UpdateAI – Zoom meeting assistant
There has been a long-standing cold war between Sales and CS.
This episode addresses the tiff.
The disconnect between the teams’ expectations makes it challenging for organizations to prioritize the long-term health of the customer.
Hamish Stephenson, Founder & CEO of, Selr.io joins our hosts, Josh Schachter, Kristi Faltorusso, Jon Johnson & Mickey Powell to defuse the tension between the two teams by discussing whether
– CS needs to contribute to the sales process to improve customer retention and NRR
– CSMs need recognition and fair compensation in comparison to sales representatives
– Organisations need to learn to act upon the insights and recommendations by CSMs
– Companies can balance the focus on growth and retention
– A strong product can reduce the reliance on sales and customer success teams
– Companies need to strike a balance between short-term revenue targets and long-term customer health
CS is not here to be the backup to sales when we are not even getting compensated appropriately for the work that we're expected to do. So culturally, what that does is it creates a bigger divide between those two teams. When you are requiring CS to fill the gaps because sales teams aren't equipped to do the work that they are being tasked to do and we're not getting compensated. You better believe that there is going to be continued friction. And I don't have any desire, any interest and any motivation at all unless I'm a leader and I've got equity and I want the company to be successful. But if I'm an individual contributor, I don't care if you can't do your job, I'm not being incentivized for it. So what do we do to fix that? Because if that's the mindset that we're bringing CS in to help when sales can't do their job, when they don't have the skills, when they don't have the knowledge to do something that is really poor form.
Josh Schachter [00:00:00]:
Hey, everybody. Welcome to this edition of CS and BS. I’m Josh. I’m here with John, Mickey, Christy, and our special guest, who we’ll introduce in a second. I think, guys, we said that starting today we were going to introduce ourselves, like, a little more thoroughly so people actually know who we are. Cool. I mean, my personal advertisement is blasted all over the intro here, so I’m Josh, CEO, founder of Update AI. Zero experience in customer success. I’m a product management guy and a startup builder. Mickey, who are you?
Mickey Powell [00:00:34]:
My name is Mickey. I’m the head of go to market at Update. AI. Spent the last ten years stumbling my way through B. Two B SaaS across way too many roles and functions and titles.
Josh Schachter [00:00:45]:
Were you drunk during some of that time? That stumbling? Was this sober stumbling or is this.
Mickey Powell [00:00:49]:
Just like I have been drunk at times. I’ve been very rarely drunk at work.
Jon Johnson [00:00:55]:
Very rarely.
Josh Schachter [00:00:56]:
Yeah.
Jon Johnson [00:00:57]:
And I’m John Johnson. I’m a principal customer success manager at user Testing. I’ve been in Customer Success for about twelve years. Yeah. And I just kind of talk a lot. They tell me to shut up most of the time.
Josh Schachter [00:01:08]:
You do? But we like it.
Kristi Faltorusso [00:01:11]:
And I’m Christy Foul tousso chief customer officer at client Success. I’ve spent the past twelve years building, scaling and transforming customer success teams in the B to B hypergrowth space.
Josh Schachter [00:01:23]:
OOH, I think Christy practiced that.
Kristi Faltorusso [00:01:25]:
No, I actually have just a tagline that is like, my thing that I always say when I introduce myself, and I didn’t even get it right on this one.
Josh Schachter [00:01:32]:
Do you want to redo that’s?
Kristi Faltorusso [00:01:33]:
You tell it’s Monday. No, I don’t want to redo it. I’ll just do it again next time. It’ll be fine. It’ll be perfect.
Josh Schachter [00:01:37]:
Okay.
Mickey Powell [00:01:38]:
She’s going to practice 50 times between now and then.
Kristi Faltorusso [00:01:40]:
I’ll be fine. You know what it is? I was recording before I came on here and I kept messing up my recording, so I’m all like, flustered.
Josh Schachter [00:01:47]:
Hamish who are you?
Hamish Stephenson [00:01:48]:
My name is Hamish Stevenson and I got invited here today because 90% of what I say upsets Josh.
Kristi Faltorusso [00:01:55]:
We’re going to get right along. That’s a good reason to have you.
Hamish Stephenson [00:01:58]:
On, but I sadly do not get paid for that yet.
Mickey Powell [00:02:04]:
That is a crying shame.
Kristi Faltorusso [00:02:06]:
Where are you currently employed? Where are you currently working?
Hamish Stephenson [00:02:08]:
I’m the founder and CEO of a sales training and recruiting business called Seller IO. And I made things hard on myself by basically naming a company that’s not phonetic, so it’s SELR IO for those listening at home. And that’s also the website. So there we go. I also thought, this is a sales podcast. Should I leave?
Kristi Faltorusso [00:02:29]:
I think I took a no, no. This is going to make it that much more fun, Hamish, because we are not salespeople, and we’re going to want to talk about the relationships that happen or don’t happen between customer success and sales.
Hamish Stephenson [00:02:41]:
There’s relationships in sales.
Jon Johnson [00:02:42]:
Abusive.
Josh Schachter [00:02:43]:
Yeah, man.
Mickey Powell [00:02:44]:
Interesting exploitative.
Kristi Faltorusso [00:02:46]:
Oh, gosh, here we go. Josh, take control of this podcast.
Hamish Stephenson [00:02:51]:
Am.
Josh Schachter [00:02:51]:
I am. All right, so we’re going to start each episode now with a little BS.
Kristi Faltorusso [00:02:56]:
Oh, God. Here we go.
Josh Schachter [00:02:57]:
So I have two I want us to talk about, and then we’ll talk about CS and.
Hamish Stephenson [00:03:06]:
We’Re xing hard pass.
Josh Schachter [00:03:10]:
Okay, I’m in. By the way, I think people are underestimating Elon Musk. I think the man is a genius, despite what you might think about his.
Mickey Powell [00:03:20]:
Views and whatnot his fascism.
