you're at like 10K
00:00:48.220 in MRR monthly reoccurring revenue and you're wondering,
00:00:51.060 I keep hearing about a customer success manager,
00:00:53.520 but how is that different than a support person
00:00:55.520 or what are they actually gonna work on
00:00:57.700 It's gonna make me money
00:00:58.740 because the last thing I wanna do
00:01:00.180 is hire somebody that just sits on their hands
00:01:02.560 and does nothing to actually increase the revenue.
00:01:05.680 So here's the deal.
00:01:06.380 When I first started off in SaaS,
00:01:08.340 this concept wasn't even a thing.
00:01:11.500 Salesforce in the early days
00:01:12.920 called it the revenue retention team
00:01:14.820 and it kind of had the same characteristics
00:01:17.560 of what you would find in a CSM.
00:01:19.540 But over the years,
00:01:20.820 companies like Gainsight and many others
00:01:22.760 have really not only created the category and the term,
00:01:26.080 but really set the precedence for what types of activities
00:01:30.220 and outcomes should your CSM be achieving
00:01:34.280 for your SaaS product.
00:01:35.560 And I had to learn this because I built my company, Sphere.
00:01:37.940 We had account managers that kind of acted
00:01:40.180 as a customer success manager.
00:01:42.020 And over the years, even with my coaching business,
00:01:44.340 I now have a dedicated CS, customer success team.
00:01:48.960 And they're really accountable for what it says,
00:01:52.320 making sure, I always thought that, you know,
00:01:54.760 So SaaS should be called success as a service.
00:01:57.700 And for me, customer success is making sure clients
00:02:00.640 achieve the desired outcomes that they get.
00:02:03.500 But you need to understand the five things
00:02:05.600 that they should be focused on achieving for you
00:02:08.040 that's actually gonna make the revenue needle move. 0.99
00:02:11.500 Here's what I got.
00:02:12.140 Number one, create a health score.
00:02:14.880 So what this means is you should have the ability
00:02:18.100 to outline kind of key activities or characteristics
00:02:21.580 or stages of a new account within your software
00:02:25.260 so that you can quantify kind of where they're at
00:02:28.820 in that process to make sure that they're,
00:02:31.120 they have a high activation or engagement score.
00:02:35.020 So every business is gonna have some changes
00:02:38.340 or different aspects of their score
00:02:40.260 that's gonna make it relevant for them.
00:02:41.960 The easiest one is just to make sure
00:02:44.000 that people are engaged in the product, right?
00:02:45.800 But I like to go even deeper.
00:02:47.280 I remember HubSpot, they talked about their chi,
00:02:49.780 their customer happiness index,
00:02:52.060 which is essentially different kind of utilization
00:02:55.220 of different aspects of the tool the customer may have bought.
00:02:57.460 So if they bought a module,
00:02:58.900 that's part of their chief for that account.
00:03:01.720 And that way they had a unified way
00:03:04.220 of identifying customers that were red, green, or yellow.
00:03:08.640 I teach my clients to implement a process
00:03:11.480 called the member at risk monitor,
00:03:13.800 or everybody calls it the MAR.
00:03:16.220 New people get confused because they're like,
00:03:17.760 what's a MAR?
00:03:18.600 Well, member at risk monitor is essentially a simple way
00:03:22.300 of quantifying customers into those three buckets
00:03:25.200 so that when you're talking to your CSM,
00:03:27.600 you can clearly ask them, who's red?
00:03:29.600 What's the strategy to execute the red playbook?
00:03:32.120 Who's yellow? 0.98
00:03:32.860 What are you gonna do to get them green?
00:03:34.360 And my favorite color is purple.
00:03:36.420 Purple is referenceable,
00:03:38.040 meaning that they are engaged and advocates for your product.
00:03:41.380 And that is the next level of health score.
00:03:44.600 Number two, outcome project focused.
00:03:47.660 So what this means for me is a CSM,
00:03:51.360 a customer success manager needs to be focused
00:03:53.540 on the outcome the client came into the product to achieve.
00:03:56.840 The mistake that a lot of CSM makes
00:03:59.040 is they think they know what was desired by the client
00:04:02.840 because hey, we have a product that does X, Y, and Z.
00:04:05.080 People bought it, that's what they want.
00:04:06.880 And if you treat every account,
00:04:08.740 especially if you're talking five figure deals,
00:04:11.780 annual contract values, kind of 10,000 plus,
00:04:15.080 you need to understand the specific desired outcome of each client
00:04:19.300 and manage their implementation or activation within your product like a project.
00:04:24.340 So great CSMs have a project management understanding or bent
00:04:29.680 in regards to needs analysis, timelines, expectations.
00:04:34.500 And for me, I teach my clients this framework called the EBR Flow Planner,
00:04:38.220 the Executive Business Review,
00:04:40.040 which is essentially a nine-box model
00:04:42.320 that you use to guide all of your interactions
00:04:45.860 with the customer because there's so much
00:04:47.580 that could happen to allow you
00:04:49.700 to not only activate a customer,
00:04:52.080 but more importantly, upsell and retain them
00:04:55.280 over the long term.
