Dan Martell - Top 5 Activities of a Great SaaS Customer Success Manager

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.

Dan Martell - August 03, 2020

Top 5 Activities of a Great SaaS Customer Success Manager

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