Josh Schachter [00:03:22]:
All of that aside. All of that aside.
Mickey Powell [00:03:25]:
Next topic.
Jon Johnson [00:03:27]:
Okay.
Josh Schachter [00:03:27]:
And the idea that he wants to create this WeChat for the US of, like, this all in one. I get it. And I think if there’s one person that can accomplish a moonshot because he has actually accomplished a moonshot, then I think it’s Elon Musk.
Jon Johnson [00:03:41]:
Put everything but why does he got to destroy something that’s been like, the brand recognition of Twitter and getting rid of everything? Behind that is just the most hairbrained mindset of founders. Like, if somebody bought you and said, okay, great, I’m going to turn all of your customers into my customers, I’m going to get rid of everything that you did, and I’m going to do something new. I don’t disagree with his vision. I don’t disagree with the WeChat thing. But literally killing Twitter overnight, there’s, like a personal affront to that. As somebody who’s been a Twitter user for 17 years, like the birds going away. The title is going away.
Kristi Faltorusso [00:04:13]:
Well, I think there’s a lot of people, John, that love Twitter, but there’s a lot of people that don’t love lot of there’s a lot of people out there that don’t want to be associated with the brand. Right. And so maybe it chased away a lot of people. And so his idea maybe is to neutralize things by starting fresh. Maybe the topic of Twitter was polarizing.
Jon Johnson [00:04:30]:
And you don’t think X will be as polarizing?
Kristi Faltorusso [00:04:32]:
We’re going to see listen, some rebrands go really well and some don’t. So we’re going to watch this one play out.
Jon Johnson [00:04:39]:
Yep, exactly.
Kristi Faltorusso [00:04:40]:
You want to make a bet on it, though? Should we bet on it?
Jon Johnson [00:04:42]:
I don’t have any money.
Kristi Faltorusso [00:04:44]:
Last time I said that, that was not good. So I’m not going to talk about that anymore. But we should have, like, a friendly wager.
Hamish Stephenson [00:04:51]:
I’ll bet on it.
Kristi Faltorusso [00:04:52]:
All right, Hamish. All right. Well, Hamish, what side are you betting on? Is X going to be a success or a flop?
Hamish Stephenson [00:04:59]:
Can we just address one thing? The pronunciation of my.
Josh Schachter [00:05:04]:
No, no, sorry. In Long Island, it is pronounced Hamish.
Kristi Faltorusso [00:05:08]:
Yeah, it’s do. I’m on my own island.
Jon Johnson [00:05:16]:
Yes.
Hamish Stephenson [00:05:17]:
So is I in Australia.
Josh Schachter [00:05:20]:
Can we address the second thing here is that Christy just whipped out a 40 ounce Big Gulp.
Kristi Faltorusso [00:05:28]:
It’s my Stanley, but then I have my Yeti, so it’s like, do you want water or coffee. They’re both oversized mugs.
Josh Schachter [00:05:34]:
And for the record, I am not exaggerating this. It is bigger than her head.
Mickey Powell [00:05:38]:
It is bigger.
Jon Johnson [00:05:38]:
Go to YouTube.
Kristi Faltorusso [00:05:39]:
It is bigger than my head. Second one is comparable to my head.
Josh Schachter [00:05:42]:
All right, next topic. What do we think about Barbenheimer? Who saw Barbenheimer?
Jon Johnson [00:05:48]:
I have not seen it yet, but I cannot wait.
Hamish Stephenson [00:05:50]:
I saw Oppenheimer yesterday, and I can tell you right now, it’s the first three hour movie I’ve sat through in the past 20 years. I haven’t fallen asleep.
Mickey Powell [00:05:58]:
Don’t spoil the ending.
Hamish Stephenson [00:06:01]:
Everything.
Jon Johnson [00:06:04]:
I can’t wait.
Hamish Stephenson [00:06:05]:
It may have been the fact that I got a morning session, but it was also, like, 110 degrees outside, so it was great. I sat there ouch.
Mickey Powell [00:06:15]:
Sat there in the front, the front.
Hamish Stephenson [00:06:16]:
Row, because I couldn’t get any better seats and reclined, and I still didn’t fall asleep. It’s a great movie.
Jon Johnson [00:06:20]:
Nice.
Mickey Powell [00:06:21]:
Thank you for converting into fahrenheit for us laggards in the.
Hamish Stephenson [00:06:29]:
Mean you you’re all is it a debate? Mickey, you’re all American, so right? You’re mostly single lingual, right?
Mickey Powell [00:06:36]:
Yes. Thank you for dumbing it down for you’re speaking our language.
Hamish Stephenson [00:06:44]:
I’m singlelingual, too.
Kristi Faltorusso [00:06:46]:
I feel sad. I’ve never felt less than before.
Hamish Stephenson [00:06:51]:
Is that how you say singlelingual?
Kristi Faltorusso [00:06:53]:
Maybe. I don’t know. I never heard of it. But I just figured it was something that people say about Americans.
Hamish Stephenson [00:07:00]:
No, I mean, Australians are pretty much British.
Josh Schachter [00:07:04]:
John, I’m delegating onto you to bring.
Jon Johnson [00:07:07]:
Us back here about Barbie and no, not about Barbie and about the real stuff. I haven’t seen it yet. I’m taking my daughter to see it, though. I cannot wait to see it.
Kristi Faltorusso [00:07:18]:
He literally said he doesn’t want us to talk about Barbie.
Jon Johnson [00:07:20]:
Who said that?
Kristi Faltorusso [00:07:20]:
Don’t you listen to our fearless leader? No, and this is why we get the feedback we get.
Hamish Stephenson [00:07:27]:
John, everyone keeps interrupting.
Jon Johnson [00:07:29]:
Josh yeah, that’s also part of the job, though. That’s half of the podcast. It’s just us interrupting, Josh.
Hamish Stephenson [00:07:33]:
Josh I promise you I’ll keep them in check.
