August 23, 2022 • 38 mins
In this episode, our host Anika Zubair chats with Irit Eizips, Chief Customer Officer & CEO at CSM Practice about how to close a renewal with an upsell.
While gaining new customers is exciting, retaining them is where your SaaS will generate revenue. So, how does your company build the best renewal process? How do you gauge the sentiment of the customer for the renewal? And how should a CSM be compensated?
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Episode Transcript
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Speaker 1 (00:04):
Hello everyone.
I'm your host, Anika zer.
And welcome back to the nextepisode of the customer success
channel podcast brought to youby plan hat, the modern customer
platform.
This podcast is created foranyone working in or interested
in the customer success field.
On this podcast, we will speakto leaders in the industry about
their experiences and theirdefinitions of customer success
(00:27):
and get their advice and bestpractices on how to run ACS
organization.
Today.
We are speaking with ear at zipschief customer officer and CEO
at CSM practice.
She is an world renowned expertin customer retention and upsell
strategies.
(00:47):
She was nominated for topcustomer success, strategists
and influencer of the year eversince 2013, for her
contributions in shaping CSmethodologies.
And in early 20, 22 year, it wasnamed one of the top 50 customer
success influencers and top 25most innovative leaders in CX E
is a big part of the customersuccess community.
(01:09):
As she shares her trends andinnovative customer strategies
on her YouTube channel blogs andpodcast episodes.
Today, we will be leaning intoI's experience as a CS
consultant and speaking to herabout the renewal process and
how not only to secure asuccessful renewal early, but to
do it with an upsell as well.
Let's chat to Eart about hermethodologies in renewals.
(01:32):
Hi, welcome to the podcast.
I'm so excited to have you heretoday.
I am really excited to get intotoday's topic, but before we do
for those few people who arelistening, who might not know
who you are, can you please giveour listeners a little bit of a
background into who you are,what your role is currently and
what you're doing at CSMpractice?
Speaker 2 (01:54):
Well, CSM practice is a firm.
I started about eight years ago,uh, July, 2014, to be exact, uh,
started it because I had aproject with one company to help
them set up the customer successprogram.
Just like, think about thevision, the strategy, the
roadmap.
And I would say not much haschanged since then.
(02:16):
basically what I do.
I have.
Um, maybe instead of just havingone project at a time, I, I
might have multiple ones at thesame time, maybe like 2, 3, 4
the most.
And then in addition to that, Iactually manage the company.
So, uh, we do a lot of thoughtleadership in this space, uh,
(02:37):
because we, you know, I'm verypassionate about promoting the
methodology and seeing it growand mature of our time.
So I have my YouTube channel.
I have a team that supports mein that.
Um, and we produce a lot ofinfographics and blogs and do
surveys.
So that's all in support of thecustomer success, uh, strategy
(02:58):
development throughout the, thetimes, if you will.
Speaker 1 (03:02):
, I'm pretty
sure anyone listening today
probably knows who you are andwho CSM practice is.
Cuz you guys are sharing so muchwith the community, which is
amazing.
And like you said, you arerunning the business as much as
you are also the chief customerofficer from your title as well.
And I know a lot of ourlisteners aspire to be what is a
(03:23):
chief customer officer thesedays.
I remember when I first startedin CS, it wasn't a thing, but it
is now.
And I love it.
So can you give us a little bitof background as to how you
ended up in the current positionand what led to your trajectory
to where you are today?
Speaker 2 (03:37):
Well, when you own the company, you can slap
whatever title you want toyourself.
Speaker 1 (03:41):
aside from
that era, you've done a lot in
the space
Speaker 2 (03:46):
Well, um, honestly when I started the company, I
put on a different title, it wasa practice director.
And um, over time I just feltthat the title really gives you
a focus.
And so when your focus is on thepractice, you're really focused
(04:09):
on managing your business.
Whereas when you put yourself inthe chief customer officer
title, then my intent in mydaily work is different.
Now I have to be synonym and bethe peer of my clients.
And I need to walk the walk andtalk.
I can't just talk the talk.
So that propelled me in and ofitself to be in a position to
(04:33):
own that the recommendations Igive my clients, I actually do
it on my own as well andexperience the same things they
experience.
So when I manage, I don't manageprojects, I manage the success
of my customer, um, my, myclients.
And, uh, I, I try to infuse asmany customer success
(04:54):
methodologies in my day to daywork with them as we go through
the project.
Speaker 1 (04:59):
Yeah.
I love that.
I love that you're being a CSMat a CSM practice.
That sounds great.
And I know you had a careerprior to, uh, the last few at
CSM practice where you were insoftware SAS as well.
Um, what actually made youdecide customer success,
consultancy.
I think you guys were like oneof the first, I I'm just trying
(05:22):
to think back of the times.
And there probably were very fewwhen you launched CSM practice,
there were probably very few CSMconsultancy businesses out
there.
What made you take that jump?
Speaker 2 (05:32):
Right?
So we were actually the firstconsulting firm to just focus on
customer success.
I think before that you mighthave had, you know, um, Michael
Blazedale with a customersuccess association that did,
you know, every now and thenmight have consulted folks on
how to do this and that, butreally just sit down with folks
(05:54):
and help them create a fullstrategy and then implement that
strategy.
I don't think that that existedbefore I started my firm and
even to, to this day, there's,uh, few consulting firms that
can actually do that.
I think now it's much morepopular, can pinpoint at least
two or three other ones thathave taken that route.
(06:15):
Uh, and I'm very happy for itbecause, um, I think there is a
need and certainly I can'tfulfill everything.
My entire career was inconsulting actually I've only
happened to work for, uh, maybethree SAS companies, my entire
career.
And two of them were owned bythe same guy, the guy that, uh,
founded gain side.
He was also the founder of aprevious, uh, software company I
(06:37):
worked for.
And so that's how I got intocustomer success.
It's through this personalconnection through Jim Lin.
And so I remember I called himout of the blue and I said, uh,
I was in between sort of like,you know, I was working for this
startup company and I happenedto talk about him over the phone
with someone.
And I, we, we were both likereally impressed with him when
(07:00):
we used to work for him at theprevious company.
And I knew he wasn't thereanymore.
And he started his, a new, a newgig, a new startup.
I was just like, give him acall, tell him all the beautiful
things we just said about him.
I knew I was, uh, back toworking with him again.
And this time it was, um, acompany called J Barra that
(07:21):
later on became gain site.
And so why customer successconsulting?
Um, well when I left gain site,I knew I either wanted to do
consulting or something that,you know, connected with
something that I do well, but Idon't know that I had the vision
that this is what I wanted todo.
(07:41):
I just knew I didn't really fitin very well in a software
company.
And, uh, I was just gonna take asabbatical for a year and see
what the universe sense to me.
And I was very committed tocreate a life that works for me,
my strong suits and also myimperfections.
I
Speaker 1 (07:59):
Love that.
I love building a life and acareer around the life you wanna
Speaker 2 (08:03):
Lead the life you wanna lead.
And I think I, I got a realclearance working at gain side
that I have some, uh,limitations around what I can
and cannot do.
And instead of fighting thoselimitations and trying to change
myself, I decided there must bea way to use all of my talents
(08:24):
in a framework that canaccommodate for these, um, yeah.
For these, for theseimperfections.
And I, I call themimperfections, but it's actually
PTSD.
And I think it's sort of like asocial PTSD of some sort, like
when I get to the office, Iwould get really stressed out
because there was like a lot ofpeople.
And if I saw somebody go tolunch, maybe I would get
(08:45):
stressed out about it if theydidn't call me and like all my
social anxiety that you wouldn'texpect, someone like me to have,
they were happening on a dailybasis.
So I thought maybe there's a wayto just, uh, not pick on that
nerve so much.
Maybe there's a way that I canbe brilliant at what I do and I
can be very successful, but Ican construct a framework that
(09:06):
works for me.
And so having doing consultingactually really works for my
PTSD.
Um, it doesn't get aggravated asmuch and I can still celebrate
the things that work reallywell.
