GIVING THE CUSTOMER BAD NEWS

Kathleen Fava

For those CSMs who have been in the uncomfortable position of having to give the customer bad news: 

How do you handle it when, for example, Product can't or won't program an enhancement or feature request for a customer. Even if Product is on board with CS, there may be roadmap issues, backlog, etc...preventing them from scheduling the work. How can we deliver this news and maintain the good will of the customer. 

An aside: If CSMs are measured on renewals, the situation above may cause them to churn. Sometimes renewals/churn are out of the CSM's control. So is it realistic to expect the CSMs to be measured on renewals (even assuming they are working collaboratively with other departments)?

I would love to hear your comments and suggestions. Thanks everyone!

Matt Vadala

It can be difficult to place churn rate solely on the back of the CSM, as sometimes product direction may not simply agree with all of your clients' ever-evolving needs. Things happen. We could try and contort every which way to convince someone they need us, but if they don't then they don't. Further - take our current world with COVID. Fewer people can afford to remain with SaaS providers, and that may add ticks to the churn column. 

That being said, my experience has shown many customers want their bad news as plain as can be. They want to know you will be straight with them so they can buy-in to your thoughts and beliefs, which will tend to benefit the service in the end. Say your Product team does need to backlog something that is a need for your customer, and it's expected they will be disappointed to not have their desired feature for the service they have subscribed to. They subscribed for a number of needs, many of which have precluded their current need. Having human representation and strong relationships can be the difference in establishing a renewal rather than a churned account. 

I've been on both sides where news has to be crafted and messaged, and where information has to be plainly dealt out. Our customers saw messaging being thrown at them and it caused backlash, and dissemination of bad reviews. We've also told them bad news plainly, and it resulted in some disappointment, but also in increased patience and understanding. Even more, it led to some evangelizing of the Success people they worked with because it is those people who go before the customer to give that news. They then not only opt to stay because of a great CSM but also bring others to the business because of the CSM.  

Kevin Mitchell Leonor

I frame it from a business perspective. People understand that we are running a business because they are running a business too. 

Any professional is painfully aware that the larger your company gets, the less likely we are able to impact feature requests unless the overwhelming public needs it.

Also, if the amount of work is untenable, this is something where we have to protect our resources. Let them know that this requires several levels of technology that is not available in our system and the prerequisites are items we are far from implementing. 

It's a hard truth but their inner businessman will understand and they will typically calm down and understand

Russell Bourne

Hi Kathleen, 

 

In terms of your external delivery, I'd focus on 2 things:

One, deliver the news quickly and with compassion.  

Two, ask them to share what they needed that particular feature for.  Keep the conversation as zoomed-out as possible (avoid detail rat holes) and have it with a decision maker who cares about business outcomes.  If the underlying need is something you can deliver another way, recommend that way.  If it isn't, position yourself as a thought leader and let them know what you see other companies doing that's helping them meet their outcome goals.  After all, they're thriving without that particular feature.

 

Internally, ideally you have a good system for Sales and Customer Success to log win/loss reasons.  If the feature request comes up commonly enough, now you've helped Product prioritize it.  And as you alluded to, you can intelligently forecast the churn.  There's great business value in that.

 

Regarding comp plans, it's true that CSMs don't control some churn factors and ideally, your plan is mostly limited to ones you can control.  What that means is different in every company and depends a lot on its own growth stage, how other departments work alongside you, and so on.  All I can really advise is, control what you can control and you'll have peace of mind.  Hopefully you have leadership that's open to hearing feedback about whether the comp plan drives activities that support the health of the business.

 

Russell

Nathan Petersen

Kathleen,

I can't agree more with all the replies already given. I might just add that it depends on who is receiving the bad news. in my company, we often deal with factors like who is recieving the bad news: marketing people or business owners, SMB or Enterprise organizations? and our CSM change the messaging slightly based on that and their relationship with the point of contact.

Transparency in my experience is the best policy but it has to be done with Empathy and a listening and inquisitive ear by the CSM. Never Split the Difference by Chris Voss is a book we walked our CSM's through to help prepare them for negotiating bad news with clients for the best chance of positive results. 

As far as the Churn factor, I can't speak to that as our organization ties Churn as a company OKR instead of just a CSM OKR. we do this because it promotes cross-department stakes in making great products, selling to the right people and retaining the best customers. Farm Don't Hunt by Guy Nirpaz might be another resource to check out too. 

Kathleen Fava

Thank you Nathan (and all) for the great advice and book recommendations. I really like the idea of tying OKRs to the company vs the individual CSM. Are you finding that this approach works well? What are the main difficulties, if any, in this approach? 

Nathan Petersen

As a SaaS business we're still pretty young, and so far it has worked really well as it balances out against other OKR's that allow for team success as well. the main drawback that has been voiced, is that it is more challenging to measure the success of your CSM's without this metric. My counter-argument is if you are only keeping a measurable metric in place because you aren't sure what else you can track, your tieing and anchor around your CSM's waist and pushing them towards the edge of the boat. focus on what you can control, and drill down on what makes a good CSM apart from metrics for your business, then figure out how to map measurable success for those teammembers.

gurd3v

I tend to simply rip the bandaid off up front and set the expectations of what can and/or cannot be accomplished. I find simply saying "can't do that" doesn't work. Educating the customer on why we can't do a specific thing typically leads to a successful outcome. 

That said, I've had customers give phenomenal advice which we haven't implemented. Being able to rely on a Voice of the Customer program can help in this situation by letting the customer know - great suggestion and idea I can see why "xyz" would help you out and I'll pass this over to our product team. I usually point to a few features recently released as being driven by customer demand and reminding the customer the more we hear about an idea from our customers, the higher chance the change gets implemented. 

Being able to measure churn and answer the "why" can help management/leadership better understand what to attribute the loss to. If you have a system in place to measure, CSM's can confidently be measured against churn since they (as a group) can now be the drivers of change to the rest of the org. 

Thomas Seelbinder

There's a quote that I like when it comes to situations like this.

"People are absolutely OK with the truth, you just gotta tell it to them". 

As humans, we brace for impact when delivering bad news. We run through the various possible responses which only serve to make us more nervous and stressed on the interaction. 

If we use your Product scenario, I follow what others have already mentioned here, give them the truth and be sure to provide exactly how that decision came to be. Don't draw it, but don't be short either

Users will absolutely stay with you for longer if they trust you. Telling the truth, whether positive or negative is a great way to build that foundation. Sometimes it will work out, sometimes it won't. 

 

gurd3v

This is key - trust builds customer loyalty and relationships. If it doesn't work out when setting the right expectation up front, it probably wasn't the best fit long term. 

Rachel Priest

Very valid points @Matt Vadala . Be honest early and consistently and be the CSM that has already built up credibility and maximum value with these clients so that the message is taken as a crucial conversation and not an unexpected, negative turn.