In this episode Jacky and Daniel meet with Joran Hofman, CEO of Reditus, exploring the topic of:
- What is the difference between customer success, sales, customer support and community manager
- How to understand that your company needs a customer success team
- How to motivate your customers to keep in touch with your company and develop mutually fruitful relationships
- How to find a great customer success person
Date: Fri, Oct 14, 2022 7:30PM • 34:18
clients, customer success, CS, product, company, sales, customer success manager, B2B, people, churn, CS, customer support, question, guess, founders, CSM, monthly recurring revenue, customers, hire, salesperson
SPEAKERS: Daniel, Joran Hofman, Jacky
So today, we've got Joran Hoffman on the show, founder of Reditus. Maybe you can tell us a bit about yourself.
Joran Hofman 00:15
Yeah, sure. Thank you, first of all, for having me on the show. So, I'm Joran, based in the Netherlands, in Utrecht. I've been in the SaaS world, I think now, for around eight years, something like that. I started at a really small startup in Amsterdam. Really Bootstrapped. So, at one point, there wasn't any funding; there was basically no money in the company anymore. After that, I went to a bit of a bigger startup; people might have heard of that; Leadfeeder. I joined them as a salesperson, which is my background. And then, basically, when we sold a lot, I went into CS. So, I joined when there were 18 people. And I left last February when they were around 130. So, I had a good amount of growth there. And as mentioned, like started in sales, went to CS, and left the company last February as head of CS, where I led a team of 25 people, which included support, customer engagement, and customer service managers.
Oh, could you do you mind just clarifying for our listeners what CS stands for?
What does Customer Success Stand for?
Joran Hofman 01:22
CS is customer success. And it's all in the name, right? Making sure that your customers achieve success. So, when you look at SaaS, we sell a product or service where people log into a web app and want to get something out of it. So, for example, with Leadfeeder, it was they or we turn anonymous website visitors into leads; they don't want leads; they want sales. So, for us, it was really important to make sure they actually acted on those leads to make sure they converted into the value they were looking for and that there was more revenue.
So, customer success is ensuring that your client will be successful with the goal they have in mind to achieve. So, your tool is, in that case, just, I guess, like a product they use to make sure that they get the value that they're looking for in the first place.
Cool. So I have a practical question about being consistent with customer success. Like we don't have a customer success team at Bird, I guess the responsibilities are a bit spread around everyone. But when you talked about looking into the data, and you gave the example of Riverside, what level of fidelity do you actually look into as a customer success person, and what I mean by this is, I'm thinking of our analytics, and we look at the data overarching, like how many bug reports are being uploaded in total?
And then we can kind of break it down to how many of these product managers, but then very rarely do we start looking at a specific account unless we're going to have a conversation with them, or they've reached out to support and we need to dig in and understand. Whereas from what you describe, it sounds like that is the customer success responsibility.
So then, how do you do this practically? Do you have an X number of accounts you're in charge of analyzing all the time and keeping track of? Or are you also looking at it from quite a macro level but just drilling deeper? Because I'm also thinking of this. A big company, you're going to have hundreds of 1000s, if not millions of users. So, how do you actually apply this deep customer success to such a huge user base? And how do you do this targeting?
Proactive Customer Outreach
Joran Hofman 03:50
To come back to the first point, what you guys are doing now is really reactive, right? So the client has to take some kind of action actually to come in contact with you guys. And I guess the question is, do you want to switch it around? And I would look at the revenue declines are paying, so when you go to that model, your second example, when they have millions of users, you will probably have low-tier users, meaning that they wouldn't pay you that much.
They might pay you between zero and $20 per month; you would have 2200. And on the plus or, I don't know, the tiers, but I guess it would start with if you want to make sure that your bigger clients stay with you, you start using those as an experiment. So maybe just have one guy proactively reach out to them, figure out their goals when they began to use your tool, and determine if they are achieving those goals and what you can do to help them achieve them.
