- Welcome to Episode 19, my friends. Today, we'll talk about customer success, and even more importantly, customer retention. This topic has been gaining more and more attention at the C-level, especially at companies that operate in enterprise SaaS environments. Executives are realizing that delighting customers often translates into more annual recurring revenue, or ARR, the metric that has become ever so important over the past few years. To help me delve into this interesting topic, I've invited a guest with extensive experiences in driving customer retention, product adoption, revenue growth and brand advocacy. Her name is Sandy Yu, and she's a growth executive and startup advisor. She has led teams in global enterprises, including Oracle, Cisco, WebEx and PricewaterhouseCoopers. Sandy recently founded Revenue Retention Advisors to help companies with assessing, designing and implementing strategies and programs that aim at retaining customers, hosting customers' adoption of products, features and functionality, and eventually increasing the likelihood of generating more revenue from each and every customer. I'm very excited to learn about the latest trends in customer success and retention today. Ladies and gentlemen, please allow me to introduce to the virtual stage, Sandy Yu. Hi, Sandy, how are you?

- Hi, Emil, how are you? Good to be here.

- Yeah, thank you very much. I'm super excited to have you on this episode, and I'm doing great, I'm excited. Look forward to a very, very insightful conversation today. So I've already provided a little bit of a introduction to the topic we are gonna discuss today, and also your background and your extensive experience in this area. But, you know, just to get started a little bit, you know, to provide a context for the rest of our conversation today, let's just focus a little bit on how you got started. How did you get involved with customer success? How did you get on this career path?

- Yeah, and let me share a couple examples about what that means, what retention looks like. You know, as I mentioned at the beginning, more important than delighting or happiness is that you're driving outcomes. So one of the ways that I was able to delight my customers is you have your customers for, it was a SaaS company. You have your customer base that using your product, right? You have a way to actually understand when they've exceeded their licenses. So instead of calling to say, "Hey, how dare you use more than your license for," we actually call the customers and help propose actually reducing their rate. Now, I don't know when was the last time you had a vendor that called you to say, "I want to reduce your rate," but we have very, very happy customers. So you wanna think about really knowing your customer, looking at what their utilization is, and really delight them by saying, "Hey, I know you've gone over your usage and that's great because that means your business is growing, you're getting more outcome that you're looking for. Why don't we actually expand the license so that you can use more of it and reduce your cost at the same time?" So that's a really great way to actually delight your customers so you never expect a vendor to come and tell you. But if we're interested in the success of our customers that they need to leverage more of our products and services in order to grow their business, then that's a natural thing to do.

- Yeah, it's pretty untraditional. I think like a lot of professionals, my career is full of twists and turns, but two things that's been the guiding light of my career is our curiosity and always driving outcomes for my customers. So I've had the good fortune working for big corporate companies like Cisco, Oracle, Pricewaterhouse and WebEx, and across actually a lot of functional roles, so I didn't grow up vertically in any one of those companies or areas. So I've had experience as individual contributor as well as leading teams across sales, marketing, product management and finally to customer success and customer experience. And so my perspective is always from this holistic, company-wide perspective of how to deliver value. And it's really my curiosity is leading from one role to the next is what else do I wanna learn? So that's really been my mantra, really leading, going with curiosity and also, what is the outcome I can drive for my customers?

- That's awesome. I mean it's more of a joke than an observation here, but I just thought it pretty much everyone that comes to speak on this podcast, when I asked them at one point of time they've experienced a moment of real urge to learn more, curiosity has always been driving them. And maybe that's the reason why they're here too 'cause the goal for this is to learn from each other and to become better at leading, at managing and coaching people. So I really appreciate the background that you described. And I think also a lot of us have non-linear careers right now. So I think everyone will appreciate the fact that you've gone from one department to another. That always enriches your point of view as a whole because you know what your colleagues next door are doing and what they're experiencing, so it's always very helpful.