For me, my ability to articulatecomplex terminologies in a very
simple way to help peoplesuccessfully articulate their
(09:31):
vision and create a roadmap forthem and come up with playbooks
and processes and help themdocument it and really mature
their organization.
That's what I think I do best.
Speaker 1 (09:40):
It's evident you do that.
Well, your reputation precedesyou.
And I think that all yourexperience that you've had, like
you said in the SAS world, butmore recently with the different
businesses you do work with, youprobably know best what all
these businesses are doing arenot doing as well.
And I think that's gonna applyso much to the topic we are
(10:01):
talking about today, which isreally renewals and ensuring
that a renewal has an upsell orgrowth attached to it, which is
what I wanna get into.
And before we kind of get intothe meaty part of the actual
conversation, I would love toknow your opinion on if a CSM
should be working with thecommercials or should they be
(10:23):
passing it back to a salespersonbecause I know a lot of SA
businesses do it two ways andI'd love to know what Eric's
opinion is or what you've seenwork the best.
Speaker 2 (10:33):
I think that, uh, it really depends in some cases it
makes total sense for the CSM toown it.
And I'll give you an example.
Let's say a customer wants to,uh, I don't know, upgrade for a
few more seats.
The whole thing shouldn't takemore than a few minutes or like
maybe an hour to, to complete.
And we had this elaboratestructure where any upsell has
(10:57):
to go to sales.
Now I need to, as a CSM, go tomy AE, um, and my account
executive and say, Hey, I havethis upsell, I need another five
seats.
Well, this guy has bigger Frifish to fry cuz his quota is
never gonna be met.
If all he dealt with is theseextra five seats for your
account.
(11:18):
So now he pushes, pushes itback, you know, for a few more
weeks until he gets a chance toget around to it finally.
And that's not a great customerexperience.
So what we wanna think about iswhen it makes sense from a
customer centricity standpoint,the CSM should own it.
And in certain situation, uh,where it calls for deep
(11:40):
expertise in developingrelationships, fast, additional
relationships to create anupsell or cross selling to other
business units or simply put thetransaction is highly complex.
That makes sense where we needto have a salesperson, uh, own
the transaction, whether it'srenewal or upsell so that the
(12:04):
CSM doesn't get bogged down and,uh, get distracted with this
elaborate sales transaction, uh,re like I said, regardless if
it's absolute
Speaker 1 (12:14):
Reading.
Yeah.
I, I totally agree.
I think that like, like yousaid, think of the customer
journey.
Think of how the customers, Hey,I wanna spend more money with
you.
Okay.
Please wait while I connect youwith four other people and a
sales order and a doc you signand whatever else you have to
do, it should be simple.
Yeah, of course.
Let me take care of it for you.
Sign here.
Five new seats.
That should be the case, but notall CSMs think commercially
(12:37):
minded.
I know I've had members on myteam that aren't commercial
minded and how do you kind ofhire then what's the skillset
you would need to have as a CSMto make sure you can, you can
success when you handle arenewal and upsells.
Speaker 2 (12:50):
I don't know that that's the right question,
honestly.
Anika.
I think it's, um, a matter ofhow many, uh, folks with sales
experience do you have on yourteam?
And can you set it up in a waythat there's a knowledge
transfer between those who knowhow to do that, that can teach
best practices.
(13:10):
Hopefully everybody on your teamis super smart and can learn new
things.
And if they're given a path,they can walk through it.
I don't know that you needeverybody on the team to, to
have that kind of skillset.
And honestly, I don't need, Idon't know that you need all the
transactions to be owned by theCSM.
Uh, like I said, I think it'swhere it makes sense the CSM
(13:33):
should own it.
And when it doesn't, um,potentially sales should own it.
Speaker 1 (13:39):
Ooh, we might dive a little bit deeper into that in a
second, but coming again, backto your experience.
And I know a lot of ourlisteners today are probably
thinking, how do I get, youknow, my renewals secured with
an upsell.
Let's talk about just therenewal process really quickly
in your experience, kind of whatdoes the renewal process look
(13:59):
like?
Or when a success leader isbuilding that out, what could,
what should they be consideringand what works really for a
successful renewal?
Speaker 2 (14:08):
Uh, that's a really good question.
So first and foremost, we needto think about the motions
within the renewal processitself.
And we've done a market researchback in March, 2022.
We had 450 respondents in thatsurvey.
And what we found is there's,there's a few things that can
(14:30):
really, if you tweak them in therenewal process can really lead
to better results.
One simple thing without evenchanging the process much is
just to start it a littleearlier.
What we found is that a largepercentage of customer success
teams started about 90 daysbefore the renewal date.
(14:51):
And what we found is that whenyou started 120 days before the
renewal date, all of a sudden,most of your renewals are
actually being completed aheadof time.
So they are finished early andthere's a higher probability for
net retention like this to, tobe completed with an upsell.
Now, why is that?
I spoke to the head of thecustomer success practice at an
(15:14):
organization called T S I, a TSAdoes a lot of research as well
in, in this domain and otherdomains as well.
And what they found is that ittakes approximately guess what?
90 days to fix a technical issueor a major technical issue,
even.
So imagine you have a customerthat's in the red, and if on
average it takes us 90 days tofix something.
(15:36):
You don't really have enoughtime if there is an issue.
And there is a risk to therenewal to actually fix it
before the renewal date.
So either end up with a laterenewal
Speaker 1 (15:45):
Or frustration, possibly turn, if they're
saying, Hey, if you, like yousaid, 90 days to fix something
and they're like, fix it, orwe're not gonna renew our
contract.
That's also a possibility aswell.
Speaker 2 (15:56):
And you end up with a loss.
You either need to extend thecontract for free for a few
months until you fix it.
But certainly you're not in aposition.
Now imagine a world where youstarted the renewal process, a
little earlier, 120 days, 180days.
Um, and it doesn't mean likethe, you know, there's just like
additional activities that youdo at the 180 days or 120 days
(16:19):
just to assess if there's a riskto come up with a, a safe plan
to, you know, socialize.
What is the sentiment?
All of a sudden when you get tothe 90 day, mark, you're much
more prepared to handle anythingthat comes your way.
And you're in a much higherprobability of closing their
renewal, let alone the upsell aswell.
(16:39):
So that's just like one simplething that companies should
definitely start thinking aboutchanging.
When do they start their renewalprocess?
Speaker 1 (16:50):
Okay, fair.
I totally agree.
I think renewals actually startin onboarding, but that's a
different conversation.
I think that the way you onboarda customer, the way you continue
to service a customer ends up ata, you know, no nonsense renewal
because you've treated them insuch a way or serviced them in
such a way that it ends up beinga non-renewal.
Um, essentially because of that.
(17:11):
And so we're talking about 1002180 days, like you said, which
is, which is great.
Let's start the renewal processearlier.
You get a little bit more time,like you said, but what are some
of the key indicators then for aCSM to understand or look for at
that 1 21 80 mark, you also, youmentioned, you know, technical
issue.
So if they're in the red, butwhat are some of the other
(17:32):
things, if I was a CSM and I was188 days out for my renewal,
what should I be doing at thatpoint?
Speaker 2 (17:37):
That's a really good question.
So we actually, uh, asked thosewho filled out the survey to
say, you know, what is, how manycustomers do you typically close
with an upsell?
And we found that most customersuccess managers closed anywhere
between 11 to 20% of theirrenewals with an upsell.
(17:59):
So then we asked them, well, youknow, and then there were some
actually, and not a, a, a smallamount, but there were some that
were like in a 50 to 75% with anupsell that's quite significant,
even 30, 60, 50% with an upsell.
So I was like, OK, are theresome things that those customer
success managers doing, um, toget from 20% to 50%, uh, upsell,
(18:23):
uh, yeah,
Speaker 1 (18:23):
What's the secret sauce.
What's the,
Speaker 2 (18:27):
So then I ask them, okay, what are the type of
activities that you are actuallydoing during the renewal process
that is, you know, that isdifferent.
Um, so we asked all of them tosay, what are they doing in
general?