And CS is pretty new. I mean, it's not that new anymore, but it's still a lot of experimenting. In sales. It's easy, right? You're hiring a salesperson; he makes X number of calls, and you can quickly see how many demos he books and how much is converted into sales. Within CS, it will take a bit longer.
So, you kind of have to have a group. And you could, if you want to get started, you can even say, okay, from the biggest clients, we're going to take 50% of our bucket. And we're going to have somebody proactively reach out to 50% of them, the other 50%; we're going to do exactly as we did right now. And what is going to be the difference in, for example, churn? What is going to be the difference in, for example, upselling? What is going to be the difference in the clients actually getting value out of the product or using different features? So that could be a way. We discussed that a lot of times within my previous company, but they were too big.
So we basically would have said, we're going to drop some customers to get attention and not give them attention anymore. But if you're trying out CS, that could be a great way to start. Segmentation can be based on anything, right? Super simple, it can be first on revenue, and at one point, we went a step further; we did it on the country level. So someone who speaks the customers' language because they already had sales in the native language?
So we needed to make sure that the customer success was also in the native language. And then, we looked at the monthly recurring revenue. And it doesn't mean all clients must have a customer success manager. But that's something you need to figure out within your company. Does it actually make sense for a human to reach out to certain buckets of clients?
Okay, that's a really interesting way of going about it. So, you've kind of got the essentially structurally speaking, you would have sales, which are bringing in completely fresh new people. And then you've got customer support, which is the reactive component of the company, and then now you have customer success, which is kind of in between, it's the active component, which is reaching out to existing big company customers, and you're measuring in terms of churn upselling, client adoption, everything. Okay. So that all makes sense. So where, where the question comes to mind now is, again, another practical one for me is, you look at, for example, where we're at a scale where we know, we've had, we don't even have a customer support team, that's basically still the founders, like taking care of a lot of this stuff. We do have a sales team now. So, we've created a sales team. So, chicken and egg question. What comes first, like, when do you actually bring in the customer success team? So, what are the triggers or the signals which kind of make you go, okay, I might need to start considering having a customer success person or a team?
When to start a Customer Success Team?
Joran Hofman 07:56
I would look at it from the perspective; you mentioned it's now the founders, right? And probably you're involved in the sales process. So, why do your prospects get attention from the founders, and your clients don't actually get attention? But when I look at my own startup, I'm using five drivers in my CRM system. I have sales follow-ups, always, of course, available or always present for every deal I'm working on.
But I also have a pipeline, which is premium clients. And I always have an activity for those as well. So even though I'm still the founder, as well, and doing everything myself, I will have activities for my premier clients as well, just to make sure that I check in on a regular basis, like how are you doing?
I actually noticed that you hadn't done X in the last month. Do you need any help? Or did you notice this guide we just published where it's easier for you to provide a free date or something like that? So, give them value along the way when they purchase your product. That could already be a great start. And I guess I would probably look at your churn, like how high is your churn? And would it make sense to try to lower it?
Or are there any upgrading examples you can do? So, do you have now, for example, clients in a lower tier where you can, if you give them attention, they might get more value out of your product and upgrade them? So, look at the metrics and define the goal versus customer aspiration; it could be a hybrid role initially. If a salesperson is really good at talking to clients, he understands the product well and the end goal. You could also start like that. That's how I rolled into CS, where I had a hybrid role because I was the only one speaking Dutch for my previous company. So, I made the sales, and they also came to me as a customer success manager, which they liked because they had one person to deal with. And I wasn't selling them anything I couldn't achieve because I was going to be responsible for their churn as well. So that could be a good beginning.
Yeah, that's nice. So actually, what you're saying, if I understand correctly, it's more like, similar to why the founders take care of customer support is because while we don't really have enough volume of customer support requests to justify hiring someone to take care of it, and actually, we can look at customer support, customer success, and sales, all of these, in the same way, essentially creating these automated pipelines to handle that initially, until we feel like this is too much for one person to do, we need a dedicated person and then bring in that person to take care of it. Is it quite common for the first customer success person to essentially be a customer support person as well, like, in that hybrid role?