Josh Schachter [00:07:36]:
Thanks, Hamish. Good luck with that. I’ve been trying for a few months now. So, Hamish, you work in sales. You are a sales coach, trainer, recruiter, and you’ve done a lot of work with Customer Success tangential and somewhat directly.
Jon Johnson [00:07:52]:
Right.
Josh Schachter [00:07:53]:
So we want to talk about this. I don’t know what we want to exactly talk about, but we want to talk about the relationship of CS and Sales. And so I’ll let you kind of figure out where you want to start with that. One thing I want to ultimately talk about know what should be the interaction between the two?
Hamish Stephenson [00:08:12]:
Great question, Josh. Great question. So, quite frankly, the relationship that CS and Sales have now is a different relationship than they had when CS kind of became a thing in every revenue team, like, say, like, ten years ago. Right? Kind of like Customer Success became, like, a pretty common title. That was in every team. But back then, and it’s only just kind of changed it was that the salespeople were like the jocks and CS were like the smart cousins that the jocks mums made them bring to the parties.
Jon Johnson [00:08:46]:
I think that’s the official JavaScript.
Hamish Stephenson [00:08:48]:
But the jocks would be like, wait in the car.
Kristi Faltorusso [00:08:54]:
I’ve never been so offended.
Hamish Stephenson [00:08:57]:
Just trust me, trust me, I’m getting somewhere that won’t offend you. The jock would say something stupid and they’d be like, well, where’s my cousin? Go grab the cousin. And the cousin would defuse the situation. Then the jock would like sneak out the back door while the cousin sorted it out. That was the relationship for many years. And now with the way that net revenue retention has become a really, really important thing, especially in SaaS where you’re getting CS teams having to be included in every step of the process. Because when you can’t expect salespeople to be complete and utter technical experts or product experts and everything, but what you can expect them to do is try to oversell something and sell promises and things like that. And what having CS in the process is, CS is there to answer a ton of the hard questions. CS is there to basically make sure you’re not churning these customers after twelve months. And in turn CS including them in every step of the process gives them the opportunity to be actually learn a lot from the salespeople who are actually selling it and therefore really learn a lot of skills about things like expansion, like farming accounts, and obviously renewing them after that initial twelve months.
Mickey Powell [00:10:11]:
All I got to say is you did a good job of offending both groups of people. Yeah, so I like that story.
Hamish Stephenson [00:10:16]:
Yeah.
Kristi Faltorusso [00:10:17]:
Well, I’m still sitting in the trunk of the car, quite frankly.
Hamish Stephenson [00:10:24]:
I train both the groups and I think all in all, everyone you’re going to see in the next five years or so, everyone be a lot closely more tied to the revenue number because the term retention is just going to be continuously incredibly all about.
Jon Johnson [00:10:41]:
So what’s your thoughts behind revenue models for sales folks? How do you get folks on the front line to actually care about what they’re selling in the long term? Do you have any thoughts around 2nd, 3rd year spiffs when it comes to renewal or growth numbers? How do you keep sales folks AES, Gads, all those folks interested in an account not just beyond that initial sale?
Hamish Stephenson [00:11:04]:
Yeah, I mean there are so many different comp models out there, but I think keeping customer success too far away from those renewals. Like for example, I’ve got a friend at the moment and he sent through a couple of follow up emails when it came to renewal time to a client of his the other day. It was a big deal. It was like one hundred and seventy k a year. Pretty decent. That’s going to hurt if someone doesn’t know what’s coming out of the account. And then it became renewal time. They sent another email, they didn’t say anything and then they just charged the client because that was the renewal. That’s contractual anyway. He didn’t know what to do when that email came from the client. He didn’t know how to deal with that conversation, like that renewal conversation, because the Ae was doing that. I think when it’s customer success, when you literally have the people that are supposed to know the customer better than anyone else not being part of that renewal chat, I think it is so silly because those are the people that are going to stop that customer from churning. And that customer now is probably going to go. Okay, fine. I’m going to sign this 170k deal. But you’re definitely never getting out business. And that could be in $1.7 million deficit in the next ten years. So I think that in answer your question, should AES be billed on expansions and renewals? Of course they should, but I definitely think the customer success should too.
Mickey Powell [00:12:25]:
One of the things that I’ve long thought about Jaime is when you silo and create specializations and keep people separate, manufacturing learned a long time ago that every time something like that happens, you have a process that hands off or has to go multiple steps, there’s just more opportunity for failure. So I think I generally agree with the premise that they need to be closer and closer together.
Hamish Stephenson [00:12:49]:
Exactly. Mickey, I don’t understand why people, why teams aren’t letting CS on every call. The only thing that I can possibly think to justify it is because they’ve got too many other good things to do other than be on six stages of a sales process. But if it means especially like we’re talking about strategic enterprise level, when these processes are like six, nine months long and you’ve got 10, 12, 15 steps in the process, I think including them on the first couple. So when we go through the demo stage and the next two steps after, and then including them on the latter stages so they’re there for a part of the really intense discovery phase. That’s when customer success can come in and the salesperson is like doing discovery and customer success can come in and actually notice the signs that they’re getting from the prospect. They can notice the little bits of information, the prospect saying that they go, wow, we could actually solve that problem, which the salespeople might a really good, experienced, heavy product knowledge salesperson will. But the more junior AES aren’t going to pick up on that as quick as a custom success person. And that’s why they should be on in the early stages. They should definitely be there when we get into the latter stages. The closing, the legals, because the closing elements are the bits that are going to help them the most when it comes to renewals that’s when real negotiations are going to come into play.
Josh Schachter [00:14:09]:
Shouldn’t we hold a salesperson accountable for knowing the product as well?
