A Prequel to Customer Success –before it was aptly named.
My focus on customer service began long before Vantive. My prior experience was quite varied. My first job was at Six Flags Over Georgia – sweeping up trash. The initial intent was just a source of income to fund my education - a degree in Music Therapy. My goal in life was to work with emotionally disturbed children and adults. In the 10 years there, I managed the grounds department, the gate ticket sales and admissions, and the rides department. It was in my development of a comprehensive marketing and operations research program, that Six Flags paid for my coursework that led to my master’s degree in business information systems. It was at this point that my career took an unexpected turn. I took a position with Hewlett Packard in Atlanta.
As I have so often taught my children, we often learn more about who we are by learning who we are not. I found very quickly that I was not fulfilled in a large company. The adrenaline and variety of my early positions at the park and the hospital left me longing for something different.
I took a job with a startup – TranSettlements - and that is where it all began. Those days were truly entrepreneurial. I found myself programming a mainframe EDI (electronic data interchange) translation engine in the basement of a trucking terminal. It was cold and loud. At the time, EDI was new and was initially driven by the trucking industry. It very quickly expanded. Few really understood all the implications of implementing EDI within their organization and even less about the impact it would have on their trading partners.
The company definitely had growing pains, so the level of service and the relationship we built made so much difference. I recall perhaps 2 months after I joined – we sent out a new release. This was back in a time that you actually sent a large tape drive with the source code. The customer was required to set up directories, load the code, compile it and test it before they ran it in production. You can see the magnitude of support required. But imagine getting that first support call on which a very angry customer explained that the code would not even compile. I had quit my very stable position at Hewlett Packard for a company that had such low levels of quality in their processes.
As cute young 24 year old, I was selected to address this devasting issue at our User Group meeting the following week. In a side conversation, I will share the joke I opened with, but the essence of my message was that we had failed. I owned it. I described the perfect storm of errors that allowed this to occur – but more importantly shared exactly what we had put in place to ensure it would not happen again. As I left the stage, I sat down next to that very angry and vocal customer. He smiled, patted my shoulder, and said “you effectively shut us up – nicely done”. He became one of our biggest advocates and I had formed my first understanding of success in services. It is really no different than any relationship -honesty and transparency are at the core.
The industry grew rapidly and I eventually shifted over to a new company (Harbinger) through a failed acquisition attempt. To understand the value of services in this organization, a short description of the company will be important. At the time, many large companies were investing tremendous resources to create their EDI capacity. A typical implementation cost between $250,000 and $500,000. Once the systems were set up, the realization hit. EDI was much like a fax machine – you could only send EDI documents to another company if they had EDI capabilities as well. Imagine a company like Georgia Power. They had over 60,000 suppliers – and most of them were small mom and pop shops. There was a clear market need for a low end solution that was simple to use.
Harbinger and others created a PC solution that connected directly to their store and forwarding mail-boxing system. The model for sales was the revolution. The sales force would sell our program to large corporations like Georgia Power, Coca Cola, DEC, Compaq, Dutch Petroleum, Exxon, etc. It cost these companies nothing. They simply had to agree to host a seminar for their suppliers and partners.
In this seminar, the corporation would explain that each supplier had 6 months to get up and running with EDI or they would lose their contract. Once this harsh statement was delivered, Harbinger was introduced. We would demo the software, explain that the price was $495 and that they could take the software, install it and use it for up to 90 days before making a purchase decision. Virtually 100% took the software with them that day. We had an inside sales force that would place calls to any supplier that had not attended and explain the program to them.
We found that if someone installed the software at least 95% kept it. Getting the installation completed was the only difficult part. Many of the suppliers may have been buying a PC for the first time, most had never set up their modem. The sound of the modem connection still echoes in my memory.
