CS Hit Every Metric and Growth Still Flopped

# Transcript

So, I've personally helped lead multiple rounds of layoffs. I have about a decade of HR experience under my belt as well. I acted as a fractional COO at a company where I reviewed the budgets and figured out where we're going to cut first. The first place that we cut is if you're not coding and you're not bringing in revenue, you got to go. So it's quite frankly that simple. You're not writing and shipping code tied to revenue outcomes.

All right, Miranda, it is scenario time. So tell me what you would do. Floppy Logistics. They are a $34 million ARR supply chain SaaS company. The board signed off on a 20% net revenue retention target for this year—the same number they've had for three years running—by cross-selling and by cross-selling one add-on module at renewal time. This year, the number comes in at 11%. The CS team hit every internal metric they were measured on: response time, seat renewal, call completion. And every account manager got their bonus. When the CRO finally sat in on the renewal calls himself, the pattern was the same every single time. Reps had a fantastic relationship, but no idea what the customer's own revenue numbers actually look like this year. Dale's nodding because we talk about this every day with clients.

Let me finish. The team did everything they were measured on, but the growth number still flopped. What does that tell you about what is actually being measured?

Okay. So they came in 9% below target. Is that correct?

Yes, ma'am.

Okay. And the CSMs own this target. They own the cross-sell expansion, upsell number, whatever you want to call it.

They do.

Okay. So they aren't aware though of what I'm asking a lot of clarifying questions.

No, you're good.

They aren't aware though of what their customers are measured on. Did I hear that right?

That's correct. No one is asking the customers what are you actually measured on?

Okay. So probably activities. So we're measuring activities and not outcomes. So I think do you want me to diagnose? This is fun.

Sure. Yeah, absolutely. Let's go. What are we fixing? This is Dale's wheelhouse lately. I feel like Dale eats, sleeps, and breathes this exact scenario.

Yeah, it is true.

First and foremost, I want to take a look at the portfolio and get a true white space rating. I want to understand, do we have enough white space to actually drive the number of 20%? Is that a realistic target?

That's thing one check.

Yes. Let's say yes, we have realistically enough white space based on the qualifying factors that we've determined to be white space. The next thing then is how are the CSM or account managers having these conversations with their customer? Like, how are they positioning value? How are they thinking through problem statements with the customers? How are they getting deep into the customer's business to understand what they're being measured on? Therefore, how this particular product could solve that problem and then position it accordingly.

Some of the things I've done with my teams is build out simple little things like a maturity matrix that shows the customer what good, better, best looks like, especially in vertical SaaS in their industry. And then walk them through how to go from good to better to best. Sometimes getting to best requires additional investment, sometimes it doesn't. You want to balance that with the customer so that they don't always feel like you're coming back to sell them more, coming back to sell them more. You are a partner with them.

And you are helping them mature within the problem sets that they're solving for, right? I specialize in B2B enterprise SaaS, mostly vertical SaaS. That is the motion that you put in place if you have a target like 20% and you have proven that you have enough white space to support that target.

I love that. And I think, you know what, we have seen a lot lately is it's not all on CS either. So like what we've been having conversations with—because so many people have focused on ARR for such a long period of time and not GRR or NRR—is it marketing? Like, are we marketing to the wrong ICP? Do we have the wrong ICP? Like, what does that ICP look like? When was the last refresh on the ICP? Like, we finally looked at the ICP two years ago, and like we haven't looked at it again. It could be sales. So sales could be just trying to sell things that we necessarily don't have yet or cannot necessarily deliver. It could be the product, right? Like, the product may just not be doing what it's supposed to do or what we've marketed it to do and sold it to do. And then last time, we could have some CS challenges. It could be some health score or challenge that the CS team is having or that the CS individual is having. So you kind of have to dig into the performance evaluation just like you would anybody else.

Yeah, I agree with most of what you said. However, I think with this—

Please disagree with him.

With this particular scenario, we're talking about back-to-base revenue, not new logo revenue. Right.

