Confessions of a Customer Success Manager [Part 1]
My last gig presented me with some of the most difficult and rewarding professional challenges I’ve ever faced.
In August of 2014, an acquaintance hired me as his first full-time employee at a not-yet-successful (failing) startup. We had less than 60 customers, about $1,300 in MRR, and I was in charge of fleshing out a “Customer Success” strategy. At first, my daily workflow looked a lot like this:
- Sign into Slack, Trello, and Intercom
- Read the subject lines of all the support tickets
- Try not to panic about how many subjects contain the word “cancel”
- Write back to the cancellation requests asking how we could do better and earn back their business
- Get a lot of “you guys are great dudes, but…” emails back
- Nervously eat a fancy scone and begin throwing coffee down my face
- Click the “refund/instant demoralization” button in Stripe a bunch
- Cope with my demoralized state by sending some humorous support responses
- Do my best to help a new customer feel successful on day one
- Get on a call with the CEO to talk through how we could improve marketing & customer acquisition
- Sign out of Slack, Trello, and Intercom
- Hold a beer to my lips and wonder if I’ll still have a job tomorrow
After about three days of that, the root of this unsustainable situation became painfully obvious.
We had no idea who our customers were, and could never know what success meant to them.
There was no Customer Success strategy to be had, and my role at the company became as nebulous and unfocused as the product itself. It only took me a few months to burn out. Something had to change – we either needed to fold or we needed to double down. We chose the latter.
What happens when you double down on Customer Success?
Fast-forward 18 months to my team Google Hangout room – there were thirteen of us, we had more than 2,000 customers, and were fast approaching $150,000 monthly recurring revenue. For all you SaaS enthusiasts out there, that’s more than 70x growth in 18 months. That’s the kind of growth many Y Combinator CEOs would sell their livers/fertility for.
I sat in front of my (now pseudo-famous) red wall, leading some of the finest people I’ve ever had the privilege of working with. Sometimes I had to stop to take a screenshot because I couldn’t believe my eyes. We went from zero to hero in eighteen months, and I’d love to tell you my side of the story.
It all starts with this:
Sales, marketing, product, support, and recruiting are networked distribution centers designed to deliver experiences which help customers feel successful.
I’ll explain how I came to that conclusion a bit later.
Back when we hovered around $1,300 MRR, the two primary failure points in our business were high churn and slow sales. Customers quit the product almost as fast as they signed up. One of the most frustrating (yet insightful) parts of my job was to get in touch with each cancelled account and ask them what we could have done better. I knew something was fundamentally wrong when, after more than a dozen exit interviews, no two customers cited the same reason for cancelling. Some people told me things like “the product is too basic” while others told me “I’m not ready for all these amazing features yet”.
Even more frustrating were the one-liner “too expensive, switching to MailShrimp free plan” emails.
Our customers ranged from twenty-something technology authors who invented JS frameworks to retirement-age affiliate marketers who just found out AOL isn’t actually the Internet. As a tiny, lean startup, how do you craft a Customer Success strategy to serve the wildly different needs of both those people? Hint: you can’t, at least not at first.
So what could we do?
We could change the product to fit the needs of our few profitable customers (turn this into a product problem), but that would be an expensive, speculative move at best. There was only one lever left to pull, and it was called sales. Our only hope was to spin this into a communication problem and try to sell what we already had to somebody who would get value out of it. We picked a vertical we thought could be profitable (technical educators/authors), made a sales spreadsheet, and started playing the cold email game. Three months later, churn halved and MRR doubled. That’s when a brand new problem emerged.
Our new accounts weren’t expanding.
Sales and marketing are on the upswing, but accounts aren’t expanding. Now, what?
We quickly discovered that serving one vertical at a time was only half of the equation, though. Our customers were a better fit for the product and felt more successful, but their account growth was basically stagnant. As it turns out, some of the best technical educators/authors have very little interest or skill in marketing. With virtually no account expansion, we estimated that to reach a respectable MRR we’d have to basically monopolize the market, which sounds a lot like something a 19-year-old would say in their first VC pitch. This very conundrum taught me one of the most valuable professional lessons to date:
Just because you’re building a product to solve a problem you think somebody has, doesn’t mean they’re going to want to use it to solve that problem.
In other words, people who spend money on things similar to your thing aren’t magically guaranteed to be successful customers if you can get them to switch to your thing.
You may be able to sell an advanced marketing automation app to a savant frontend developer who writes bestselling books about the nuances of designing user-friendly checkout pages, but if she’s a novice marketer, she’s going to hate using your bloated app and will churn no matter how many books it helps her sell.
Conversely, an amateur blogger with market competence, a few thousand email subscribers, and a pervasive interest in automating their content-marketing funnels would put your slim, sexy app to use every day. Though this may be a small account, it will almost certainly expand over time. Also, this person will be much easier to keep happy, as they’ll know the right questions to ask in their support tickets.
An uncomfortable, fluffy-edged question emerged from this newfound awareness:
“What if, instead of defining potential customers by the vertical they operate in, we instead define them by their relevant skill level?”
In our case, successful customers seemed to have demonstrated competency (or better) in the following skills:
- Building an email list
- Executing content marketing strategies
- Devising and deploying multi-stage marketing automation funnels
- Consistently producing blog content
- Building relationships with profitable joint venture partners
- Producing basic educational products (like courses/ebooks) to sell to their audience
The reason I feel confident declaring the above heuristic is because I spent countless hours having strategic conversations with new, existing, and recently churned customers. Competence in those six skills seemed to be ubiquitous among our most successful customers, and Customer Success dropped off rapidly with a lack of competency in any of the six.
Our ideal market then emerged from the heuristic: professional bloggers. Bloggers who earn a living blogging almost always have demonstrated competence in all six relevant skills.
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Targeting customers based on their relevant skills (among a few other changes) helped put us on the path to growing up to 40% month over month for a year, all while keeping churn under control. In the next installment of this series, I’ll introduce you to a rather elegant model developed in the 1980’s for the US Air Force which proposes five stages of skill acquisition. My hope is that you’ll be able to use this model to gain new and profound insights into the way your customers think, and how their relevant skill level fits (or doesn’t) into your Customer Success strategy.