The new competitive advantage: Building customer experiences AI can’t replace

Please note: This transcript was generated using an AI-assisted transcription tool and may contain errors, omissions or mistranslations

Customer Experience as a Competitive Advantage in the Age of AI

You Mon: Good afternoon, everyone. This is You Mon from ChurnZero. We’ll wait 30 seconds to get started with our webinar as people come in. And so let’s give it 30 more seconds. Hope everyone’s having a great day. We’re gonna have a great webinar. Jennifer, how are you?

Jennifer: I am doing so good. I’m here in the Pacific Northwest, and so we are right into just the most beautiful time of year here. How about you?

You Mon: Yeah, it’s rainy and hot. So no, it’s a little bit different. You guys do have the great weather, although maybe the winters are not as warm.

Jennifer: Oh, yeah, we pay for it in the winter.

You Mon: Yeah. That’s right. That’s right. Yeah. All right. Let’s see. A couple of housekeeping things before we get started. By the way, Jennifer, why don’t we maybe just start the slides just to make sure they work. But as we get started, a couple things to note. We will be recording this webinar, and you will also get a copy of the slides. And that will happen within 24 hours of the end of the webinar. So just as housekeeping, if you wanna take notes, great, but otherwise you will get access to the video and the slides. All right. People are still coming in. Let’s just wait 30 more seconds, and we’ll get started. Okay. I see your slides. It looks great. All right. Okay. Hey, let’s get started. Thanks, everyone, for joining us today. Have a great webinar today.

You Mon: And today we are being joined by Jennifer Courchaine, and she’s the VP of customer experience at Vehlo. She has written a book called The Moat. I had an early look at it. It was really well-written, super insightful, practical. I actually enjoyed reading it. I don’t enjoy reading a lot of business books, but I really enjoyed reading her book, and so I thought it would really be a great conversation to have her share her thoughts on how things are changing in the age of AI. So Jennifer, welcome to the webinar, and I’m really glad to have you here. Maybe introduce yourself a little bit more about what you do.

Jennifer: Absolutely. Thanks so much, You Mon, for having me, and to the ChurnZero team, and thanks everybody for being here today. I have been in customer success and customer experience for coming up on about 20 years now, and most of my time has been at SaaS software companies in the early to mid-stage startup. So anywhere from about a million in ARR up until about 250 million ARR. So I’ve seen a lot, but it’s mostly been at those smaller to mid-stage companies, which means lots of change. Change has always been part of startup life, and over the past few years I’ve also been privileged enough to do a little bit of local early-stage investing as well as startup advising.

Jennifer: And, you know, 20 years in, I’ve felt for the past few years that I had a pretty strong understanding of what good looks like for customer experience teams, and what a good executive in customer success looks like.

You Mon: That’s amazing. So lots of different views, Jennifer, from the smallest to 250 million. That’s a, I call that a large mid-market company. And now you’re consulting with smaller companies as well.

Jennifer: So I do that on the side, just locally where I can help out. But as my day job, I lead customer experience for Vehlo. We’re an automotive SaaS software company.

You Mon: Awesome. By the way, as we go along, you may have questions for Jennifer. We’re using the Q&A function here of the Zoom webinar. So please go ahead and just put your questions in the Q&A. All right, Jennifer, back to you.

Jennifer: All right. Fantastic. I thought up until a couple years ago that I had a pretty good understanding of what good looks like, and suddenly, overnight, I was a whole lot less sure, and I started asking a lot of questions of my peers, of folks who were starting and running companies. And when I talk to other customer experience leaders, everybody seems to be going through the same existential crisis. Took us forever, it felt like, to actually establish customer success as its own department, as a seat at the table, and then felt like as soon as we did that, we immediately got it diminished again. It got automated. It got moved under the office of the CRO. Only top-line revenue started to matter.

Jennifer: So I started thinking about, what does our craft actually look like in this new world? Does our work even still matter to founders and to investors? And after a lot of soul searching, I’ve realized that fundamentally, the work of caring for our customers is still the same, at least at the companies I want to help build, but the way we talk about it and how exactly we go about solving problems has shifted in this new world. And that’s really why I wrote the book.

You Mon: That makes a lot of sense. I think there’s… I agree with you. Even, this is a story I have to tell to a few people. Even the most veteran startup founders that I hang out with, these are folks who’ve started multiple companies, the future is unknown, right? And their confidence is shaken, right? Most entrepreneurs see themselves as really mapping out the next 18 months, and yeah, it’s hard to do. So I’m glad you’re here to help us out.

Why AI Is Eroding the Traditional SaaS Product Moat

Jennifer: Yeah. Thank you so much because all of the traditional moat levers that you used to have are going away, or they’re less valuable and less protected than they used to be, right? So for decades, the plan to build a venture-scale business has always been you find as big a total addressable market as you can, and then you focus on being first to market. So if you get there first, you have the time that it would take people to catch up, and then you can keep running ahead while they’re trying to catch up.

