Dec 9, 2022

Read Time 9 min

Making the jump from Customer Success to CEO with FranConnect’s Gabby Wong

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Which executive role gives you the best likelihood of becoming CEO?

Traditionally, it’s the chief officer of finance or operations. But promotional paths are a-changing, according to a time-series by Spencer Stuart summarized in Harvard Business Review’s “Finding the Right CEO.”

Twenty years ago, COOs accounted for 76% of CEO promotions in the S&P 500.

In 2020, that figure dropped by half to 38%. Who made up the lost ground?

Today, division leaders who run market-facing GTM functions account for 36% of CEO appointments.

Additionally, “leapfrog” candidates—those who come from a level below the C-suite, such as senior vice presidents—now make up roughly 5% of new chief execs.

Gabby Wong, CEO of FranConnect, considers herself to fit into both of these classes of fast-rising underdogs. However, given her CS background, Gabby never envisioned herself becoming a CEO, as she explained during her keynote session, “The new ‘C’ in CEO” at ChurnZero’s Customer Success Leadership Summit, BIG RYG.

“Typically, when you think of CEOs,” says Gabby, “you think of a path that’s up and to the right. But my path was more of a meandering path.”

Gabby shared how her customer experience acumen set her apart for the CEO role, advocating that “Customer Success is front and center of all the skills that you need to be a great CEO.”

In the session’s Q&A, Gabby further explores shifts in the CEO persona, the importance of professional sponsors, and expanding to serve an entire market.

Q: CEOs can tend to be self-serving. On your path to CEO, you made a deliberate choice to put the customer before yourself. Do you see a shift happening in the temperament of high-status executives?

Gabby: I always focused on solving the hardest problems. As CS leaders, you’re in the catbird seat to solve the hardest problems because you have the nexus between the product and the market need. You understand the customer, and you understand the strategy. I put all that together, and that’s the customer value. I think it’s changing, and the Spencer Stuart data in Harvard Business Review show that it’s changing too. More and more people are hiring leaders, not for past experience, but for capability and capacity.

Find the hardest problems to solve and you will succeed. You all have the best experience in solving the hardest problems; I can tell you that. That was my secret sauce all the way through. How do I solve the hardest problems that no one else can solve because they don’t have the triad of experience that I was able to bring to the table.

Q: FranConnect is owned by a private equity (PE) firm. It can be hard to convince PE firms to invest in the customer. How did you get your PE colleagues to invest in the customer experience?

Gabby: I’m lucky, so Serent Capital is our private equity firm, and probably the reason why we gravitated together is because they are focused on the customer experience. They have a core philosophy that you cannot have a successful high-growth software company if your core metrics around Customer Success are not strong, including NPS. They’re all ex-McKinsey people, so they firmly believe in NPS. They give us NPS goals. We dig deep into the NPS. We have four board meetings a year. In one board meeting, we have product day, and in another, we have customer day. For one meeting a year, we just talk about the customers and what the customer experiences.

The other thing I’ll tell you is that we’ve acquired two companies in the last two years, and we’ve looked at more. We go extensively into the customer experience. We hire a third-party firm. That third-party firm does what they call IDIs, or in-depth interviews, to get a sense of the customer experience. We also measure NPS, and we benchmark that across all acquisitions. I’m lucky in that they firmly believe that you cannot have a successful company without having successful customers.

Q: Based on your acquisition experience, are for-sale businesses focusing on the customer and NPS?

Gabby: Yes, most successful software companies that we would look at measure Customer Success. Not everyone looks at NPS the way that we look at it. I showed you the four or five ways that we look at NPS. I just don’t believe in one score. I just don’t. I never have, and I’ve been a customer experience person. I’ve taught customer experience. If you only look at your user NPS and say that it’s great, you’re not getting the buyer or the sponsor. And if you’re not looking at the service experience, then you’re only looking at what the sponsor says, and not what the experience is with your frontline team. We’re probably unique in that we look at all of it, and I would encourage you to look at all of it because they’re all metrics. They’re not always great, and you have to meter off them.

Q: FranConnect has customers of all sizes, from emerging and growing to scaling and enterprise. You run the gamut. That’s quite a challenge. Was there a goal to tighten your ICP?

Gabby: We did 8% CAGR (compound annual growth rate), and then we leapfrogged up. In that first initial period, we were great at mid-market. People knew us in mid-market. That was our core bread and butter.

Franchising, just so you know, is 3% of GDP. It’s an $800 billion market, but there are only roughly 3,500 targets in North America. We have to serve the entire market. We have to serve all areas of the market. Let me give you some stats. Seventy-six percent of the 3,500 brands are below a hundred units. But the other 25% produce 90% of that $800 billion. It’s a really bifurcated market. The smalls are really small and the bigs are really big.

We had to—and I love talking to Customer Success people because you all know segmentation is your friend—hyper-segment our desired customers and targets. We had to say: what does SMB want? What does the sub-100 (emerging) want? What does the middle market want, and what are they trying to do? They’ve got a proven concept they need to scale. What are their needs and how does our software help them do that? And then enterprise, they’re typically going international; they’re doing joint ventures. It gets quite complex. So, we combined our 20 products into one and said here’s a package for SMB, here’s a package for mid-market, and here’s a package for enterprise. Because the needs are different in that maturity curve.

Q: Given that FranConnect has a diverse landscape of markets and different businesses within those markets, how do you think about KPIs within those individual market sets relative to itself versus revenue size?