Sure.

So with it being back-to-base revenue, I feel like sales has less to do with it. Like, sales is—

It depends on when they churned, right? It could be like if they churn it in the first 12 months.

We're not talking about churn though. We're talking about expansion. Are we talking about churn? Did I miss that?

No. Or expansion. Like, so it's a valid point. I think these are those valid points. These are just conversations that we're having with people. But I do think expansion—like, sales sometimes will give additional pieces of functionality that doesn't really exist. We do tell them to sell in front of it. But I think you make a really valid point on that.

Yeah. If we were talking about churn, those are definitely different levers, right? If you gave me the scenario that my gross retention is 70%, how do you diagnose that? Absolutely. I look at the ICP. I look at what are the churn reasons. I interview churned customers if they will have me to figure out what happened, where did we go wrong, what could we have done better. I take a look at the sales cycle and how we are presenting the product and the problem sets that we're solving for and so on and so forth. But churn is a different problem than expansion, right? However, there's no way you can hit that 20% growth target or the NRR target if your gross retention number is garbage, right? Because you'll have a leaky bucket.

NRR and a couple of clients we have talked to are cover-ups for bad GRR.

Awesome. I really appreciate the push back on that. And I think what you—the second part of that—

First guest who asked clarifying questions, by the way.

I love it. And true. First, I love that you talked about the retention side. I think that's super important as well. The next part I want to talk about is something that you've talked about on Sales King podcast. You talked about how there needs to be a commercial mindset in CS and not just relationship management. I've been trying to preach this for a while, especially to our clients. And in a separate conversation, you also said there are new openings like CS ops, CS enablement. So when you're hiring CS leaders today, if you were hiring CS leaders today or people that are hiring CS leaders today, what do you want to screen for that you wouldn't have looked at five years ago?

Yeah, that's a fantastic question, Dale, because it has changed a lot. Recently, when I've hired, I've hired for folks that have owned a number. They understand what it means to own a number. I don't care if it's in an AE capacity, an AM capacity, a CSM capacity. I want them to have owned a number and not just a renewal number. Either they've owned an expansion number directly and have been responsible for closing it, or they owned it in partnership heavily with a sales counterpart, depending on the complexity of the sale. But having owned that number and understanding what it looks like to set your portfolio up to be able to drive the right revenue outcomes is mission critical these days, especially with money being so expensive, especially with jobs being at a premium. We're not in the world where I just get an unlimited bucket of money where I can hire both DSM and AM. I need to have mostly one or the other unless the unit economics support having both, which most unit economics aren't supporting that these days.

Well, that was going to be my question: would you hire someone who can talk ROI? But we answered that, and they have to be able to sell. So let's shift gears.

Not even sell. I don't want to use the word sell. I want them to be able to take a look at where our products are driving value and where it can drive more value and partner with the customer to figure out what that looks like within their walls and how that's going to help them meet their goals, right? What I don't want is a CSM who is just dialing for dollars. I want somebody who can strategically think through their portfolio and figure out like what's the right thing for the customer at the right time, and that requires a certain muscle.

So I have a question. Yeah, I had a question for you, and that I just want to double click on.

# Transcript

So you said that is driving value for their client and their position. Who should be defining that initial value statement?

>> That's a good question. I think it's a partnership with the customer and the CS team. We shouldn't do it for them. If we say "hey, we drove value for you, look ABCXYZ" and they're like "we don't give a crap about ABCXYZ," you failed. Period.

>> I want to add one piece. So I agree with that. I'm thinking about pre-sale and the post-sale. And one of the things that we've seen a lot of challenges on is the salespeople actually getting the impact and the goals because whatever they're defining as impact in the sales process is why they initially bought us. CSMs are kind of just coming in that motion afterwards.

>> So I actually feel like it starts with the sales team, whether it's like a joint impact plan, mutual action plan, that then gets transitioned into the CS team as the handshake. And then inside of the year, things will end up changing because we all know whoever bought the product isn't necessarily using the product or service.

