May 23, 2016
Dev Tools Digest – May 23
This week's Dev Tools Digest features news from Citus Data, Meteor and Gradle. Heavybit introduces a new member, Netlify.
During a recent session on customer success, Dremio’s VP Customer Success and Heavybit alumni OverOps’ former VP Customer Success, Ohad Almog shared what effective customer success for early-stage companies should look like. If you’ve already watched his talk, read on to learn more as he responds to some questions from the audience.
CSMs can absolutely get overwhelmed if there are a lot of support tickets. In some ways, dealing with a lot of small tickets is worse than dealing with a few big tickets– it’s like death by a thousand cuts. So it’s important that you have enough people to handle the load.
Quality of a product is a different topic, but it is important to have a dedicated support team that handles support tickets and it’s important that CSMs don’t end up spending most of the time dealing with support tickets because you want the CSMs to do something, you want them to work with technical account managers to build the relationships that lead to adoption, to get the customer onboarded, to be on the lookout for new opportunities. They need to make sure that the customer gets value out of using your product.
Implementation, adoption, work with sales on expansions.
If CSMs are spending their time dealing with support tickets– even if they’re not troubleshooting it themselves, if they’re going back and forth between support and the customer, providing updates and spending even 50% of their time doing it– that’s time not being spent on making sure the customer is adopting or looking for expansion opportunities.
So, every moment a CSM is doing something else other than adoption, onboarding and expansion, it means that it’s just time wasted, so try to minimize it. It’s also a different skillset. Support should be a reactive function. They should have a support system. They should respond to tickets fast, work with engineering. Build a whole process around support.
You want to be able to have a process and have specialized people do it right. If you’re still early, don’t hire 10 support people, hire two or three. That’s what they do for a living, they specialize in support and can build the processes. Don’t hire just one person because that person is not going to do a good job building processes, they’re not going to scale and no one’s going to be happy about it. Also, there’s accountability. If you expect one person to do 10 things, it’s much harder to keep that person accountable. If you have a dedicated support team, the CSM can offload it and say, “Thank you,” without worrying about whether it’s going to be dealt with because at the end of the day, the success of the customer is on the CSMs’ shoulders.
Headcount is a tough question. It depends on the product and type of customers you have. I will tell you that I’ve seen anything from $1 million per CSM to as high as $10 million per CSM, so it’s a pretty wide range. It depends a lot on your ACV. I can probably tell you that $2 million is the average based on my experience, but it’s not an exact science. I would aim at having a CSM handle about 20 customers. If you have mostly enterprise customers, I think a CSM should be able to handle closer to 10. But it also depends on if your ACV can afford it. Let’s say your ACV is $100K, 150K, 50K– that kind of changes how you plan. What’s the total renewal? If you go above 20 enterprise customers per CSM, they’re going to stop being efficient. They’re not going to spend enough time to get adoption and expansion.
Very different story. Let’s stick to the average of $2 million per CSM, which means if your ACVs are around $10k, your CSM is going to need 200 customers. It’s not impossible, but you have to have a lot of things in place to be able to do that. You absolutely need to have great use of metrics. I would recommend going with Totango or Gainsight, you can use whatever tool as long as all of the usage metrics are in one place or one dashboard, and the CSM can get alerts. They need to see in a click of a button the entire activity of every customer. Insight is key. Otherwise, they won’t be able to manage it and they’ll have no idea what’s going on. You’ll start losing customers.
There needs to be automation in place around the onboarding, around Quarterly Business Reviews (QBRs,) around emails. Low touch is very different from Enterprise and involves a lot of automation around online enablement. You need a lot of documentation. Think about the process that your customer is going to go through, think about what they need to be successful and if it’s a big customer, you can have a person do it. If it’s a small customer, you have to make sure that the same needs or similar needs are answered by automation, whether it’s documentation or an automated email that goes out with a guide on how they can onboard themselves and so on.