And what we found that customersuccess managers who included,
uh, these four steps that I'mgonna share with you actually
(18:48):
close above 51% of their renewalcontracts with an upsell.
So, um, the first thing that wefound is that they actually have
a product, um, roadmap call withthose customers.
And that can be done either inan agile way, you know, using a
(19:08):
solution that, uh, shares those,uh, insights via video email, or
they actually have a discussionwith them, or they share it with
them using the advocacy board,if that customer happens to be
on their, uh, advisory board.
Sorry.
So either way, the customer hasan understanding of what the
roadmap is.
The second thing that they do,they have either a customer goal
(19:32):
based call and think about thelower cohort.
You won't have, uh, a QBR done abusiness review done with a
customer, but you'll actuallymaybe just call them and say,
you know, how can we help?
What are your goals?
What are your priorities for theyear?
How can we help with that?
So that's that kind ofconversation that is around
outcome, uh, with outcomes withcustomers.
(19:54):
And then if they are larger,they're actually doing a
quarterly business review withthem.
By the way, I love how quarterlybusiness review is not really
done quarterly ever,
Speaker 1 (20:03):
Ever.
.
If anyone's listening, who'sactually doing quarterly
business reviews every quarter,please feel free to email me,
cuz I have no idea how you fitthat into your schedule.
Speaker 2 (20:14):
and clients
don't want it quarterly,
Speaker 1 (20:17):
Who has time for that ?
Speaker 2 (20:19):
Yeah, no.
Anyway, so that's, that'ssomething, but they do either
QBR or customer, uh, goal basedcalls.
And so it could either be aquick call.
It could be an executivebusiness review, but some sort
of a call where we align ontheir business goals and kind of
share how we can, um, help withour solutions, whether it's
(20:39):
services, products, or software.
And then all of them included asuccess plan.
I wanna emphasize that in myexperience, when you create a
success plan it's, andespecially at this phase of the
customer journey, meaning a fewmonths before the renewals, the
success plan should not be forthe next month or two.
It should include your visionfor what the customer, uh, can
(21:03):
do to maximize value in the next12 months.
That means that the plan goesway beyond the renewal date.
Now I'm creating a long termvision.
Speaker 1 (21:14):
Yep.
I completely agree.
Super passionate about successplans, but also I think in
general success plans should bea 12 month rolling.
So even if you start a successplan, let's say when they kick
off, right when they start thereonboarding 12 month rolling, cuz
you're taking it to the renewalwhen you're doing a QBR EBR,
whatever it is still successplan, let's say that's at the
(21:35):
six month mark, 12 month rollingputs you past the renewal.
And like you just said, ifyou're doing a success plan 90,
120 days out before renewal,that puts you well into past the
renewal.
Speaker 2 (21:47):
And how many times have I seen success plans for
three months?
Way too many times.
Speaker 1 (21:53):
Yeah.
I always think of that kind ofsuccess plan as a quick fix.
Like you said, like where youhave maybe something wrong with,
uh, technically that you have toredo something or get your
technical account management to,to set something up differently
in their account or whatever.
That's a quick fix.
That's fine.
That's a very reactive look at asuccess plan.
If you really want to build agood, strong relationship with
(22:17):
your client and really help themout in the long term and help
them drive towards theiroutcomes, you need to look at
longer than three months.
Speaker 2 (22:24):
Correct.
So we don't have any evidenceabout what kind of success plans
these guys included, but theyall had one and hopefully it was
I'm just
Speaker 1 (22:35):
Got it.
Got it.
OK.
And the fourth one,
Speaker 2 (22:37):
The fourth one is they actually had a commercial
call with the customer.
And I'm assuming that that meansthat, you know, they set up a
time to review the renewalcontract.
So if there's any downgrades orupsell opportunities now
sometimes right?
The, so let's say they have 90%of their seats already, uh,
(23:00):
filled out and they're about togo overage or they already went
over their assigned seats andthe percent of utilization is
above their plan.
And they're just paying way moreversus if they went to a
different package, this is agreat way to just true up the
cut the contract and save themsome, some dollars.
Speaker 1 (23:21):
I wanna dive into four cuz we were talking
commercials again.
And we came back earlier wherewe were saying like, CSMs might
not have that commercialmindset, but even if they don't,
how is a CSM gonna gauge thesentiment of a customer for the
renewal?
Like what are they looking forhere?
You just mentioned like seatusage utilization, but what
signs maybe they're, you know,in conversations with a
(23:44):
customer, how can a CSM reallybe able to read between the
lines of the renewal processgonna be a success with this
customer?
Or maybe it's going the otherway?
How, how can a CSM best gaugethat?
Speaker 2 (23:56):
Well, I like how you said it, that the renewal
process starts from onboarding.
Uh I actually had oneclient that had the opportunity
for the renewals in their CRMsystem open as soon as the, uh,
first contract was closed one.
And then ever since every timethe renewal is closed and new
one starts and they have twofields there.
(24:17):
One is to say, what is yoursentiment around, you know,
whether the renewal is gonnahappen.
And if so, what is the expectedrenewal amount?
And is it different than theamount that we're projecting
based on last year?
And so just keeping a dial onthat and help, you know, holding
the customer success managersaccountable to find that out
(24:39):
throughout the year.
I think that's an important stepbecause we don't wanna start
guessing three months priorthat's one.
Secondly, I had another client,they did something really smart,
uh, because they had so manycustomers, they actually sent
out a survey to the customer.
And in that survey, you know howwe send like the NPS survey or a
(25:00):
customer survey, maybe once aquarter or once every six
months, one of the questions washypothetically, if you could
renew now, would you?
Speaker 1 (25:10):
I love that question by the way.
It's something I tell every CSMon any of my teams, don't be
afraid to ask that questionbecause you have to, that's like
asking the ultimate question ofis everything okay or not.
And if it's not, you have timeto, to, to fix the problem or to
address what the concern is.
But if you're not asking, like Ithink a lot of people get really
(25:33):
scared to ask that direct of aquestion.
And I would say, don't bebecause it's actually giving you
time back.
It's giving you time as a CSM tocorrect.
Maybe what's going wrong withthis account.
Speaker 2 (25:44):
Yeah.
Maybe just ask that verballywhen you are with someone you're
very comfortable with within thecustomer's organization and
you're having a moment oryou're kinda sensing, maybe
something is going differently.
Maybe they're a little bit moresilent.
Maybe they're exporting a lot ofdata out.
(26:04):
Something is off.
Uh, they mentioned a competitorin a discussion, uh, a CSAT
survey came off wrong.
on the wrong side of thescore.
All of those call out to askthat question.
And if nothing really registers,including that question in your
(26:25):
customer survey could, uh, be areally good move to just help
the customer success managergauge whether or not the renewal
is actually going to happen.
Speaker 1 (26:34):
Yeah, for sure.
For sure.
I agree on all of the above, butyeah, I think not being afraid
to ask that question will onlyhelp you not hurt you in my
opinion.
I just think that it never, itnever hurts you.
It gives you time back.
It gives you time to reallyunderstand if there is a problem
or they're looking atcompetitors or, I mean the, the
(26:55):
best case scenario, it can justbe that they say, yeah, of
course I'm gonna renew.
I love everything that's beengoing on then.
Great.
Like, you know, whew, you know,you can relax there, but on the
other side it really does giveyou insights and then open
dialogue with your customer of,Hey, what is it that it's gonna,
that I'm gonna have to do to getus to that renewal point?
And it's, uh, gives, gives theCSM again, a roadmap of what
(27:19):
they should be doing.
Um, so I totally love thatquestion.
It's a, it's, it's a must ask inmy opinion, but asking a little
bit more around renewals andcompensation.
So we were talking about howCSMs are, are responsible for
the renewal or in mostorganizations.
It, it should be the case, cuzit's easier that way, but
(27:41):
upsells renewals, these, thesestart thinking of compensation,
I, I start thinking of asalesperson more than a CSM.
Should we be compensating CSMslike sales people or, or what do
you think?
Speaker 2 (27:54):
Okay.
So that's, that's a loadedquestion.
