Taking advantage of the great opportunity of the CX Summit 2017, I talked to Lincoln Murphy and brought you valuable content to you
Customer Success Consultant focused on Customer Success
Lincoln Murphy is considered a master at Customer Success. Directly helped over than 400 SaaS companies, from startups to big enterprises, which helps accelerate the growth by optimizing the consumer life cycle. Your job is focused on measures and studies to be applied in the whole journey of the public, targeting customer retention and the increase of revenue. As speaker, has already been present at events worldwide, such as SIIA On-Demand, HostingCon, Pulse, RD Summit and CASE.
Antônio Augusto (AA): We’re having a talk with Lincoln Murphy, a master of Customer Success in the world. Service Show’s audience will get a great waited gifted with your teaching. I would like to start here with a simple, but powerful question.
No one better than Lincoln Murphy to define: what is Customer Success…
Lincoln Murphy (LM): You know, Customer Success, my definition for it is when your customer achieve their desire outcome through the interactions with your company. There’s a lot going on in that simple definition, desired outcome is kind the main thing that needs to be further defined, but in that simply, your customer has a thing that they need to achieve and the way they need to achieve it; so desired outcome is the required outcome plus appropriate experience.
If we can give our customers that, through all their interactions with our company, then we’ll be successful, and that’s really the operating philosophy that we need to have and we need to figure out a way to operationalize that, and that’s where the Customer Success Manager comes in.
AA: A simple and strong definition. Many companies have a big problem, especially in Brazil: they have totally disconnected areas with the customer. How customer success can help (or solve) this?
LM: I think having the overall philosophy… can we go in back in the definition of the Customer Success, being that ours customers achieve their desired outcome through all the interactions with our company. Right there, that overall philosophy, means that every interaction we have with the customer across the entirely lifecycle means that we understand that’s either leading towards the success or keeping them for being successful, so we need to look at it that way.
The main thing is Customer Success really does require a cultural shift inside the company. Those disconnected areas of the company from the customer; areas where parts of the company that don’t play well with the others parts of the company, they’re silos and things like that, that are keeping communication from happening. All that happens because we don’t have this overall philosophy of moving our customer toward success.
So if we can have that as a, again from the top-down, from our executives down, let’s say this is the way we’re operating in a way that’s gonna make our customer successful, the negatives pushdowns and all the things that operationalized around that starts to take role.
AA: In an article, you say: “When the consumer becomes a customer in fact, the hard work begins”. Why this is so important in CS?
LM: Well, I don’t think it’s just important in Customer Success, I mean, this is the way we need to thinking about it. A lot of people celebrate the sale; we lockdown this customer and we good to go. And then we go try to get another customer. But the thing is we make this promises during the sale cycle; you told the customer these things would happened and you need to follow up on that, right?! And if we understand, it’s not just about giving the customer, it’s about giving the customer and then keeping them from longer, keeping them as long as we can, and then getting them to buy more while they are our customer, and then getting them to advocate for us, to go out and spread the good word.
If we understand that then we know that it’s not just about that initial sale. That initial sale it’s just the beginning of this long-term relationship. If we’re just in this for money grab, you know, to hit some short numbers that doesn’t have any impact on the long-term successful of our company, then whatever, you can go on just acquire customers and celebrate the win and move on. But if you’re in this to build a long-term business and a long-term relationship with your customers, and a profitable relationship with your customers, then you need to understand that the sale it’s just the beginning.
AA: Startups are already born with the “blood” of customer success. They are very sensitive in monitoring their customers. On the other hand, traditional companies have many difficulties in incorporate the strong concepts of CS. My question is: How could traditional businesses reduce barriers to achieve the customer success?
LM: It’s interesting, startups used to tell me and say things like: “Why do I need to act in my customer best interest when companies like Oracle or Microsoft… whatever the example of the company is, they don’t do that?” and well… you’re not them. As a Startup, you don’t have their legacy; you don’t have their brand; even have their momentum. So you have to do something different.
Like you said, now we have a lot of Startups and most of the Startups they fully are coming up with basically Customer Success as their operating philosophy. That started at the market share from those big companies. And so, those big companies there were just getting by on the momentum started to see their momentum slowing down because the friction of their customer negative behavior. These Startups with Customer Success as their backbone started to eaten the market share and that scared those big companies.
