Turning Customer Success Into A Revenue Driver

Webinar – Turning CS Into Revenue Driver 1280

Aseem Chandra: [00:00:00] Wanna welcome everybody and this is our first live webinar from Immersa. We’ve been doing several prerecorded webinars that we’ve been putting up on our website at immersa.ai/events. Go ahead and check that out. The conversation today is gonna be around customer success.

Aseem Chandra: So if you have anything to do with customer success, you’re gonna love this discussion. And my guest that’s joining us today is Luke from Outreach. But his prior experience includes doing some data and analytics work at the Air Force, the US Air Force. You were at McMaster car for some time doing actual data actual warehousing, not data warehousing, related work.

Aseem Chandra: And then Qualtrics where you really took on how to scale up a CS organization and then of course outreach as well in a customer success role. So that was a quick introduction to what Luke does. My name [00:01:00] is Aseem Chandra. I’m the founder and CEO at Immersa. We help you bring data together from your product side, from your CRM side, and help you make sense of which accounts are likely to churn and which ones are likely to grow and how do you approach them to keep the conversation going. 

So if you’d like to learn more about Immersa, hit me up on immersa.ai and I will go from there. Okay, look, I’m gonna hand it over to you. So first, before you even introduce yourself, were you in a fight recently? Cuz I see a black eye. 

Luke Ferrel: (Laughs) I was. I’m not a huge guy. I’m about six feet and every once in a while I try to sneak rebounds when I’m playing basketball. And I tried to sneak in behind about a six five guy and his elbow was right the same height as my eye. 

Aseem Chandra: Interesting that, so that’s the story. We’re gonna stick with it. Either way. Either way. It works. That shiner looks good on you. Makes you look… 

Luke Ferrel: I came home and my wife said, you should ice that. And I said, no, I want it to look cool.

Aseem Chandra: All right. [00:02:00] All right. Let’s talk a little bit about you. I gave a quick readout of your career, but I know there’s so much history, so much color. So why don’t you take us quickly through it and help us understand from the Air Force to outreach.

Aseem Chandra: There’s a lot that happened in between

Luke Ferrel: Yeah, for sure. So I started out my career in the Air Force. Loved it. Did a lot of data analytics around Combat search and rescue. So like I wasn’t one of the cool guys with the beards doing really cool things. I was one of the nerds behind them. So essentially, how do we go and get off the ground?

Luke Ferrel: How do we have better outcomes using data analytics? I speak a couple East Asian languages and so I worked in China for a while and said, I wanna do that full-time. The Air Force has a program where you do that. They picked me up for it, but they said, Hey, you’re good at learning languages.

Luke Ferrel: Why don’t you learn Arabic? I did not wanna be in the Air Force and know Arabic, cuz that definitely changes your career. So that’s when I got out. The funny thing is I talked to a lot of [00:03:00] veterans and a lot of folks who are working at transitioning into customer success and I didn’t go directly to customer success.

Luke Ferrel: I think that you have to do a single pivot oftentimes in your career. And when I say a single pivot, there are things you can change and one I would say is industry and one is job function. And so it’s really hard to pivot industry and job function. And so for me it was like, first I want to go learn about the commercial world.

Luke Ferrel: And so that’s when I went to McMaster car and I went into an operations analytics type role because that could leverage my past experience and I was there for a little while. Eventually I felt like I was maintaining rather than building a company. And so then I moved to Qualtrics when it wasn’t an early a late stage startup, I would say.

Luke Ferrel: And I actually started out in support because again, that was, I changed industry, but some of the math and the optimization was the same. [00:04:00] And so that was again, a single. And then I wanted to get closer to revenue, which I’m super excited that we’re talking about today because I think that revenue is the lifeblood of a company and the lifeblood of any department.

Luke Ferrel: You have to tie yourself to revenue and so I wanted to get closer to revenue, and so then I pivoted over to customer success and I think it’s really important that people think about where is your end goal? And there’s probably a series of pivots that have to get there. And I think oftentimes people try and make that double pivot.

Luke Ferrel: Yeah. Which is, can be a bit dangerous. So at Qualtrics, I got to scale customer success, and then now at outreach. 

Aseem Chandra: Awesome. Very cool. So I think the idea of a single pivot, I couldn’t agree more. It’s essentially how I’ve managed my career as well is you change one dimension and not try to change too many things.

Aseem Chandra: Build on what you’ve done before and keep moving forward. But let’s come back to your Air Force days cause I think that’s a really interesting time and an interesting point in your life. We’ll talk about customer success in a moment [00:05:00] as well, but you mentioned you, you’re using data and analytics in your air Force days and how to improve.