And I think, um, let's separatelike the different components of
what does it mean to becompensated like a salesperson?
So a salesperson, first of all,has a variable component.
Second of all, the variablecomponent is very, very high
it's significant portion oftheir salary.
(28:14):
So, um, a typical salespersonmight have 70% base with 30%
variable component and it willbe attached to the quota and
that quota can change every,every quota I do.
I think that that's anappropriate way to compensate
customer success managers.
Absolutely not.
(28:35):
Uh, it's dangerous even becauseit calls out for some, uh,
ethical dilemmas around for theCSM around meeting their quotas
and being able to feed theirfamily versus, you know,
overselling or versus reallytaking care of the customer and
making sure that the customergets value, which is their
primary goal.
(28:55):
However, that being said, uh,what we found is that companies
that do have their customersuccess managers, having a
variable component in theirsalary tend to achieve over 100%
net retention rate.
So it is effective.
The question is how do we dothat?
And we can't do that exactly.
(29:17):
Like a salesperson might haveit.
Um, so I kind of ask, you know,uh what, what should it
look like?
So just so you know, most of the, uh, folks that answered the
survey and achieved higher than,uh, high NRR results, their, um,
(29:38):
customer success managersvariable component is between 16
to 20%.
And so, but the most part it'sdefinitely under 20%, that's,
that's one, uh, it's never over,uh, 30%, there were about 6%
that were over 30% and about 15%that were over 20%.
(30:03):
So the majority was under 20% inan overwhelming, secondly, the
variable component, wasn't acommission like a salesperson
would have, for the most part,it was quarterly bonuses and, or
a combination of, uh NBO, whichis kinda like a, a bonus that's
(30:24):
driven based on performance, um,of specific activities that help
the overall strategy, notnecessarily quantitative revenue
related goals.
People don't have quarterlybonuses typically and they
certainly don't have MBOs.
Speaker 1 (30:41):
So I'm guessing most, most businesses based on what
you said of the survey and howit's like an 80, 20 split.
I, I hear that quite often ofthe 80 20, and then the 20 is
driven by outcomes more thanjust the number, because that's
how sales looks at it is thenumber.
And, and like you said, ifyou're just driving numbers
towards that variable, you'regonna end up with bad behavior
(31:04):
rather than outcome basedbehavior as well.
So I completely agree on thatone, but kind of wrapping up the
topic of renewals and bestpractices around it.
Like, what is your ultimaterenewal playbook that any SAS
business can adopt?
You mentioned the four stepsthat was really key, but is
there, is there anything elselooking back at your experience
(31:27):
that you would say is a bestpractice to incorporate in a
renewal playbook?
Speaker 2 (31:31):
First of all, I, I think it's really important that
we start the renewal process atthe beginning at the beginning.
Like as soon as the contract issigned and then every year, as
soon as another renewal contractis signed, I think it's very
important to include aforecasting component.
Uh, I would say one of the topthree challenges that most
(31:54):
companies had, uh, during that,sorry, the three top challenges
that most companies had, uh, inaccordance with that survey were
no visibility to forecasting orinaccurate forecasting around
renewals.
So that could really take careof that and having a customer
sentiment survey, uh, as part ofthat process could help
(32:18):
accelerated quite a bit.
And, uh, the rest we kind oftalked about, you know, like
really having, uh, aprescheduled conversation with a
customer, aligning internallywith other teams, all of those
things can really help a lot.
Speaker 1 (32:35):
Yeah.
I love it.
I love it.
I also love the fact that whenyou start earlier, you end up
closing up cells within therenewal as well, because you're
just becoming more and moreprepared and that's, it makes so
much logical sense when youthink of it that way.
But sometimes when we're in theday to day of being busy as a
CSM, we forget about those,those little things that we can
(32:57):
do to really help secure notonly an upsell, but the renewal
and the upsell tie it all intoone.
So that's awesome to hear.
So I wanna jump into ourquickfire questions.
I challenge every single one ofour guests to try to answer
these questions in one sentenceor less.
Are you ready?
(33:18):
Speaker 2 (33:18):
Hopefully.
Speaker 1 (33:20):
Okay, cool.
My first question is what do youthink is next for the CS
industry?
Speaker 2 (33:24):
Well, most likely we're going to see a lot more
tools specializing in specificareas of the customer journey.
I love seeing, you know,softwares like, uh, cast app and
, uh, involved do AI and, uh,rocket lane that start really
taking every step in thecustomer journey to the next
(33:46):
level.
And I think that's gonna besomething that we're gonna see
in the, in the market,
Speaker 1 (33:52):
For sure.
I think the tech stack for CS isinsane now and I'd love it
though, because 10 years ago, Icouldn't find a tool to help us
out.
It was always like, yeah, hereyou go.
You can use Salesforce or youcan use the CRM or whatever
other tool sales or marketing isusing.
So I love that there's morespecialized tools for CS and I
completely agree.
(34:13):
Um, next question is, what isyour favorite app on your phone
or laptop that you can't livewithout?
Speaker 2 (34:20):
Honestly, for me, it's an app on my iPhone.
That's, uh, called timer and Ihave customers from various
parts of the world.
My team is in a different timezone and just, I could go nuts
without it.
Uh, so anytime I need to set upa meeting with someone that's
outside my time zone.
And especially if I have themright in front of me in an
(34:43):
online meeting, in a livesession, it's so much easier
when I just pull timer and I cansee exactly, you know, the time
differences.
And it's so much easier tocoordinate RX call that way.
Speaker 1 (34:55):
I love that I have one that's on my Google Chrome,
but I'm just thinking my phonemight be easier cuz it's just in
front of you and then you'rejust adding it on.
But that's, that's awesome.
And yes, I'm still waiting for aglobal time zone by the way.
That is what I'm waiting for iswe all work on one time zone
Speaker 2 (35:11):
I wake up at 8:00 PM and you wake up at the 10:00 AM.
Speaker 1 (35:14):
Yeah, exactly, exactly.
So we could make it work.
Um, cool.
I think I know the answer tothis next question.
Cause we talked about itearlier, but the next question
is what sort of compensation doyou think a CSM should get?
Should it be just base salary orbase salary plus commission.
Speaker 2 (35:30):
So definitely base salary in a variable and to be
specific, I think what worksbest is a base salary, a
quarterly bonus, partially tiedto, um, an MBO or a spiff to
encourage the right behavior andan annual bonus for, you know,
whatever it is that the howeverit is that the company is
actually performed.
Speaker 1 (35:50):
Mm, wow.
I like that.
I like that.
A lot of people usually do oneor the other, but that's cool.
And then my final question foryou today is what is your
favorite part of customersuccess or being a CSM?
Speaker 2 (36:02):
Well, obviously it's the community.
, that's the best part.
I think I'm very fortunate.
Every time I have a client,they're so nice.
They totally get it.
And we are sort of like customersuccessing, each other.
Speaker 1 (36:18):
I love that customer successing each other coined by
ear.
We can, we can say that that'sthat's E's thing.
amazing.
Well, thank you so much, Eric,for being with us today and
sharing all your insights onrenewals and making sure they're
secured with an upsell.
If any of our listeners today,have any other questions or
(36:38):
wanna get in touch, what's thebest place to find you?
Speaker 2 (36:42):
Well, I would love everybody that listens to this
podcast, at least check out myYouTube channel.
Speaker 1 (36:48):
Yep.
And we'll link it down in the,in the description of this
podcast as well,
Speaker 2 (36:52):
Subscribe and like as many videos as you can
and then, um, obviously if youwanna connect around, you know,
potentially like a project orhelp you with your customer
success strategy optimization orset up a customer success
department for your company,then you can reach me on my, uh,
website, CSM practice.com.
Speaker 1 (37:12):
Amazing.
Thank you so much, Eric, foryour time.
Really love this chat and I'msure we'll be talking to you
again soon.
Speaker 2 (37:19):
Awesome.
Thank you so much, Ann.
I you're absolutely wonderful.
Speaker 1 (37:23):
Thank you for listening to the customer
success channel podcast today.
We hope you learned somethingnew to take back to your team
and your company.