- Yeah, that level of empathy definitely is really helpful. And I think one of the things that's been the most interesting for me in terms of my career is about a year ago, I saw this, after 20 plus years in these big tech companies, I saw this gap in the marketplace where companies don't quite know how to drive growth from their customer base. So about a year ago, I started my own consultancy helping companies do just that, how to drive growth through existing customer base, through upsells, customer retention, and making sure, kind of like my thesis, my north guiding light, is how do we drive outcomes for customers? So that's what I've been doing now for the past year is really helping different companies going through that customer-led growth process and strategy.

- That's great. And thanks for mentioning your current business. I think it's very important for people to learn more about that as well. So in the beginning of the recording, I forgot to mention that people can go to Cerebrations.Info to learn more about you and they will find there links to your current business, your consulting agency, and a little bit more information about you in general. So I really appreciate you mentioning this and I would urge everyone to go and learn more about you and also find out what other topics we've covered in the past and what other guests I have on the podcast. And, you know, to go back to the topic of customer success, I mean you mentioned something that's very interesting and it caught my attention immediately when I heard it now that, you know, people have not been focusing that much on growing their, you know, growing based on their existing customer base. And I think that's very important especially in more specialized niche markets. You know, for example, I come from healthcare, and healthcare is huge, I mean it's the largest sector in the country and probably in the world. But at the same time, there are a lot of very specialized areas in it and I come from these specialized areas. And when you think about your total addressable market is not that big, and when you think about how many customers you really have, we are talking about less than 1,000 maybe. So at one point, you're gonna start running out of opportunities to really add customers to the growth rate that you need. So growing within your existing customer base, I think, becomes more and more important. And it's a great revelation for everyone to have and as soon as as possible, hopefully as they're thinking about their business.

- Yeah, and Emil, just one other thing to add on that, it's not just an additional channel of revenue, it's actually a more cost effective channel for revenue as well, right? Think about all the costs you have associated with getting a new customer, with sales, with marketing and all the trips you have to go and take versus driving growth from customers, whether it's expansion or adding additional products or additional services, they already trust you. They already have said yes to you in the past. And we can really focus on delivering value for them and driving outcomes for them. They're more than likely want to actually buy from you. I think a HBR article, recent one, I think 2023, shared that 88% of people are more likely, customers are more likely from an existing vendor from then a new vendor because the trust is already there.

- That's absolutely true. And I think it also has to do with the way decisions are being made at the enterprise level these days. I mean there are multiple stakeholders. A lot of these people are there and not so much as actual users or decision-makers. They're there just to potentially block the sale because they are in a technical role that may have to deal with what you're saying, so as someone on the IT side, someone on the legal or compliance side. So if they already know it's a known entity that they're dealing with, obviously, their guard is gonna be lower and they're gonna be more open to discussing that. So that's important to mention as well. So I mean I already put the question on the screen a couple of minutes ago, but I wanted to ask you, obviously, customer success has become almost a buzzword these days, everyone is talking about it. But what is it? Let's make sure that we aligned what is the best definition for customer success.

- Yeah, my favorite definition is from Gartner, a research analyst firm, that customer success is a method for ensuring customers reach their desired outcomes when using your products or services. And it's really a relationship-focused strategy that includes involvement in the purchasing decision, implementation, the use of your product or services, and also how you support them. And so all that goes to, it's a method for ensuring that your customers get success or their outcome from using your product and services. So that's my favorite definition.

- Great. Thanks, I like this definition. I think it's fairly short, but at the same time, it kind of covers all the important elements of what customer success does. So it's useful. I definitely appreciate that we mentioned it here. So the natural question is, I mean we kind of started alluding to this, but, you know, why is it important to keep your customers delighted? And there's some obvious reasons. I mean we started talking about those, there's also brand reputation. Obviously, you don't wanna be creating bad experiences for your customers and then those customers go and mention to someone else that they've had bad experiences. And I can even think of recent examples where in the industries that I've worked with in the past, there've been some botched implementations by some of our competitors. And we'll hear it, we'll hear it even two years later when we talk to someone who's been involved on the customer side and they'll say, "You know, it's been bad." We've seen some really bad implementations, and we wanna know, are you gonna deliver or are you gonna be another one of these bad experiences that we should expect? So it impacts not only the company that's doing not so good from a customer perspective, but I would argue it even impacts the whole industry, because, by extension, other companies may be put in the same boat that they may be not delivering the same value. So that's how I see it. But I would like to hear your point of view why you think it's important and, you know, maybe some examples of that as well.