Jennifer: Or you can be the most feature-rich. If you’re the best, nobody can come and replace you because who else could design such a robust system? And then, of course, there’s the folks who’ve been really niche players. You go after, maybe it’s a smaller TAM, but you’re not gonna get the same level of competition, or you have such industry expertise that nobody can really replace that. But that gap is really shrinking. It’s not just that AI is smart, it’s not just that AI is fast, it’s that the barrier to replicating software has gone away.

Jennifer: You don’t have that 18 to 24 months of lead time because if a large incumbent or even a super tiny early-stage startup decides they’re going to create that feature or go after that market, they don’t need 50 engineers. They don’t need two years. They might need a prompt engineer and a week. They might be able to vibe code an MVP. And so that proprietary tech, that first mover advantage, those complex feature sets, those are all becoming easier and easier to replicate, which is really why that moat is disappearing and why there’s so much uncertainty these days.

You Mon: So you’re… Okay, so I agree with you. I do think product is a vanishing moat. There’s gotta be a moat somewhere else, right? I guess that’s what we’re gonna be talking about.

Jennifer: Oh, for sure. Yeah. You can absolutely still have moats, but the old-school product moat is really vanishing everywhere except the biggest players and the most niche industry edges. Like manufacturing, that expertise isn’t going anywhere. Aerospace, crazy regulated industries. Hard sciences, research, those are probably exceptions where you do still have product moats.

Jennifer: But if you think about SaaS software, there’s a lot of misaligned incentives to having your customer experience be your moat, and that’s where I think we as customer experience professionals have a ton of opportunity to compete and to really differentiate. Because the misaligned incentives are your VC or your PE backers often drive to short-term revenue and short-term results, and sometimes those are at odds with providing a really delightful customer experience. But I think that attitude is a gift to those of us who still wanna prioritize doing right by the customer, because a lot of businesses that are deprioritizing their customer support and their customer experience, customers feel it, and customers hate it.

You Mon: So even in the age of AI, you feel like the… And because some people would argue, ‘Hey, AI’s faster to respond, maybe even more accurate in some cases. It has knowledge to everything. It can stand up very quickly,’ but you still feel the human touch is an important one.

Jennifer: I think we all feel it, yes, in our day-to-day. I work with, just in my personal life in addition to my professional one, with a lot of different providers who are so big that it is worth it to them from an efficiency standpoint to downgrade the customer experience. And I’ve started, and I know most folks I talk to have started, putting my dollars where I get a better experience.

Jennifer: Yes. I want to be able to, if I have a flight issue, be able to pick up the phone and talk to somebody who can help solve my problem. I actually took a flight on a business trip, and I had booked it through our work expense management. One direction I was flying on one airline. On the way home it was a different airline. Both directions I had delays.

Jennifer: On the way out I made a phone call. My phone call got answered. They resolved my flight. Super easy. On the way home I do the same process. I get an automated message that says, ‘We can tell you booked through a third party. Call them,’ and they hang up on me. Yeah. I was calling about that flight, but what if I had been calling to try to book something else? They gave me no recourse to actually get to a human. Who do you think I’m spending more dollars with when I book travel? Whenever I can, I’m going with the provider that I know is actually gonna solve my problem when I run into issues. And that’s what I’m seeing professionally as well.

Jennifer: If you’re a SaaS-only play, you can’t rely just on your software as your moat. But by that same token, you don’t have to be the best software. Decent software is gonna become table stakes. Lots of people are gonna do very similar work. Where you can differentiate is the service you provide, and this has always been true. We’ve all worked with companies of, yeah, maybe I prefer this product, but you’re so darn likable, I’m gonna do business with you. That is gonna become more and more important, and I think we’re already seeing that becoming more of a differentiator where you can compete in rooms you might not have been able to if you didn’t double down on providing that great experience.

AI Commoditization, Retention, and the New SaaS Buying Environment

Jennifer: Yeah. And so a little bit more about just some of the dynamics that are happening with AI commoditization, that unique value, we’re actually seeing that hit businesses in multiple ways. In SaaS, you used to be able to do growth at all costs, right? Spend twice what you’re making for the foreseeable future as long as you keep growing like crazy. But that was partly because customer acquisition cost might not have been that high. Your payback period might not have been too bad. Across industries, we’re seeing CAC actually rise, where it costs more to get customers and they are less loyal. Their lifetime value is shrinking because the barrier to switching products is easier than it used to be.

Jennifer: But there’s something else that’s going on, too. Everybody is buying more software than they ever have before through a combination of AI and just this new productivity stuff that’s started coming out. So with all of the new tech that’s flooding the market, most businesses don’t have specific budgets like they used to. So a lot of what they’re doing is doing proof of values or proof of concepts side by side, lots of pilot programs where companies are testing out multiple competing technologies side by side. So you might feel like you won the business, but you’re actually still in the sales process because businesses are testing out what’s gonna work for them, and then they’re gonna pick their preferred.

Jennifer: It’s also much squishier to actually find budget now when you’re trying to buy software. It’s not owned by the same teams that it used to be, and companies are buying what they can when they can. And if they see something new and shiny, and they have to eliminate some existing software in order to pay for it, lots of companies are making that bet as well. With how commoditized everything is, switching costs are also pretty low. AI makes it a lot easier to migrate from one system to another than it used to be. It’s not gonna take you a year to lift and shift your data in most cases.