>> Exactly.

>> And the people that are using the product or service may have different challenges that they're trying to figure out. And so you have like an executive buying something, a user using something, a salesperson selling something, and a salesperson or operations person trying to implement something. So you have like these weird dynamics that are happening that not everyone's always going to be aligned and a lot of times they're not, and that's where we end up with a lot of churn or dissatisfaction because the user is like that's not what my real problem is. And so there needs to be that conversation between—

>> I completely agree with you, Dale, and that is why mutual action plans are so, so important. And I would take it even a step further when you get that handoff. When that handoff comes from—

>> My next question.

>> When the handoff comes from sales to the CS team or the CSM, first of all, the CSM should get involved prior to the close of the deal. Period.

>> So let me interrupt you because that's exactly where we're going to go.

>> Everyone talks "handoff." We prefer the term "handshake." And it's the handshake that no one owns, right? And you have previously said—I actually think in my research it was on Churn FM, if I'm not mistaken—the fix for sales to CS handoff is putting the CSM on the kickoff call with the implementation team so the customer never has to wonder who to call next. Is that enough on its own, or is that just the visible part? Do we need a larger, more structural fix?

>> It's not enough on its own. It is the visible part. It is definitely a little bit of showmanship at the beginning of the relationship of showing up and saying "this is your account team, this is what I do, this is what they do, this is who you reach." It's a bit of a security blanket, but it's not enough. It's definitely not enough. Especially, again, I want to emphasize that when I'm talking, I'm talking B2B enterprise six, seven, sometimes eight-figure deals so the unit economics makes sense to do this.

I think bringing the CSM in in the final stages of the sale, making sure that there is a conversation about the goals and the mutual action plan—then when you get that mutual action plan in your hand and the deal is closed, implementation manager and CSM show up. You will likely have a different crew in this call and you say, "Hey, this is what we discussed during the sales cycle. Do you agree with this? Is there anything that you would like to add? If we're looking back in six months and we're wildly successful, what does that look like? How do we measure that?"

Right now, I have a team that is meeting with a customer. We're actually meeting with them in a couple of hours to define KPIs on a pilot, right? So we're responsible for this pilot. We closed it. Now we're going to define mutual KPIs that we agree upon to show us that this pilot is going well and going well enough to where we will convert it to a full commercial contract, right? But that is an agreement between your contacts at the customer and the team that this is what success looks like. And it's the same thing.

>> I love this, and I actually, what I'm starting to feel is that the CS team, if possible, should be at the proposal stage. So not even near the end, but even more in front so they can hear any questions that get brought up during the proposal stage and they can hear the challenges they have with the proposal.

It becomes a little tricky with like, do you have enough time to do that? You're supposed to be doing other things. And playing devil's advocate a little bit, what I hear sometimes is we don't want to commit a particular CSM to this particular account necessarily because that could change. Let's say proposal to close is still another three months, for example, because you go through iteration like these big deals. And so you can't necessarily commit that CSM. But all of a sudden that's the expectation you set with the customer. So the expectation the customer believes is that's going to be their CSM.

>> But how scalable is that, Miranda? Like, how scalable is it to add a CSM to every like pre-proposal call? I'm going to push back on Dale.

>> I don't know if I completely agree with Dale about putting them in the proposal level. I know sales folks would love that. They would love to have that because CS can be a big factor in helping close deals. I mean, you know, the attention that they're going to get. I wish we had the luxury to be able to do that. But the reality is, as somebody who's managing my own budget, I have to be very cautious and conscious about where and when I insert a CSM. And it's not for the reasons you said, Dale. You can overcome that. You can overcome that by saying, "Hey, this isn't necessarily your CSM, but this is a CSM on our team and they can talk to you about what that partnership will look like. We wanted them to be here to understand where we're going." Or you could put the leader of the CS team. It depends on how many deals you close a quarter, right? If you're a high-volume organization, it's tough. If you're low volume, if you're talking a few deals a quarter, might be a little bit more doable.