Kristi Faltorusso [00:14:13]:
Of course you should, Josh. That’s what I was going to go back to. I know that we kind of shifted ways towards, like, upsells and crosssells, but let’s go back to the renewal comments there for a second. If your sales team is not equipped to execute the renewal process independently, are we enabling them? Are they the right person to be doing this? I’ve seen salespeople not need customer success professionals to go and orchestrate that, and it depends, right? There’s a different model for every single business. There is no right or wrong way to orchestrate this. But I would never, ever have somebody in a sales team try to execute a renewal that they are not well equipped to handle. And that means knowing the customer, knowing the use cases, knowing the product. So why are we putting somebody in front of the customer who all they’re doing is sending emails? I don’t know. That’s a point of friction for me. That’s not a well orchestrated renewal. That might as well be email automation.
Josh Schachter [00:15:02]:
See what happened, Hamish? You insulted CS and Christy got you right back, punched you right back in the face.
Kristi Faltorusso [00:15:08]:
I don’t think I did that exactly. I’m just saying, the example there, I.
Hamish Stephenson [00:15:13]:
Think I insulted CS once, to be honest. I said they’re a smart cousin.
Jon Johnson [00:15:18]:
No, but to your point, Hamish, one of the things that stood out to me is I think that is incredibly duplicative efforts. If your salesperson needs a CS person on the call to keep them honest, then we need to go back to enablement. And this is something that I think that we as sales and CS professionals need to be as aligned as possible. Meaning we need to be in the same trainings, we need to have the same skill set. 1 may be focused more on closing when it comes to medic and all that kind of process that’s in there or whatever process you’re following, but if I have to assign my CSMS to every single discovery call, somebody’s not doing their job, and I would argue and refute that at every turn. I also align Mickey with what you’re saying about the handoffs and the mechanics and that whole kind of Six Sigma mentality. But we have jobs. We have job divisions for a reason, right? And there are skills that are absolutely definitive, right. You wouldn’t expect an Ae to be able to get on and talk about deep outreach methods when it comes to strategy for training and enablement. Right? So we have these specialized roles. So the question is, how do we keep them aligned without making sure that you’ve got five people for every call? Because there’s all of these steps that need to be validated, and I need to keep them honest and they need to keep me know it kind of gets into that mentality of what’s the point of the person on the call?
Hamish Stephenson [00:16:40]:
Okay, so can I answer that, John?
Jon Johnson [00:16:42]:
Yeah.
Hamish Stephenson [00:16:42]:
So I think we’re moving a little far away from the point I was trying to make, or I just wasn’t making the point very well. But the point I’m trying to make comes back down to retention and like, net revenue retention, and the point that everyone in the revenue.org is going to be much closer to the revenue in years to come. And having just account executives, for example, the amount of layoffs that are happening at the moment, you can’t expect most of the industry to have four years of tenure in every position. And when it comes to really complex sales processes and complex products, it takes time to learn about these products. And you can have all the training in the world to learn about a product. But there are going to be questions that you’re going to get from a prospect on a call that are going to be really complex. And that requires a sales engineer. It requires a customer success person. My point is that if customer success people are trained in actually doing the renewal aspect, and they’re trained in doing the expansion side of things as well, then that means they’re going to be like a really true extension of the sales team. It’s also going to attract more people to customer success, more salespeople, more sales engineering people, because they’re going to have that number. They’re going to have that OTE T tied to it. If they’re going to make 2% on a yearly deal, that’s a lot to these people. So that’s my point, is that I think everyone should be a little bit closer to the revenue as we get into especially these really crowded marketplaces. And that’s my point. Does that make more sense?
Jon Johnson [00:18:08]:
It does, but I mean, I think it goes back to the initial point, is that what we’re seeing, we’re seeing record high churns, we’re seeing record high layoffs, we’re seeing a lot of stuff in the industry where NRR is the focus. We’re even seeing folks go back to GRR because we need to stabilize revenue. And growth isn’t as important as stable revenue. Right? But at the same time, we’re also seeing a pretty substantial disconnect when it comes to CSMS and the professions in CS with the frontline sales. And so my initial question was, how do we think we can get sales not running the renewal. I would never suggest that. But having sales know that it is more valuable for them to sell a one year deal that they know is a good fit, that solves the problems, that they’ve met all their needs, that meets their customer value on a two, three, four year renewal upfront. So that when that handoff is done, we don’t have CSMS that are sitting there digging through shit, basically because they had to close their deals, because on top of it. We also have revenue leaders that are saying, you guys have to do 20% more than you did last year, because we need to make these numbers right. And we’re seeing a ton of stuff getting thrown over the fence that has no attachment, that has no renewals, and we’re not able to do anything with it because the initial work hasn’t been done. So that’s kind of what I was getting at, is how do we get sales folks invested in the long term health of alignment with if we have a functional CSM team, whether it’s a renewal manager or not, kind of the mindset of not even sales, that’s not even part of it. It’s really like making sure that what the customer bought is something that is going to last and meet their needs and values over the course of the next two, three, four years.
Kristi Faltorusso [00:19:47]:
John we’re not incentivizing the right behavior. That’s the problem, right? Sales isn’t being incentivized to sell ICP. Customers who are well equipped to do the things they need to do with the product to accomplish the vision that has been sold and thus renew, right? That’s not what they’re being incentivized to sell. I look at salespeople all the time. I’m like, WTF why are we selling to these customers? We haven’t done proper discovery. They bought because they fit some arbitrary model that has nothing to do with a success probability and outcome. It has to do with an ICP. That means that that person will buy. It does not mean that person will renew. And this is also going back to why ICPS are broken, because they’re designed by marketing and sales and not inclusive of customer success factors. But if we’re telling salespeople, all you have to do is close, that is what they’re going to do. And they will close at all costs because their money is on the line. Now, if we told them that they were going to get compensated because they had to close and renew, I guarantee you things would look different. But organizations are not prepared to make that change.
Mickey Powell [00:20:50]:
They would also have to wait a long time, like a year, two years, to figure out, is this person good or bad?
