00:00hi and welcome to the a 16z podcast this
00:02conversation is all about the rise of
00:05or chief customer officer the episode is
00:08a conversation with a 16 ZZZ Matt Levy
00:11partner on the executive talent team
00:12discussing the role with ccos all
00:15Allyson Pickens of gainsight krysta
00:17anderson copper men from octa and Hatem
00:20Shafiq from data bricks i hear the
00:23question a lot in working with folks
00:25like you I want to be a chief customer
00:26officer one day how do I do that what
00:28does that mean it's a role that I think
00:30gets bandied around a lot in our
00:31portfolio started become more and more
00:33prevalent just in the industry as a
00:35whole so we're gonna talk about hey why
00:36are companies creating these roles
00:38what's the strategic value the different
00:40definitions and compositions of these
00:41roles and then finally the career path -
00:43chief customer officer alice' how many
00:45of your customers do you see creating a
00:47chief customer officer role it's
00:49definitely an emerging role I think
00:51there have been a couple reasons why
00:52it's grown up one has been I think
00:54people are realizing that customer
00:56success needs to report directly to the
00:58CEO I think in doing that folks are
01:00realizing customer success isn't just
01:02about customer success management it's
01:04actually about other functions that need
01:06to work in tandem to drive value for
01:08clients and so the CCO role becomes
01:10about ensuring really strong
01:13cross-functional coordination across the
01:14whole lifecycle for all these functions
01:17that are involved you operate kind of
01:19like a symphony orchestra where as
01:20everyone's looking at the same sheet
01:21music you might be playing different
01:23instruments but you're all playing the
01:24same general tune I think that's the
01:27role of a chief customer officer is to
01:28ensure that all these functions are
01:29actually playing to the same sheet music
01:31as well as advocating for other
01:33functions at your company to play
01:35according to that sheet music so if
01:37that's the role the chief customer
01:38officer I mean how is that different
01:40from an SVP of customer success or a VP
01:43of customer success why why is the C
01:45title matter yeah customer success is a
01:47pretty broadly used term and it can mean
01:50many different things for different
01:51companies it can signify a platform it
01:54can signify a function it can signify a
01:56person so that in of itself is kind of a
01:59confusing title so much so that our
02:02organization just stopped calling
02:03ourselves customer success and now we
02:05call ourselves customer first in order
02:07to encompass all of these other things
02:09the kind of this concert playing in
02:10symphony what I think is differ
02:13and why it's so important is we all new
02:15customers have a bigger voice than
02:16they've ever had right media social etc
02:19but we also know that in the SAS model
02:21they've got choice but it's much easier
02:23to move and they don't have to make
02:24those investments that they've made so
02:26ensuring that they have this experience
02:28that is cohesive and unified and they
02:30can move seamlessly within each function
02:33become so critical to your company's
02:35success and I think that's why the role
02:36really is emerging because you can't
02:38survive without that you can't not have
02:40that it's autumn you actually ended up
02:43in this role front much more of a
02:44technical background did that help you
02:46hurt you coming into more the customer
02:47facing world I mean regardless of where
02:49you come from I think there's a big
02:51learning curve what I also realized is
02:53from outside in probably the role is
02:57oversimplified it's like okay like what
03:00do you do I make the customer successful
03:02but there is a ton of stuff that
03:04actually goes into making that happen
03:07really from understanding the DNA of the
03:09customer what kind of life cycle are
03:11they going through what is important how
03:14do i structure my or based on that life
03:15cycle what kind of metrics do I want to
03:17measure what is important and how do i
03:20structure the or to actually achieve
03:22that how do I make sure these different
03:24functions are accountable to each other
03:26there's a lot to be figured out growth
03:28is king it's still King and will
03:30continue to be King and the way you fuel
03:32it your growth is through your current
03:34customers you take any good growing
03:37company which is growing at whatever 50
03:4060 percent or higher half or more than
03:43half of their revenue comes from
03:44existing customers which means the
03:47looool is just not a part of the game
03:48it's actually how do i upsell this
03:51account how do I grow this account I
03:53like you know make this a multi-million
03:55dollar account and that's where the
03:57value of the post sales function comes
03:59in and that's where like you can
04:01articulate that's in a very simple term
04:03which is I'm sort of driving the top