00:04:56.060 I'm gonna talk about that in a second,
00:04:57.260 but if you don't have somebody that is outcome focused,
00:05:01.040 that can manage projects, manage expectations,
00:05:04.380 move things forward, unblock friction points
00:05:07.280 for your customer in the customer journey,
00:05:09.740 then they're gonna fall backwards
00:05:11.260 and they're not gonna get you what you need in your SaaS.
00:05:13.960 So make sure that they're outcome and project focused.
00:05:17.220 Number three, engage the renewal and upsell.
00:05:20.740 For me, one of the most valuable opportunities of a CSM
00:05:25.140 is to make sure that you create
00:05:27.020 what's called a land and expand model,
00:05:29.300 meaning that somebody buys your product,
00:05:31.460 they invest, let's say, 5,000 or 10,000 annually
00:05:34.080 for your technology,
00:05:35.900 but that should just be the beginning.
00:05:38.320 You should definitely have a pricing structure,
00:05:40.540 product roadmap. I have videos on those on my YouTube channel. You can go check out where you
00:05:45.760 figure out how can I engage the customer to get more, extract more value from them and have them
00:05:52.360 get more value from our product. And that to me is really about the process, what we call a renewal
00:05:58.120 path. Do you have a structured and detailed process, ideally within the 90 days of a contract
00:06:05.140 renewal, that your CSM executes that playbook to encourage the renewal. But not only that,
00:06:10.960 throughout the lifetime of the customer, the life cycle of the customer, is there a touchpoint and
00:06:16.160 a process, in my world we call it the EBR flow planner, to make sure that we're maximizing what's
00:06:21.980 called expansion revenue. We're trying to figure out how can we grow an account. Because if you
00:06:27.280 spend a dollar on a CSM, my rule is you should be getting a five times ROI on that dollar
00:06:33.780 expenditure. It's just like in sales. If I spend a dollar on sales, I want 10 times that dollar
00:06:40.420 in total contract value. I think the revenue opportunity, if managed properly of a CSM,
00:06:47.460 is a five to one investment. And if you've looked at any SaaS businesses, the reason why
00:06:53.060 they peter out and they can't grow anymore is because they hit the growth ceiling,
00:06:57.220 primarily driven by their lack of ability to retain and grow customers. I have a whole video,
00:07:03.240 You can search Growth Ceiling, again, on my YouTube channel to dive into that.
00:07:07.040 But for me, if you don't have somebody that knows how to really build out the renewal path and the upsell opportunities,
00:07:13.700 then they're not going to get you the revenue expansion or the expansion revenue that you need to justify that investment.
00:07:20.640 Number four, escalate value.
00:07:23.280 So the way I think about it is getting somebody to become a customer, that's step one out of like several steps
00:07:29.680 because that captures the value
00:07:31.620 in regards to their investment in your technology
00:07:33.780 to get results or success.
00:07:35.660 But there's so much more, right?
00:07:37.080 When I talk about taking a customer,
00:07:39.300 you know, when they start, maybe they're red
00:07:40.540 because they haven't deployed the software.
00:07:41.840 So red, yellow, they're getting better.
00:07:43.860 Green, they've got activated.
00:07:45.860 They've got success.
00:07:47.120 The next color is purple.
00:07:48.920 Purple means that they are a referenceable account,
00:07:51.800 meaning that if you have somebody in a sales process
00:07:54.260 and they ask for references,
00:07:55.400 you're able to actually introduce them.
00:07:57.580 and they're so excited about your technology
00:08:00.420 that they ask you, hey, if anybody needs to talk
00:08:03.060 to a customer, I'm such a big fan of what you guys are doing,
00:08:06.080 just send them my way, I'll make sure I can kind of,
00:08:08.300 you know, elaborate on how we're using your technology
00:08:10.500 and maybe get you some more customers, that's purple.
00:08:12.460 So, how does a CSM escalate that path and really value?
00:08:16.960 Well, a few things, number one,
00:08:18.500 they can ask for a testimonial, right?
00:08:20.260 Somebody has a great experience,
00:08:21.780 best time to ask for a testimonial.
00:08:23.340 Number two, they can ask for a referral.
00:08:26.100 My rule for growth, especially in SaaS,
00:08:29.100 is a very simple formula.
00:08:31.060 The number of referrals, so track your lead sources.
00:08:34.220 If you can increase the number of referrals
00:08:36.620 on a monthly basis to overcome
00:08:38.520 the number of canceled accounts on LogoChurn,
00:08:41.700 that's what canceled accounts is,
00:08:43.600 if you just got that to zero,
00:08:45.340 meaning that your customer base is referring
00:08:47.500 the same amount of customers that are churning,
00:08:50.220 that means that that covers your bases
00:08:53.660 and then every new marketing or sales initiative
00:08:56.800 that adds new customers hits the bottom line.