If you found value in ourpodcast, please make sure to
give us a positive review andmake sure you subscribe to our
channel as we release newpodcasts every month.
Also, if you have any topicsthat you would like me to
discuss in the future, or youwould like to be a guest on the
(37:45):
podcast, please feel free toreach out all my contact details
are in the show notes.
Thanks again for listening andtune in next time for more on
customer success.
Hello everyone.
I'm your host, Anika zer.
And welcome back to the nextepisode of the customer success
channel podcast brought to youby plan hat, the modern customer
platform.
This podcast is created foranyone working in or interested
in the customer success field.
On this podcast, we will speakto leaders in the industry about
their experiences and theirdefinitions of customer success
(00:27):
and get their advice and bestpractices on how to run ACS
organization.
Today.
We are speaking with ear at zipschief customer officer and CEO
at CSM practice.
She is an world renowned expertin customer retention and upsell
strategies.
(00:47):
She was nominated for topcustomer success, strategists
and influencer of the year eversince 2013, for her
contributions in shaping CSmethodologies.
And in early 20, 22 year, it wasnamed one of the top 50 customer
success influencers and top 25most innovative leaders in CX E
is a big part of the customersuccess community.
(01:09):
As she shares her trends andinnovative customer strategies
on her YouTube channel blogs andpodcast episodes.
Today, we will be leaning intoI's experience as a CS
consultant and speaking to herabout the renewal process and
how not only to secure asuccessful renewal early, but to
do it with an upsell as well.
Let's chat to Eart about hermethodologies in renewals.
(01:32):
Hi, welcome to the podcast.
I'm so excited to have you heretoday.
I am really excited to get intotoday's topic, but before we do
for those few people who arelistening, who might not know
who you are, can you please giveour listeners a little bit of a
background into who you are,what your role is currently and
what you're doing at CSMpractice?
Speaker 2 (01:54):
Well, CSM practice is a firm.
I started about eight years ago,uh, July, 2014, to be exact, uh,
started it because I had aproject with one company to help
them set up the customer successprogram.
Just like, think about thevision, the strategy, the
roadmap.
And I would say not much haschanged since then.
(02:16):
I have.
Um, maybe instead of just havingone project at a time, I, I
might have multiple ones at thesame time, maybe like 2, 3, 4
the most.
And then in addition to that, Iactually manage the company.
So, uh, we do a lot of thoughtleadership in this space, uh,
(02:37):
because we, you know, I'm verypassionate about promoting the
methodology and seeing it growand mature of our time.
So I have my YouTube channel.
I have a team that supports mein that.
Um, and we produce a lot ofinfographics and blogs and do
surveys.
So that's all in support of thecustomer success, uh, strategy
(02:58):
development throughout the, thetimes, if you will.
Speaker 1 (03:02):
probably knows who you are andwho CSM practice is.
Cuz you guys are sharing so muchwith the community, which is
amazing.
And like you said, you arerunning the business as much as
you are also the chief customerofficer from your title as well.
And I know a lot of ourlisteners aspire to be what is a
(03:23):
chief customer officer thesedays.
I remember when I first startedin CS, it wasn't a thing, but it
is now.
And I love it.
So can you give us a little bitof background as to how you
ended up in the current positionand what led to your trajectory
to where you are today?
Speaker 2 (03:37):
Well, when you own the company, you can slap
whatever title you want toyourself.
Speaker 1 (03:41):
the space
Speaker 2 (03:46):
Well, um, honestly when I started the company, I
put on a different title, it wasa practice director.
And um, over time I just feltthat the title really gives you
a focus.
And so when your focus is on thepractice, you're really focused
(04:09):
on managing your business.
Whereas when you put yourself inthe chief customer officer
title, then my intent in mydaily work is different.
Now I have to be synonym and bethe peer of my clients.
And I need to walk the walk andtalk.
I can't just talk the talk.
So that propelled me in and ofitself to be in a position to
(04:33):
own that the recommendations Igive my clients, I actually do
it on my own as well andexperience the same things they
experience.
So when I manage, I don't manageprojects, I manage the success
of my customer, um, my, myclients.
And, uh, I, I try to infuse asmany customer success
(04:54):
methodologies in my day to daywork with them as we go through
the project.
Speaker 1 (04:59):
Yeah.
I love that.
I love that you're being a CSMat a CSM practice.
That sounds great.
And I know you had a careerprior to, uh, the last few at
CSM practice where you were insoftware SAS as well.
Um, what actually made youdecide customer success,
consultancy.
I think you guys were like oneof the first, I I'm just trying
(05:22):
to think back of the times.
And there probably were very fewwhen you launched CSM practice,
there were probably very few CSMconsultancy businesses out
there.
What made you take that jump?
Speaker 2 (05:32):
Right?
So we were actually the firstconsulting firm to just focus on
customer success.
I think before that you mighthave had, you know, um, Michael
Blazedale with a customersuccess association that did,
you know, every now and thenmight have consulted folks on
how to do this and that, butreally just sit down with folks
(05:54):
and help them create a fullstrategy and then implement that
strategy.
I don't think that that existedbefore I started my firm and
even to, to this day, there's,uh, few consulting firms that
can actually do that.
I think now it's much morepopular, can pinpoint at least
two or three other ones thathave taken that route.
(06:15):
Uh, and I'm very happy for itbecause, um, I think there is a
need and certainly I can'tfulfill everything.
My entire career was inconsulting actually I've only
happened to work for, uh, maybethree SAS companies, my entire
career.
And two of them were owned bythe same guy, the guy that, uh,
founded gain side.
He was also the founder of aprevious, uh, software company I
(06:37):
worked for.
And so that's how I got intocustomer success.
It's through this personalconnection through Jim Lin.
And so I remember I called himout of the blue and I said, uh,
I was in between sort of like,you know, I was working for this
startup company and I happenedto talk about him over the phone
with someone.
And I, we, we were both likereally impressed with him when
(07:00):
we used to work for him at theprevious company.
And I knew he wasn't thereanymore.
And he started his, a new, a newgig, a new startup.
I was just like, give him acall, tell him all the beautiful
things we just said about him.
I knew I was, uh, back toworking with him again.
And this time it was, um, acompany called J Barra that
(07:21):
later on became gain site.
And so why customer successconsulting?
Um, well when I left gain site,I knew I either wanted to do
consulting or something that,you know, connected with
something that I do well, but Idon't know that I had the vision
that this is what I wanted todo.
(07:41):
I just knew I didn't really fitin very well in a software
company.
And, uh, I was just gonna take asabbatical for a year and see
what the universe sense to me.
And I was very committed tocreate a life that works for me,
my strong suits and also myimperfections.
I
Speaker 1 (07:59):
Love that.
I love building a life and acareer around the life you wanna
Speaker 2 (08:03):
Lead the life you wanna lead.
And I think I, I got a realclearance working at gain side
that I have some, uh,limitations around what I can
and cannot do.
And instead of fighting thoselimitations and trying to change
myself, I decided there must bea way to use all of my talents
(08:24):
in a framework that canaccommodate for these, um, yeah.
For these, for theseimperfections.
And I, I call themimperfections, but it's actually
PTSD.
And I think it's sort of like asocial PTSD of some sort, like
when I get to the office, Iwould get really stressed out
because there was like a lot ofpeople.
And if I saw somebody go tolunch, maybe I would get
(08:45):
stressed out about it if theydidn't call me and like all my
social anxiety that you wouldn'texpect, someone like me to have,
they were happening on a dailybasis.
So I thought maybe there's a wayto just, uh, not pick on that
nerve so much.
Maybe there's a way that I canbe brilliant at what I do and I
can be very successful, but Ican construct a framework that
(09:06):
works for me.
And so having doing consultingactually really works for my
PTSD.
Um, it doesn't get aggravated asmuch and I can still celebrate
the things that work reallywell.
For me, my ability to articulatecomplex terminologies in a very
simple way to help peoplesuccessfully articulate their
(09:31):
vision and create a roadmap forthem and come up with playbooks
and processes and help themdocument it and really mature
their organization.