Here’s how I did it. We sold an onboarding package, so our professional services “bank of hours” had a prescriptive onboarding package. Whether it took 50 hours, 200 hours, it didn’t matter. But it wasn’t just a free for all, it was, “with this package you get XYZ.” We didn’t commit to a deliverable “bank of hours,” but it gave some structure to the onboarding package. It also allowed us to avoid a Statement of Work (SoW). It gives them a good idea what to expect from the X amount of dollars they spent on it.
The package can span from three to six months, two weeks– it depends on the complexity of the project. There will be cases when the customer is going to have questions, complicated questions, after the onboarding package is over and the questions might be above the skill level of the CSM. You’ll have to make exceptions. When we plan headcount for professional services, I do take into account that they will need to spend some extra hours to answer those questions and continue to support customers after onboarding. My job is to make them successful and that’s part of the service.
Now, when do we draw the line? If it’s once in a blue moon– one hour to jump on a call with a customer to answer a question, that’s one thing. But if it becomes, “Hey, can you come here for…” let’s say, moving from ServiceNow to Jira, and they want you to help them through that process because your product is somehow involved and it’s a three to five day project, that’s above and beyond the onboarding. This is where I would loop in sales as it would be an ad hoc professional service. CSMs are technical but the problems they tackle aren’t as difficult as professional services. Professional services are even more technical. They’re probably more expensive as well. So you have to be very careful about how you spend their time. At some point you’re going to need to do a Profit & Loss statement around them.
Make sure that you charge for it, there’s a budget around it and so on. I would be careful with using professional services for anything. If it’s obvious that the customer needs more of your expertise, loop in sales. I think most customers are happy to pay for expertise they don’t have so just sell them a “bank of hours” that you can leverage.
For me, a QBR is a continuation of a kickoff meeting and it’s been working well for me. I will not have a kickoff meeting with the customer if the executive buyer refuses to join the kickoff meeting. And the reason for that is, it’s critical that you keep the executive buyer, the person who signed the check very close. Most sales organizations will not start a Proof of Concept without talking to the executive buyer as well. Same thing should happen post-sales.
If the executive buyer doesn’t bother to come to your kickoff meeting, that raises a lot of red flags. When things get stuck and things will get stuck, you are left with no one to escalate to. You won’t be able to connect with the executive buyer, to show them all of the value that your product delivers. If the executive buyer won’t join your kickoff meeting, it’s going to be very difficult to get them to join a QBR. The executive buyer, they sign the check and they move on. They delegate someone to implement the product but that person will have no idea what’s going on and you and your team will be stuck with that person. It will slow the whole onboarding process down. Down the line you’re going to lose the customer so it’s on you as a vendor to push the customer.
Kickoff meetings are a chance to talk about goals that they’re trying to achieve and accomplish with your product. Short-term goals, long-term goals, where they’re at today. Discuss what would be the best return of investment for them. If you do get them to join the kickoff meeting, keep them very close. My team would send all of the stakeholders a weekly summary of progress on onboarding. Every Friday, I made my team clear their schedule and we would spend two hours writing the summary of what happened with that customer over the week.
Now that you know what their goals are, follow up on it every QBR. “Three months ago during our kickoff meeting, we talked about you wanting to achieve XYZ. We were able to deliver on X and Y.” If you weren’t able to reach those goals, then have a conversation about what went wrong.
The conversation and protocol on QBRs will change based on the size of the customer. The conversation with a 20-person start-up customer and a conversation with a customer like JP Morgan Chase will be very different. They have a different mindset, they have different priorities.
Small companies just want to be up and running. They want all their bugs to be fixed. More often than not, if there’s a feature request that needs to be fixed, they’re less likely to care about big picture goals and value. When you talk about someone who’s paying you half a million, they need to justify the half a million dollars to their CFO. They need your help capturing the value that you provide. Otherwise, when it comes to renewals and needing to ask for another half a million dollars from the CFO, they’re going to have to answer questions. But if you provide them the answers, they can go to their CFO and say, “Look at the improvement metrics. We tripled X, doubled Y, and shortened Z by 90%” and the CFO will give them the half a million dollars and some.
But that’s not to say that those smaller customers don’t care. They’re going to care about how they’re comparing to other customers and whether they’re following best practices. They’re growing, they’re figuring things out. They’re going to ask you more often about things like benchmarking.
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