Kristi Faltorusso [00:20:57]:
Yeah, I mean, I don’t think so. Mickey. I think listen, yes, there is some level of learnings from the data that we would eventually get to. But up front, I could tell you I know ten qualifying things I can look at with every customer that comes in from my pipeline to tell you if we looked at these ten things on a binary scale, yes or no. If these things were more yes than no, these customers have a higher probability to be successful. And I don’t need data a year or two years from now to tell me that. I know that these customers are better equipped to make good use of our products today where we can help them get a win and materialize some value and outcome I don’t need three years from now data. I know that we can change behavior if we looked at things different, but we don’t, and this is a big part of it. Listen, I’m not blaming this on just sales. I’m not just blaming this on leaders. I’m actually blaming this on CS a lot, too, because they’re not loud enough about the learnings and the findings and the things that do not work that we see every day in the business. All we do is bitch and moan and say, oh, Sales sold a non ICP customer, now I have to go make it work. But nobody takes this data and goes back to sales and goes back to marketing and says, this is what we need to change. This is who should be selling to. We’re not using our voices. And this goes back to this victim mindset that all CS leaders have. And I complain about that all the time because we want to sit here and mope about how bad things are, but we are not doing the right things to drive change.
Josh Schachter [00:22:18]:
I really like what you just said there, Christy.
Kristi Faltorusso [00:22:20]:
It’s the first time I’ve said anything meaningful right on this podcast.
Jon Johnson [00:22:24]:
That’s not true.
Kristi Faltorusso [00:22:25]:
Thank you. You’re right. It’s not true. It’s not true. So value.
Josh Schachter [00:22:28]:
But we need to educate sales on what makes for a good customer, because CS does know that, but it is getting lost there. And you’re right. The burden is on CS to speak up and advocate for themselves. I don’t think you’re going to ever find a solution that completely solves the motivation and incentive of selling for the initial sale. Because think about it, the company itself is motivated. You have to show your results to your investors about your growth.
Jon Johnson [00:22:54]:
Right?
Josh Schachter [00:22:54]:
If I’m the CEO of Update, I need to show growth in revenue. I can’t be like, oh, well, we’ve got one customer, but these guys are going to be with us for the next ten years. No, you show growth in numbers today. So the whole thing is I don’t know how to solve for it, quite frankly. But I think you’re right, knowing that the motivations are going to be what they’re going to be. You can tinker it a little bit, right, with the comp incentives, but articulating what a good customer is and what a bad customer is is really important.
Kristi Faltorusso [00:23:28]:
All right, can we go back also to what we talked about with bringing CS in when sales can’t figure things out? That is damaging to a culture, because customer success is not here as the kid sister kid brother to be the backup to sales when we are not even getting compensated appropriately for the work that we’re expected to do. So culturally, what that does is it creates a bigger divide between those two teams. And I’m telling you, like, I see this all the time when you are requiring CS to fill the gaps because sales teams aren’t equipped to do the work that they are being tasked to do. And we’re not getting compensated. You better believe that there is going to be continued friction. And I don’t have any desire, any interest and any motivation at all unless I’m a leader. Right? And I’ve got equity and I want the company to be successful. But if I’m an individual contributor, I don’t care if you can’t do your job, I’m not being incentivized for it. So what do we do to fix that? Because if that’s the mindset that we’re bringing CS in to help when sales can’t do their job, when they don’t have the skills, when they don’t have the knowledge to do something that is really poor form.
Josh Schachter [00:24:34]:
Hamish, what say you?
Kristi Faltorusso [00:24:36]:
Maybe this topic is too sensitive for me. Maybe I should go.
Jon Johnson [00:24:38]:
No, I love it.
Josh Schachter [00:24:39]:
We’ve lit in a fire.
Mickey Powell [00:24:41]:
Christy, we love your passion.
Hamish Stephenson [00:24:43]:
I think it comes back down to Christy, and I agree. Let’s try our best not to completely generalize the whole of the industry, because from my experience, I think the best collaboration comes from teams. That I’ve said before of saying when teams CS teams are on more than one call, that’s not the end call, and it’s not because they’re babysitting the sales team. I made the comment before about driving the cousin. That was like ten years ago. Not saying that’s the case now, but I do believe that sales teams should have CS on the calls because CS should be compensated with those renewals and expansions. And all in all, it comes back down to getting the right sales training to one the salespeople, getting the right product training to the right salespeople, but also getting the element of sales training to the CS people as well. But in turn, I still don’t think that salespeople that are nine months into their role selling a complex product are going to have enough knowledge about that complex product, especially if there’s any form of infrastructure or data involved. These are really, really complex things that I think are much more equipped for a CS person to be a part of. And you’re right, I do think that CS should be compensated, but I think it should be compensated in a way that they’re also part of the sales process. Rather than just coming in at the end when you think you’re about to lose or churn a deal, they should have some more knowledge throughout the whole process.
Kristi Faltorusso [00:26:15]:
I think the challenge there, though, is, is that the right collaboration that’s necessary? I don’t think that I need to be on every call to feel like I’m collaborating strategically with sales or any other team on the motion. Right. And when it comes down to product complexity, if products are super complex, usually there’s tams. You’ll have technical account managers, you’ll have solutions engineers, you’re going to have folks that are. More technical. And I don’t think that in a lot of organizations with highly complex products, CS, I don’t think that they’re necessarily the best person equipped to do that. We have to have a very good understanding of the product. But if we’re talking about real enterprise solutions here, we are not product experts. We are not technical in that level. Customer success roles are supposed to be strategic. And so I think this is something else that’s lost about the role and what we should be doing in the partnership, rather, what the perception is of what we do.
Jon Johnson [00:27:06]:
Yeah. And I also hear and this isn’t just you, Hamish. This is just in general, I hear a lot of people saying, well, sales needs to be trained, or CS needs to be trained in sales. Like, I never once hear sales leaders need to be trained in CS. Like, these people that are making three times our salaries, like, legitimately three times our salaries, have absolutely no interest. The gads that I work with, the folks that I meet, they kick everything over the fence. They take no ownership over the longevity of a health of a customer. And it is something that you hear the fire in Christie like, this is not directed at you. This is directed at doing this job.