Joran Hofman 11:00
Good question. I think that when a company gets bigger, there are two different roles. A lot of people who worked in customer support in my previous role wouldn't be that comfortable jumping on a lot of calls. So they were more comfortable typing; they were really dedicated to being online during the timeframes of support to make sure that they can help the clients as well as possible. But they weren't always the best people to actually talk to a human being face to face or virtual via meetings. When we look at the hires we did, they often came from at least a customer-facing role in types of, for example, sales, where they already knew exactly how to sell, or they already know how to have conversations with the client. Because when you have your first CSM, it doesn't mean everybody wants to talk to them.
So, in the end, you still need to sell the CSM to your clients. Because if they haven't had that touch with you yet, you might have to convince them that they need to talk to your CSM to get value out of the tool because they didn't need one before. Why would they need one? Now,
You raise a really good point; clients might not be used to or familiar with a CSM manager. Sorry, a customer success manager. So what tips or practical suggestions do you have for creating that relationship? Because, you know, we're just reaching out of the blue? What do you do to sort of set up that process?
How to start a relationship with your clients?
Joran Hofman 12:41
I would definitely start from the beginning. So how we set up CS in my previous company is that everything before the actual purchase was sales; after that, everything else was CS. So, what we did at one point, of course, was that sales already introduced CS. So basically, it was okay if you're going to go premium, you're going to get your dedicated customer success manager. When you purchase, let's set up a call with them right away.
So, we already sold customer success at the beginning, just to ensure that they would schedule that call, and it wasn't a combined target. But in the end, we had people working really well together. So, when you have native people working together, they can introduce your colleague along the route. And, like, if you're going to have salespeople working on a commission base, you could also figure out that they're going to get more commission if clients stay for a year or if they stay for even longer than a year.
So, if they see the value of CS, they will introduce the CSM person. And like in-app, when they purchase, you could schedule a call with your customer success manager; small things, right? To make sure that they book a call right away. Because after they have already used the product, they might not always want to have a call. So get that relationship as quickly as possible and then start expanding on it.
Yeah, just going back to what Jackie said, that customer support is the first step toward customer success. I have the impression that customer support is, like I think you mentioned is, more like a passive role and reactive. I wouldn't say I don't know how to identify, but basically, you are receiving the request from the client when actually, in customer success and sales, you actually reach out to the client, so it's a little bit more active behavior.
But also, this reaching out to the client, the way that you're describing, feels like a very labor-intensive and manual process, Where you actively go and call and schedule appointments, etc. But at some point, I think that you could always keep some part of its manual and kind of human-based, but at some point, you also have to automate a lot of stuff to make it happen. Right? So, how do we go about creating this fine balance between the manual versus the automation? And how much automation? When does that come in? According to the size of companies, etc. So more about that?
When and what to automate in Customer Success?
Joran Hofman 15:23
Yeah. I mean, automation is important, right? Famous sales, like you, will run some sequences to get a meeting; you can do the same within customer success. For example, if you have really low-tier clients, so low, they're just looking at monthly recurring revenue, it would probably wouldn't make sense to have a customer success manager on it because they would need, I don't know, 200 accounts where they need to guide them to get value.
So, from there, you could already think about automation. So instead of doing a 30-minute demo one-on-one, why not do a webinar where you can actually guide them towards the same value, but then in a more scalable approach? So, you could think about pre-recording the webinar or doing a live one every week.
And, I guess I would definitely look at the client base and what would make sense to start working with clients. And I would always start with the bigger ones, of course, to figure out does it actually make sense to guide them through it and then see what the need is going to be. Because within customer success, a really big term is QBRs, quarterly business reviews, do people actually want them.