>> And just to push back because I love to do that, I didn't say every deal. I said you definitely have to segment them. You definitely have to have your high-value ones. You told me every customer is a tier one customer.

>> No, we definitely know that with some of our clients, these long-tail clients that customers have—because we go in a lot somewhere between a five and hundred-million-dollar stage—and some of these clients have been doing funnel sales for a long period of time. They've just tried to get a lot of customers in the door and then all of a sudden like you're going to cut off that long-tail because those customers really, they're not really good for you anymore. And they're not good for your CS team because the reality is you're spending a lot of time and you're burning resources. Like, you know, we talk about total cost of sale, but we should actually talk about total cost of ownership within the CS side. We don't do enough of that calculation on the back side of this. Like, how much is it costing us to maintain and manage a customer? And if you looked at that as some of your lower customers, you may fire the bottom 20% of your client base. I don't know if that's something that you feel strongly about, but I feel strongly like not all customers are good customers.

>> Oh, I don't disagree with you completely, but I've never been in a company where I've had the luxury to do something like that. And also, I have been at a customer at the bottom end of that tier and I know how it feels when I go from being super important in your strategy to a couple of years later I can't get anyone to pick up the phone. Like, people were tripping over themselves to support me and send me swag, you know, five years ago, and now it's like pish posh, we don't have time for you. So I don't want to make customers feel like that. There are definitely unit economics at play. So I have to always be creative about how I will continue to support the long-tail. I think you actually have to be just honest with your customers on some piece as well. Like, whether it hurts their feelings or not, like it's not personal, it's business. And like, yes, every customer can be important to us, but like things have shifted and we have different levels of CS, right? But how do you say, "Hey, Miranda, you're not important enough to get access to a live human, everything has to go in an email"?

>> Let me answer the question. So like you would put it, just like you would on any other—you would ask them like, if a customer was costing you more money than you're bringing in, would you keep that customer?

# Transcript

So you're telling me I'm costing more money than I'm bringing in?

Yes. I don't think—

Miranda, come on. Jump in here. Hey, can I name a company name on this or no?

Yes.

I mean, listen, we are uncensored. We drop names all the time.

Okay. Well, I will tell you, 14 years ago, I was—I still am—I'm a customer of Zendesk. And I have brought Zendesk into well over a dozen companies, either as a consultant or as an employee of an organization. I used to get wined and dined like crazy. My office was right by Zendesk's office in the Tenderloin in San Francisco. I'd get free lunch. I got a private dinner at Trevor Trainer's house with them, which is the stepson of Danielle Steel in Billionaires Row of San Francisco. Right. Like I used to get wined and dined like crazy by Zendesk. Then they're like, "Yeah, we don't need startups anymore." And I no longer even had a phone number to call.

Right. Right. Support at zendesk.com.

Right. Exactly. And look, I get it. Logically, I get it. Emotionally, I was ticked. Right.

Yeah.

Logically I get it. However, I do think companies have to be very careful and very smart about how they handle this because while the revenue associated with the company I'm currently at may be small, the revenue you associate with me as a champion could be massive. Two different things, my friends.

Yeah, we're kind of talking about two. So I'm curious, in this scenario, Miranda, did Zendesk have a conversation with you and be like, "Miranda, you see this is the problem"?

No, I just moved. I moved companies, right?

But they—let her talk. But then Zendesk is like companies are not treating individuals as partners or, correct, like if you brought in a bunch of revenue with a bunch of clients that should be tracked somewhere in their CRM. They should be able to track it in their own CRM and they could have a conversation with you like, "Miranda, I know we—like you know what, whatever the conversation with her talk track is—that should be a conversation." And because we don't do that, most clients are not good customer client success teams because they're not thinking revenue.

