Customer Success is BS

While titles can vary, it's undeniable that a process needs to exist to ensure everything happens so that customers remain customers and increase their spend with a company.

“Customer Success is BS, and you should get rid of it.” My heart sank. I was boarding a plane at JFK, heading home from New York City, where I had just finished hosting one of our most successful Customer Success Meetups to date. The night before, over 250 enthusiastic Customer Success professionals had packed Monday.com’s Midtown office to listen to Chief Customer Officers from Datadog, UiPath, and mParticle share their knowledge. We capped the night with a fireside chat featuring tech’s most preeminent writer, Alex Konrad. By all accounts, it was a validating event, and I was on a real high. And there it was, bullet point five, in the show notes of the 20 MinuteVC, hosted by my friend Harry Stebbings and the guy who first introduced me to Customer Success almost 10 years prior: "Customer Success is BS.”

I downloaded the podcast, boarded the plane, and put my headphones on. I wanted to hate it. As the opening credits played, I planned my counterpoints. But as the show began, I found myself hanging on to every word. I didn’t hate it; I LOVED it.

Chris Degnan, the show's guest, is an impressive outlier by all accounts. In the startup world, it’s almost gospel that, regardless of the function, most leaders aren’t able to scale beyond a few stages of growth. This truth holds especially true for Sales, the function Chris has overseen at Snowflake since before product-market fit, where he now serves as the CRO. Early in my career, I was the first hire at a pre-product-market fit company, and most recently, I led Customer Success from $1 million in ARR to over $300 million at Motive. Having experienced many of the same inflection points, I understand just how exceptional Chris’ career is. As I listened, I realized that he wasn't merely sharing second-hand wisdom observed from the board level; he was a true builder with experience earned in the field. We shared a lived connection, and there was instant credibility.

Listening to Chris talk, I confirmed what I had long suspected, shared in blog posts, and even discussed the night before in my fireside chat with Alex: Snowflake has incredible product-market fit. When coupled with a generational technology wave (cloud computing) and a consumption-based pricing model that captures and monetizes the energy from this wave, it has become an unstoppable company. 

But beyond confirming this fact, what I loved learning most was the incredible execution — at every stage of the company’s journey — on the pillars that supported Snowflake’s incredible growth and Chris's role in building this generational company.

Chris and Snowflake got right the most import things that set apart exceptional companies.

1. Product-Market Fit: Nothing matters more in startups. A good seller can close deals on vaporware, but no Customer Success playbook can solve churn tied to a product that doesn't deliver value. Snowflake took the time to get this right early on. At one point, Chris commented that the founder had gone so far as to say to him, “For two years, you're not selling a thing. Like, I don't want you to sell anything. I just want you to get customer feedback.” While Chris’ original title was Director of Sales, if you listen closely, the reality of his first job was customer discovery. The goal was to learn everything about the customers' needs and to build an amazing product for those needs.

2. Product Feedback Loops: Chris talked about the memos he’d write and email to the founders, engineers, and the board, sharing the things he was learning about the customers – he and his team continue to do this to this day, even with Snowflake as a public company. He described the highest order of his role as being a feedback loop for the company; others described him as the shadow-CTO. As the most prominent customer-facing person, Chris owned this feedback loop, and it’s been a critical part of building an enduring organization.

3. Good Fit Customers: Throughout the episode, a major theme was selling to the Ideal Customer Profile (ICP). Chris talked about how early on Snowflake made a decision not to chase customers who were not already running on the public cloud. He credits his success to prospecting harder to find customers with the pain point he was able to solve, stating, “They've got to know they need it, and they've got to be in the market.”

4. No Overselling: Snowflake uses a consumption model, meaning revenue can fluctuate daily. Chris says, “I look at revenue on a daily basis. And if a customer goes up really fast or down really fast, it sets off alarm bells because I don't want them to overspend because all of a sudden, they'll be really mad at me.” More often than not, the root of a lot of customer frustration starts when customers are not getting value from what they are paying for, Chris watches this like a hawk.

5. Forecasting: Chris stresses that good forecasting, both renewals and new logos, is the result of truly knowing your customers and asking the hard questions. One of my favorite exchanges in the episode was in this section where Chris says, “Forecasting is about compelling events [...] The biggest hole that you can poke in a forecast is what is the compelling reason or compelling event that the customer is going to do something.” He stresses that people need to ask the hard questions, especially in this macro economy where a relationship alone isn’t enough; he’s so right!