00:08:59.700 And that is a powerful place to be.
00:09:02.620 For me, referrals needs to be a strategy and a process.
00:09:06.020 I have a whole referral page system
00:09:07.820 I've talked about that I teach my clients.
00:09:10.640 It's gonna allow you to make sure that equation works out.
00:09:13.660 The other thing is you can do case studies.
00:09:15.660 If somebody's purple, asking them,
00:09:17.300 the customer success manager should engage,
00:09:19.060 identify, produce maybe one case study a month
00:09:22.020 that helps increase the sales motion.
00:09:25.420 If you have a sales team out there talking to clients,
00:09:27.660 they're always gonna be asking,
00:09:28.940 who's a company like me that's using your product?
00:09:31.440 You wanna make sure that your CSM
00:09:33.700 is always creating these case studies.
00:09:36.180 And one of my favorite opportunities
00:09:38.040 for you to do is customer marketing,
00:09:40.580 which is inviting your customers to podcast,
00:09:43.180 to speak maybe at your annual customer conference,
00:09:46.180 to speak at other industry conferences,
00:09:49.160 talking about implementation of your technology.
00:09:51.380 really engaging your top customers
00:09:53.880 because there's so much,
00:09:55.200 and that's why I call it escalate value
00:09:57.380 that your CSM could be doing
00:09:59.560 that's more than just upsells and renewals.
00:10:02.180 Number five, voice of the customer.
00:10:05.000 This is the probably, obviously,
00:10:07.880 I always say it's the most important,
00:10:09.200 but the truth is if you have somebody
00:10:11.340 talking to your customers,
00:10:12.760 understanding the friction points in your softwares,
00:10:14.820 monitoring their deployments
00:10:16.820 and how they're using your software,
00:10:19.040 having that person be the voice of the customer
00:10:21.980 to your product development process.
00:10:24.120 So you should have somebody accountable,
00:10:25.640 product manager, maybe it's you
00:10:27.340 if you're a small SaaS CEO.
00:10:29.880 Having that person represent the customer's voice
00:10:33.320 in product meetings is invaluable.
00:10:35.700 At minimum, understanding where customers
00:10:38.900 are getting tripped up through their perspective
00:10:40.880 to feed that to the product team.
00:10:43.740 This is to me, you know,
00:10:45.220 I always think about feedback cycles.
00:10:47.160 And if you have a team and you're not getting feedback,
00:10:50.800 critical feedback from your team,
00:10:52.760 it doesn't mean that it doesn't exist.
00:10:54.520 It just means that you haven't created a process
00:10:56.260 to escalate and elevate and open up those conversations.
00:11:00.200 It's in that critical feedback
00:11:01.960 that the real growth opportunities lie.
00:11:04.680 So that's why for me,
00:11:06.160 making sure that my CSM is part of that feedback loop
00:11:10.860 and really fighting for the customer
00:11:12.660 and having that customer empathy
00:11:13.860 is so critical in regards to how they add value
00:11:17.960 to the organization, your SaaS business.
00:11:20.600 So quick recap on the five key areas
00:11:23.900 that your customer success manager should be focused on.
00:11:26.840 Number one, creating health score.
00:11:28.560 Number two, outcome project focus.
00:11:31.660 Number three, engage the renewal and upsell.
00:11:34.320 Number four, escalate value.
00:11:37.100 And number five, voice of the customer.
00:11:40.200 As I mentioned at the beginning of this episode,
00:11:42.380 I wanna share with you an exclusive resource
00:11:44.600 called the EBR Flow Planner.
00:11:47.520 Stands for the Executive Business Review.
00:11:49.800 It is my nine box, nine specific steps
00:11:52.600 that you should be going over
00:11:54.040 when you meet with an account with a customer
00:11:56.380 to ensure that you get an understanding
00:11:58.340 of what they wanna achieve,
00:11:59.920 the progress they've made so far,
00:12:01.620 the friction points that they might be having,
00:12:03.700 and the opportunity, the best part,
00:12:06.280 to maybe identify things
00:12:08.460 that you can essentially upsell or cross-sell.
00:12:11.340 that's called Land and Expand.
00:12:13.440 You need a repeatable playbook.
00:12:15.660 Use the EBR Flow Planner.
00:12:17.140 You can click the link below to download your copy.
00:12:19.380 It's all there for you to give to your CSM
00:12:21.960 or implement yourself to start growing your account revenues.
00:12:26.720 And with that, if you like this video,
00:12:28.040 be sure to smash the like button, subscribe if you're not,
00:12:30.660 and click the notification bell
00:12:32.040 so you get notified when new videos get uploaded.
00:12:35.100 And as per usual, I want to challenge you
00:12:37.420 to live a bigger life and a bigger business,
00:12:39.620 and I'll see you next Monday.
00:12:41.340 Do we still do outtakes at the end or no?
00:12:43.340 Yeah.
00:12:44.340 Okay.