That's what I think I do best.
Speaker 1 (09:40):
It's evident you do that.
Well, your reputation precedesyou.
And I think that all yourexperience that you've had, like
you said in the SAS world, butmore recently with the different
businesses you do work with, youprobably know best what all
these businesses are doing arenot doing as well.
And I think that's gonna applyso much to the topic we are
(10:01):
talking about today, which isreally renewals and ensuring
that a renewal has an upsell orgrowth attached to it, which is
what I wanna get into.
And before we kind of get intothe meaty part of the actual
conversation, I would love toknow your opinion on if a CSM
should be working with thecommercials or should they be
(10:23):
passing it back to a salespersonbecause I know a lot of SA
businesses do it two ways andI'd love to know what Eric's
opinion is or what you've seenwork the best.
Speaker 2 (10:33):
I think that, uh, it really depends in some cases it
makes total sense for the CSM toown it.
And I'll give you an example.
Let's say a customer wants to,uh, I don't know, upgrade for a
few more seats.
The whole thing shouldn't takemore than a few minutes or like
maybe an hour to, to complete.
And we had this elaboratestructure where any upsell has
(10:57):
to go to sales.
Now I need to, as a CSM, go tomy AE, um, and my account
executive and say, Hey, I havethis upsell, I need another five
seats.
Well, this guy has bigger Frifish to fry cuz his quota is
never gonna be met.
If all he dealt with is theseextra five seats for your
account.
(11:18):
So now he pushes, pushes itback, you know, for a few more
weeks until he gets a chance toget around to it finally.
And that's not a great customerexperience.
So what we wanna think about iswhen it makes sense from a
customer centricity standpoint,the CSM should own it.
And in certain situation, uh,where it calls for deep
(11:40):
expertise in developingrelationships, fast, additional
relationships to create anupsell or cross selling to other
business units or simply put thetransaction is highly complex.
That makes sense where we needto have a salesperson, uh, own
the transaction, whether it'srenewal or upsell so that the
(12:04):
CSM doesn't get bogged down and,uh, get distracted with this
elaborate sales transaction, uh,re like I said, regardless if
it's absolute
Speaker 1 (12:14):
Reading.
Yeah.
I, I totally agree.
I think that like, like yousaid, think of the customer
journey.
Think of how the customers, Hey,I wanna spend more money with
you.
Okay.
Please wait while I connect youwith four other people and a
sales order and a doc you signand whatever else you have to
do, it should be simple.
Yeah, of course.
Let me take care of it for you.
Sign here.
Five new seats.
That should be the case, but notall CSMs think commercially
(12:37):
minded.
I know I've had members on myteam that aren't commercial
minded and how do you kind ofhire then what's the skillset
you would need to have as a CSMto make sure you can, you can
success when you handle arenewal and upsells.
Speaker 2 (12:50):
I don't know that that's the right question,
honestly.
Anika.
I think it's, um, a matter ofhow many, uh, folks with sales
experience do you have on yourteam?
And can you set it up in a waythat there's a knowledge
transfer between those who knowhow to do that, that can teach
best practices.
(13:10):
Hopefully everybody on your teamis super smart and can learn new
things.
And if they're given a path,they can walk through it.
I don't know that you needeverybody on the team to, to
have that kind of skillset.
And honestly, I don't need, Idon't know that you need all the
transactions to be owned by theCSM.
Uh, like I said, I think it'swhere it makes sense the CSM
(13:33):
should own it.
And when it doesn't, um,potentially sales should own it.
Speaker 1 (13:39):
Ooh, we might dive a little bit deeper into that in a
second, but coming again, backto your experience.
And I know a lot of ourlisteners today are probably
thinking, how do I get, youknow, my renewals secured with
an upsell.
Let's talk about just therenewal process really quickly
in your experience, kind of whatdoes the renewal process look
(13:59):
like?
Or when a success leader isbuilding that out, what could,
what should they be consideringand what works really for a
successful renewal?
Speaker 2 (14:08):
Uh, that's a really good question.
So first and foremost, we needto think about the motions
within the renewal processitself.
And we've done a market researchback in March, 2022.
We had 450 respondents in thatsurvey.
And what we found is there's,there's a few things that can
(14:30):
really, if you tweak them in therenewal process can really lead
to better results.
One simple thing without evenchanging the process much is
just to start it a littleearlier.
What we found is that a largepercentage of customer success
teams started about 90 daysbefore the renewal date.
(14:51):
And what we found is that whenyou started 120 days before the
renewal date, all of a sudden,most of your renewals are
actually being completed aheadof time.
So they are finished early andthere's a higher probability for
net retention like this to, tobe completed with an upsell.
Now, why is that?
I spoke to the head of thecustomer success practice at an
(15:14):
organization called T S I, a TSAdoes a lot of research as well
in, in this domain and otherdomains as well.
And what they found is that ittakes approximately guess what?
90 days to fix a technical issueor a major technical issue,
even.
So imagine you have a customerthat's in the red, and if on
average it takes us 90 days tofix something.
(15:36):
You don't really have enoughtime if there is an issue.
And there is a risk to therenewal to actually fix it
before the renewal date.
So either end up with a laterenewal
Speaker 1 (15:45):
Or frustration, possibly turn, if they're
saying, Hey, if you, like yousaid, 90 days to fix something
and they're like, fix it, orwe're not gonna renew our
contract.
That's also a possibility aswell.
Speaker 2 (15:56):
And you end up with a loss.
You either need to extend thecontract for free for a few
months until you fix it.
But certainly you're not in aposition.
Now imagine a world where youstarted the renewal process, a
little earlier, 120 days, 180days.
Um, and it doesn't mean likethe, you know, there's just like
additional activities that youdo at the 180 days or 120 days
(16:19):
just to assess if there's a riskto come up with a, a safe plan
to, you know, socialize.
What is the sentiment?
All of a sudden when you get tothe 90 day, mark, you're much
more prepared to handle anythingthat comes your way.
And you're in a much higherprobability of closing their
renewal, let alone the upsell aswell.
(16:39):
So that's just like one simplething that companies should
definitely start thinking aboutchanging.
When do they start their renewalprocess?
Speaker 1 (16:50):
Okay, fair.
I totally agree.
I think renewals actually startin onboarding, but that's a
different conversation.
I think that the way you onboarda customer, the way you continue
to service a customer ends up ata, you know, no nonsense renewal
because you've treated them insuch a way or serviced them in
such a way that it ends up beinga non-renewal.
Um, essentially because of that.
(17:11):
And so we're talking about 1002180 days, like you said, which
is, which is great.
Let's start the renewal processearlier.
You get a little bit more time,like you said, but what are some
of the key indicators then for aCSM to understand or look for at
that 1 21 80 mark, you also, youmentioned, you know, technical
issue.
So if they're in the red, butwhat are some of the other
(17:32):
things, if I was a CSM and I was188 days out for my renewal,
what should I be doing at thatpoint?
Speaker 2 (17:37):
That's a really good question.
So we actually, uh, asked thosewho filled out the survey to
say, you know, what is, how manycustomers do you typically close
with an upsell?
And we found that most customersuccess managers closed anywhere
between 11 to 20% of theirrenewals with an upsell.
(17:59):
So then we asked them, well, youknow, and then there were some
actually, and not a, a, a smallamount, but there were some that
were like in a 50 to 75% with anupsell that's quite significant,
even 30, 60, 50% with an upsell.
So I was like, OK, are theresome things that those customer
success managers doing, um, toget from 20% to 50%, uh, upsell,
(18:23):
uh, yeah,
Speaker 1 (18:23):
What's the secret sauce.
What's the,
Speaker 2 (18:27):
So then I ask them, okay, what are the type of
activities that you are actuallydoing during the renewal process
that is, you know, that isdifferent.
Um, so we asked all of them tosay, what are they doing in
general?
And what we found that customersuccess managers who included,
uh, these four steps that I'mgonna share with you actually
(18:48):
close above 51% of their renewalcontracts with an upsell.
So, um, the first thing that wefound is that they actually have
a product, um, roadmap call withthose customers.