Jennifer: So again, if you’re relying just on your product, a customer may leave because the competitor has a slight feature edge, and it’s just not that hard to leave anymore. And then these show up in your valuations as well. So from a broader market dynamic perspective, since growth rates are slowing down and cost to acquire is getting higher respectively, that means that investors are taking a much harder look at your retention rate, both on the gross and the net, so that they’re really gonna reward those who have stronger customer satisfaction, stronger gross and net retention, even if maybe there’s a slightly lower growth rate than a similar company with much worse retention just because that is indicative of a much healthier business.

You Mon: The thing that was interesting right before this webinar, Jennifer, we were having a conversation about where we want to take our own messaging here at ChurnZero. Just staring at my belly button for a second, one of the things we did say was, whether or not AI is going to have an impact or not on your business, right? Or do you think AI is a differentiator or not, like the noise out there is really deafening, right? And so a bit out of your control.

You Mon: And so it does feel like, in fact, you should just assume no matter how good you are or how good your competitors are, that no one’s going to hear it, right? They’re going to do all the things that you’re saying on the screen, no matter how good you are. And so therefore, you have to assume that buyers are behaving this way. And for us, it was like, okay, we have to continue to double down on what we always thought was what made us different, was that we were a good partner to our customers. Like we will join with them to lead them through transformations and through optimization and improvement. So yeah, we had this conversation ourselves just now. It’s interesting.

Jennifer: I love that because part of it is also being a good partner means you have a little bit of personality as a company as well, right? And I think that is something we’re seeing more with brand recognition and loyalty as well, is you can’t just have a great CSM who you love working with. CSMs get other jobs. They get promoted, right? And so how do you make sure that you’ve got that spirit, kind of that soul of the company in a way that shows up, whether you’re attending a webinar or a conference or using the software?

Human-Centered Customer Success: Trust, Expertise, and Empathy

Jennifer: All right, so when we think about what makes humans different than AI, ’cause like I said, there’s a ton of utility in AI. We should all be using it in various aspects of our day-to-day and our businesses, and we should also be infusing it into our products as well. Take advantage of the tools that are out there, but don’t think that it’s gonna replace some of the best things that we have always gotten out of our humanity.

Jennifer: I really think that if you see AI just as a threat, you’ll hide from it, and that will continue to make you less and less marketable as a business, as a person. But also, if you see it as a magic wand, you’re not gonna have the right level of guardrails in place. So the future of customer experience isn’t humans versus AI. It’s actually the same as it always has been. It’s humans with technology enablement. But that technology enablement is actually better, stronger, faster than it ever has been.

Jennifer: I think anybody who’s been in customer success more than one job, maybe even if it’s your first job in customer success, you’ve heard the mantra of, ‘We need to do more with less.’ And so that’s always been the struggle of, how do we keep satisfaction high? How do we keep retention high when we have less people to actually do the work? I think AI has actually unlocked it to where we can actually do more and not have to scale linearly, which is awesome. It’s a huge opportunity, but you also can’t abdicate your trust, your expertise, or your empathy.

Jennifer: It’s funny, if you actually chat with AI about what it’s good at and what it isn’t, the first thing it’ll tell you it can’t do is empathy. It’s like, ‘Yeah, I can fake it, but I don’t care.’ And that kind of comes through if you’re an AI-only company. It doesn’t really focus on solving the problem. It may solve the problem, but it’s really focused on efficiency and deflection.

Jennifer: And so when you think about how to double down on the things your humans are good at, it’s not just good support. It’s leveraging your humans as a strategic asset across these pillars of trust, expertise, and empathy. I would argue that every high-performing team has always been great at trust building, at providing expertise, and at empathy. But I think we’ve all had a lot of players on our teams through the years who do a lot of just checking in, right? And the just checking in is something that is really gonna go by the wayside, and these core themes are going to be what provides better experience, not just better software, not just better product.

Jennifer: So the consultative piece is really asking prospects and customers how they would prefer to utilize the software. We can go so fast now with software builds and with workflows with customers. We may be able to provide more configuration, more customization. SaaS software’s always solved 90% of whatever a customer’s trying to do, right? That’s the perk of SaaS is we don’t customize it. We configure it. And I think AI is gonna let us tailor more. But how we tailor it is gonna need to be adjusted customer by customer. That 10% isn’t the same at every business.

Jennifer: What AI is good at is the sameness, right? So yeah, if 80% of your tickets are always the same types of questions, AI’s gonna be great at that 80%. If the 20% is really niche, get that into a human’s hands as quickly as possible so that they can actually solve it. So the value really is all about expert guidance, and also giving customers the confidence that they’re not gonna just get stuck in this AI loop. If there are mistakes, if there are outages, there’s accountability where they’re actually going to get humans who are working to solve the problem and communicate.

Jennifer: And then the final piece here, I really think AI’s really good at answering how do I do this. It’s bad at saying why or how do you actually solve this problem. So expertise looks different if you’re doing a reactive interaction versus a proactive one, but the common thread is really that customers rely on you to be the expert and to be the guide.