Aseem Chandra: I guess tell us more about what you were doing there. We talked about this a bit in the, but I’d like for you to hear. Yeah. So 

Luke Ferrel: really what I did was tactics optimization as well as product development. So oftentimes there would be, let’s say, Something that our combat search and rescue folks generally run a tactic and it takes six minutes to get off the ground.

Luke Ferrel: We need to figure out a way to be off the ground in four minutes because it drastically increases survivability. And so then it’s how do we go and layer things together? How can we change our tactics? And to go and. Be safer or, we have a certain amount of assets.

Luke Ferrel: I wrote a thesis on this. This was actually a really fun project. We have, let’s say we have a bunch of assets in the theater, [00:06:00] like airplanes and different things. And then you need to predict how are we gonna minimize the time to recovery if there’s an incident. So let’s say there, there’s a fire.

Luke Ferrel: Firefight somewhere, and then you have injured people. How should you allocate all of your assets in a network so that you’re gonna minimize the time to recovery of that? Injured personnel. Super fun stuff. 

Aseem Chandra: Very interesting. When I think about the Air Force, I don’t think in terms of product or data optimization, like those are not words that first come to mind, but it’s really interesting to hear your perspective.

Aseem Chandra: Okay. We have our first few guests that have just joined, Kelly, Michael, you guys, if you have questions we want to hear from you. Feel free to pop into the q and. Section and ask your questions as you go. And I’ll bring them up to you. Lucas, as we go through this, you don’t have to follow the chat.

Aseem Chandra: I’ll just bring it up to you. So the q and a section is [00:07:00] open. The chat session I think is disabled for this particular webinar. But feel free to jump in and ask your questions as you go through this. Okay. So from the Air Force to the real world in a commercial role going into McMasters and tell us about Like supply chain and warehousing.

Aseem Chandra: Obviously the math carries forward, like there’s a lot of, and an operational background carries forward. But what was new and interesting about that transition for you? 

Luke Ferrel: It was interesting cuz like my goal has always in the Air Force was in outcomes that I would say were fairly, like we had such an advantage, right?

Luke Ferrel: And I’m biased. I think the US Air Force is the best air force in the world, but like we have such a technology advantage and we play on kind of an uneven field and. Really, it’s about how to not make mistakes so that you survive. When you get into the commercial world, it’s all of a sudden like, how do I optimize [00:08:00] and make tradeoffs?

Luke Ferrel: Like you don’t make a ton of tradeoffs in combat search rescue. It’s like how do we get out alive? Whereas the commercial world objective function 

Aseem Chandra: is very clear. Yeah, very clear. 

Luke Ferrel: Beautiful. To clear. And now you’re in a situation where it’s okay, we can reduce. The time to order delivery, but it will increase our errors in order.

Luke Ferrel: And then how do I balance that? So there’s a lot more in, in some ways, there was more judgment and decision making because the objective wasn’t incredibly crystal clear. Interesting. 

Aseem Chandra: So from, from there, you move on into a customer success capacity at Qualtrics. Now Qualtrics, of course for those of you not familiar, has done incredibly well, essentially a voice of a customer company that really raised that particular neglected part of the software industry.

Aseem Chandra: To [00:09:00] a very elevated position company originated outta Salt Lake, is my understanding. From Utah? Yeah. Yep. 

Luke Ferrel: Yep. Provo, but Sameish. 

Aseem Chandra: Okay. So your neighborhood. And then of course they were acquired by SAP and then spun out by SAP as an independent company. So tell us a little bit more about that experience and this is where we’re gonna, like to go a little bit deeper into the customer success side of.

Aseem Chandra: What was the business like when you entered, how, what scale was it at and particularly the CS team and what did you walk into? 

Luke Ferrel: Yeah when I joined customer success at Qualtrics, I’d say Qualtrics was probably about a 1200 person company. Doing well over a billion valuation, it had probably 50 to 60 CSMs.

Luke Ferrel: Didn’t have a CS ops team, and so I built out the CS ops team, and then we were renewing, I don’t remember the exact numbers, but we were renewing mid eighties, and we [00:10:00] had very strong goals that we wanted to get our gross renewal rate above one 90, I mean above 90, and our net retention rate above 120.

Luke Ferrel: What was interesting is we took a lot of different tactics to go at that and sniffed a lot of data. So we, at Qualtrics, we have, we had AEs, but we didn’t have a hunter farmer model. So we didn’t have a growth overlay where they’re dedicated to certain customers. And so we needed to try and find ways to get revenue out of cs.

Luke Ferrel: So originally what we did is we said, we’ll incentivize our CSMs on. Do they create opportunities and then these opportunities pass. And that sort of worked. The problem was they weren’t great opportunities because they have a book of 60 clients and you could just create an opportunity on all of those clients.