04:06line in our dynamics we coined that word
04:08and I kind of take it you know with me
04:10wherever I go which is customer success
04:12driving the top-line revenue like that's
04:14how you justify your role in the company
04:17I'm curious if you guys agree with that
04:19like does this role have to drive
04:21revenue this is one of the most hotly
04:25don't have quotas for CSM's at gainsight
04:28we are in the business of ultimately
04:30driving revenue by driving value for our
04:32clients on top of saying well we make
04:34the renewal happen we make upsell happen
04:36we also make advocacy happen which i
04:39think is one of the most overlooked
04:40outcomes of the customer success team is
04:42that when you generate really strong
04:44outcomes for your clients and they go
04:46advocate to prospective clients in
04:48speaking at an event that prospects are
04:50attending or writing a case study with
04:52you a testimonial serving as a sales
04:54reference that's key you know every
04:57board meeting I share a slide where I
04:59say like this is how much new business
05:01pipeline my team is influenced through
05:04advocacy it's a super powerful metric to
05:07go and avoid meeting with and we also
05:09track something that we call a customer
05:11success qualified advocacy which is the
05:13number of times that our customers
05:15actually engage in some form of advocacy
05:18so I'm a huge proponent of the idea that
05:20we're driving revenue I think it you
05:22know in terms of how you divide
05:23responsibilities I think it's probably
05:25just a matter of what your customer base
05:27is like and the leaders at your company
05:28this function exists ultimately to
05:31retain your customers and grow them
05:33so we depending on what your role is you
05:36will have different metrics specific to
05:38CSM's they have a metric that's around
05:40qualified opportunities get to a certain
05:42stage in the sales process so depending
05:45on who their accounts are the size of
05:46their accounts that they're managing
05:47will give them a metric that says hey if
05:50you've got five accounts you have to
05:51toss four opportunities over the fence
05:54every quarter that gets to a certain
05:55stage that helps us understand how they
05:58are in their accounts and mining those
06:00accounts and looking for additional
06:01opportunity there because in many cases
06:02they know those accounts the best
06:04they're the ones who are there all the
06:06time they're the ones who say yeah this
06:07is the problem they're trying to solve
06:08yeah maybe we could talk a little bit
06:10more about metrics is I think that might
06:12be one of the things that distinguishes
06:13the CCL from again that sort of VP or
06:16SVP of customer success what do you guys
06:18care about now that you're in these
06:19c-suite roles that maybe you weren't
06:21paying as much attention to earlier we
06:23measure three different leading
06:25indicators or the three different types
06:27of revenue that you can drive in a
06:28recurring revenue business so we've got
06:30a predictor of the renewal we've got a
06:32predictor of upsell which is actually
06:34customers with qualified leads and then
06:36we have a predictor of new business
06:38the csq a qualified advocacy I was
06:41talking about the predictor of renewal
06:42is our health score for each of these
06:44three metrics our CSM's have targets
06:46every quarter so they're held
06:48accountable for moving a certain number
06:50of customers into the green level the
06:52health score every quarter achieving a
06:54certain number of customers success
06:56qualified leads and a certain number of
06:57advocacy we actually bonus them based on
07:00those metrics so those are the three
07:02things that our CSM's are accountable
07:05for now of course there are other
07:06functions that I manage and so there's
07:08certain certain metrics that I measure
07:10for professional services certain
07:12metrics for customer support and I think
07:15that's actually one of the most
07:16challenging jobs of a CCO is that you
07:17can have a scoreboard with like 15
07:19metrics on it and all of them are
07:21actually pretty important for like
07:23keeping this symphony going for us
07:25though at the end of the day we're in
07:26the business of driving outcomes that
07:28ultimately results in revenue growth so
07:30the three metrics by which we measure
07:32our CSM's are also like the three
07:34metrics that apart from grocery newel
07:36rate that I care the most about for our
07:38organization how do you make space for
07:40another c-suite officer right you have
07:42your CMO you have your CRO in some cases
07:44you see a chief customer officer coming
07:46up a more toward serve traditional sales
07:48path or marketing path how do you carve
07:50out room for a CCO in that boardroom
07:53again we're here for retention and
07:55growth so it's more about why wouldn't
07:57you there's not a single shareholder of
08:00any company that doesn't want that right
08:01so I don't know that it's about creating
08:04room it's about saying hey we're all
08:06here for the same thing and that's