Here's something I keep seeing with sales teams I work with. Generic sequences don't work anymore. We've all gotten so good at tuning out the noise that even your own buyers are ignoring you. The problem isn't your reps, it's that your sequences are static and your signals are somewhere else entirely. That's why our clients use Nooks. And the thing that stuck with me is that their sequences actually stay fresh because the signals update them automatically. Right buyer, right moment with no manual babysitting. If your outbound feels like it's shouting into a void, go check them out at nooks.ai/bridge-the-gap.

I never want to be the customer that takes advantage of a vendor in a way that's unfair to their bottom line. That's just not something I want to do because I as well own a budget and I get it. I know the decisions you have to make and I know what that looks like. However, I do think there needs to be thought about how we treat the long tail in every organization, period. We can't just shut them off, shut off their support. And taking Zendesk completely out of the equation, I'm just saying in general now: not every account will get a CSM. I remember, I don't know, a few years ago—and I've been doing this for 27 years now—I remember a few years ago this new thing came out and everybody's talking about digital CSMs, tech touch. I'm like, "You mean marketing funnels? Is that what you're talking about?" Like we've been doing this for a long time, right? In that one-to-many motion, that's not new. The drip campaigns, the in-app walkthroughs, the training videos, the office hours—all of this stuff is not new. We need to make sure that we're not just shutting this long tail off and not supporting them because they actually make up a big chunk of your revenue when you put them in a bucket.

Totally agree. Like I think there has to be a plan. And there has to be transparency. Companies grow in a ball. I mean, I saw the same thing at Oracle. We had a lot of customers, small customers, large customers, and they just bucketed them into different places. And like if you were on the long tail, you almost ended up into a call center type of scenario where like someone would just randomly pick up and you never had the same person twice. The reality is the business economics of how we execute on the CSM level is different. And so when we get into negative margin places with clients, we have to be honest with them and say like, "We love having you as a client. We just have to say like, we're getting into negative margin territory and we have to figure it out together or it's not going to work out."

Clients don't care. They don't care about your negative margins. They care about the business problems that they're solving for and how your solution supports them or doesn't support them. They don't give a damn about your margins, period. And that's good. They shouldn't.

I mean, it's funny—I agree with what Dale's saying from a business sense: the why and the what. But I can tell you as a customer and as the one who purchases the majority of our software and software for our clients, if I ever got on the phone with someone and they started telling me about their margins, Miranda, like I would say exactly that: "Not my problem. Like I don't care. Figure that out."

Would it be your problem when I increase your price by 50 percent? Like you just leave. Like that would be the conversation.

Maybe that's okay, right? If you can't support them and you can't afford to support them, then maybe that's—

Maybe there's a premium support tier. We did this with a client. If you remember, we had that recruiting client out in LA. And one of the first things I did on that project, Miranda, because I was leading, is we had customers that ranged from spending $38 a month to $6,000 a month. And they all got treated the same.

Yeah.

You know what? At $38 a month, you get support at whatever. If you would like to pay for premium support, we absolutely have that as an option for you.

Yeah. And they don't have to go up in tier. Like I'm not going to make you go to 6,000, but you can pay for a human being to talk to.

That's fine too. That's a fine solution as well. I did something—I won't name company names—but years ago we—I work for a company that had a free offering. And we had like hundreds of thousands of monthly active users. We had everything from free to people paying us tens of thousands of dollars a month. The free users were cannibalizing my support team and we had a phone number. We had a phone number on Google. I went and I took the phone number down.

Of like, phone number gone. It was funny how quickly things shifted internally. It wasn't the most customer-friendly thing to do, but it was a survival mechanism.

I don't hate it. I mean, listen, you've got to be able to survive. You've got to be able to take care of your customers. You can't tell a customer, in my opinion, about their margins. But I think, you know, maybe that's the middle ground, Dale, what we just spoke about—like you find a way to phrase it in a way that isn't saying you're screwing my margins, but you've got to pay more if you want this kind of service.

Let me show you my P&L.