Luke Ferrel: Were they good? Didn’t matter. You created your opportunities. So we had to go and change that as we moved on.[00:11:00] 

Aseem Chandra: Got it. 15 or 20 CSMs is the starting point at where you started in that capacity, and then how long were you there and as you were exiting, what was kinda the scale of the team?

Luke Ferrel: Yeah, I left in 2021, early 2021, right after we were spun out by sap. At that point there were probably like 150 in, in cs, and we’d been more tightly integrated with services. One thing that we noticed was that we had a siloed view of, Customers.

Luke Ferrel: So we were working in customer success over here, services were working over here. And so we combined a lot of that. Like we still had an EVP of customer success, but that EVP of customer success started to roll up to a shared services leader Brian Stuckey, who’s in my mind, the best CS leader I’ve ever worked for.

Luke Ferrel: Awesome. 

Aseem Chandra: Got it. And Luke, in terms of [00:12:00] you know, you already had, you already mentioned that you were starting to go down the path of like, how do you create opportunities in the customer success role, et cetera. I hear a lot of debate on this issue. On the one hand, customer success, if it’s about, let’s say, needing to renew the account and make, help the customer be successful to where there’s greater adoption of the product.

Aseem Chandra: And the renewals are a simple conversation as opposed to a protracted negotiation. That’s one model for customer success. The other is, go find me upsell opportunities. Go find me cross sell opportunities, bring those back to the sales teams or try to close them yourselves, et cetera.

Aseem Chandra: At that point, doesn’t the voice of the customer get lost? Does it become another selling organization? And I know there’s viewpoints back on, on both sides that favor one model the other. But what’s your perspective? 

Luke Ferrel: I think that you have to be careful either way, but I think the purpose of customer [00:13:00] success, people often get lost and they say it’s about renewal or it’s about customer health.

Luke Ferrel: And I don’t think that’s accurate. I think customer success is about optimizing the lifetime value of a customer. So the method to do that is to drive customer health, and then the symptom for customer health and adoption is renewal and expansion. And so you have to focus on the primary root cause, which is the adoption and the usage.

Luke Ferrel: But. You have to go and treat the symptoms as well. Like a medical professional will not just say here’s the root cause. I’m not gonna go treat the symptoms, or I’m not gonna go do the treatment. And so I think you root cause and then you do the treatment. So I think it is important that you come across as an advisor that is very much engaged in their customer’s value.

Luke Ferrel: But then you have to find ways to almost [00:14:00] offload the commercials, but it’s gotta be a smooth process. And if you’re like, at the end of the day, if I’m a CFO and you can’t say to me, I will give you $2 back for every dollar you give to me. I’m not funding your department. I. 

Aseem Chandra: Makes sense. I like the way that you just articulated that as, what’s the metric, it’s lifetime value, and then taking it all the way down to what’s the symptom or how do you address that?

Aseem Chandra: So that’s actually a very interesting framework to work off of. So lifetime value versus nr, right? Like we hear a lot of conversation about NR net revenue retention, how. What was the account at when you got it? How much is it at the end of the year? Did it or no? Did it, downsell, did it upsell, et cetera.

Aseem Chandra: It kind of factors all of those elements in. And at some, in, in some sort of instances, it’s even more important than say ARR because, and particularly in the as if you are headed into [00:15:00] a recession or down economi, like how do you mind your existing install base? Because the cost of acquisition of new clients is so incredibly high in those kinds of environments.

Aseem Chandra: What’s your take? NR versus lifetime value? How should people view that? 

Luke Ferrel: I think Nrr is a component of lifetime value. So you have to renew someone to get that high nr. So I think that you should be segmenting your customers based on not only arr, which I think most companies do, most companies will just segment on arr, but there has to be some kind of potential segmentation as well, right? If Microsoft signs a $10,000 license with me versus Al’s hardware shop signs a $10,000 license, like I should probably be doing something different with Microsoft than AL’S hardware shop. No offense to Al’s hardware shop. 

Aseem Chandra: Got it. Now, you [00:16:00] obviously you’ve managed and scaled large teams. A question that Michael just asked a few minutes back is, how do you create alignment around a common objective, right?

Aseem Chandra: So across the team and what’s the process that you lead the team through to establish an objective, get buy-in from the team and get already marching in the same direction? 

Luke Ferrel: Yeah I think you have to go really high to a principle level of what are the company objectives? Because if you talk to CSMs and you start to say, we’re gonna create revenue, I think that it creates panic in CSMs cuz they say, am I gonna go to quota?