Gabby: We probably track 50 to 60 KPIs, so I’m not going to multiply that times four. That would just be crazy. But there are a few that are differentiated. Certainly, we call it our CARR (contracted annual recurring revenue) waterfall, so our net retention numbers and how that flows through year over year and quarter over quarter in terms of revenue to churn to logo churn to same source sales. We look at that and we do differentiate that CARR waterfall in the markets.

The other thing we look at is CAC ratios. Our CAC ratios inherently are different in the lower end of the market than they are in the upper end of the market. We’ve got to be OK with that because if we’re serving the entire market, we’re naturally going to have higher churn and therefore a lower CAC on the lower end of the market. But when those players hit, they hit big, and they grow fast. Orangetheory is a customer of ours. They started with us when they were nascent, and now they’re 1,500 units worldwide and growing. The nature of the game is high growth, so we have to serve that entire market.

Q: How can women and people of color get more representation in the C-suite?

Gabby: The answer is don’t do what I did, which is say no [to the position]. If someone’s offering you the position, maybe you should consider it because maybe they see something in you that you don’t see in yourself. That is the case with Bob Post [Gabby’s professional sponsor]. He saw something in me that I didn’t see myself. Don’t say no right away.

As women, we do this risk-reward thing. Is the risk worth the reward? I honestly did that analysis myself. In my head, I was like they’re never going to give it to me. I love my job. I love this company. I want to stay. They’re never going to give it to me. What am I doing? I went through all that analysis in my head, and I would encourage you that the risk is worth the reward. That’s number one.

Number two, it starts with sponsorship. I wouldn’t be here if it weren’t for our board and Bob Post. The people who are in positions of power need to make room.

We also need to change the way that we make hiring decisions. Hire based on capability and capacity, not based on whether you’ve done it before. Because I hadn’t done it before. I had all the goods, but I hadn’t done it.

Q: In your career, did you actively seek out coaches, sponsors, and mentors?

Gabby: You should always seek out mentors. I would also encourage you as a new executive to have a separate executive coach. Steve Gladis is my executive coach. You want someone separate in your cone of silence, like your business psychologist, who you go to outside of your reporting structure.

I would definitely seek out an executive coach as you’re growing in your career, and if your company can offer one to you even better. We have offered that to members of our team. It’s great self-learning. You should always seek out mentors. It’s hard to find a sponsor. I would tell you to recognize when you have one and take advantage of that.

Q: How can Customer Success leaders be better coaches, mentors, and sponsors to their teams?

Gabby: I always start my one-on-ones by asking people how they’re doing. As CS people and just in general as line leaders, we can get very focused on the metrics, and the metrics are important. But sometimes you have to take a step back and you have to say this is not all about what we’re achieving and growth and metrics. How are people doing?

Just a funny story. It’s certainly been an interesting year. We just had an acquisition, and everyone’s stressed out. I walked into our exec meeting and said, “I want everyone to stop, and I want you to take a breath and sit here for five minutes and not talk and just meditate.” Then I said, “Now, we’re going to go around the table. Tell me the three top things that are most important to you right now. Take everything else and put it by the wayside, because we all have too much going on.” To be a good mentor, you have to know when your team is at capacity. You have to get to the human side. If Covid taught us anything, it’s that management is a human problem, not just a people problem. It’s a human problem.

Q: How do you incorporate your Customer Success team’s feedback into larger decisions at the company?

Gabby: It’s so ingrained in our culture, it’s almost hard for me to answer because we started that way. Our CS team is involved in product strategy and prioritization. If you look at our product strategy, 50% of our product roadmap is dedicated to growth. Thirty percent is dedicated to existing customers’ needs because they always come up and you don’t always get it right. The other 20% is platform maintenance so the platform can keep up.

For that 30%, we essentially collect all the feedback. The CS team—both professional services and CS—are intimately involved in ranking and prioritizing what gets through that customer feedback. For all the roadmap, we storyboard the changes with key customers. Our chief product officer uses lean stack, which is a methodology that’s very focused on the business value and the workflows. We go toe to toe with customers and we map what the workflows are, and we pull in the CS team for that as well. Because they’re the team that is most able to interpret what that customer workflow is and how it’s going to be utilized in that potential new product area. We do it across the board. Honestly, it’s harsh for me almost to think about not having CS at seat at the table.

Q: At FranConnect, your support team reports to your product team. In what cases do you think different aspects of the post-sales experience make sense to not report to one person?

Gabby: It’s actually moved, and what I tell people about growth is that the problems you solve when you’re $10 million, you’re going to probably solve again at $20 million, and you’re going to solve them again at $50 million.

We did it because I wanted the support team to be closer to the product and to be closer to engineering. I wanted a better dialogue. I didn’t want them to have to go through a CS leader to get to engineering. It’s not that our CTO and CPO are not customer-focused because they very much are, but it showed them some of the repeated pain points that were coming in from the support desk.

We started to build those things into the product now to make it easier, so it solves some of our user experience issues as well. It’s not perfect but it wasn’t always there, and we changed it. The answer is that it depends on what problem you’re trying to solve. We’re a pretty nimble organization, and it’s worked well.

Know the customer and business metrics that matter

As a rising CS leader, whether you have your eye on the CEO spot or any executive-level role, you need to understand how to measure the financial health of the business and track performance against shared company goals.

Use this SaaS and Customer Success glossary to learn the terms, metrics, and formulas that every business leader needs to know to prove their value as a strong decision maker and become a top contender for CEO.

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