Yes. Let me pull up my P&L for you, Miranda.

We have something that we call the Triple M. Um, which is the Monday Morning Move. So it is a practical takeaway that listeners can test next week. We're going to put you to work a little bit. So number one, Dale would like you to score me on my Monday Morning Move on a scale of 1 to 10.

Then you're going to do dot points. Like you can do 3.2.

I mean, if we have a 3-point anything, I'm just going to leave the podcast because that's going to be a big problem. And then you're going to tell me what you would add, change, or push back on. So here we go.

You cannot influence the scoring by telling our guests that you're going to leave.

I mean, that might be a good thing.

Don't worry, it doesn't scare me.

Right. Like Miranda doesn't get scared easily. I'm sensing that Miranda's not shy and timid and is going to hold back here.

Yeah.

All right, Miranda. So this week, folks should pick the single highest risk handoff moving through their pipeline right now—whether that's sales to CS or CS to renewal. Write down the success criteria that the sending team believes that they handed off. Separately, ask the receiving team to write down what they think they were handed. Put both of those lists side by side, and wherever those don't match, that gap is what's costing you your retention. That's the problem with whether the two teams agree on what the customer actually bought and what the customer is going to be delivered.

So you want me to score you on this?

Score it and then give me some feedback. What do we change?

# Transcript

Sure, I'll clarify. So essentially what you're saying is okay, I think I got it. So you want everybody in like the CS or to write down what they're handing off and everyone on the renewals team to write down. Did I miss that?

Yep. What one person pick your single highest risk handoff? The person on sales or on CS. Let's just do sales to CS. We'll simplify this.

Okay. Thank you. And I want the sales folks to write down what they think they handed off and the CS folks to write down what they think they got handed off. Where's the difference? Because what that difference is is what's gap costing you your attention.

Dale, maybe I'm getting my 3.2 here.

Theoretically, I can see why you would say that. I think you're missing a big part of the picture, and that's the customer's perspective. It doesn't really matter what sales and CS think if there's no external alignment as well. So there's like this third component. So I would give you a five. I think it's a good start.

I'll take it.

So to say okay, you write down sales write down what you thought you handed off. CS write down what you thought you received. Let's find the gap. And then what I would do is I would take that to your champion and hopefully you have a fantastic relationship at your customer, which I often have great relationships with my customers. I can just have private candid conversations with them and say hey, like what are we missing? Make sure it's like a customer-friendly version of course, but again bringing and looping in customer goals, customers' desired outcomes, what value looks like for them, so on and so forth.

Yeah.

And then marry that with those other two data points, and then you probably have a better picture.

I think that's a great add-on. I think if you had that good relationship getting what sales thinks, what CS thinks, and then the external piece, that will tell you a lot of where your gap is in the process.

And if you don't have that good relationship, there's still a way to loop them in. You can look at the original handoff docs and kind of see what were they sold on, what problem statements, was there a mutual action plan, all kinds of stuff like that. You can continue to add.

Awesome. I really appreciate that. I think that was really good and something people can take on today to actually execute on. As we start wrapping some of that stuff up, we'd like to go into some uncensored questions with you. A little bit of rapid fire to see how you handle a little bit of the heat in that hot seat.

So Jason Lemin has written that customer success took the biggest brunt of the SaaS layoffs. Worse than sales, worse than marketing, and CS got weaponized by sales into chasing renewals. If CS is really the growth engine, why is it always the first head to be chopped off the block?

I love this one. Yeah, I kind of chuckle because you're not the first person to reach out to me to ask me for comments on Jason Lemin and some of his posts. That's why if you saw me look down, that's why. So I, it's quite frankly, it's what I said in the beginning. They're not tied to revenue outcomes good enough or deep enough within the organization. So I've personally helped lead multiple rounds of layoffs. I have about a decade of HR experience under my belt as well. Acted as a fractional COO at a company where I went and I reviewed the budgets and figured out where are we going to cut first. The first place that gets cut is if you're not coding and you're not bringing in revenue, you got to go. So it's quite frankly that simple. You're not writing shipping code tied to revenue outcomes. So I hate to be so blunt about it, but...