08:07retention and ultimately growing this
08:08company and that's what this functions
08:10about the other way of looking at it is
08:11somebody needs to own the post sale
08:13cycle sales owns the sales cycle who
08:16owns the post sale cycle and the way
08:19actually a lot of founders co-founder
08:22CEOs are getting convinced is they are
08:24worried about the long term view in the
08:25company so you know the CRO our good
08:29they are their organization is very
08:31short-term focused quarter after quarter
08:33who actually is a real advocate of this
08:36customer said that you have and who's
08:39taking the long term view who's making
08:41sure you're sticking the accounts who is
08:43actually holding the product accountable
08:44who's saying the product team is doing
08:47XYZ or not doing XYZ that's impacting my
08:51steam is not doing X Y Z in that's
08:53impacting my customer who's like
08:54actually keeping the rest of the
08:56functions accountable speaking for the
08:58customer and that's I think what the CCO
09:00does and finally needs to do is give the
09:03long-term you to the company so we can
09:05continue growing at that same clip
09:07without you know what happens to
09:09companies where you're suddenly growing
09:11this way and then there's a cliff and
09:13you haven't really your blindside and
09:15you didn't see it yeah the CCO should
09:17prevent that clip for from happening for
09:20the company so at what point is it
09:22appropriate to start thinking about a
09:23chief customer officer and someone with
09:25that c-suite title is there a staging
09:27company or a you know type of customer
09:30sales model whatever where it's maybe
09:31not appropriate I think that having the
09:34voice of the customer which is part of
09:36the role of the CCO is such an important
09:38part of the DNA of a company that the
09:40earlier you start the more likely it's
09:43going to be that customer success in
09:45that context the voice of the customer
09:47is in the DNA of everyone in the
09:49organization so that you're not walking
09:51into situations where maybe the product
09:53team or the engineering team or the
09:54sales team doesn't think of it that way
09:56so the earlier the better in order to
09:58really instill that in your company
10:00culture and company values and the other
10:02thing is at some point in a high-growth
10:04company that renewal number will be
10:06bigger than your new ARR every quarter
10:09every year so from that context yeah
10:12just nice work so yeah one thing I would
10:16add is I think it's important to
10:17distinguish between the title and the
10:20responsibilities that are held by the
10:22role it could be that you only have VP
10:24level folks at your company because
10:26you're too small and your VP of customer
10:27success might actually manage all the
10:29same functions that a CCO DeLeo stage
10:31company would what's important is sort
10:34of carving out an executive level role
10:36it someone who sits at the executive
10:37team who reports the CEO who manages you
10:40know these funds how's the influencer to
10:42actually make things that yeah the other
10:44thing that I will also touch on is no
10:46matter what company the CCO joins and
10:49there's another function which is
10:50actually building the culture of the
10:52company to be customer obsessed
10:54really looking at your organization and
10:56figuring out whether not just a customer
10:59success team but are the rest of the
11:01functions as excited at
11:04much informed about the customer to the
11:07celebrate success right in the customers
11:09environment do they know how the
11:11customers use your product do they know
11:13where we are falling short I think if it
11:15is the chief customer officers job or
11:17the head of customer success whatever
11:18you want one thing I used to say in my
11:20early days that octa was well if the
11:22customer was sitting here in the room
11:23with us what would they say it can be a
11:25new thing to have that person at the
11:27executive table in larger companies that
11:30are shifting from an on-prem business
11:32model to a SAS business model often it's
11:35the customer success leader who is
11:37informing the other functions about how
11:40they need to change their jobs to adjust
11:42the fact that you're now in a recurring
11:44revenue business model we're seeing the
11:47CCO having to take on this role sort of
11:49evangelists and chief within the company
11:51for everyone who's just a new business
11:52model not even just to think about
11:54customers but to recognize actually
11:55everyone's role needs to change because
11:57instead of thinking about sort of an
12:00upfront sales model and that's it
12:01actually you need to be thinking about
12:03growth across a lifecycle so as a result
12:05you know marketing leaders need to be
12:07thinking about how can we generate leads
12:09from within our customer base not just
12:11you know cold at the top of the funnel
12:13it's no longer a funnel actually it's an
12:15hourglass and and sales leaders need to
12:18be thinking about expansion as being an