Luke Ferrel: There’s a reason I’m not in sales. That’s not the lifestyle I want. So I think it goes back to, let’s have a conversation around lifetime value. Let’s have a conversation around net retention and what that means for you. I’m a big fan of incentives drive behavior, and so if I can say to a CSM who’s maybe a little hesitant if we get our net retention above 1 [00:17:00] 25, like that does wonders not only for our multiple, but it also helps your story in your career.

Luke Ferrel: I look at my career. My career has been greatly enhanced by being a part of Qualtrics. That, that story that I was able to tell and then be able to join Outreach I like. I never would’ve gotten this job at Outreach, which I love. If I hadn’t been a part of Qualtrics and Qualtrics wouldn’t have been what it was if we couldn’t have had the high net retention and the high renewal rate.

Luke Ferrel: And so we always knew we had to get renewal rate above 90 and we had to get net retention above 1 25 to be what we wanted to be. And so I think linking all of that together and letting people know yeah, it’s for the company, but it’s really at the end of the day, people are motivated by what benefits them.

Aseem Chandra: Interesting. So look, help me connect this. We’re hearing about customer success ops quite a bit in the industry these days. I think you either were in that  role or managing that role. Tell us a [00:18:00] little bit about that. As far as what did that role entail?

Aseem Chandra: Cause it’s, I think there’s a lot of confusion about rev ops and sales ops and CS ops and whatnot, so I just kinda wanna hear your thoughts on what, what did you do in a CS ops capacity? 

Luke Ferrel: Yeah. I think there’s levels of maturity for a CS ops organization.

Luke Ferrel: I would say level one maturity is bringing visibility. To data that CSMs need to do their job. Hey, here’s the usage by customer creating dashboards. And just getting all of that data in front of leadership. So we used Domo when I was at Qualtrics, creating all these Domo dashboards that say, Hey, here’s your projected renewal rate.

Luke Ferrel: Here’s what it is, here’s the usage. Maybe here’s some of the risk in accounts. I think that’s level one and that’s probably. When I left CS Ops, I wish I could say I progressed beyond that, but that’s probably where I left At CS ops, I think level two is insights, the drive actions, [00:19:00] and so being able to say, Here are your accounts that are likely to churn and here is why, and here’s what you should do about them, and here are your accounts that you could possibly upsell, and here is why, and here’s how you should do that.

Luke Ferrel: I think to me, that’s a really advanced CS ops function, and what’s awesome about that is as an ops person, you’re off, you’re often not at the strategic decision making table. But when you get to level two maturity of CS Ops, you are the driver of strategy. And so I look as a CS ops person, that’s where I, that’s where I wanna be if I wanna drive my career, that’s how I get my seat at the table.

Aseem Chandra: I love the way you framed that. I think we talked to a lot of people in operational roles just given what Immerser does and many in the customer success space. And there is a, in fact, we ran a survey earlier this year with ops teams. It is on our website.

Aseem Chandra: Everybody wants to go check it out. It’s available, the results of it. But 70 different [00:20:00] SaaS companies and PLG companies responded and ops teams from those companies. And I think one of the key issues we learned was that ops people feel like they don’t have a voice or a budget or a, part, a seat at the table to drive strategy.

Aseem Chandra: And I think you’ve like this level one, level two, et cetera, maturity curve that you’re describing here. It’s a nice way to frame how to elevate yourself into that position. It really makes sense the way you describe it. 

Luke Ferrel: Yeah. If you go in and you say hey, run this and I’m gonna create more revenue, guess who’s ear you now have the CROs ear, you now have the leader of CS.

Luke Ferrel: Like you are in those conversations and you’ve just made yourself in. Yeah. 

Aseem Chandra: Yeah. Very cool. Okay you mentioned, as you mature, the intention is to identify the opportunities and figure some action. So let’s talk about the identification of those opportunities. How did you go about that in your CS ops capacity?

Aseem Chandra: What was [00:21:00] the tool set and what was the secret sauce and the methodology to co, to approach that and say, what are the opportunities in my account base? 

Luke Ferrel: Yeah. I wish I had a secret sauce . A lot of it was just brute force. So a lot of it was we would tell reps. So originally we started out with create opportunities and we’d judge you on the amount of opportunities you created.

Luke Ferrel: That led to really bad opportunities. So then we started saying, okay. Part of your bonus, we’re gonna tie to the amount of revenue that is closed, that you originated the opportunity. So then we started to get good opportunities there. What it incentivized the CSMs to do was to go look through their accounts and then have conversations about another product or another use case and then funnel that up.