Yeah, but sometimes the bluntness is what's needed.

If I just double-click on one segment on this because I do think CS does get a really bad rap. So I think if you do jobs to be done on each of these functions and then figure out like how people map to those jobs to be done because it may not be the CS challenge, but you may need to move them into a different place in the organization or out. That's fine. But I think we haven't done a good enough job on what your job description is as a CS person because they've always kind of been these project manager operational people versus revenue tip of the sphere.

Yeah, and I don't know if I completely agree with that, Dale. It depends on the organization you're in. I think you're right. If you're down in like, you know, business-to-business but lower dollar values, yeah, they're probably more project managers or sometimes even elevated support. But the enterprise motion for years now customer success managers have had to be tied to revenue outcomes whether that is directly with them owning renewals, upsells, expansion, yada yada yada, or them playing a really big part in owning CSQLs or some other motion.

Love that.

Miranda Gartner is predicting that half the companies that cut customer service or customer success staff for AI this year are quietly going to have to rehire those same jobs by 2027. Do you agree? And if so, how would you advise companies to prevent being one of Gartner's statistics?

Oh gosh. Boy, I wish I would have had this question in advance. That's why it's the hot seat, right? It's a really interesting statistic. I think that we are still learning all the upper ends of what AI is capable of. I personally in my organization, we've been building agents and we've been working to get them to function autonomously. We're this close. It's pretty impressive what they can do. I do think human in the loop, especially in customer service and customer success, is crucial. Humans want to work with humans mostly. I say mostly because sometimes humans just want their problem solved. They don't care if it's AI or a human. But I don't know if I can take a firm stance here one way or another. However, I do think that we will know more soon. I think we're getting to the point where Anthropic, OpenAI, other AI tools are going to stop being so liberal with their packaging. And because they're going to stop being so liberal in giving with their packaging, we're going to start seeing the cost to actually run autonomous agents start to peak up significantly. And then what will happen from there is there's going to be conversations of is it cheaper for me to outsource support, offshore support to some other country, or is it cheaper to have an autonomous agent? Right. There will be these conversations as well going on.

Yeah. The only good news is at least there's competition here. It's not one team, one group in the race. But I do agree. I think this is like a big fishing lure and I think fishing hook and I think they've thrown it out and been casting it for a while.

Yeah.

And eventually we get hooked on to it because I know like if Anthropic goes down and like the servers are gone, people are like getting on like what is going on? I can't do any of my work. Your whole business is shut down. It happened recently with Anthropic.

And I I worry about the state of our organizations and our ability to critically think our way through things now because we're so dependent.

So we are outsourcing our strategic thinking to AI in many cases. Instead of being thought partners with the AI, we're allowing them to be thought leaders, which we just had this conversation in Utah with a client. And what ends up happening, you don't even come to center. So everyone's not even coming to center. It actually is getting you're reduction to center. Like, you're less than average when you're starting to do this stuff. That could be another whole podcast and we should probably do that at some point. But if we don't move on, we will never get to the end. I just want to make sure I call out I did not take a stance. So this is me. I am Switzerland on this because honestly, who knows at this point in time.

Fair. Very fair.

Name a company that rebranded CS as growth or revenue and changed nothing else about how they actually operate.

I don't know.

I think you already named one. Zendesk, but that's okay.

Yeah. Okay, with Zendesk.

I mean, so that's going to tie into my next question. We talked about how CS needs to be responsible for renewals and expansions, but when you're hiring a CS person and you're building out a comp plan, should there be a hard quota attached to that? Do CSMs have a quota, a revenue number that their compensation is based off of?

Look, if you would have asked me this a decade ago, I was so against this idea of CS having commissions, and I mean, you'll even hear and you, I will give you both credit, you've researched me very well. I'm impressed.