12:20important number that they should drive
12:21product teams need to be thinking about
12:23how do we gather feedback from customers
12:25not just build shiny new features so I
12:27do think we do see in a lot of companies
12:30that the CCO is is a change agent you
12:33guys just went through the IPO process
12:34ready to doctah what was your role in
12:36that process right well how are you kind
12:38of evangelizing that model or that sort
12:40of change in thinking when it comes to
12:42dealing with the street dealing with
12:43investors kind of going on that roadshow
12:45educating them on the model helping them
12:48understand where we are in this cycle
12:50and how that renewals number and that
12:52growth number is so important in an X
12:55amount of time it's going to be bigger
12:57than the new business we're bringing in
12:58and this is how our function supports
13:01that and makes that happen was very
13:03powerful for the core DNA or values of
13:06octa being around customer success you
13:08have to also show efficiency in your
13:11gross margins or a pair time I think a
13:14lot of investors care about it they do
13:17of the business profitability over time
13:20and that's where a lot of the automation
13:22pieces help really making sure you can
13:26prove to the investors that you are
13:28running an efficient process and you
13:30have a formula behind how you invest in
13:34the customers that can scale over time
13:37you exactly know which customers you
13:39invest in they're tiered properly you
13:42know how to actually make your team's
13:44efficient you have a global model that
13:46scales one of the components was
13:48actually the health score as a predictor
13:50of renewal we got some questions around
13:52that I think it speaks to certainly your
13:53value as an organization and what you
13:56it'll be interesting to see if that
13:57actually becomes something that you know
13:59gets valued by investors right I was
14:02actually curious to hear from yours do
14:03you count customer success and cogs and
14:05is that why gross margin so different
14:09companies do it different ways it
14:11finally all sets in cause if you're
14:13running a professional service and
14:14training organization you know you can
14:16report it of a different line item as
14:17long as your business is not running in
14:20negative 50% margin you know and can be
14:23shown as breakeven target or you know
14:26moderate margins that you're you're
14:27making but the rest of the stuff like
14:29customer success was just considered an
14:32extension of just proactive support like
14:34we don't wait for a customer to file the
14:36ticket we figure out how to help them
14:38earlier on we build a plan for them we
14:41figure out how you're gonna actually
14:42drive growth in the account and it pays
14:44off you could account for some of this
14:47as CAC depending on how much of upsells
14:50they're driving and if you actually have
14:52a formula that you know is put against
14:55the new ARR that they're able to drive
14:57you might be able to justify it as CAC
15:00but mostly its cogs and you have to
15:02worry about it all the time as you scale
15:04so this is your second go-around as a
15:06chief customer officer how are you
15:08approaching the role differently like
15:09are you doing it better you know what
15:11sort of the growth critter for you
15:13outside of I now actually know what I'm
15:15doing the journey now is is a lot faster
15:21I am very focused in really
15:24understanding the customer and what
15:26actually makes them buy more and how can
15:29we actually double down and
15:30functions right or that piece of the
15:32journey so we built a custom maturity
15:34model not dynamics but I've done a
15:37version two of it in data breaks and it
15:39was actually allow us to calculate the
15:41stickiness of our product in the account
15:43which is a combination of a lot of
15:45things right from how much money have
15:47they spent to what kind of products are
15:49they building do those products actually
15:51drive revenue are we a part of the
15:53revenue line for that customer I always
15:56try to answer the question of like if
15:57there's a budget cut well we get cut or
15:59will some other tool get cut you might
16:01be doing an awesome job the customer
16:03loves you right your champions love you
16:05but like are they actually gonna you
16:08know put the money behind their loyalty
16:11with you we're trying to figure out how
16:13much of that stickiness is there in the
16:16account which is a combination of how
16:17much money they'll spend and what kind
16:19of features they're using and how many
16:21people within the organization actually
16:23using it why don't we transition a
16:25little bit and talk about career pathing
16:27right so relatively new role it's very
16:29much not established how you actually
16:31get there Chris you know career pathing
16:33do you think differently about like the
16:34DNA of the people you can hire into your
16:36organization are you looking for
16:37different things and maybe 10 years ago