- Yeah, I think for me, customer delight is one way to look at it, or you can say customer satisfaction or customer success. But more important than that is, I think the whole customer success industry as a whole is driving towards customer value. So more important than happy customers, happy customers also lead 'cause there are other, you know, I know we're gonna talk about a little bit later about why are reason people leaving, but it's important to keep your customer delighted because that's why they will stay, that's why they'll buy more from you. That's when they will talk about you and your products when you're not in the room. If you think about a CMO that's looking for a chief marketing officer, that's looking for a analytics tool, do they go to the vendors? Maybe they will read one of those analyst reports from Forrester or Gartner that rank the products.

- Yeah.

- But more often than not, they're gonna call up their two or three CMO friends, say, "Hey, Emil, you just bought this analytics tool. What do you think of it, right?"

- Yeah.

- So by keeping your customers outcome driven, you know, on their outcome, delighted, successful, then you as a CMO will be in a position to say, "Hey, Sandy, yeah, I just purchased this analytics tool and they've actually increased our productivity by 20% in the first six months." So did I ask you specifically to refer? I didn't even know that someone was gonna ask you about our product. But by keeping your customers delighted, not only will they are more likely to stay with you, buy more, but they will also advocate and refer you even when you don't know about it.

- That's great. And it's a very good example. I also wanted to mention, I know we've talked in the past with you about it now. There's been a couple of years ago, maybe last year, there was a white paper that came out by a consulting agency called Winning By Design. And I don't remember the full name of the white paper, but it was basically focused on what has happened with the SaaS world in general and where it's going in the future. And the one thing that really, the main ingredient of that article that really, really caught my attention was the bowtie that they were talking about there, the "Revenue Bowtie". So what is your thought on that? I know you've read the same white paper and, you know, I know we both agree that it relates to what we're talking about here. So let's just, for the sake of our listeners and watchers, let's just talk about it.

- Yeah, a common framework is that, so what you're talking about is the revenue bowtie, it's a bowtie because it's an infinite loop.

- Yeah.

- And it's created by Winning By Design. And what it is is a customer journey model and a data model that extends beyond the traditional marketing and sales funnel to better represent the recurring revenue, the impact of journey of SaaS customers. So typically, when you think about revenue, you think about top of the funnel, you think about sales and marketing, getting new customers. And what this bowtie is is that it provides a very easy way for you to understand the relationship between delivering value to the customer, driving adoption, driving usage, and driving that delivering on the value so you develop trust that would allow you to actually go to the top of the funnel and that's what the bowtie represents. And it really helps you to think about tapping your existing customers as additional revenue source. And retention and expansion of the existing customer, it really has taken center stage especially in the last couple of years when money is no longer cheap, right? So economic times are tough and the new logos are less predictable to come in through and it's even more expensive. And driving growth from your customers, driving retention and value is much less expensive than landing new customers. And that's what the bowtie is trying to demonstrate that infinity loop in the form of a bowtie.

- Yeah. Thanks for explaining that for everyone here. I definitely recommend reading this article to those that haven't come across it. We'll add it to the entry for this podcast on cerebrations.info as well, we'll add the link there. But it is an important and fairly succinct total leadership piece that will provide with a lot of insights into the importance of customer satisfaction.

- Mm-hmm, mm-hmm.