You Mon: In many ways you’re really talking about what CS people were originally supposed to do, right? Which is really, all these things that you’re talking about is really why we hire CSMs. But there’s a lot of busywork, right? The checking in, the answering, the 80% question. And we’ve hired a lot of people to do those things. Are you expecting, from those of us in the audience who are CS leaders, that our team composition’s gonna change over the next few years as we focus more on what’s on the screen, the consultative, the connection, rather than the check-ins and the problem-solving?

Jennifer: Yeah. Bluntly, I think it’s gonna be harder for people to be mediocre at their jobs. Like the good CSMs, I think, have always been strong at this, and they’re gonna be able to do even more. Like they’re really gonna be able to focus on long-term retention, but also expansion just naturally. I think I have, and I’ve always felt that expansion is a natural follow-on to a great product and experience that solves your problems. The more problems we solve, the more problems you want us to solve. The more value we create, the more value you want us to create.

Jennifer: I think we may see more CSM involvement in implementations than we’ve seen in the past. But the reason for that is I think there’s a lot of implementation work that is going to be automated or be able to go away because of AI. I think that’s an area that’s really ripe for just great enablement and automation. And so CSMs building that relationship from the beginning, remember, it’s really hard to success your way out of a bad implementation, right? So setting a customer up with a great experience from day one, who’s best at that? It’s not the project manager who’s just going to work with you for the duration of your implementation. It’s the CSM who’s supposed to be with you your whole life with us. And so pulling them in early and getting the stupid stuff off of a CSM’s plate, I think is a huge enabler.

Jennifer: I also think there’s gonna be a lot of opportunity, and there already is, to scale non-linearly. It’s always been something, do we go pure digital touch, or do we do a CSM per five million, or a CSM per 100 customers? Whatever that right number for your team might be. So much of a CSM’s time is sifting through bad data, that if you have your AI clean information up, cross-check systems, bubble up to you, ‘This is the most important stuff today,’ then the human can do the good humaning. And they’re going to be able to spend most of their time doing that work, not doing the number crunching that great CSMs aren’t good at anyway.

You Mon: Yeah. I know we’re gonna come to this, but I’m sure a lot of people in the audience, how do I… I’ve been told to cut funds. How do I fund all this? But we’ll get into that in just a bit.

Customer-Centric Leadership and a Company-Wide Customer Experience Culture

Jennifer: Yeah. Yeah. Yeah. Absolutely. All right. There’s a dangerous assumption that a lot of organizations have that the customer experience is the responsibility of customer success or support, and I think that’s a failure of leadership. Customer experience is a team sport, and leadership in this really starts at the top. If the CEO doesn’t personally care about customers, customers can tell that.

Jennifer: So if the leadership team treats support tickets, let’s say, as a cost to be minimized, right? We need to get deflection high and it as efficient as possible, then how are the frontline agents gonna behave? They’re gonna treat customers like tickets to be closed. And so the culture across the customer experience, it trickles down, it doesn’t trickle up.

Jennifer: I think the biggest barrier to delight isn’t budget, it’s bureaucracy. If you empower your support and your CSM teams to have some delight budget, maybe it’s a threshold of normal buy-up features that they can give for free, maybe it’s consulting or services projects that they can offer either for free or at a discount. Giving your teams some tools that they are empowered to use to solve customer problems really can help move the needle.

Jennifer: Personally, I have a standing rule that any customer, no matter how big or small their contract is, can be escalated to any executive at any time. CSMs almost never use it, but they know it’s there in case of an emergency. Exactly what options you give your team are less important than actually having options, but even without any additional budget, you can dramatically improve morale and improve that customer experience because it moves you from having to go through approval workflows for stuff into actual problem-solving much quicker. And then when your employees feel trusted, they can trust the company back, so they stay longer, they have more expertise, they perform better, and they take better care of your customers. So it becomes this really nice virtuous cycle.

You Mon: Yeah, I am with you on that. It is the culture. If you’re a CSM at a company that doesn’t value customer experience, it’s really… Now, the intractable problem is what if you do have a leadership group that you don’t think is customer-centric? You could try to change from within, right? Which I think it feels, and it’s the everlasting problem, is it feels hard. I don’t know. Have you seen anything that works to try to, if you feel like your CXOs are not customer-centric, is there something that you can do, like a couple of tricks that you would share with the audience?

Jennifer: Yes. I think it’s important to temper your expectations, right? If you have a leadership team that doesn’t deeply care about your customers, you’re not gonna suddenly make them see the light, and they’re going to completely change how they operate. But that doesn’t mean you can’t make improvements. So you have to try to understand what does your C-suite value, and how can you leverage them in a way that makes them feel like they’re getting that value.

Jennifer: So for example, I once worked with a CEO who didn’t particularly care for customers, and he also hated bad news. Okay. And a lot of the customers weren’t terribly happy, right? So you can imagine he never liked to talk to customers. But he was one of those people who really liked to feel important, right? And that’s okay. I score pretty high on the importance scale. We all like to feel important and valued, right? So what I would do is these really premium events with him, where we would host Michelin-star dinners with the buyers at the top companies, or these really exclusive little happy hour events. Very small group with senior leaders who, even if they’re not happy, they’re not just gonna spend an hour ripping you to shreds, right? Everybody’s a professional in the room.

