"I Don't Believe In Customer Success", says Snowflake CRO Chris Degnen

Camille Acey

https://www.thetwentyminutevc.com/chris-degnen/

"When you say 'CS' that's a naughty word. So I don't believe in customer success. Because what does customer success do in most companies? They are basically either renewal people or they're guiding the customer around to how to use the product.

But if you ask the tough of customer success, can they sell the product? No. Are they technical enough to be a sales engineer? No. What are they doing?

So me, I'd rather take that money that you are spending on customer success and invest it in either professional services people that are paid for -- that you can use as free resources -- but they are technical or sales engineers or sales reps. So you're getting something. As opposed to this weird thing that you can't really quantify.

We have a business value engineering group, which they actually are more of an enablement group for the sales team to help build business value plans for the customer. 'Hey you were doing X before, you are doing Y with Snowflake; here's the benefit.' But it's an enablement. You're teaching the sales team how to fish. It's not like they are going to do this for every single sales rep across the company. The sales rep should end up doing that for themselves.

Get rid of 'em. Build a professional services organization. Hire more SEs who can do it. Customer Success-- look people think that's blasphemy -- I don't believe in it. I inherited customer success. I got rid of it. It was an expense that I didn't see the value in.

Just give the sales rep a renewal quota. It's a basic thing. 'Hey guess what, you have a renewal quota and you have a growth quota. That's easy. Here go sell. And if you're too busy to do the renewal, I'll just take away half your accounts.'"

THIS ONE REALLY BURNED ME UP. 🤬

Ed Powers

Yikes. This seems to be a fundamental lack of recognition that Value Engineering is about planning for value and Customer Success is about executing it. Can another function do this? Sometimes, but most professional services organizations are focused on projects, not customer value outcomes, which usually come sometime later.

As we've seen from the pull-back in CS investment this past year, a lot of C-levels remain ignorant of these distinctions. So it's incumbent on us to show clear evidence of the financial impact CS makes.

How can we do that? Multiple data-driven approaches work, depending on your circumstances. Perhaps the simplest way is to define two identical customer groups, one in which expected value (as defined by the customer) was materially achieved, and another in which it wasn't. Then use contingency tables and Pearson's chi-square to determine if there was a significant difference in churn rates between the two, and if so, use the Odds Ratio or Yule's Q to show the effect. The difference in GRR alone typically justifies CS investment. Assuming the revenue is normally distributed, you can also use ANOVA (Analysis of Variance) to quantify Expansion or NRR differences between groups in a similar fashion.

Applying statistics then allows you to then make powerful, data-driven, factual statements, such as "Customers who realized their expected value were X times more likely to renew their agreements and increased their spending by $Y, on average. This resulted in an overall $Z impact on topline revenue, company valuation, and margin contribution." If the analysis is done correctly and communicated effectively, no CFO, CEO, or board member can rationally justify eliminating the Customer Success team.

And if you can further quantify the reasons why some customers leave, why others stay and buy more, specifically the revenue and total, hidden costs associated with upstream failures in product, processes, and services, then their entire perspective on your role can change. Armed with right information, a formal, enterprise-wide approach to continuous improvement, a supporting management system, effective change management, and good leadership, a VP CS or CCO can work side-by-side with the CEO to make even more dramatic and sustainable improvements in business results.

This isn't a pipe dream. It really works!

Ed

Anita Toth

I posted about this podcast episode on LinkedIn this week @Camille Acey . It was interesting to see the differing opinions about his view that "CS is BS" and had some interesting comments.