And that can be done either inan agile way, you know, using a
(19:08):
solution that, uh, shares those,uh, insights via video email, or
they actually have a discussionwith them, or they share it with
them using the advocacy board,if that customer happens to be
on their, uh, advisory board.
Sorry.
So either way, the customer hasan understanding of what the
roadmap is.
The second thing that they do,they have either a customer goal
(19:32):
based call and think about thelower cohort.
You won't have, uh, a QBR done abusiness review done with a
customer, but you'll actuallymaybe just call them and say,
you know, how can we help?
What are your goals?
What are your priorities for theyear?
How can we help with that?
So that's that kind ofconversation that is around
outcome, uh, with outcomes withcustomers.
(19:54):
And then if they are larger,they're actually doing a
quarterly business review withthem.
By the way, I love how quarterlybusiness review is not really
done quarterly ever,
Speaker 1 (20:03):
Ever.
If anyone's listening, who'sactually doing quarterly
business reviews every quarter,please feel free to email me,
cuz I have no idea how you fitthat into your schedule.
Speaker 2 (20:14):
Speaker 1 (20:17):
Who has time for that ?
Speaker 2 (20:19):
Yeah, no.
Anyway, so that's, that'ssomething, but they do either
QBR or customer, uh, goal basedcalls.
And so it could either be aquick call.
It could be an executivebusiness review, but some sort
of a call where we align ontheir business goals and kind of
share how we can, um, help withour solutions, whether it's
(20:39):
services, products, or software.
And then all of them included asuccess plan.
I wanna emphasize that in myexperience, when you create a
success plan it's, andespecially at this phase of the
customer journey, meaning a fewmonths before the renewals, the
success plan should not be forthe next month or two.
It should include your visionfor what the customer, uh, can
(21:03):
do to maximize value in the next12 months.
That means that the plan goesway beyond the renewal date.
Now I'm creating a long termvision.
Speaker 1 (21:14):
Yep.
I completely agree.
Super passionate about successplans, but also I think in
general success plans should bea 12 month rolling.
So even if you start a successplan, let's say when they kick
off, right when they start thereonboarding 12 month rolling, cuz
you're taking it to the renewalwhen you're doing a QBR EBR,
whatever it is still successplan, let's say that's at the
(21:35):
six month mark, 12 month rollingputs you past the renewal.
And like you just said, ifyou're doing a success plan 90,
120 days out before renewal,that puts you well into past the
renewal.
Speaker 2 (21:47):
And how many times have I seen success plans for
three months?
Way too many times.
Speaker 1 (21:53):
Yeah.
I always think of that kind ofsuccess plan as a quick fix.
Like you said, like where youhave maybe something wrong with,
uh, technically that you have toredo something or get your
technical account management to,to set something up differently
in their account or whatever.
That's a quick fix.
That's fine.
That's a very reactive look at asuccess plan.
If you really want to build agood, strong relationship with
(22:17):
your client and really help themout in the long term and help
them drive towards theiroutcomes, you need to look at
longer than three months.
Speaker 2 (22:24):
Correct.
So we don't have any evidenceabout what kind of success plans
these guys included, but theyall had one and hopefully it was
Speaker 1 (22:35):
Got it.
Got it.
OK.
And the fourth one,
Speaker 2 (22:37):
The fourth one is they actually had a commercial
call with the customer.
And I'm assuming that that meansthat, you know, they set up a
time to review the renewalcontract.
So if there's any downgrades orupsell opportunities now
sometimes right?
The, so let's say they have 90%of their seats already, uh,
(23:00):
filled out and they're about togo overage or they already went
over their assigned seats andthe percent of utilization is
above their plan.
And they're just paying way moreversus if they went to a
different package, this is agreat way to just true up the
cut the contract and save themsome, some dollars.
Speaker 1 (23:21):
I wanna dive into four cuz we were talking
commercials again.
And we came back earlier wherewe were saying like, CSMs might
not have that commercialmindset, but even if they don't,
how is a CSM gonna gauge thesentiment of a customer for the
renewal?
Like what are they looking forhere?
You just mentioned like seatusage utilization, but what
signs maybe they're, you know,in conversations with a
(23:44):
customer, how can a CSM reallybe able to read between the
lines of the renewal processgonna be a success with this
customer?
Or maybe it's going the otherway?
How, how can a CSM best gaugethat?
Speaker 2 (23:56):
Well, I like how you said it, that the renewal
process starts from onboarding.
Uh
for the renewals in their CRMsystem open as soon as the, uh,
first contract was closed one.
And then ever since every timethe renewal is closed and new
one starts and they have twofields there.
(24:17):
One is to say, what is yoursentiment around, you know,
whether the renewal is gonnahappen.
And if so, what is the expectedrenewal amount?
And is it different than theamount that we're projecting
based on last year?
And so just keeping a dial onthat and help, you know, holding
the customer success managersaccountable to find that out
(24:39):
throughout the year.
I think that's an important stepbecause we don't wanna start
guessing three months priorthat's one.
Secondly, I had another client,they did something really smart,
uh, because they had so manycustomers, they actually sent
out a survey to the customer.
And in that survey, you know howwe send like the NPS survey or a
(25:00):
customer survey, maybe once aquarter or once every six
months, one of the questions washypothetically, if you could
renew now, would you?
Speaker 1 (25:10):
I love that question by the way.
It's something I tell every CSMon any of my teams, don't be
afraid to ask that questionbecause you have to, that's like
asking the ultimate question ofis everything okay or not.
And if it's not, you have timeto, to, to fix the problem or to
address what the concern is.
But if you're not asking, like Ithink a lot of people get really
(25:33):
scared to ask that direct of aquestion.
And I would say, don't bebecause it's actually giving you
time back.
It's giving you time as a CSM tocorrect.
Maybe what's going wrong withthis account.
Speaker 2 (25:44):
Yeah.
Maybe just ask that verballywhen you are with someone you're
very comfortable with within thecustomer's organization and
you're having a moment
something is going differently.
Maybe they're a little bit moresilent.
Maybe they're exporting a lot ofdata out.
(26:04):
Something is off.
Uh, they mentioned a competitorin a discussion, uh, a CSAT
survey came off wrong.
All of those call out to askthat question.
And if nothing really registers,including that question in your
(26:25):
customer survey could, uh, be areally good move to just help
the customer success managergauge whether or not the renewal
is actually going to happen.
Speaker 1 (26:34):
Yeah, for sure.
For sure.
I agree on all of the above, butyeah, I think not being afraid
to ask that question will onlyhelp you not hurt you in my
opinion.
I just think that it never, itnever hurts you.
It gives you time back.
It gives you time to reallyunderstand if there is a problem
or they're looking atcompetitors or, I mean the, the
(26:55):
best case scenario, it can justbe that they say, yeah, of
course I'm gonna renew.
I love everything that's beengoing on then.
Great.
Like, you know, whew, you know,you can relax there, but on the
other side it really does giveyou insights and then open
dialogue with your customer of,Hey, what is it that it's gonna,
that I'm gonna have to do to getus to that renewal point?
And it's, uh, gives, gives theCSM again, a roadmap of what
(27:19):
they should be doing.
Um, so I totally love thatquestion.
It's a, it's, it's a must ask inmy opinion, but asking a little
bit more around renewals andcompensation.
So we were talking about howCSMs are, are responsible for
the renewal or in mostorganizations.
It, it should be the case, cuzit's easier that way, but
(27:41):
upsells renewals, these, thesestart thinking of compensation,
I, I start thinking of asalesperson more than a CSM.
Should we be compensating CSMslike sales people or, or what do
you think?
Speaker 2 (27:54):
Okay.
So that's, that's a loadedquestion.
And I think, um, let's separatelike the different components of
what does it mean to becompensated like a salesperson?
So a salesperson, first of all,has a variable component.
Second of all, the variablecomponent is very, very high
it's significant portion oftheir salary.
(28:14):
So, um, a typical salespersonmight have 70% base with 30%
variable component and it willbe attached to the quota and
that quota can change every,every quota I do.