Jennifer: And that was great, because we’d get him in the room, he’d feel important ’cause he’s hosting this fancy event with these fancy people, but then you know what? Those fancy people also like to feel valued and important. And so they get some face time in this intimate situation with their peers at these other big companies. We were serving Fortune 500 companies here. So we had some really big names and some very senior people. And that really helped get those senior leaders more engaged and more comfortable, and then the actual customer experience team could drive any follow-ons. But that was a way that was really successful at getting our CEO actually out there and in front of people.

You Mon: I love that tip, because it basically is meet your customers, CEO tenet number one, but do it in a way that feels better for a CEO that may be more reluctant to do it. So I do like that a lot. Yeah, put them on a roadshow. I love it.

Jennifer: Yeah, exactly. And then the other team that I think at the C level is hardest to put in front of customers is your CTO and your CPO, right? And I’ve had a lot of luck getting product and technology leaders doing really targeted, focused customer advisory boards. And my favorite thing to do there is take the worst feature of your product that they wanna fix, but they don’t know how, and get your most vocal customers into either a virtual or an on-site—you can do this as a roadshow too—and get your product and technology leader actually talking with those customers about what they’re hoping to accomplish.

Jennifer: ‘Cause often, the product and tech teams just aren’t exactly sure what the customer wants, and so this lets your most vocal, usually power users, get that feedback directly to the source. And that’s actually been a lot of fun for me, because it lets us focus on the bad, and even before we’ve solved it, we immediately change the customer perception, because now we’re listening.

You Mon: That’s great. I know I’m peppering you with questions, but we do have a bunch of slides to get through, so let’s move through.

Customer Experience Budget: People, Technology, and Experiences

Jennifer: All right. You got it. So you asked before, right? Yes. Where do we spend our money? How do we spend our budget? And I would propose that the right spend is about 60% on your people, about 20% on your systems and tooling, and about 20% on your experiences. And you’re probably gonna say, ‘Jennifer, I spend 100% on salary. I can’t take 40% and spend it on systems and tooling and experiences.’ Somebody at your company has budget for experiences and systems and tooling. Somebody’s paying for it. It might not sit in your budget right now. Try to get it.

Jennifer: I think if you have control over the systems and tooling that you are using, you will be able to go so much faster. And you don’t necessarily need more tech, you just need a little bit more control over the tech that you have. Same thing on experiences. Most experiences get run through marketing, right? And maybe a little bit from sales. Get some of that budget earmarked into the customer experience team, and do not put it at the director level or above.

Jennifer: Put a bunch of that money into the actual teams so that it’s not just sales that can send out a fruit basket, right? Make it so that, oh, a customer had a baby. I’m gonna send a DoorDash gift card. Oh, somebody lost a family member. Send a sympathy basket. Most companies are already doing these things, but you have to ask for it. Make it so that CSMs have a budget. Even support, give support a little bit of budget of, ‘I heard this good or bad thing, and I want to recognize you as a person.’ And build some of that money. I promise you do have these dollars. It’s just a matter of getting some of that out of the teams that it might have been abdicated into.

Building an AI Roadmap for Customer Success and Customer Experience

Jennifer: All right. And so once you have some AI that you know you plan to roll out, there’s a real challenge here, right? Because there’s so much opportunity. I could slap AI on anything, right? I could vibe code anything I want to start playing around. So where do you actually start? The number one tip that I always give is don’t replace what’s working. There’s always a tendency to go, ‘Oh, I know this part of our process really well, so I’m gonna automate this process.’ Honestly, for most customer success and experience teams, if you already have a process on something, don’t start there. Start on the black holes. Start on the areas that frustrate you. Start on the areas that you know you should do, or, ‘Oh, yeah, we’re going to get to that.’

Jennifer: If you’re not exactly sure where to start, do an audit of your processes to figure out what is breaking or what is missing across your team, your tooling, or your workflows. Think about where do your internal teams burn out? Where are you lacking visibility into your customers and their behavior? Where are the biggest friction points when you have handoffs between different teams? And then if you’re still not exactly sure where to start, take the time, take a half day, do a full customer journey mapping exercise. You don’t have to get consultants in for this. You just need a whiteboard and some team members from each group to actually do this.

Jennifer: But capture every stage that a customer goes through across their full life cycle, starting while they’re a prospect, and then capture every handoff, figure out what success looks like at each stage, and then who owns the successful navigation of each stage. And you might find in some stages you actually don’t know what success looks like, right? And in some cases you’re gonna have really robust areas that you know. So you’ll find some areas that you do really well. Leave those alone. But you’ll also find some areas where maybe you do okay, but there’s some friction, and then some areas where you’re not doing anything.

Jennifer: Those friction points and those we’re-not-doing-anything areas are the places to start, and start with the easiest stuff first. It can be really tempting to take the thorniest issue. Don’t. Go for low-hanging fruit first. So if you have this huge project that will take a month, but it’ll be life-changing, maybe don’t start with that one. Start with the one that saves everybody five minutes every day.