Luke Ferrel: So that’s where we started. I think it worked. It worked. Okay. What it did was the CSMs who had fewer accounts and were deeper embedded in their accounts, knew those accounts [00:22:00] really well, and so they could do it, they could do it well. It was much harder for the account, the reps that had a hundred plus accounts and they were having more shallow discussions with those customers.

Luke Ferrel: Or even like we had scale. Actually I’ll get to that in a second. But like the reps that had fewer accounts they couldn’t get as deep. And so that’s where we had to start getting into the analytics. And so we would pull like customer use cases and we would say, okay, similar customers as these customers are buying these products.

Luke Ferrel: And then we would give a list to those CSMs and say, these are the customers we believe should be targeted. Now, was it incredibly accurate? No. But we had to find a way to narrow it down. . The other thing that we had to go into was when we did scale customers, so at the end of the day, you have to get scale in CS because that’s another way of creating value, right?

Luke Ferrel: Because [00:23:00] normal CS your volume, your ARR goes up and you assign a CSM for every, let’s say, $4 million of arr. You’re never gonna get margin that way. So you have to find a way to say, okay, now for 10 million of ARR, I’m gonna assign one csm. What we found when we did that was that renewal rate didn’t suffer, but expansion did.

Luke Ferrel: And so that’s where we needed a lot of lean in from our data teams to go and figure out where that expansion should go. 

Aseem Chandra: Interesting. Got it. Got it. One of the questions that I draw some parallels here to is growth marketing and in fact like prior to that, even sales operations roles where the sales sales arena, there’s been a number of technologies that have emerged around Salesforce or HubSpot as the core platform, but then there’s a number of different data apps and engagement apps and AI tools and machine learning tools [00:24:00] and whatnot. And so that elevated the position of an operations person in that role where they’re trying to bring all this information together, trying to make sense of.

Aseem Chandra: And then generate these insights. And then, we saw a similar, or we’re seeing a similar sort of movement with growth marketing where again, a lot of new marketing technologies have come up. There’s this complexity of go to market motions where it primarily used to be sales led.

Aseem Chandra: Now whether it’s product led or marketing lab or a whole bunch of different new ways to go to market. What are the key trends in the customer success space? What are you seeing there that sort of feels different from, say, when you first started your career? Like how are. Forward-leaning Cs people thinking about where they should be investing their time, resources, energy looking ahead.

Luke Ferrel: Yeah. There’s a big push to get more programmatic, so I think for a long time we’ve hired really smart people into CS that can be consultative. But we [00:25:00] wanna be more data driven as we move forward. Oftentimes we get to a point, and this kind of works in the enterprise, cause you can throw dollars and heads at it where we say Hey, here’s the risk in the account.

Luke Ferrel: I talked to their vp, John who said this, and they can hedge that out. When you have a hundred accounts, or when you’re trying to get margin in your customer success team, you have to be data driven. And so that means you have to be more programmatic. So ops is taking an elevated role. Versus in, in the past I think it was just go be an athlete and figure it out.

Luke Ferrel: You have to get programmatic and that’s where you’re seeing like VPs of CS are people who can drive ops and the whole CS motion. 

Aseem Chandra: Got it. And as you think about in a CS leadership role, who are your closest stakeholders in an organization? Who are the people that you work with the most closely CFO side to, to actually achieve the objectives in terms of [00:26:00] NR or LTV and so on? Who are the people you work with?

Luke Ferrel:  I would say the closest stakeholder is sales. Like you, you gotta get really close with sales. That’s a, yeah. The end of day revenue matters. Also pretty heavily with professional services and support. Oftentimes what I’ve seen at companies I’ve been at is it’s not always the product.

Luke Ferrel: Sometimes it’s implementation or the customer knowing how to use it and. We try to get through a lot of that in customer success, but if someone needs to get their hands on the product, that’s not something that I would recommend customer success doing. And so professional services need to do that. So you have to figure out if there are gives and takes with the customer to get a professional services engagement there and then support.

Luke Ferrel: There’s gotta be a strong handoff process between. Customer success and support. You don’t want your CSMs just managing escalations, technical escalations all the time. Account escalations we should be managing, but not technical. The area [00:27:00] where I think that there is room for improvement, and this may just be my experience, is the link with product.

Luke Ferrel: At the end of the day, I think CS should be a voice of the customer, but I personally have not done a ton of that. But maybe that’s just a commentary on me. Got it. Got it. 

Aseem Chandra: Very helpful. So I heard sales, then the support and professional services side of things, and then product in your experience.

Aseem Chandra: The third area where there’s opportunity for growth. Okay you mentioned this notion of data driven approach to driving customer success. So let’s maybe parse that a little bit to say who do you turn to for getting access to the data and what kinds of data and, what’s the most relevant.