16:39going into a situation assessing it both
16:42technically and politically what's going
16:45on in the room who has power who's who's
16:47making decisions who's not those skills
16:49are invaluable in any customer facing
16:52organization so I do look for that I
16:55mean my advice to anyone who wants to
16:56sit in a CC overall is go broad you know
16:59go broad and go spend some time do a
17:02tour in each of these functions and
17:04ultimately that's what's going to equip
17:06you for the role do you go do a tour in
17:09sales marketing and the product I mean
17:11is that yeah at that point then we have
17:13some people in my team right now who are
17:14you know starting to sort of
17:16rhythmically move them around and
17:18spending 18 to 24 months in a new
17:20function so that they can get that under
17:22their belt a how-to may be looking at
17:24this from a little bit of a different
17:25angle like your top performer so the
17:26folks you actually think you can make
17:27that leap into a c-suite role what do
17:29they bring to the table the long term
17:31more strategic view for the company is
17:34very very important for all the metrics
17:36that we've spoken about in this
17:37discussion right from how do you grow
17:39the revenue to how do you actually break
17:41down the customer lifecycle what do you
17:43do to actually enhance
17:45it and then figuring out how do you do
17:48it efficiently you have to have a
17:50combination of great operational
17:52capabilities understanding off what the
17:55customer lifecycle looks like you could
17:56come from a professional services
17:58function a training function a support
18:01function you could come from outside of
18:03the CES function as long as you bring in
18:06those two or three qualities which is
18:07the ability to manage and lead that's
18:11very very important because a lot of
18:14what the chief customer officer does is
18:15by influence in the other parts of the
18:18organization will actually lead without
18:20having direct reports even if they don't
18:22have any and then the third is really
18:25the analytical capability to understand
18:28make data-driven decisions having the
18:31actual data to like make the decisions
18:33correctly for the long-term strategic
18:35views is super important looking back
18:37would you have done anything differently
18:38over the course of your careers to make
18:40yourself more effective in the role now
18:41one thing I learned is companies that
18:44are younger tend to be on the extreme
18:46ends either they're not investing enough
18:48in customer success because they're like
18:50what is this I don't understand this is
18:51this just support we have the sales team
18:53to actually go close the deal so like
18:55you have to actually build an
18:56understanding and you know sometimes
18:58they are under invested and sometimes
19:00their way over invested and that could
19:02cause problems for you in the long term
19:04if you don't have a formula to really
19:08invest in customer success how do you
19:10hold them accountable are they on a
19:12commissions model are they X percentage
19:14of spend on the air are having that
19:16figured out really well and showing the
19:21CFO and the CEO that really you're able
19:24to impact that compression of the sales
19:27cycle which you know helping your sales
19:29productivity you know the ability to
19:31actually grow faster in the existing
19:34accounts right as compared to core
19:35comparisons which are not retention
19:37rates and the usage overall usage growth
19:39that those formulas are very very
19:42important and that's where you pickle
19:44down then eventually into your teams and
19:45that's how you hold it accountable so
19:47you're not having a proper model and
19:49just I'm customer obsessed so I'm just
19:51doing it doesn't really work at scale
19:55learn to interpret my biggest mistakes
19:58over the past four years have been
19:59related to budget and giving up on a
20:02budget battle in too early you've got to
20:05prove that case that you're truly
20:07aligned to revenue we have often the
20:09same challenges that the marketing team
20:11has where they're trying to like prove
20:13attribution and who was it that drove
20:14the pipeline was that the rapper was it
20:15marketing well probably was both you
20:17know and I think that's often true in
20:19customer success too so I honestly I
20:21think it's an industry we need to figure
20:22out how to solve this question and be
20:25able to advocate to our CFOs better you
20:27can solve that problem questions
20:31enterprise software company with large
20:33sort of fortune 500 companies what's
20:36your perspective on you know having a
20:38renewals function which is like highly
20:40compensated Account Manager partnering
20:43with CS versus CS potentially owning the
20:46commercial responsibility question I
20:48think it depends on what your sales
20:51model is you know do you have a name to
20:53count model are you about hunter I mean
20:56what is the function of your sales team
20:58and really defining that and based on