Early on we made the decision to schedule a one hour call with the prospect to walk them through the installation rather than waiting for them to try on their own. Inevitably we found that the mistakes they made would take numerous hours to detect and correct. To the customers it felt like we were offering a superior level of service, but for us the preventive time to guide them through it was incredibly cost effective. Aleesa Cummings was our first installation engineer. I remember her voice outside of my office as vividly as I remember the modems connecting. “Hi, I am Aleesa and I want to schedule time with you to assist with your installation. My goal is to have you up and running with a trading partner before you have to make a purchase decision.” Her energy and empathy were infectious. We started with an A/B test to measure the outcome. We dramatically increased the number of installs and the acceptance rate remained at 95%.
Our hypothesis was correct, but the results were far more reaching than we had imagined. From a corporate standpoint, given the 95% keep rate, we began recognizing revenue at the time of install completion instead of the 90 day mark. The services organization actually controlled the revenue number. We were able to create models based on historical activity – knowing how many packages were shipped, we knew when we could get the installation completed – because it was scheduled. We had found our repeatable predictable model and began to grow quickly.
Then, a fateful day. Aleesa came in quite frustrated. “Marie, the sales force is shipping s%#!, you have to stop them”. She went on to explain that she had called several customers, excited to assist them only to experience a very frustrated prospect, “this is the pushiest company I have ever worked with. I told the sales rep that I only wanted a demo. He has shipped the product and now you are forcing me to install it.” Rather than changing what the reps were doing, we had them mark the account in our CRM system – noting that this was the situation. Aleesa’s next call went as smoothly as all our other approaches, “Hi, I am Aleesa, and your sales rep Mark came over and asked me to call you. He was concerned that you just wanted a demo and he sent you the actual software. He has asked me to help you get it installed and to demonstrate how to use it.” This approach resulted in the same 95% keep rate of the software.
The initial package was configured to work with the specific vendor who had forced them to submit the electronic documents. The PC package worked with a simple template that translated the business documents to and from the EDI standards for transmission. However, most of the suppliers had numerous trading partners and they would need a different template for each trading partner. The industry standard was to charge between $300 and $700 per template. This approach was definitely a barrier to adoption and expansion. I was able to convince our CEO to offer a subscription service rather than a fee for each template. For $500 per year, you could get an unlimited number of templates.
At first blush, this appeared crazy. But about 98% of the customers signed up for the subscription, immediately creating not just initial revenue but a recurring and highly profitable revenue stream for support. We would create a template once but provide it to numerous customers. The hidden beauty of this approach was that this program was actually our lead generation program for new corporate accounts.
When just one subscriber asked for a new template for a trading partner, we created it and then worked with the larger company to follow their implementation plans. As you might imagine – the process of adding trading partners for a large corporation was far more costly and time consuming than their original software installation. Once we had completed it for one of our PC customers, we would send a notice out to our subscriber base to find all companies that would need that template. Typically it would be at least a dozen companies as there was an overlap in the supplier base for companies in the same industry.
Once we had completed the implementation process for these dozen subscribers, the services team would notify the sales organization that we had developed a new opportunity for them. The sales rep could call the larger company (or Hub as we called them). In the initial sales call, we would have already completed a pilot program or proof of concept and could show the results of our approach. You can imagine our win rate.
The entire system was referred to as Marie’s Wheel of Fortune. In 1992 we had created a business model in which the services organization was responsible for the revenue recognition, a profitable recurring revenue stream and the primary lead generation engine. The system was designed to ensure the customer’s success and adoption and in the end the engine for our corporate growth. I was perhaps most proud of the fact that each of us felt blessed to be a part of it.
Even though I had not yet labelled this process as Customer Success Management, it was actually the initial implementation. The entire focus was to design a systemic and profitable method of ensuring adoption, loyalty, and advocacy from our customers. Customer Success Management is not about account management. It is a about forward thinking process design and implementation. While not obvious, it was my studies in music therapy that were at the core of my thought. Results come from behavior modification – both internal and external to your company. A process is merely a behavior modification plan designed to get the appropriate results. The key to customer success is found in understanding the psychology of behavior and working to obtain behavior integrity in the comprehensive organization.