6. Spend Time with Customers: Chris requires his team to spend a lot of time with customers. Beyond new logo calls, sellers have to do a minimum of 8 customer meetings per week. He highlights that this effort is led from the front, and from CEO Frank Slootman down, this is a core part of Snowflake's culture, not just for the customer-facing teams. He says part of his job is to, “put the product (team) in the room with the customer to give them direct feedback.” Product market fit never stops and everybody in the company needs to know who they are building for and serving.

Whether you’re a CEO, CCO, CRO, or an emerging Customer Success Manager, imagine what your organization would look like if you truly nailed these things? What would your sales team look like? What would Customer Success be like? How much more efficient would you be? How happy would your customers be?

Chris puts Customer Success on blast and says, “What does Customer Success do in most companies? They're basically either renewal people or they're guiding the customer around on how to use the product. But if you ask the tough questions of Customer Success the fail. Can they sell the product? No. Are they technical enough to be a sales engineer? No.” He goes on to say, “I’d rather take that money that you are spending on Customer Success and invest it in Professional Services that are more technical or hire more sales reps that can sell, this way you’re getting something for your money.”

It's a fair point, and in the context of everything that Snowflake gets right, it has merit.

Customer Success in its most general form, where a Customer Success Manager works with a select group of customers without direct ties to revenue or critical metrics, is quickly becoming an antiquated model. In a world flush with Venture Capital funding, it came to be the catch-all function to appease customers of bad products without product market fit, to hang onto customers who would never find value in a poorly sold deal, or as a crutch for ZIRP-era sales teams, fat with under-qualified reps who didn’t know the product and who lacked the skill to navigate a new logo, leaving them to leech their way to quota through existing customers. Money isn’t free anymore; if you’re in Customer Success, the value proposition has changed.

Truthfully, the very best CS teams and leaders I know are either highly technical or drive significant and very attributable revenue. The key to a good career in tech has always been to either be the person building the software or the person closest to the revenue the software generates. The best I know have never deviated from this.

In SaaS, most of our revenue comes from our existing customers through renewals and expansion, and there are as many gaps to solve and ways to ensure this revenue is secured as there are types of companies and go-to-market motions. Market segments, industries, product complexity, organizational strengths, and weaknesses — there’s an infinite number of variables that determine the best approach to serve and generate monetized value for your customers. Snowflake has certainly found an approach that works in the context of its business, strengths, and market forces, but to quote Chris in paraphrasing Snowflake CEO Frank Slootman, “There's no playbook. It's situational.”

Modern Customer Success is a dynamic function that looks different in many organizations. While titles can vary or may not even be, it's undeniable that an orchestrated process needs to exist to ensure everything happens so that customers remain customers and increase their spend with a company.

If I can add anything to the conversation:

1. Allocate your Customer Success resources wisely and think outside of the box. Professional services, automation, one-to-many, PLG and paid-Customer Success models are all things that should be explored. Margins matter; ask what the highest leverage use of your budget is to ensure that customers are wildly successful? Don’t be married to a title, be married to the business outcome your customers are able to get to.

2. Get close to revenue and/or get close to Product but don’t be in the middle. Customer Success leaders are the best equipped to own and drive value whichever direction you choose. Nobody should be spending more time with your customers than the CS team. Notably, Yamini Rangan, Hubspot's Chief Executive Officer, was HubSpot's first-ever Chief Customer Officer, Christina Kosmowski, CEO of LogicMonitor, who was previously Slack's CCO, and Miro’s CRO Sangeeta Chakraborty who led Customer Success at both Okta and Checkr previously are Customer Success leaders who intimately know both product and revenue and who are companding the most important roles in tech's most important companies. Take note and do the extra learning so that this is you.

3. Customers matter, in a world where the pace of innovation is accelerating at a clip never seen before (did you watch OpenAI’s DevDay last week!?). Knowing your customers matters more than ever. Technical moats are more quickly becoming disrupted, and in this new world, the power that comes from knowing your customers more deeply is at an all-time high.

Despite the absence of capital letters in 'Customer Success,' make no mistake about it; Chris Degnan deeply cares about customers' success. He even says he’d never work for a CEO who doesn’t prioritize the customer. This love for customers, combined with the knowledge to back it up, is what has made Chris’ career exceptional. I would go so far as to say that Chris embodies what many Chief Customer Officers aim to be and sets a new standard for greatness as a Chief Revenue Officer.

I would challenge every CS leader to give this podcast a listen and to ask yourself honestly if you, as the person in the company who should know customers the best, are doing the things Chris did to make Snowflake the company it is. His example is something that CEOs, sales leaders, and Customer Success professionals alike should look to.

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