Aseem Chandra: Companies are swimming in data these days, like that’s, that’s usually not the issue, right? So what are some of the issues that you then have to tackle [00:28:00] once you have so much data around you? Like how, what are some of the issues you’ve had to work with and who do you have to work?

Aseem Chandra: From a role standpoint, who do you have to work with to address those issues? 

Luke Ferrel: Yeah, you’re really working a lot with CS ops, but you also, I would say you’re working a little bit with finance cuz CS ops I think there’s really two things that they should be telling you. Who is likely to churn and why.

Luke Ferrel: And then who is likely to expand and why? And then as a CS leader, My job is to go create playbooks and enable my team to go attack those different use cases. But the, and then the third thing I would say is, how does this impact my forecast? Like at the end of the day, it should be tied to commercials because that matters.

Luke Ferrel: And that’s where your finance team starts to get involved. 

Aseem Chandra: Got it. And your CS Dean in order to figure out where’s the [00:29:00] opportunity for upsell or where there’s risk in an account. What data sets are they tapping into to figure that out? What’s their methodology or their approach to figure that out?

Aseem Chandra: Yeah. 

Luke Ferrel: A lot of it is usage, like how is the customer using which features. Are the customers using what they sold recently? How saturated are they? What’s the white space or the green space whatever space you wanna call it. What’s that space on the account?

Luke Ferrel: How are customers acting? Is there some kind of similarity network? Those are the things that I’ve seen. But it can be tough. The problem is a lot of these models get really complex. And when they get too complex, you’ll find exceptions and then you won’t understand the exceptions.

Luke Ferrel: And so where I see these models fail is when you give a model to a CSM and you say, here are your [00:30:00] likely to churn customers. And then they say this one had a 5% likelihood to churn, but I knew for sure they were gonna churn. Yep. And they’re like so the model’s not accurate. Yeah. And so they’re using the exception to prove the model.

Luke Ferrel: And so there’s gotta be clear reasons why, and they’ve gotta be explainable to a CSM because otherwise they’ll just discount the model. Or if it’s too complex, they’ll say yes, 70 variables. I don’t know. Yeah. But if you can parse it down to a few variables, one, they know how to take action on it cuz they can say, okay, I need to change that and that.

Luke Ferrel: And then two, when the model is inaccurate, which inevitably there will be exceptions. Yeah. They can understand why the model projected the way it did without discounting the whole model. 

Aseem Chandra: Interesting. So how do you get them to trust the data? I think that’s the point that you’re bringing forward.

Aseem Chandra: And we see that again, we see that all the time in conversations with our clients that the, and I think you’ve just made a very key point, which is. The [00:31:00] exceptions actually, people turn to the exceptions to either prove or disprove the model and then at that point they make the call on whether they’re gonna trust the data or not.

Aseem Chandra: So how do you change that behavior in an organization to where, let’s say you’re rolling something new and you’re trying to. Get people to adopt that approach, that new model that the CS team invested a lot into, to build out and pull a bunch of data from and so on. How do you change the behavior in a CS organization?

Aseem Chandra: What’s the change management that’s associated with it?  

Luke Ferrel: I think there has to be a lot of reporting back because people will have an, they just have, they like to look at the trees when they’re in front of the trees and sometimes you have to say, here’s the forest. Yeah. And so you have to pull people back and you have to be hyper transparent about it.

Luke Ferrel: Like people can smell BS. And you have to say, this is where we were wrong. This is where we were accurate. This is how much revenue and time we feel we have. I think just make it super simple for [00:32:00] CSMs. Like CSMs are a bright bunch. I would say I’m one and so I’m a fan, but at the same time, like one is super simplistic.

Luke Ferrel: Yeah. And be able to say, look, we were right on 92% of these accounts. Here’s where we were wrong. Here’s what we’re gonna do going forward. Here’s what you need to do as a csm. You can’t just go in and look blindly at the number you have to go and validate. And then when you see something that is off, you have to push and say why it’s off, and then that’s how we’re gonna continue to get better.

Aseem Chandra: Makes sense. Look, I think it’s so both Qualtrics and outreach, your companies that have a very large number of customers and what’s the, and then CSM of course, map into those accounts and have a certain coverage ratio and a coverage model. And at some point the data becomes very, database models become very valuable to understand, cuz they have a very large account.

Aseem Chandra: How do you tell which one’s gonna create or [00:33:00] like you to grow without having conversations with them every day, whereas, if you are an enterprise csm, top segment, you know your 10 accounts and you know exactly what’s going on there. So what’s the value of data if you are in that enterprise segment?

Aseem Chandra: Like where does that start? Where does it help in that context? 