I have personally worked with Microsoft, HB Enterprise and Cisco, and all these big companies that you would say, those from the guys that didn’t care about that stuff not that long ago, they saw that they couldn’t keep doing that if they wanted to keep going. So, big companies are starting to see this and are making their changes.
Now, answering the big question: “What has to happen?” It’s a big deal because it really does require that culture shift, but you know, when the CEO says: “If we want to maintain profitable, if we want to continue to grow, we have to do this”, that has a pretty strong impact in the overall culture of acceptance of Customer Success. And think bottom line is don’t ever mistake Customer Success for anything other than commercial endeavor. Yes, we’re doing what is right for the customer, but we’re doing it because it’s gonna making us a more successful company.
AA: Could you tell us a little bit about the relation between Consumer Life Cycle and the customer retention and the increase of sales?
LM: I look at the lifecycle and some people push back and then they say: “Lifecycle means that there’s an end in life”. And you know what? Yeah, there is and we have to accept that. Now, I want to push that as far as possible; I want to make sure that our customer stay with us as long as it make sense, and if normally they would stay a year I can figure out how to keep them for 02 years. That’s amazing, right?! So we need to think in the lifecycle as that, as this whole big thing that happens with our customer and we need to make sure that we were there the entirely time.
A lot of companies do as they say: “We get the customer, maybe we’ll spend some time on board with them, we’ll comeback in renewal time”, and everything in between is just sort of left to chance. If you really think about that, that’s a horrible way to run a business. We need to make sure that in the year between the time that they become a customer and when they contract is up that they’re actually getting value, that they’re actually getting something from us, so that renew would happen.
But I think that sometimes people mistake contract for success. Contract says: “You’re gonna be with us for a year, you’re gonna pay us this much”. Has no bearing on success. We need to look at the lifecycle for what it really is and that is our customer initially trusting us to get what they need, and then hopefully, us actually delivering on that, and delivering on that as they needs evolves, as their desire outcomes evolves.
Understand in that, this is something that I realized probably in the last year, at least starting to see it at the right way, which is renew and then expansion; expansion being upsell cross that kind of thing. Those actually are part of the customer journey towards success. They’re not just things that just come from successful customers, but it means if we take away this arbitrary time box, our contract, and say: “How lightly is that our customers gonna get value from us, you know, achieve their desire outcome in that one year time frame”. It may not happen, and if it’s gonna take 13 months or 18 months, then that renew is just part of the journey along towards the success. So, again, look at the lifecycle as this active real thing with the customer, that’s all about moving them towards that evolving desire outcome.
AA: In your opinion, what is the best approach to approve a CS project for the board?
LM: This difficult. Getting the board to approve a Customer Success initiative is not hard when you put it into commercial terms, when you put it into the terms that the board understands. That’s the thing! I would like to remind you that Customer Success is not about making customers happy, it’s about making them successful. If you want to be taking serious by the board don’t talk about happiness or delight, talk about the things that has direct impact on.
Customer Success directly impacts the Lifetime Value (LTV) of the customer, by if we get them to stay longer and buy more. The lifetime value goes up and directly affects the customer acquisition cost and the efficiency of payback of the customer acquisition cost. If we turn it in customers, it’s gonna be a harder force to bringing new customer because of all the negative marketing syndrome. So, we have to make sure that our customer are successful so they advocate for us, actually reduces the cost to acquire those costumers. And honestly, it’s not about “can we spin the last two required costumers?” I actually want to spin more, I want to be able to out spin of my competitor. If I have customers that are staying longer and growing, then I can actually spin more money to require costumer and payback faster. So my customer acquisition cost efficiency.
Net revenue intention is another metric that the board will care about is to say: “We started the month with $1000,00 in revenue, we end the month with $15000,00 in revenue, that was 150% net revenue retention for that same customer base”. Net of any customer the turn and take that revenue with them or stay but pay us less, and net of any expansion. If you start talking in terms that your board understands, giving approval for this is a nonevent. It just happen. If you go in and say: “We need to make our customers happy”, no one is gonna listen to you.
AA: In your book “Customer Success”, you refer to CSM – Customer Success Manager. How to be a successful CSM?