We try. We try.

Super impressed. You're like dropping podcasts that I've been on and I was like very impressed. So if you go back five, maybe even ten years ago, I had a very strong stance around the word commission being associated with a CSM. Here's where I am now. I am okay with the word commission being associated with a CSM so long as we are actually requiring them to deliver revenue. If we're requiring them to deliver revenue, my god, they should be compensated appropriately. Period.

Totally agree.

And I'm watching way too many organizations require CSM to deliver the renewal, deliver the upsell, and then they're like, "Yeah, and we'll give you a bonus at the end of the year." I'm like, "No, you need to give them a piece of the pie."

100%. So, and I also hear the other side of the argument that it drives different behaviors. You know, if you tie commission through CSM and you essentially make them more transactional, you know what? I hear you. I don't disagree in some cases, but that is why it's the CS leader's job to make sure you are setting up the right environment for them to be true partners to the customer and not be transactional. And the last little statement on how that looks is if your CSM comes to you and says it is not the right time for us to talk about this product. It is not the right time. Right? They know best. That is the difference between it being a heavy-handed sales motion and a value partnership.

100%. I want to add one thing to it. And actually, I'm going to give a shout out to a technology. So we've been doing some work with Codapath and they've done a really nice job. If you're putting in comp plan stuff, they'll give you some of the differences. But I was just building comp plans with one of the CS leaders that we have. Obviously, we can't go 100% commission on the CS team because you will generate bad working environments. We talked about health scores, we talked about delivery, we talked about other things that they need to do, whether it's a 60/40 split, however you feel, because the CS team has been used to OKRs and bonus plans. And that transition is very tricky as well. Because when you're using, and let's be honest, let's be super transparent—when you have a bonus, most of them are just paid out because they're so loose in the process. Like, they can fight it, so they're just paid out. Like you said, the bonus is just part of their salary.

Yeah. And that's a whole other thing. Like, you got to think about the base and the OT. Like, there's a whole different transition that has to happen, and most sales, most CS leaders that have been traditional CS leaders don't know how to do that either. So there's a whole learning cycle that needs to happen in this process.

Yeah. One piece of advice I would give to CS leaders that are contemplating doing this is take a look at what drives the right behaviors. And one of the things that I've done at multiple companies now that seems to work when I'm structuring this is 50% of the comp is tied to individual gross retention, and then 50% is a team net retention number. Right? So that seems, for some reason, that seems to drive the right behaviors because they're focused on making sure the customer gets enough value to renew and they're achieving their desired goals, and then it's a team environment around the net retention. And then if you have a product that you really want to push, give them an extra 2%, 3%, or 4% on anything that crosses the finish line, and I'll be damned if the magic doesn't open up.

100%. I love all that. We'll give you a layup on the last one. We'll give you an easy one for the last one. Dream vacation destination.

Oh, I, you know, I went to. I do a lot of solo international travel—leave my husband at home and just go explore by myself. It's very empowering. And one place that I went to that's very obscure that I would love to go again is the North Korean border. I did that trip and that tour, and it was just weird and amazing. And I also hiked in Czech Republic and Poland. So I'm a big hiker, outdoors person. I'm not somebody who wants to sit on a beach and sip a drink. If I'm going somewhere, I'm hiking. I'm exploring. I'm in museums. I'm eating all the food.

I got you beat on travel, man.

You do have me beat slightly. Um, I'm so with you though. I do not want to go sit on a beach or look at a palm tree. I want to go do things. It's funny you say the North Korea border. We're planning Japan for next year, and my wife wants to because we're right there, add on South Korea, and you know, as close to the border as we get. So I'm very jealous.

Book a DMZ. If you get to Korea, book a DMZ tour. It is very interesting.

I'm totally in. I love it. That's awesome.

Miranda, thank you so much for joining the show. Thank you for sharing your knowledge. Thank you for arguing with Dale and I and pushing back. It's been a great episode.

This was fun. Thank you for having me.