Luke Ferrel: I’ve lived more in the smb, so I may not have a good answer. Okay. But I think it’s often, like I look at when we were at Qualtrics, You think like how many Fortune 500 companies are there? There’s 500 and you need to get in and saturate ’em.

Luke Ferrel: And so like now you’re in 498 at the Fortune 500, like where are you gonna go now? Yeah. There’s a ton of other businesses within the Fortune 500, right? Like we’re in BMW North America. Yeah. Awesome. How do we get in BMW, Asia? How do we get in BMW here? And so I think it’s valuable that we can show those leaders.

Luke Ferrel: And make it really easy for them to become champions and say Hey, [00:34:00] here’s the value you have gotten. And then we can let a CSM know, hey, now is probably a right time. They’ve gotten a ton of value. They look like someone who would be ready to expand into another business of theirs. Cause it’s really, that’s in a lot of cases, that’s almost a new customer.

Aseem Chandra: Got it. Okay. I think we’ve touched upon the role of data. Now when you look at the enterprise, but when you look at the SMB segment what are some of first of all I would love to hear how you think about coverage ratios, because like we hear all the time right now, particularly with companies saying, I wanna move to mid-market, or I wanna expand my account base, but I’m not adding any more CSMs.

Aseem Chandra: And this conversation comes up a lot and. How do you think about coverage ratios and coverage models and, when a company takes that stance, how do you respond?

Luke Ferrel: Yeah. So [00:35:00] right now at Outreach, we’re at about one CSM to about 3 million of revenue. And I feel like we would like to get closer to the 4 million revenue number.

Luke Ferrel: Yeah. So a lot of it is, you look at your data and you see you almost ab test and you see where if this is my ratio or if this is my ratio, what does my expansion renewal rate look like? Then in scale, so for accounts less than 40 k arr generally, that’s the general rule.

Luke Ferrel: Anyway, we’re at about 10 million to one ratio. And so one way to drive that ratio is to have automation. So we reach out to customers based on specific triggers. So you know, customer usage drops, or we see poor account health based on an automated audit. Then we’re gonna reach out to those customers. It feels proactive to the customer, but it’s reactive to our team, which makes it more efficient.

Luke Ferrel: And then also creating assets for digital engagement. And those shouldn’t just be used in scale. Those should go all the way [00:36:00] across, right? Like we have these webinars that we do. Yeah. Then like enterprise customers should go to those, but it should be linked back so the CSM knows when that’s occurring.

Luke Ferrel: So I think that’s another way to drive higher ratios, which I think we all want. 

Aseem Chandra: So what was interesting to me you responded to the question, not in terms of the number of accounts, but in terms of the value of those accounts or the total book of business is 3 million in SMB or 4 million in smb equal into, 10 million in enterprises, the way that you look at it.

Luke Ferrel: I think it’s an interesting paradigm, right? Should we be looking at accounts or should we be looking at dollars? I think you get to a certain saturation point with accounts where you’re not gonna be able to handle them. The way our revenue breaks out at outreach generally 50 ish accounts will be about 3.5 million or so.

Luke Ferrel: But [00:37:00] in the enterprise, yeah that three to 4 million, maybe two. Yeah. Yeah. I think that there’s room in enterprise to go to six, 8 million depending on the accounts, but those accounts are also way more complex. Yeah. When I’m talking smb, I probably have one organization. Like I have a CRO that’s doing things with their sales development reps, and that all rolls straight up when I’m talking to Cisco or sap, they probably have so many different organizations.

Luke Ferrel: So even though it’s one customer, you really have a ton of clients. 

Aseem Chandra: Makes sense. Got it. Okay. Okay. Very cool. I wanna take the conversation into what are the tools in the CSMs tool belt to take action within account? So I’ll tell you the two that I hear the most often. QBR and playbooks. Okay.

Aseem Chandra: Yeah. Let’s unpack that a little bit. What else [00:38:00] can you know, can a CSM do? These particular tools have been around a long time, so what’s the modern way of thinking and how do you expect these to evolve? Or what are some of the new things that are out there that people should be thinking about?

Luke Ferrel: Yeah. I think you have to have an operating rhythm for your CS. And generally QBR and playbooks to me are a portion of the operating rhythm. And your operating rhythm in my mind should be based around a value plan. So essentially you come in, there’s a reason a customer bought your software. They are trying to solve a problem, so you need to align on whatever that problem is with the most senior leader, the stakeholder, the one who holds the wallet and says, this is successful or not.

Luke Ferrel: Then, There are probably some tactics that you’re gonna take to solve that problem. So there’s probably three to four things. Usually the problem you align with your SVP or whatever, and then next you’re gonna go, there’s a director that’s gonna actually do it. So [00:39:00] that director is probably gonna give you three or four large.