LM: It’s interesting… the book was finished in late 2015. It was probably published 2016. And so we were at least 2 years remove from when the book was published and things were evolved. I refer to Customer Success Practitioners, and to mean all of the different types of people that can be involved in the Customer Success Management organization. So we have Customer Success Managers but you also have to understand that there are Customer Success operations people, there are Customer Success analysts, you know, sort of other support staffs within the Customer Success organization, people running the infrastructure. Copywriters, Customer Marketing … all this different players.
And so, you know, we used to say, even just a couple years ago, there was one type of person that was in the Customer Success organization, and they were Customer Success Managers. But we realize that that’s not how it works. Now it’s carried over really for the Call Management; you just have this Call Manager and we give them a book of business, and the reality is that doesn’t work in real Customer Success.
In scalable, really scaling your operations, you need to look the right kind of people, so you need to say: “Here are our different customer segments, based on properly experiences. What kind of people do I need to put in place to give them that properly experience?”
So you may be working with a particular vertical, let’s say healthcare; you may need to hire someone with 5 or 10 years of healthcare experience and teach them Customer Success Management skills. Things have evolved a little bit from there. I would just say this: If you’re gonna get into the Customer Success and if you’re gonna be a Customer Success Manager, the one thing that I would to say is a thinking role. You can’t come in and just expects to check some boxes in your to do list. You really need to think. And I think that no matter what the customer success partition is, no matter what they do, this is really a critical piece of the business and you need to be able to thinking and be creative.
AA: Are you developing any specific program: courses, workshops, for example, for Brazil? Have any idea?
LM: I don’t know… this is my fifth or sixth trip this year so I came here a lot. And I discovered somethings… I learned somethings. I think I expected and I think other peoples expected me to bring sort of the best practices from the world here. But I actually learned a lot from Brazil that I’ve taking back to the US and taking to other parts of the world. One of the greatest things about Brazil that I absolute love is this kind of heavy reliance on relationships. It’s awesome! I love that… it’s part of the culture. The problem is that connection hurt your scalability, because your customer really want to have this heavy relationship with you and you may not be able to spend as much time with them as you would like… as they would like. Maybe you even wouldn’t like that.
So I come in working with companies and they’re spending hours with the customer who are paying very much and it’s all because that’s just sort of the culture. We need to figure out ways to work around that, without insulting; otherwise undermining what is a cultural norm. And that’s challenging, but you can do it. You just have to managing the expectations and orchestration and all that stuff.
That’s one thing. The other thing that I’ve learned was the “boletos”… it’s a very unique payment system here in Brazil that’s requires your customer to basically make a buying decision every month when they go to the process of actually complete the transaction using the “boleto”. Some companies have 67% of their customers using this way of paying. The idea of a credit card that just auto renews it’s not necessarily the norm here. My joke is always: “How many US based companies, subscription companies, will go out of business if they didn’t have that auto renewing credit card”. So, what that means is that we have this unique financial instrument, and we have some level of financial insecurity, which means every month your customer have to make a buying decision, and there are some months where they have to decide what vender they’re gonna pay. If you’re not delivering value, you may not be at the top of that stack, you wanna be on the top of that stack of boletos to pay this month; and the only way you do that it’s to make sure you’re delivering value. So, there’s a lot of little unique things about Brazil that I’ve just picked up and tried to incorporate into those sort of global best practices. But that’s the thing, you have to take everything you hear and learn from the US, from Europe and all the places where Customer Success is happening and think about it and say: “Okay, how that’s actually play out here in Brazil?”. You just simply copy and paste? It may not work… it probably won’t work!
AA: Many people would like to learn with you in Brazil, I will hope for this program. Let’s go to the last question. We would like to know a little about Lincoln Murphy. What do you do when you’re not working with CS?
LM: Interesting… this is what I do so much. But my only interest outside of this is wrestling. I watch wrestling and I was a wrestler for a while. So that’s like the only thing that I do outside of this. Luckily, I love what I do, so, I mean, I do this every waking moment…
AA: Is it dangerous?
LM: I got out of it probably 10 years ago, but I got hurt a lot… I broke my collarbone. It’s very dangerous… it’s very physical. So that’s my only real interesting outside of CS.
AA: Are you learning Portuguese?
LM: Yes. Slowly but truly… I’ve been taking lessons now for about 03 or 04 months. Of course, once I get here I forget everything, so…
AA: Lincoln, thank you for your time. We had an excellent experience here. Thank you so much!