Management debt: it's a prevalent, but entirely avoidable, blight that affects every department in business. And we're afraid to say, this can hit customer success too.
The solution? Look no further. Rav Dhaliwal an Investment & Venture Partner at Crane Venture Partners is here to share some actionable advice.
One of the best ways to improve the performance of any business is to improve the quality of talent in its workforce*, yet hiring is the one area of business that continually resists being systematized.
A lack of a systemic approach to hiring often results in managers relying on their favorite (usually) self-taught interviewing techniques or on an unhealthy dose of “gut instinct” when trying to discern if a candidate will be successful in the role.
Such “voodoo hiring” techniques** greatly reduce a company’s ability to hire top talent, with research showing that most companies hire top performers only 25% of the time.***
Beyond the monetary costs of recruitment, the “management debt” incurred from mis-hiring manifests itself in much more impactful ways, with increases in workload, missed opportunities, elevated stress levels, and drops in team productivity and morale all being tell-tale symptoms.
Whilst management debt is a common phenomenon across many different parts of a business it is particularly prevalent in customer success, especially in the function’s formative stages where it is not uncommon for start-up founders to go through three or four iterations of hiring before landing on the right candidate profile.
The missing context
The challenge for founders when it comes to hiring for customer success stems from the fact that customer success is highly contextual — what it takes to make a customer successful in one company is often completely different from another.
Not understanding or considering the contextual skills and experience needed to make their own customers successful is one of the biggest hurdles founders and customer success leaders need to overcome in order to minimize the management debt caused from mis-hiring.
Founders and CS leaders looking to establish a customer success function (or reorient an existing one after some mis-hiring), should consider the following variables to help better identify the contextual skills and experience a candidate would need to make their customers successful.
How do we sell?
Despite it usually being considered a “post sales” function, customer success – if done correctly – forms the backbone of a continuous selling motion, with the ultimate long-term success and revenue growth from existing customers being heavily correlated to the company’s initial sales motion.
For example, in a freemium self-service sales motion where customers have largely been left to their own devices, there is a high likelihood of little or no executive sponsorship and lower usage proficiency than in say a free trial or pilot led sales motion.
Both represent a risk to retaining and growing revenue, so a successful customer success hire would need a track record of successfully navigating a customer’s organization to secure executive relationships as well as strong product education skills to ensure the solution is being used in the most sophisticated way possible.
How do we deploy?
One of the core goals of any customer success function is driving fast time to value. In some cases, a company’s software does not require any deployment effort — it is simply a service that is provisioned and made available.
In others, the deployment may be relatively straightforward but driving fast time to value relies on being able to help customers efficiently configure the software for their specific business workflows. In other instances, the speed at which a customer sees value from the software is heavily dependent on the timely completion of a complex technical deployment project.
Depending on the type of deployment, a successful customer success hire might need specific technical and project management expertise, or strong consultative and business discovery skills. In the case of a no-deployment provisioned service, they may even need to have had first-hand experience of doing the same role as the end users.
How much domain or industry experience is needed?
Often overlooked by founders and customer success leaders is whether having specific domain or industry experience is a factor in driving fast time to value.
In some instances, a successful customer success hire may need very specific domain, industry or regulatory knowledge in order accelerate value for customers (for example DevOps skills or experience with financial regulations).
In other instances, such requirements may be learned relatively quickly on the job and are therefore less of a consideration in the candidate profile.
What is the size and scope of the change impact of our software?
Introducing any software into a business represents a change in how some or all of its employees will work. The depth, complexity, and scope of the change the software represents needs to be taken into consideration when hiring for customer success.
For example, the goal of enterprise messaging software may be to transform how thousands of employees communicate, requiring a successful customer success hire to have extensive digital change management experience, whereas a complex piece of middleware may only impact a handful of a customer’s IT employees.
How do we expand revenue?
Similar to considering the initial sales motion, a company’s expansion motion is also an important variable to consider when hiring for customer success. In some instances, new revenue comes from driving additional consumption of the same product (e.g. more users, more data throughput etc.) whereas in others it comes from identifying additional features, or complimentary products that could add additional business value.
Taking the expansion motion into consideration helps identify whether a successful candidate will require experience in identifying opportunities and whether they need to have the commercial acumen to work effectively with their Sales or Account Management counterparts to turn those opportunities in to new revenue.
Operationalizing the variables
Once these variables have helped to identify the contextual skills and experience a successful candidate would need, founders and customer success leaders can begin making the candidate sourcing process simpler and more efficient by mapping them to one of the following customer success organization types:
The 'deep tech' CS org
The 'deep tech' CS org is categorized as one where driving customer value quickly correlates heavily with a Customer Success Manager having either specific technical skills and experience that closely align with the end user’s (e.g. DevOps skills) or they have the deep technical and project management skills needed to successfully deploy and configure a complex solution.
The 'consulting' CS org
The 'consulting' CS org is categorized as one where there is no significant deployment (or deployment is handled by another group like professional services or partners) but driving fast customer value correlates with either the ability to conduct effective consultative discovery to map the customer’s business problems and workflows to the right product configurations, or to successfully driving team or organization wide digital change management (or some combination of both).
The 'service' CS org
The 'service' CS org is categorized as one where there is no (or very minimal deployment) but driving fast time to value for customers requires a thorough understanding of the customer’s role, team, and function. This can often mean that a successful candidate will have come from doing the role of the end user (e.g. for a recruitment software company the ideal candidate profile may be or have been a recruiter themselves).
This list of CS organization types is by no means exhaustive, and many customer success organizations will likely be a combination of elements from one or more of them, however at this stage of the hiring process, these broad “buckets” combined with the variables should be enough for founders and customer success leaders to put together a “hiring scorecard” that lists the foundational and contextual skills of a successful candidate together with a list of relevant companies to source them from.
This hiring scorecard can then be used to underpin every stage of the hiring process, from sourcing, screening, interviewing and (hopefully) offering, to more efficiently and consistently maximize the chances of hiring those often-elusive top performers.
Like this article? Check out Rav's presentation 'Avoiding management debt', from The Customer Success Festival Vol. 3. 🔮
*John Zillmer, Chairman, President and Chief Executive Officer of Aramark Corporation
**“Who: The A Method for Hiring” by Geoff Smart & Randy Street
*** Topgrading: How Leading Companies Win by Hiring, Coaching, and Keeping the Best People by Bradford D. Smart, PhD (April 7, 2005)
Originally published on September 3rd, 2021 via https://www.farviewequity.com/2021/09/avoiding-management-debt/