Kristi Faltorusso [00:27:37]:
Yes. I actually like you very much. You’re wonderful.
Jon Johnson [00:27:39]:
Constantly being told that we’re not doing enough to retain businesses that have no possible successful outcomes available while the gads get made whole because they had some justification around why they didn’t hit their numbers this quarter and being paid two to three times more in an industry where retention we have to work together. And as Christy said, it creates this animosity. CSMS don’t go to president’s club. CSMS don’t get awards on their desk. CSMS don’t get any of the things when they are responsible for more revenue on a yearly basis than any gad in any SaaS business, we have more ownership. And to continually hear and even on this call, continually hear you say, yeah, but we need to make sure the CSMS get trained in sales bullshit. No, absolutely not. You won’t get me on that job call ever. Because we’ve done it. We’ve been doing it for ten years. I have every certification under the sun when it comes to sales because our CFOs or our CROs have put us into these revenue things and said, you need to learn how to discover. And it’s like, guys, we’re telling you, you don’t listen to us. We do all of the discovery. We give you all of the reasons why these people are churning, and you do not change the front end of this machine, and you continually put things through this pipeline that burn the long term efficacy of this business. And CSMS have been spending their entire lives saying, oh, you just want me to go through another training? How about you just listen to me in the first place because you already trained. So that’s it kind of gets to the heart of this. And I feel like this is the typical sales and CS conversations, like, well, you need to be trained. It’s like, no, well, you need to be trained, and nothing fucking happens. And we continually have these conversations where gads are paid so much money, and we see it, and they buy their boats and their fancy houses, and we’re sitting here with impossible outcomes that we cannot manage, because not once has that gad been like, hey, we lost these three accounts. What are some attributes that you heard from this? And to Christy’s point, you’re right. I think we do suffer from a victim mentality. I think it also comes from ten years of nobody listening to us, of people putting in figurehead CCOs that come from sales or marketing that don’t understand that the purpose of this job is refinement. The purpose of what we do outside of growth and retention and all these things, is to say, hey, marketing, you’re bringing the wrong people in. And here’s why. Hey, sales, you’re selling the wrong people by, like, 10%. Here’s why. It is this cyclical energy that need and we have been screaming this from the rooftops for so long that what we should be doing is not only encouraging growth and retention with our customers, but also looking inwardly at the refinement process of everything that goes before to get those customers on the call.
Josh Schachter [00:30:18]:
So I know we got folks like I think his name is Frank Slutman, the CEO of Snowflake, publicly saying that you don’t need customer success, that sales and support. Does anybody here believe that there’s a universe in the future where there is this marriage and this merger of CS and sales and I don’t care who?
Jon Johnson [00:30:42]:
Yeah, I think it comes down to the title is, like, you don’t need a CSM, but you need somebody doing these lists of ten things, just like you don’t need a Gad. You need somebody doing this list of ten things. And if you can figure out the harmony between the first ten things and the second ten things, I don’t care what you call it, that is going to be a successful customer. Do you think it’s going to happen?
Josh Schachter [00:31:01]:
Do we think that that’s going to happen?
Jon Johnson [00:31:03]:
I think it is happening within a number of companies. I think the ones that are crushing, the ones that have incredible culture you even said it, Christy. Like, this is shown in culture. It is rarely shown on paper because revenue is so hard to trend and analyze from our points of view. Christie’s, a little bit. You guys have some higher level jobs. I don’t have that. But when it comes to culture, when you are able to go spend time with your sales team, and when you’re able to reflect and refine and have open and honest conversations about what is and isn’t working within your book. I absolutely think it’s happening in the industry these days. I just don’t think that it’s something that you can give somebody a checklist and say, do these ten things and it’s going to happen because it’s an individual thing. It is gads that understand that selling the right thing at the right time and hitting their numbers, obviously, because we got to keep the lights on, is the right path to this long term success. And to your point, Hamish, you’re right. We’re in an industry right now where people get cut after a year and you can’t prove your salt. If you’ve only been selling this product for a year, you do not have the justification. Just like, like it’s really hard for me to get on an interview with a CSM that’s never been at a company for longer than a year and they start spouting their NRR and GRR numbers and it’s like, bullshit. This isn’t your work. This is the work of three people before you. It’s like a president coming in and saying, look at my jobs numbers on day one. It’s not his. Right. There isn’t enough proof. And I think we have the same kind of issue with culture. People just want to jump chip and find new jobs. And there’s also companies that just don’t believe or understand long term investment in these jobs. And a good CSM is in the role for three years because they’ve been able to prove themselves that they can manage and grow a specific set of business over time. But that rarely happens in SaaS.
Kristi Faltorusso [00:32:49]:
Hey, Josh, can I add one more dynamic to your question there? It’s not just about sales and CS. It’s about product as well. Right. You’re less reliant on these teams, like if your product is easy to use, if it is intuitive, if the use cases are built in, if value realization is easy, if there’s a direct line to usage, and that as an outcome. So I think that in organizations where you have amazing product as well, there is less need for the specificity that is required in maybe organizations where the product isn’t as cut and dry. Right. When you’re going to have these really complex enterprise solutions that multi year contracts, and you need eight teams and twelve projects to get it stood up and deployed. I don’t think that you can do away with the customer experience function. And I say the customer experience function because we’re talking about professional services, project managers, customer success managers, account managers. Tams right. Like you name it, you need it. I do think that there’s a little bit of it depends. These models that we’re seeing work, they may work in specific organizations for specific reasons. And the problem is that sometimes people talk about it and generalize these things and it’s not customer success. And these different team structures are not a one size fits all. Right? They’re not even a one size fits most. So we’ve got to be very specific around what is the product and the market, where are we as a company, the maturity of the space that we’re even in. So I think that there’s a lot of factors at play that determine whether or not an organizational structure like the one you’ve just discussed, Josh, can even work.