It's an ugly word; if you put that in somebody's calendar, he will probably decline it most of the time. So, think about what the client actually wants. So make sure you help them to achieve their goal, help them to achieve their value. So, he doesn't want to talk to you on a quarterly basis if he doesn't know he's getting good value out of it. So again, why did they start using your tool in the first place? And how are you actually helping them to achieve that goal? It is not your meeting; it should be their meeting where you're going to help them to achieve value.
Got it? It sounds almost like something you could actually sell as an extra for service employees. It feels that the bigger clients and more important clients are the ones who actually get you customer success, someone that is dealing with them all the time. And that, is it something that could be understood as okay, this plan, you also get a CS representative just for you? Do we also do that in that direction?
Customer Success as a Service
Joran Hofman 17:46
Yeah, yeah, we've done that before. We even offered customer success as a service. If they, for example, weren't in the tier, they were able to get a customer success manager; they could upgrade their plan and actually get a dedicated customer success manager. So, you can either use it as an upgrade. I mean, it's not a software upgrade, but it is a manual upgrade where you can get more monthly recurring revenue from them if you actually help them to get to their goals. So, many SaaS companies would indeed have a dedicated customer success manager if you only purchase a certain plan.
To come back to your original point, as you mentioned, you guys are doing a lot of support now. I, for example, support myself as well. I'm hoping now nobody's opening up the support yet. But what I do is I try to turn it into a quick call; for example, sometimes where, if they can't figure something out, let's just jump on a call because I do get a lot more value and a lot more feedback from actually jumping on a call. They see my face, know who I am, and open up more to let me know how Reditus works for them. So, I guess, what I'm trying to say to you guys, as you mentioned, is you're doing just support, and it's really reactive, right? Like try to actually, when you start engaging with your paid clients, you will get so much more feedback.
So, in the beginning, as a founder doing calls with your premium clients, it will give you so much feedback. To give one example, I received a mock-up from a client of ours, a baseline of ours, where he basically did a mock-up of a page of our landing page, which we created for him. And he wanted to jump on a call, but because I had already built that relationship, he helped me build the product. So, we jumped on another call. He showed me what he actually wanted to achieve. And now, two and a half weeks later, it's implemented for all our clients. So, this is what a relationship with clients can do when you really talk to them and listen.
So, I would say we're definitely not as active as you describe it, having someone reach out to all the premium clients directly and trying to build that relationship. We have that on the sales side, but certainly not on an ongoing basis. Having that conversation with you has definitely triggered that thought in my mind of, like, Oh, damn, like, we haven't been doing this. But the other things that we do have, and I guess this is a bit more when you start out, and you're resource-strapped, so you try and find the solutions, which get you 80% of the way.
So, we set up a community, a slack community; for example, some other startups have discord. And we get some of the interactions that you describe as well, where we've got some users who are clearly power users really engage, and we also send mock-ups and things like that. So that gave me a bit of a question on my side, actually, because the community stuff is, again, one of those things where you create it, but you need to nurture it, you need to encourage interaction and feed into it, and you need to make it feel like a space.
Otherwise, it quickly becomes, you know, you see the kind of like hay bales rolling along; it feels a bit dead. But we also have the challenge of who exactly is responsible for the community. And then someone, I remember, brought up that we need to hire a community manager, and they would take care of all of the social media and all that stuff.
But yeah, I'm just curious whether customer success overlaps into these spaces as well because, so far, you've described it very much as focusing on the premium accounts. But then you also have all these lower-tier accounts, which I'm assuming still accounts for something in the business, right? Because you want to make these people happy because they also help you spread the word about the business. So, does Customer Success get involved in that? If not, who do you think is responsible for the lower-tier side of things?
Joran Hofman 22:10
In my opinion, customer success is responsible for all paid clients. So basically, for the monthly recurring revenue, and then the churn related to that. So yes, they would be engaged in the community. I guess, like communities, it is always tricky; it could be a nice way, I guess, to start for a customer success person to come on board. But for him or her as well, it's going to be a side job, or they need to be responsible for the entire paid client bucket, I guess.