You Mon: I’m 100% behind you on that one. Yeah. Yes.

Jennifer: Yeah, and then you can just chip away at it, right? But the more value your team sees, the better their adoption is gonna be. So the better the results are gonna be, and the better the results are gonna be, the easier it is to get your C-levels to continue to say yes.

Jennifer: All right. One more tip here on your AI roadmap. A lot of these things cost money, right? So if we’re back to budget and we’re being told we don’t have any budget, what do you do if you have no budget? Look at your current contracts. There’s actually a lot of software that I think of in kind of a borrow stage, where you’ve already purchased software from some vendors and what were we talking about earlier? Everybody’s sprinkling AI on their systems, right? Every SaaS company is trying to figure out what their product AI roadmap is. So there’s a lot of incentive for the businesses you work with to get you to use their AI, and there’s a lot of pricing concessions in order to get you hooked. So if you have no budget, figure out what systems you’re already using that have AI included as part of your contracts. Even if it’s just included for a period of time, use it for that period of time, showcase results, and then you can show the ROI and you can get budget for it.

Customer Success Metrics: Retention, Customer Effort, and Voice of Customer

Jennifer: All right. Unhappy customers don’t always churn. Happy customers don’t always renew. This is the great sadness of leading customer experience, right? You can have a really happy customer, and for some reason they still walk away. So because of that, while it’s easy to rely on things like CSAT, NPS, the real core of whether or not you keep and expand your customer base is how many problems you solve for your customers, how many unmet needs they still have, even as a customer of yours, and how smooth you make it for them to go about their business.

Jennifer: Remember, most people are not using your software as their job. They have their job, and your software is supposed to enable them to do their job better. I think a lot of companies fall into the trap of measuring things that are easy to measure or that look good, not necessarily what’s meaningful. So because of that, a lot of metrics can be manipulated. They don’t necessarily by themselves predict the health of your base. So look to metrics that measure intent, customer effort, cost to service, trust. Those are the leading indicators that are gonna tell you not just if somebody’s happy or not, but how successful they are and whether or not they are likely to stay with you.

Jennifer: I also think the way you talk about metrics in board meetings, in executive meetings really matters. Build your leadership decks with an opinion, and don’t ever let that opinion be a complaint. You do not want to go in and be a tale of woe. Think about when your sales counterpart misses their number, or they don’t have the pipeline. They don’t go in with a tale of woe. They go in with, ‘These are the numbers. This is what we’re doing about it.’ That’s what we should be doing. ‘These are the metrics. This is what’s good. This is what’s bad. This is what we should do about it. This is the cost if we don’t do something about it.’ Don’t just report on the what, report on the why and the how.

Jennifer: I think as you’re adding color to your metrics, voice of customer interviews are really important if you’re not sure where to start, because you can tie them to both positive and negative themes that you see in at-risk conversations, in loss interviews, and it really can show what’s working and what’s not working. Customer stories have real power everywhere, as long as they’re rooted in data, and that includes the boardroom. So all of those things are really unique value adds that you get to add as the customer leader, and they contribute directly to your bottom line. So don’t just present the numbers, tell the story, too.

You Mon: Yeah, one of the things that I would add to this is, if you had shown me this slide five years ago, it would be, ‘Oh, that’s so hard to do. It’s all anecdotal, right?’ You’re talking about now with AI, you really can process tons of information, calls and whatnot, intent, in order to do this. So this has been pretty much unlocked by AI and at a scale that we just were not able to do before. So yes, the more we dig in on this, I think the better off we all will be.

Jennifer: Yeah. No, fantastic point. And I think it can be so tempting to say, ‘You need to give us more money,’ right? When the actual answer is often, if you spend money here, you will get this money here. If you do not spend money in this area, then we will lose… Then these are the impacts, right? It’s all about what is the impact versus the cost of investing in a certain area.

AI Strategy for Customer Success: Build, Buy, or Borrow

Jennifer: All right. So once you identify where AI can help, you have to figure out how you wanna implement it. I think a lot about what should we build, what should we buy, what should we borrow? I already mentioned that borrowing to me is really, it’s already in with my existing vendors, right? Maybe I have to pay a little bit for it, maybe it’s free as part of my subscription, but I don’t have to go through another security review. I don’t have to go through another full budget approval process, right? So I really like borrowing, especially where we’re at in this stage, because you know it’s an established business that you can trust.

Jennifer: There are thousands, probably tens of thousands, maybe even more AI companies that have been started within the past few months, right? Some of those are gonna turn into really incredible companies. Some of them are gonna try to sell you vaporware, and in a demo it’s almost impossible to tell. So you need to be diligent about looking at what you’re buying, but also with your borrowing you’re gonna be able to start testing things a lot faster.

Jennifer: A lot of companies will look at buying as well because, oh, this solves this exact niche problem. I’m gonna buy it, gonna plug it in. You can do that, but you can also end up with a bunch of systems that do something really similar, we just have 20 of these that we’re buying, right? So be mindful in your overall AI landscape.