- Another thing that we've been able to do at a different company to help delight our customers is actually helping them understand the hidden frictions that they have put in place for their customers. So one of the things that we did is we went into our existing customer base and say, "For no fee, we're actually gonna help you do an assessment to look at the maturity of how well using our product." Because I don't know, for a lot of products that we all use on a day-to-day basis, we use just a fraction of their overall capabilities. And as we go in and do these assessments, we actually help uncover some of the things that's making, by them using our product to service their customers, some of the hidden frictions that they didn't know existed. So that was really important to the leaders and as well as the team that we're using our product to service their customers 'cause we show them something that they didn't even realize that they were doing. So again, our focus is always on how do we actually help our customers achieve the outcomes that they're looking for? Because success is not just us using our product, not just, you know, taking our trainings or anything like that. It's really how about driving value and outcome for our customer base. That's when they're delighted.

- Yep, yeah. These are great examples, I think they definitely broaden the viewpoint on what exactly is related to customer success, customer delight, customer retention. Because, like you said, I mean people may be happy and they may still leave, but when they know that the amount of service that they're getting from their vendor is going well above and beyond, then they'll probably have a second thought about leaving 'cause that'll be very hard to find somewhere else for someone to go and either offer them ways to lower their cost or offer them ways to understand better how to serve their own customers, so that's-

- Totally agree.

- That's a great point. So I mean I have a question that kind of relates to that. And in the past episodes, I've had people come as guests who talk about market research and how this ties into drawing insights from your customers. We also recently spoke about "Blue Ocean Strategy" and one of the main premise there is obviously create more value or reduce the cost, the pain of doing business. So in essence, a lot of these things lead to here. But again, the most important question is how do we truly understand what a customer values, and especially maybe what they understand before they buy the product, which is where market research typically focuses how to get them to buy the product is different from what they value after they've experienced the product and they learn more about that product. So what's your take on this? You know, how can we truly understand what a customer values?

- Well, I'll throw the question back at you is who determines customer value?

- It should be the customer itself. I mean I can think about 10 different reasons why I'm creating value for that customer, but if the customer doesn't agree with me, it doesn't matter.

- That's exactly right. So customer value is to perceived benefit that the customer gets from using your product and services, so the perception is actually from the customer's perspective. But what you mentioned at first is, you know, coming up with a 10 value, it's important for companies to actually have a point of view on what is the expected value that the customers get. But the actual value that customers perceive is gonna be different probably by cohort, and sometimes for larger customers, by customer. So it's not the same. Some people think of value as price or the cost of your offering, but it's what they paying for and what they feel like they got out of it, the outcome they were able to get. And it could be influenced by a lot of different factors, by features, convenience, the support. So a lot of different factors go into the customer perceived value, but the more satisfied and better outcome that they're getting, the higher value that they're gonna get. And the bottom line is you have to ask your customers, that's where your previous podcast says in terms of research comes into play.

- Yeah, and just to mention something that also caught my attention and got me thinking as you were answering this question, there's certain element of service that I can never predict as a customer before I actually start working with this vendor. I mean they could tell me, "We are gonna offer you white glove service and we're gonna be there for you 24/7 and answer your questions within 30 minutes," or whatever their SLA says, right?

- Yeah.

- And I will probably believe that. And then maybe I'll ask other customers to vouch for that. But until I actually start working with them, I would never know how good it is, and I think after I've become a customer, I can think of at least several examples from my point of view buying marketing technology, that there are certain solutions, certain vendors that before I was convinced to buy them based on just pure comparison to what else was out there on the market and how it fits what I want. Now, I'll just buy them because of how they served me, what they did for me when times were tough, what we did together when we were thinking about how they can grow, but they can allow us to grow also in that direction. And that's such a great relationship, but I would never have experienced that before I became a customer. So I wouldn't know that they can provide that value to me. So I don't know if it's relevant to what we're discussing here, but I just think that, like you said, the perceived value is so important because the customer determines, I mean they believe in their own value. They're not gonna listen to you saying what the value is, but it's very hard to really measure that in so many ways, at least the way I think about it.