But indeed, you need somebody who's going to take things forward because, for example, virtually, in ten slack groups, I wouldn't engage that much caution in all of them. And I think I'm not the only one; maybe ten is a bit too much. But I would say maybe three to five is the average. So, there again, it's really reactive. You guys probably respond to people's questions and things like that. But are you also, for example, taking the other way around, as we have been thinking of doing XYZ? What do you guys think? And then, would you actually jump on a call with them to hear their opinion?
Or just do you want to see that one phrase or sentence in Slack? So again, you get a lot more information by talking to a human, besides just chatting, like you can see now, right? I will probably give you one sentence if you ask me something about CS on chat. And now, I'm giving you one hour of content, which is going to help you to think about CS in a different way. So, I guess to come back to the point; I would definitely put something; I wouldn't hire a community manager; I would then hire somebody who's going to be responsible for the paid clients. So definitely put it in CS, and then the community definitely can be part of it because they have to talk to the power users.
And then the power user can be low tier or high tier; I guess that doesn't matter. But at least hearing what they're looking for
You mentioned. But many of these clients reach out to you, or there's a problem. And it's just easier to get them into the call, so you can have a conversation and build that relationship. I understand the benefit of this. We do a lot of user interviews, for example. And nothing beats having face-to-face time every time you talk to a user, right? And having a bit of humor in the conversation is so different from just that kind of chat where you have no idea what the other person looks like.
My question, though, on this front is that it's generally, especially with business clients, quite hard to get time from them on a call. And one of the things that came to my mind is they're probably thinking; I'm paying, we're paying for these products, we're enjoying it, we've had a couple of calls.
In your experience, how interested or how engaged are customers to want to continue having these calls and conversations? Because everyone's always really busy and always has a lot of calls, especially with remote working, we've got even more calls. How open are they? And how much do they like it, versus it being more beneficial to you as a customer success person and the company versus the users themselves?
How to get clients on a call?
Joran Hofman 25:49
Yeah. I mean, it's up to you, right? Like, how are you going to approach those calls? Is it just you asking a couple of questions? How are you doing? How do you like the product? Or are you going to provide them with value? We looked into your account, and we actually said, the XYZ, we should recommend doing this, or again, we saw this client doing this; I would definitely recommend looking into that.
Or, I mean, if you provide value during those calls, they are more likely to attend the next one as well. If you're trying to help them, they might even ask for a new call again next month. So it's really how you approach them. Because in the end, if you again help them to achieve their goal, the churn would go down, and you probably get more feedback to ensure your product improves.
And then, in the end, you're going to turn them into G2 or trust-rated reviews. And then it's going to help the entire company. So don't do calls for the sake of calls; make sure you actually provide value during them. So see what they have been doing. It's the same as a sales call; you need to prep them and figure out where they are right now. And how they can go to the next step.
Also, I think it makes it easier because you're probably not trying to sell them stuff. But basically, you're trying to help them more. So, I think it's a better call than a sales call; let's say it's an easier one to have.
Joran Hofman 27:15
If you find someone who genuinely wants to help them, you have a good customer success manager. So yes, you need to have some mindset where they are not afraid to talk to clients, but they need to just really want to help people. And then you can see the numbers in usage, churn, the amount of feedback, etc.
What is the difference between CS for a B2B, mostly the things we've been talking about, and CS in B2C companies?
The difference in CS for B2B & B2C companies
Joran Hofman 27:47
I haven't been working in B2C SaaS myself, but I guess like when you look at B2B, in general, the ticket prices are a bit higher, right? So, what we see is maybe $10 to $50 for SaaS starting at 40, 50, and then can go up to 1000 plus. So, I guess the amount of labor you can do for the client also increases. So, with B2C, you probably need a lot more automation.