Jennifer: And then if you’re at a small, particularly founder-led company, you’re probably gonna hear a lot of emphasis on, ‘We should just build it.’ Founders really like to build because that’s how they were able to build their company, right? I would caution you against building too much that is not at the core of your business. For example, if you are a customer success platform, you probably shouldn’t be AI coding your HR system, right? Yeah, you might be able to build it, but is that really something you want your developers to maintain? It’s really easy to forget about the maintenance portion of software and actually getting it ready for production, right? You can make something really elegant in AI that might not actually work in real life, and it might be terminal, right? There’s no way to actually change this into a way architecturally that will work. And you won’t know that if you’re a non-technical user vibe coding it. So really think, ‘Okay, what should I buy? What should I borrow?’ And then, ‘What is going to move the needle on our core business that we should build?’ And then that really lets you kinda double down in those areas.

Building Customer Success Teams for the AI Era

Jennifer: All right. So the last piece of this is really how should you hire? What team should you build? I think the best human traits are still the best human traits. So you wanna look for people who can navigate the gray areas, ’cause we’re gonna get more of them, with empathy, and approach their work with curiosity, learn fast, are resilient, are adaptable, and have a bias for action.

Jennifer: Also think about enabling your teams to really do a lot of continuous learning to get them to the next level and keep them competitive. So consider hackathons for your non-technical teams. Let them use AI and other emerging technology, and really use what they create. Don’t put too many guardrails on things like hackathons. See what creative things your team can create, and then infuse the great ideas. Also think, make sure you’re doing strategic offsites. Getting your teams together, especially if they’re remote first, on a quarterly basis if you can, is super impactful. If you can’t get them together in person, get them together virtually. Still carve out real time to pull people up from the day-to-day and think about what we are and where we wanna get to and who we wanna be.

Jennifer: All right. And so at the core, you really want to think about not just retention, but naturally shortcutting to value realization. When you truly care about your customers, making sure that your customer achieves the business outcome that they bought your software to achieve is job zero. So when you’re working with customers, efficiency is not the goal. Effectiveness is. Speed is not the goal. Resolution is. And cost isn’t the goal. Value is. When you prioritize these things, you’re much more likely to have customers who stay with you and continue with you in the long term. I don’t think it’s ever been more important to be in the business of customer success.

Jennifer: And with that, those are our slides. So I did write a book called The Moat, and so you can always access the book on Amazon via this QR link if you’re interested. Please also connect with me on LinkedIn. Would love to hear your thoughts and what you’re seeing as the world just kind of shifts.

You Mon: Yes, changing. Jennifer, thank you so much. That was great. Lots of tips, lots of sort of ways to think about how companies can really survive all this change and really focus on the things that matter.

Customer Success Transformation, Hiring, and Board-Level Growth

You Mon: I have a couple questions as a follow-up. One I’m gonna take—Jan had a question in the Q&A. I’m gonna take her question and expand it a little bit. So she’s transforming her team. In her case, she has customer support people moving into customer success, so expanding that role. But in general, I think we will, just listening to you, I think we will all have this challenge: What should I do with my people, right? Those are the folks who, that’s just the hardest thing to change in a company, is the personnel. There’s a lot of emotion behind it. There’s a lot of investment behind them. But they are gonna have to change. So maybe either specifically for Jan, who’s trying to move from customer support into customer success and trying to uplift her people, or just in general, how do we face the change? Any day one or week one tips you would have us think about?

Jennifer: It’s such a great point. Change is scary for everybody. It’s a human trait that change makes us nervous, right? Even when it’s good, change makes us nervous. I think we have to reframe change as continuous improvement and continuous evolution in order to wrap our brains around it. That’s what I try to do, where it’s not, ‘Oh, another change,’ it’s, ‘Oh, this is the next step of our business.’ And just, culturally saying that, the same things over and over. We don’t talk about change, we talk about this new process as part of our evolution. We talk about, at this next stage we’re able, we have the privilege to operationalize this component. We have the privilege to expand your role because we’ve been able to automate the dumb stuff, right? So part of it is the words we use. A lot of people will say, ‘Oh, it’s just semantics,’ but I believe words are all we have. So framing things can actually help in being super consistent in the words you use.

Jennifer: Specifically when you’re transitioning from support to customer success, there’s some things you’re really good at in support. You’re really good at solving problems. You’re less good at the proactive stuff, and you’re less good at the problems you can’t solve. So focusing on those areas as part of a transition path, understanding that those aren’t weaknesses, those are just areas you aren’t as strong in because they haven’t been as required, can really help. And exactly how to do that can vary based on your organization, but those are the areas to go, ‘Hey, it’s okay that maybe you’re not familiar with how to navigate this. Here’s a peer mentor. Here’s a team lead,’ that kind of thing, who can work with you on this. But also double down on that great technical knowledge and product expertise that they already have so that they can add some real value to their customers as they transition.

You Mon: Let me ask you about your specific, let’s say about your situation. So you sell into the automotive vertical. Who’s your actual customer? Are they dealers?

Jennifer: Our actual customer is the service department at automotive dealerships and at repair shops.