Luke Ferrel: Projects type things, and then you’re gonna build out a project plan. And to me, that is your operating rhythm. Everything should tie back to the value plan. There should be recommendation meetings, and it almost turns CS into project management. You can say, at this point, we were supposed to have this done and these are the results we expected to see.

Luke Ferrel: And then your QBR or EBR is not. So I’ve sat through QBR that you just wanna rip your hair out cuz they’re just boring and it’s a marketing slide and then it’s here’s how we’ve done. But it ties back to the project that you said was gonna be your success. Yeah. And so you can say, Here’s how we’ve progressed.

Luke Ferrel: We’re doing well on this one. On this one, this is where we need to make some changes. The changes we recommend making based on the customers and everything we’ve seen are A, B, and C. And now you don’t even have to build alignment because the alignment was built in that value plan. 

Aseem Chandra: Got it. How much [00:40:00] time do you think qbr, CSMs spend on building QBR?

Luke Ferrel: If it’s like an enterprise QBR, you’re gonna spend probably like a week building that thing out. If you’re maybe SMB and you have 60 clients, you’re probably gonna spend, a day building this out. And that’s a lot. And then sometimes customers don’t care from being Frank.

Luke Ferrel: And so you’ve spent a day building a deck that they honestly don’t care about. Yeah. 

Aseem Chandra: Yeah. Got it. Do you see any automated ways of triggering actions that customers would care about? So QBR get into this big deck and a big presentation and whatnot, but what’s the operational cadence that can be established with clients, particularly in the SMB segment where you’ve got a lot of clients you’re not gonna do QPS with all of them.

Aseem Chandra: You’re not gonna spend a day, you don’t have a data spend with each one of them to build a qbr. So what’s the operating [00:41:00] rhythm or cadence over. 

Luke Ferrel: I love trigger based actions. So one thing that we do at Outreach is we will go at certain time intervals, we’ll evaluate customers and it’s a super quick evaluation.

Luke Ferrel: I eventually would like to automate this. We haven’t gotten there yet, but we’ll look at their content, their organization, their crm, and then their governance, and we’ll rate them basically good, bad. On those. And then we will send out outreach as a sequencing tool. We obviously use our own tool, but we’ll write them good, bad, and then based on their rating, we’ll send them follow up sequences that say, Hey, you’re doing great on these three things.

Luke Ferrel: You could use help on this one. This is what we recommend, schedule a call with us, very proactive to a customer, reactive to us. So I think that’s one. The other one is usage and risk based triggers. So we can see, I love, I’m a big fan of statistic process control. This goes back to my warehousing. You can look at all your SIGs and you can say, this person’s usage is outside of three sigmas of what I would expect up or down.

Luke Ferrel: And so now I, they’ve [00:42:00] dropped, or, they have rule of six down I’m gonna go message them with this set message. And so now it’s telling you which accounts to focus on. Got it. 

Aseem Chandra: Got it. Very cool. Okay, so we have another question here on the chat.

Aseem Chandra: So this is again from Michael asking the question early on, did you create an s role to fulfill the reporting needs of the CSMs with a lot of accounts or did you just have your did you just go to your CSMs to do that for you? 

Luke Ferrel: I created a role and that’s where it was great. Problem was, that’s like the level one maturity of ops.

Luke Ferrel: Yeah. Just reporting. And man, you can get bogged down in that, especially when reporting is spread out across the company. Like you have a Rev team, you have a sales ops team, you have your CS ops team. Because what can happen is the way we report a number is slightly different than the way that Rev reports a number, and now we have [00:43:00] Incongruities and we’re going into standups.

Luke Ferrel: And so you can, I probably spent a bogged down in just how to record. Maybe I wasn’t a good OBS leader, but that was that it’ll bog you down. 

Aseem Chandra: Interesting. Okay. Great. Look, this has been incredibly interesting from my perspective, cuz if I were to look at, what we’re building with Immersa is essentially a data platform that brings data from a bunch of different places and helps you figure out where there’s risk in your account and where there’s growth and opportunity in your account. So separately, I would love to show you what we’re doing and yeah, your feedback straight back to our product team cuz this is exactly the kind of stuff.

Aseem Chandra: We need to hear. But I think on behalf of the audience here, super, super interesting conversation. I don’t think we could have found a better guest for our first live webinar. Thank you for joining us. Okay, thanks. It was great rocking that shiner and you just laid out the knowledge bombs. It was pretty fun.

Luke Ferrel: Okay. Awesome. I had a great [00:44:00] time. Take care. Bye.