People probably don't even want to talk to a human being, versus B2B, where the product prices are higher, and you probably want to talk to them to ensure they don't churn. So, I think those will be the biggest differences. But we, within B2B, can learn a lot from B2C because when you open up any app, for example, HelloFresh, if you want to cancel or something is wrong with the product, and you put it in the app, they always try to save you or give you a small discount to make you happy right away, things like that.
So those kinds of things happen in B2B as well, right? Where you can either cancel your product, you hit that red button, and it canceled automatically, or they tried to save you again as in while you're actually trying to cancel your product, you have five options, and those options will revert into a solution again, really trying to save you.
So, the short answer, B2C is going to be more automated because the volume is going to be higher, ticket prices are going to be lower, and B2B is going to be more manual when the price is going to be higher because, in the end, you don't want to lose a $1,000 client without ever having talked to him in the last six months. For me, that's no option.
Has a customer success role always been around, or has it become more prevalent in recent years, maybe because B2B SaaS has been booming too? Because I, in my personal experience, it seems I hear so much more about customer success roles nowadays, compared to, you know, five, six years ago.
Popularity Customer Success
Joran Hofman 30:04
Yeah, it's definitely more popular. But I also guess because of the potential extra revenue or the potential extra growth CS can bring. If you decrease your churn by 1%, it will have a huge impact on your company's growth. So, if you can even get a negative churn, now you can increase your company's growth exponentially. So, I think it's just because people actually noticed that when you talk to your clients, and you figure out what they really want and make sure that they stay, you're not filling up a leaky bucket, as you say. So, if you can keep the bucket solid at the bottom, then you can just fill it up with new clients. And that is the biggest value, of course, CS can bring where you keep your current client; you're not losing them, you just have to add on top of that, and then your growth will be much faster.
Okay, then. So, then the million-dollar question, since a CS who can retain 1% could be a huge amount. How do you find a great customer success person? Like what? Because, you know, we have talked about customer success so far. And it's different from customer support and different from sales. But then, when they talk about onboarding, it also has some relevance to the product.
I haven't touched on that question yet. But, like, how it overlaps with product management. But back to this, what skills do you look for when interviewing potential customer success hires? What are the hallmarks of a good one? You already mentioned people who genuinely want to help, but how do you look for these traits in an interview?
How to find Customer Success people?
Joran Hofman 31:51
I guess, how I rolled into CS or Twitter back in the day, I think what made me a good CS person is that I actually used their tool before I started working there. So, I knew exactly the ins and outs, I knew exactly the challenges somebody would have with using the product, and then I moved to sell the product. And then, I could also quickly move to CS because I knew exactly what the clients were trying to achieve.
So, to answer the question, what does somebody need? They need to understand the value of the product brand; they need to understand, of course, what the product actually does, and how they need to use it to make sure that they get value out of that. And then they don't have to be afraid to talk to clients.
Because again, CSMs, if you're going to implement them when you haven't had them before, it doesn't mean everybody wants to talk to them. So, they need to ensure that they're comfortable with following up with clients, providing them value, and recording a quick video to show: Hey, have you seen this? Or do you want to jump on a quick call because I noticed this in your account? So, basically, you need to have somebody who's not shy, who knows the product, and then knows how to ensure that they can educate your clients in a way they like.
When you bring up the point that he knows about the products, it's so true when it comes to hiring product managers, designers, and engineers, and it still baffles me how often you do interviews nowadays; and then you ask, so, have you tried our products? And they're like, no. If you're going to apply to the job and look to join a company for at least a few years, at least know what you're going to be building. It astounds me when that happens.
Joran Hofman 33:42
One question we would always ask is, what does our product do? And it's a super simple question, but you get the most random answers. So, that is something. Or what is the value our product is giving to our clients? What do you think the product's value gives to the clients? If you do that, you already know if they looked at your product, and do they know why clients are using it?
Okay, nice. I just noted those down, cuz they're so good.