I think that that's anappropriate way to compensate
customer success managers.
Absolutely not.
(28:35):
Uh, it's dangerous even becauseit calls out for some, uh,
ethical dilemmas around for theCSM around meeting their quotas
and being able to feed theirfamily versus, you know,
overselling or versus reallytaking care of the customer and
making sure that the customergets value, which is their
primary goal.
(28:55):
However, that being said, uh,what we found is that companies
that do have their customersuccess managers, having a
variable component in theirsalary tend to achieve over 100%
net retention rate.
So it is effective.
The question is how do we dothat?
And we can't do that exactly.
(29:17):
Like a salesperson might haveit.
Um, so I kind of ask, you know,uh
look like?
So just so you know, most of the, uh, folks that answered the
survey and achieved higher than,uh, high NRR results, their, um,
(29:38):
customer success managersvariable component is between 16
to 20%.
And so, but the most part it'sdefinitely under 20%, that's,
that's one, uh, it's never over,uh, 30%, there were about 6%
that were over 30% and about 15%that were over 20%.
(30:03):
So the majority was under 20% inan overwhelming, secondly, the
variable component, wasn't acommission like a salesperson
would have, for the most part,it was quarterly bonuses and, or
a combination of, uh NBO, whichis kinda like a, a bonus that's
(30:24):
driven based on performance, um,of specific activities that help
the overall strategy, notnecessarily quantitative revenue
related goals.
People don't have quarterlybonuses typically and they
certainly don't have MBOs.
Speaker 1 (30:41):
So I'm guessing most, most businesses based on what
you said of the survey and howit's like an 80, 20 split.
I, I hear that quite often ofthe 80 20, and then the 20 is
driven by outcomes more thanjust the number, because that's
how sales looks at it is thenumber.
And, and like you said, ifyou're just driving numbers
towards that variable, you'regonna end up with bad behavior
(31:04):
rather than outcome basedbehavior as well.
So I completely agree on thatone, but kind of wrapping up the
topic of renewals and bestpractices around it.
Like, what is your ultimaterenewal playbook that any SAS
business can adopt?
You mentioned the four stepsthat was really key, but is
there, is there anything elselooking back at your experience
(31:27):
that you would say is a bestpractice to incorporate in a
renewal playbook?
Speaker 2 (31:31):
First of all, I, I think it's really important that
we start the renewal process atthe beginning at the beginning.
Like as soon as the contract issigned and then every year, as
soon as another renewal contractis signed, I think it's very
important to include aforecasting component.
Uh, I would say one of the topthree challenges that most
(31:54):
companies had, uh, during that,sorry, the three top challenges
that most companies had, uh, inaccordance with that survey were
no visibility to forecasting orinaccurate forecasting around
renewals.
So that could really take careof that and having a customer
sentiment survey, uh, as part ofthat process could help
(32:18):
accelerated quite a bit.
And, uh, the rest we kind oftalked about, you know, like
really having, uh, aprescheduled conversation with a
customer, aligning internallywith other teams, all of those
things can really help a lot.
Speaker 1 (32:35):
Yeah.
I love it.
I love it.
I also love the fact that whenyou start earlier, you end up
closing up cells within therenewal as well, because you're
just becoming more and moreprepared and that's, it makes so
much logical sense when youthink of it that way.
But sometimes when we're in theday to day of being busy as a
CSM, we forget about those,those little things that we can
(32:57):
do to really help secure notonly an upsell, but the renewal
and the upsell tie it all intoone.
So that's awesome to hear.
So I wanna jump into ourquickfire questions.
I challenge every single one ofour guests to try to answer
these questions in one sentenceor less.
Are you ready?
(33:18):
Speaker 2 (33:18):
Hopefully.
Speaker 1 (33:20):
Okay, cool.
My first question is what do youthink is next for the CS
industry?
Speaker 2 (33:24):
Well, most likely we're going to see a lot more
tools specializing in specificareas of the customer journey.
I love seeing, you know,softwares like, uh, cast app and
, uh, involved do AI and, uh,rocket lane that start really
taking every step in thecustomer journey to the next
(33:46):
level.
And I think that's gonna besomething that we're gonna see
in the, in the market,
Speaker 1 (33:52):
For sure.
I think the tech stack for CS isinsane now and I'd love it
though, because 10 years ago, Icouldn't find a tool to help us
out.
It was always like, yeah, hereyou go.
You can use Salesforce or youcan use the CRM or whatever
other tool sales or marketing isusing.
So I love that there's morespecialized tools for CS and I
completely agree.
(34:13):
Um, next question is, what isyour favorite app on your phone
or laptop that you can't livewithout?
Speaker 2 (34:20):
Honestly, for me, it's an app on my iPhone.
That's, uh, called timer and Ihave customers from various
parts of the world.
My team is in a different timezone and just, I could go nuts
without it.
Uh, so anytime I need to set upa meeting with someone that's
outside my time zone.
And especially if I have themright in front of me in an
(34:43):
online meeting, in a livesession, it's so much easier
when I just pull timer and I cansee exactly, you know, the time
differences.
And it's so much easier tocoordinate RX call that way.
Speaker 1 (34:55):
I love that I have one that's on my Google Chrome,
but I'm just thinking my phonemight be easier cuz it's just in
front of you and then you'rejust adding it on.
But that's, that's awesome.
And yes, I'm still waiting for aglobal time zone by the way.
That is what I'm waiting for iswe all work on one time zone
Speaker 2 (35:11):
I wake up at 8:00 PM and you wake up at the 10:00 AM.
Speaker 1 (35:14):
Yeah, exactly, exactly.
So we could make it work.
Um, cool.
I think I know the answer tothis next question.
Cause we talked about itearlier, but the next question
is what sort of compensation doyou think a CSM should get?
Should it be just base salary orbase salary plus commission.
Speaker 2 (35:30):
So definitely base salary in a variable and to be
specific, I think what worksbest is a base salary, a
quarterly bonus, partially tiedto, um, an MBO or a spiff to
encourage the right behavior andan annual bonus for, you know,
whatever it is that the howeverit is that the company is
actually performed.
Speaker 1 (35:50):
Mm, wow.
I like that.
I like that.
A lot of people usually do oneor the other, but that's cool.
And then my final question foryou today is what is your
favorite part of customersuccess or being a CSM?
Speaker 2 (36:02):
Well, obviously it's the community.
I think I'm very fortunate.
Every time I have a client,they're so nice.
They totally get it.
And we are sort of like customersuccessing, each other.
Speaker 1 (36:18):
I love that customer successing each other coined by
ear.
We can, we can say that that'sthat's E's thing.
Well, thank you so much, Eric,for being with us today and
sharing all your insights onrenewals and making sure they're
secured with an upsell.
If any of our listeners today,have any other questions or
(36:38):
wanna get in touch, what's thebest place to find you?
Speaker 2 (36:42):
Well, I would love everybody that listens to this
podcast, at least check out myYouTube channel.
Speaker 1 (36:48):
Yep.
And we'll link it down in the,in the description of this
podcast as well,
Speaker 2 (36:52):
Subscribe and like as many videos as you can
and then, um, obviously if youwanna connect around, you know,
potentially like a project orhelp you with your customer
success strategy optimization orset up a customer success
department for your company,then you can reach me on my, uh,
website, CSM practice.com.
Speaker 1 (37:12):
Amazing.
Thank you so much, Eric, foryour time.
Really love this chat and I'msure we'll be talking to you
again soon.
Speaker 2 (37:19):
Awesome.
Thank you so much, Ann.
I you're absolutely wonderful.
Speaker 1 (37:23):
Thank you for listening to the customer
success channel podcast today.
We hope you learned somethingnew to take back to your team
and your company.
If you found value in ourpodcast, please make sure to
give us a positive review andmake sure you subscribe to our
channel as we release newpodcasts every month.
Also, if you have any topicsthat you would like me to
discuss in the future, or youwould like to be a guest on the
(37:45):
podcast, please feel free toreach out all my contact details
are in the show notes.
Thanks again for listening andtune in next time for more on
customer success.
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