Josh Schachter [00:34:23]:
Yeah, that makes sense. It’s about the segmentation. So to round us out here, Hamish, you work a lot in recruiting, right? That’s one of your primary roles of your business. We hear from a lot of folks. We know there’s a lot of folks out there in CS that are looking for their next role. I can imagine. And I know that the same thing is occurring with sales as well. What are you seeing right now? What are the trends you’re seeing as far as the job market and just macro trends of the job market, but also what SaaS companies are looking for right now in a good sales individual or leader?
Hamish Stephenson [00:34:59]:
The leader one’s hard. I think that there are more quality sales leaders on the market than there’s ever been before. There are just so many. Every day seems to be like a really successful sales leader who’s contacted me going, hey, can you help me find a job? And my answer is, let’s have a chat. But I literally cannot promise you anything because it’s just these roles just don’t exist as much as they did two years ago. Like, for example, I had a client brief me on a CRO role at 200K base the other day and I was just like, man, that can’t help you. Unless we put someone in as like an enterprise sales director who wants to level up to that, there’s not much we can do. But funnily enough, there are people who will take that right now, which is just, it’s really tough on the industry. But there’s just two years ago, there were so many, like, there were enterprise sales directors getting 220 base, like big roles, and those roles just don’t really exist as much anymore. The market’s settled a bit. The roles that are quite hard to find, the people that are quite hard to find are, well, tenured enterprise account executives. Like, if you’ve got an enterprise account executive that’s been in the market for say, twelve years, they’ve had no more than three roles and looking for a role, like they’re the ones that are getting snapped up real quick. There’s not a lot of those. There are still tons of account executive roles on the market. There’s still tons of customer success roles on the market. But people hiring managers getting really picky with who they find. So, for example, three years ago, you probably could have ticked like six out of ten of the boxes, whereas now you need to tick like nine, sometimes eleven out of ten of the boxes. Sometimes you need to tick all of the boxes and then something’s nice to have for even to even interview you. So that’s where, I guess I’m probably making the most success as a recruiter at the moment, is that I come from a SaaS background as well, so I know exactly why some boxes are more valuable than others and finding those kind of needle and haystack candidates. But in a day yeah, that’s my quick five minute analysis of the market.
Jon Johnson [00:37:04]:
I want to ask you a question just because of this perspective, at least in your placements, do you see the crossover between the two industries as one of those boxes to be checked? So if you have an Ae that comes in and, you know, I spent three years in CS, I’ve been doing Ae for seven years, or vice versa. I used to be an Ae, and I’m a CSM now. Do you see companies? Because that’s a solve that I see is where people have kind of this kind of multifaceted experience, where they are able to blend the skills of both roles and kind of focus on the different journeys of the customer. Right. Do you see that as something that folks they’re hiring are looking kind of.
Hamish Stephenson [00:37:40]:
John my favorite hybrid at the moment, which is so valuable, so valuable, is someone who starts their career as an SDR. So they know how to prospect. They move into CS, and then they move into, like, a CS Rev Ops hybrid, and then they move into partnerships.
Jon Johnson [00:37:56]:
Yeah, partnerships is huge. That’s actually a really good point you just described.
Josh Schachter [00:38:00]:
Mickey.
Jon Johnson [00:38:01]:
Yeah, that’s mickey.
Josh Schachter [00:38:02]:
Mickey.
Jon Johnson [00:38:03]:
Are you looking for a job? 200 base?
Mickey Powell [00:38:09]:
No, you did describe me. I started as an SDR, and then I moved into CS and learned about sales and then kind of just, like, worked my way up to where I am now. And I fooled a bunch of people along the way.
Jon Johnson [00:38:21]:
Yeah, well, hamish but giving me jobs, you kind of made something connected my brain is that what I want out of AES is more of a partnership? That’s that’s the mindset. Which means I need to go work with my partnership team.
Hamish Stephenson [00:38:35]:
I mean, maybe that’s the answer to Josh’s question. Sorry for cutting you off, john no, please. But maybe that’s Josh’s question is, what’s the title going to be in the future?
Jon Johnson [00:38:44]:
Yeah.
Hamish Stephenson [00:38:44]:
And is it that the account executives, the CS teams come together, and this is way more partnership teams. The commission overall goes down, so we’re talking, like, going from the average, like, 12%, 13%. We’re going down to, like, 6% across the board. Literally everyone’s a partnerships person, and people are just KPI’d more on different parts of the role, and then they come together in the renewals. I mean, christy, what do you think about that?
Kristi Faltorusso [00:39:11]:
I think there’s something interesting that this is where I’ve seen AES be most successful, is when they are responsible for the land and expand, when they are just responsible for landing the deals. That’s where they don’t care, right? They’re going to get their commission and they’re onto the next thing when they are going to be responsible for growing that account. Over time, that customer needs to be a great, fit customer because their continued growth in revenue depends on it. So when you have that model, I see a lot more success. Now, the Pod model that you’re kind of describing, I think it’s okay. I think it makes sense in certain businesses. I don’t think it always does. And so this is where it’s like, again, all these different scenarios that we’re playing out depend. And so there’s no way that we’re going to design a model that is going to fit even 40% of all organizations. It’s just not going to work that way. But what I would challenge every company to do is figure out what is the objective and then figure out the best structured organization to go and achieve that. The problem is that we’re so hung up on this one size structure of sales and customer success and marketing and this that I would challenge organizations, get creative, design an organization that will drive outcomes. Right. It doesn’t need to look the way that it’s looked for 20 years, but because that’s all people know. They stick with what they’re comfortable with and they stick with what is easy to justify to their boards and easy to explain to employees. Right? We’re taking the easy way out, and the easy way just isn’t working. And so with all the changes to market, to product, to employees, to experience, to all of these things, the economy, why don’t we just stop doing what we’ve been doing and try something different?