You Mon: Okay, so very specific, right? So service folks. Let’s say you didn’t have any CSMs. Zero. So you’re just hiring a new team from scratch with this vision of what’s changing and this moat you have to create. Are you hiring folks who have been in the business, actually been in automotive service? Or are you looking for, say, Jack and Jill of all trades? Are you looking for liberal arts majors that can learn and be flexible and speak, have good ownership of language? If you were to generalize, like what types of people would you look for if you had to start from scratch?

Jennifer: So if I was starting from scratch with no product—

You Mon: No. Oh no, for Vehlo. Yep.

Jennifer: Yep.

You Mon: For… yeah.

Jennifer: So for Vehlo I would hire folks from industry.

You Mon: Industry, okay.

Jennifer: And that’s actually what we do as well. We are constantly in a state of transformation. We’re highly acquisitive. We’re made up of 20 different businesses that ended up getting acquired over the past seven years or so. And so with that highly acquisitive nature, we’ve got a lot of products that are various stages of integrated with each other. And service drives are also very specific in the way they work. And so it is easier for us to just train you on how our software works, and have you already know who our buyer and user is because you’ve worked with them than it is for us to train you on our users.

Jennifer: That’s not true for support. For support, I hire more technical people who can dig in. Because when somebody needs their problem solved, they don’t care if you’ve worked as a technician. They care if you can fix their problem, right? And so I want more technical people who can solve those problems, but I want people who understand more of the business need for my CSMs.

You Mon: All right. Friend of the pod, Bob London, who’s a great friend of CX, he has a question. I’m gonna reframe it this way. If you’re gonna make change in your organization, you need board support. You need boards to really back you. How would you connect what CX does to a board-level priority? Or like what is that board-level priority that you think resonates with CX the most? Sometimes it’s a metric, call it growth or NRR. What would you attach it to?

Jennifer: I would do it against top-line growth. I would do, if you invest in customer experience, we are going to improve the cost to acquire customer, we are gonna drive down the sales cycle time, we’re gonna improve cross-sell and upsell, and, by the way, we’ll shore up gross retention as well. I put them in that order because gross retention takes the longest to move. Those other metrics are very sales-driven historically, and we can tend to operate pretty quickly on them. But sales hates filling a leaky bucket. Everybody wants to see if we’re selling an extra… if we’re growing at 30% from new business, the last thing we want is to be losing 20% off the bottom, and then we’re only a 10% grower.

Jennifer: So tying it to that top-line revenue is the best way to get the board to listen up, and then be correct. Don’t be too conservative on your numbers. You want to be able to deliver on your numbers, but don’t be so conservative that it’s a non-starter. You need to actually be aggressive in the kind of goals that you think you can hit if you’re asking for really meaningful investment.

You Mon: I want to share a comment from Michael. Michael says, ‘Multipliers and compounding customers, that’s what matters.’ Actually, I do want to focus… I love the word compound. And by the way, I think this, if you’re talking to CFOs and you’re a CX person, use that word. ‘Hey, retaining a customer has compounding effects.’ They’ll know it. They’re like, ‘Ooh, I love compounding effects,’ right? Those are the ones that really move a spreadsheet. And they understand, the CFO understands more than anyone else the impact of retention.

You Mon: In fact, one of the things I think maybe we talked about before is if you had a buddy among all the CXOs, like, who’s gonna be your buddy? Who has the most impact CEO-side to do what’s best for CX? Would it be the chief product officer, the chief technical officer, the chief financial officer? Who would you pick to choose to be best friends with?

Jennifer: I think CX leaders really need to have strong relationships across the board, but I’m gonna say the CFO.

You Mon: Oh, okay.

Jennifer: Yep. I think you need to not negotiate against yourself. You need to present options, and if you can get in tight with your CFO, then they can make real change with you. Second, I would say the CRO. You need to be part of the go-to-market engine. I hear a lot of teams talk about go-to-market as though it’s only marketing and sales, and you’ve gotta be in those conversations.

You Mon: I agree with you 100%, 100%. We only have a minute left. I do think there’s one real quick thing that maybe I’ll address, is there’s some bottlenecks created from the uneven distribution of AI, which creates what Virginia calls bunching, right? I’ve seen this. It happens, by the way, it’s gonna happen everywhere, right? The implementation and use of AI is gonna be uneven, and all of a sudden you get a lot of high productivity from one department that then gets bunched up at another department.

You Mon: Anyway, so I think that actually is unanswerable. I think we all just have to… it’s a big game of Whac-A-Mole until all the moles are gone, and guess what? The moles never go away. It never ends. So Virginia, it’s gonna bunch, and you’re going to smooth it out, and it’s gonna bunch somewhere else. You’re gonna smooth it out. Anyway, we’ll end there. Hey, Jennifer, thank you so much. Really appreciate your time. And folks on the webinar, you will receive a copy of the slides. I encourage you to buy a copy of the book, The Moat, and you will also get a copy of the webinar. So thanks, everyone, and appreciate you spending an hour with Jennifer and myself. Jennifer, thank you so much.

Jennifer: Thank you, You Mon. Had a great time.

You Mon: Okay. Talk to you soon. Bye-bye.