21:01that then you can start to figure out
21:03what's the function of the CSM should
21:05they own the renewal should they not
21:06should there be a separate renewals team
21:07and a lot of that is about the
21:09transaction so who's putting together
21:11that data for the transaction and making
21:13that transaction so it really depends on
21:16on the sales team and what their
21:18function is the other thing I would say
21:20is it also depends on the size of the
21:22company and what the size of your field
21:25is and what is the size of those
21:27accounts you know having a CSM owning
21:31the forming part of the equation is
21:34similar to you having multiple products
21:36and then you have one main sales person
21:38and then product specialist layering
21:41works okay if you have a very large
21:44company and a very large account where
21:48you can drive the amount of revenue you
21:49need to actually pay all of these people
21:52right if you don't then you need to find
21:56a way to make them more productive and
21:58useful I always ask the questions of
22:00what is this person gonna do in this
22:01account so even if it's a CSM are they
22:04doing project management what is their
22:06job like are they reporting
22:07on how the customers are doing and
22:09opting the product is that what you're
22:11doing are they actually gonna own the
22:12transaction and walk the halls and build
22:15the relationships and you know take
22:17everybody out for dinner and figure out
22:19how much money they have and formally at
22:21a deal based on that then they're doing
22:23a sales job and they should probably be
22:25doing the account management having
22:27multiple people trying to do the same
22:29thing never worked out and also it's the
22:32general tendency of the sales rep to
22:38I don't communicate anything to this
22:39customer without talking to me
22:41especially you know as you get closer to
22:43the renewal of the transaction they're
22:45trying to control every single piece of
22:46the communication having to three people
22:48in that you know do three chefs in the
22:51kitchen like it just doesn't work out I
22:53was just curious about customer sad and
22:56MPs I was curious where it sits in your
22:59orgs and whether ultimately you as a
23:03chief customer officer are accountable
23:05to the improvement of that yeah so NPS
23:07super important metric I think it's one
23:09of the most widely recognized customer
23:11satisfaction related metrics out there
23:13for sure and the benefit of that is that
23:16there's a lot of benchmarking data out
23:17there that can tell you whether you're
23:19NPS is strong or not couple caveats
23:22we found that NPS isn't always
23:24correlated with revenue outcomes
23:26we use NPS as a very early indicator of
23:30how things are going with the client
23:31meaning so much is gonna happen after we
23:34get that NPS response so sometimes we
23:37might get a detractor response when we
23:38get one we're closing the loop like
23:40right away I'm fixing that problem and
23:42actually the response to the detractor
23:45score can sometimes result in such a
23:46great client experience that actually
23:48that customer becomes a super strong
23:50advocate and and then they're renewing
23:51so I think it's really important to
23:53think of it not necessarily as a
23:55predictor or a leading indicator of
23:56renewal but more like an operational
23:58metric that you're leveraging to drive
24:01well we found is that NPS really varies
24:04depending on how you serve it to them
24:05and where you serve it to them so if
24:08it's going out in our cs ops function we
24:11do a customer sentiment survey quarterly
24:13and if it goes out there depending on
24:15the context of that what the focus and
24:18who the focus group of that
24:20survey is you'll get one score if you
24:21put it in the product you're gonna get a
24:23wildly different score so we don't track
24:26NPS at octa we take a look at function
24:29by function how are we doing so how do
24:32you rate us in product how do you rate
24:34us in your sales experience how do you
24:35rate us transactionally for support
24:37professional services education and then
24:40we take a look at those and where do we
24:41need to move those styles
24:43I think the NPS is a company's core it's
24:45the CEOs core not the CCOs core it could
24:49be because pricing is wrong it could be
24:51because they had a bad experience in
24:53their billing we over build them or
24:55whatever right so it's important to
24:57actually break that down really into
25:00functions and at the appropriate time
25:03because that really matters and and then
25:05correlate that back in to were these
25:08guys responsive in general what is
25:11happening with their overall product
25:14so that you're not just taking that one
25:16off and reacting to it and you'd look at
25:18that holistically thank you guys for
25:20coming this benefits a photographer
![How To Succeed As A NEW & YOUNG Realtor [Deals Every Month + Luxury Listings]](/_next/image?url=https%3A%2F%2Fi.ytimg.com%2Fvi%2FrtrRghgTayc%2Fhqdefault.jpg&w=3840&q=75)