- Yeah, I think it's a combination of qualitative and quantitative. So it's important to understand what are the features and capabilities that your customers are using and also the ones that they're not using, so that's the quantitative side. But the qualitative side is actually to just ask, you know, when you're doing the research. And for the high touch, I would say ask very specifically and ask different personas within the company.

- Yeah.

- Oftentimes within our customers, there's a misalignment in terms of expectations of outcome from the executive to the person that's actually using the tool. There may be a lot of resistance for people that are having to change the tool even though the executives have bought in on the overall value that your product's gonna be. So I think it's important to articulate that by looking at the data that you have and then also collecting qualitative data over time. because that will change as you mentioned before.

- All right, well, let's move on to another topic that's very important and I'm sure it's top of mind for people as they listen to this conversation. Why do customers typically leave a vendor? I mean if they're not happy, yes, that's one reason. But what else could leave? What else could lead them to leave?

- Yeah, I just have a foundational belief that our customers don't want to leave. It's very, very painful for customers that have spent the time and costly, right? Not just the money that they've invested in you, but also the time to train their team, trying to do change management within your organization, time to integrate the product with the other systems, it is a big, big hard process. So my foundation will believe that customers don't want to leave, but they are experiencing so much pain because of bad customer experience or onboarding, pricing concerns or product problems. Those are the more traditional ones, but some of the less obvious reasons that customers leave are actually, they should not have been customers in the first place. So when you're at, you know, in my work now, I work with some startups and they are just in a space where they will take any customers that's willing to pay for them. You're nodding.

- Yeah.

- Right?

- They're not rich enough to be able to say no to anyone.

- And that's reasonable. But really, as they continue to define their product market fit and who their ideal customers, they actually have not captured the right customers from the get go. So some of the startups that I'm working with are actually having say goodbye intentionally to the customers because especially customers who are starting out early with you, they sometimes think of you as a custom development shop, and that's just not the way software as a service works, right? So it's about, you know, I think some of the less conventional reasons why customer leave, I think it's best if you can come to that mutual agreement that this is no longer the right thing for you. The fit is not there anymore, or the value that you're hoping to drive is not the direction that the product wants to go. And it's a very hard conversation, but I think that's one important to have and that's by knowing where your customer wanted to go and the outcomes they're driving and having that conversation across the functions. So not just the sales and customer success talking to the customer, but is product actually and maybe sometimes engineering. All those functions have to be in alignment to drive to this custom, to one vision of what the customer, where the company and the product and the value that we wanna deliver. But bottom line, people leave because they're not getting the outcomes they're looking for. They could be unhappy and still, if they're still getting outcome, then they'll stay with you. And so the key is really understanding what is the outcomes that are trying to drive. But they really don't wanna leave, it's hard. It's hard to leave. It's a divorce. Nobody likes divorces.

- It is, especially when a product takes a long time to implement, that's such a big opportunity cost that no one really wants to go down that path again unless they absolutely want to.

- Yes.

- I mean you talked a little bit about startups refining their portfolio as they grow and understanding that they may have to say bye to some of their existing customers. That's a great topic and I think it could serve as a topic for an entire different episode. So I'm gonna leave it, let's put it as a sidebar, something else to be discussed in the future 'cause we, you know, for the interest of time, you know, I don't think we can cover it here because I have so many questions about that. But, you know, this is a podcast that's mostly focused on sales and marketing. I mean obviously, it serves other executives' needs, but I really want to always tie it back to sales and marketing. So the obvious question that I would ask is how can sales and marketing help with customer success? What can they do?

- Yeah, I actually might turn it around. Think about how customer success can help you, right?

- Well, the bowtie, the revenue bowtie already shows me.

- It is a revenue bowtie. I think if I, you know, one thing to take away is it's really that cross-functional alignment. And it comes from either the CC, you know, the CEO or the CO, depending on the size of the company. I think the leaders of each of these primary functions really need to try and work together and have, because I think the experience, if you have a marketing experience, you have a sales experience and success experience, customers don't think of you as different departments, right? If you look at the customer journey, you wanna think about what is the right time to bring different teams. I think it's always a great idea to create empathy with each other's, understanding what each other do and why they do it that way, that would actually go a long way for them to know when to better collaborate, and the sharing of data, I think oftentimes, sales and marketing may have more operations power behind them.