Hamish Stephenson [00:40:57]:
But aren’t we just looking? Aren’t we all wanting the same thing? Don’t we all just want no, nobody.
Kristi Faltorusso [00:41:02]:
Wants the same thing. Everyone literally has different objectives.
Jon Johnson [00:41:06]:
But I get what you’re saying, Hamish, that’s the ideal, like the ideal outcome is us all rowing our boats in.
Hamish Stephenson [00:41:12]:
The same that’s that’s, that’s what I meant.
Kristi Faltorusso [00:41:16]:
Sure. But the models are not designed to achieve that. And that’s what I’m challenging. So we can want it all we want. As a person, I could want that, but I’m not going to be able to achieve it with the way that the business is structured today, with the way that people are compensated today.
Mickey Powell [00:41:29]:
I think you can track that problem up and up and up. Because think about it this way. Hey, investors just gave me $20 million. They’re expecting, they’re expecting they’re expecting 40% either growth or profit or combination every year. So I better figure out how to make that work.
Jon Johnson [00:41:46]:
Well, yeah, this is like a whole nother podcast, and we got to figure out who we’re going to bring on and yell at next time. Hey, Mish, thank you for being our punching bag. No, but that’s the thing. It really comes down. What christie just said, yeah, that’s a utopia. But the goal is investors that understand this and that are partnered with you, that you guys are in the process of looking for investors and hiring. The market doesn’t say agree with you when you say, I need 40% growth. That’s not the way that markets work. You have to go find it. Right. And if you’re not finding it, you need the feedback loops of where you’re missing those holes. Right. And this is that kind of, like, perfect world. We have an owner. We were purchased by a PE firm, and it’s very similar, where it’s just a lot of friction right now because we’re told what our targets are, and we’re saying, yeah, but look at our customer base. Look where we’re at. There’s actually some discrepancies. We want to be heard and seen, and that isn’t the way that the ecosystem works right now. Right. So there’s challenges that you have to overcome if you want to keep your job. And sometimes you just have to sell the shit. Right. That’s the truth. It comes down to the fact that sometimes you sell bad fit customers because you have to show growth.
Josh Schachter [00:42:52]:
I don’t know how to fix it because I don’t see, like, broadcasting about this public company having great NRR reportings in the last quarter. When was the last time you heard about Procter and Gamble’s?
Kristi Faltorusso [00:43:07]:
Great.
Josh Schachter [00:43:07]:
Great. It’s their growth. Right? And the fact that something like Proctering Able, that’s probably not even relevant. Right. But growth is universal, so I don’t know, because it starts there, right? It starts with that and investor sentiment and enthusiasm, and then that’s what kind of dictates what the head of that VC or PE shop needs to drive for, and then that dictates the board meeting, and that dictates, like you get it. So that’s why I actually don’t know capitalism.
Hamish Stephenson [00:43:39]:
That’s why we need to burn it all down.
Jon Johnson [00:43:40]:
We need to burn it all down.
Hamish Stephenson [00:43:42]:
Yeah.
Josh Schachter [00:43:42]:
Burn it all.
Hamish Stephenson [00:43:44]:
Yeah.
Josh Schachter [00:43:45]:
Yeah.
Jon Johnson [00:43:46]:
Okay, hamish, do you hate CS now?
Mickey Powell [00:43:48]:
Do you have any other things that you’d like?
Kristi Faltorusso [00:43:50]:
He definitely doesn’t want to be friends with us at, like now I get why sales doesn’t want to be friends with customer success.
Hamish Stephenson [00:43:56]:
I mean, Josh and I are very good friends. He’s probably my best friend.
Jon Johnson [00:44:02]:
Probably. We are.
Josh Schachter [00:44:04]:
I like Amos. Amos is one of the good guys. And he sat back and he’s taken.
Hamish Stephenson [00:44:09]:
Very we’re very, very close. I don’t know how close we’re going to be after this chat. My final parting gesture is mickey, I know you’re the co founder of Update AI, but, man, I could place you in the best role. What are we talking about here?
Jon Johnson [00:44:30]:
If it doesn’t work out, man?
Hamish Stephenson [00:44:32]:
Let’s side group in this chat. Can we go into listen, you want.
Mickey Powell [00:44:36]:
To take it offline?
Hamish Stephenson [00:44:36]:
Can we go into okay, well, on.
Jon Johnson [00:44:38]:
That note, while Mickey gets headhunted, if.
Josh Schachter [00:44:42]:
You find Mickey a job for a million dollars. OTE. He’s yours.
Mickey Powell [00:44:46]:
That’s right. And I played footy, so you should.
Jon Johnson [00:44:50]:
Like me even more. Your footy. Not our footy. Your footy.
Mickey Powell [00:44:55]:
Aussie rules.
Kristi Faltorusso [00:44:56]:
I don’t think you’re allowed to play our footy.
Jon Johnson [00:44:58]:
Yeah, not in a business environment.
Kristi Faltorusso [00:45:00]:
No.
Josh Schachter [00:45:01]:
I’ve enjoyed this session. We’ve enjoyed this session. I don’t know if you have, Hamish, but thank you so much for being on this call. He did.
Kristi Faltorusso [00:45:08]:
And he’s still smiling. Yeah, he’s a hero in my book.
Hamish Stephenson [00:45:13]:
Thank you, Christy.
Kristi Faltorusso [00:45:15]:
You’re a hero.
Jon Johnson [00:45:16]:
Well, you drew something out of Christy that I love, and that’s her passion.
Hamish Stephenson [00:45:20]:
Was it passion, or was it anger at me?
Jon Johnson [00:45:22]:
Because I they’re the same.
Kristi Faltorusso [00:45:25]:
No, not anger. No. And it’s not towards you. It’s towards what we have to navigate all day, every day. CS is hard.