- Yeah.

- And I think it'll be important for them to say, "Okay, well, what are the things that within customer success? What are the KPIs that instead of thinking about your KPIs in your silos, thinking about KPIs that's gonna drive customer outcomes and what information can you use to support each other?" When can you bring in customer success earlier in the sales funnel, right? You mentioned one of the things that you really enjoy is the support that you get after the sale. And that's a terrific way for the sales team to actually bring in customer success to say, "Hey, we don't disappear after you sign on the dotted line."

- Yeah.

- That's really when the work begins. And this is the person, Sandy, from our customer success team that's actually help you take you through the journey of post-sales. And because customer success in a perfect position to help you describe what that post-sales experience is. And people love to know what's gonna come, right? And marketing, one of the things that customer success can help you with is actually help you further refine the ICP. Customer success have insights on what customers value, what they use, what they like and what they don't like. And you can use all that information to actually target more of your ideal customer personas and profiles so that your leads are coming in that align to the value that your product actually delivers. So it's really that bowtie mechanism, leveraging information from sales, bringing them in to actually help further expand the trust that you have with your customers and your prospects as well. So I think that's how you can work together.

- Yeah, yeah. I agree, I agree. I mean, actually, you were saying about ICPs and how you can help marketing from that point of view. And I was also thinking that another way of looking at it is that on the customer success side, when you are already working with the vendor and some barriers are taken apart and there's more of a direct honest conversation because both parties know each other anymore, there's no commercial conversation at the moment happening. You probably have a better view into the internal decision-making and the business cases that need to be built internally for decisions to be approved. And that's invaluable information for sales and marketing because we can only assume how the business case internally is being built to be brought to the senior leader or whatever the executive committee that needs to decide on this purchase. And then once you start working with this customer, you see for every single day, there's probably some communication that goes up or they probably share with you, well, I need to say this to my board or to my executives in order for them to continue supporting me in this particular journey. And that's very interesting information that we can't get so much on the sales and marketing side before the conversation goes beyond the commercial side. So because we don't open up that way.

- And I think that companies, oh sorry, go ahead.

- No, I was gonna say because people don't open up that way to us. They always know we're trying to sell them something.

- I think just depends on, you know, a lot of the consultative sales approach actually get garners a lot of trust.

- Yeah.

- I think sales people, sales department get a bad rep, but I don't think everyone sells in a very transactional way. But I do think that you are right, that you can actually use the voice of the customer that are often residing with the customer success to help refine your messaging, your value proposition and your conversation, really inform your conversation and your messaging with your customers and prospects.

- Okay. All right, so just to wrap things up, I always ask this question at the end. I try to always reserve a couple of minutes at the very end to a recap. If people were to think about this podcast six months from now, what would you like them to remember the most? What are the key takeaways that you'd like them to remember? So what's your final advice for everyone who wants to delight customers?

- Yeah. In order to delight customers, understand your outcome, I think it's really important to show me you know me and its taking the time to understand who are the people you're talking to, why you need to talk to them, what's in it for them to talk to you? And then how are you as a company or a department gonna help drive the outcomes that you're looking for either personally, maybe a promotion, or maybe some increase in visibility, or for the company, productivity, time to value, driving outcomes for their customers. I think that would be my advice. Show me you know me and the understanding what's in it for your customers from your product perspective, and how else you can add value, and again, value in terms of what your customer wants, not the value that we have come up with in the company.

- Great. Well, thank you very much, Sandy. I think we had a great conversation. I hope that this was insightful for everyone else who spend the time listening to us today. I appreciate you coming on this episode and I hope that we'll get opportunities to talk about this topic or other topics on other episodes as well. Thank you.

- Thanks, Emil. Thanks for having me on.

- Absolutely. You're always welcome, thank you.