INTERVIEW
Is Customer Success Dead?
With Chris Adlard – Founder, The C-change Diagnostic
That’s just one of the questions answered during this discussion. (Spoiler alert: it may well be dying at your company.)
Chris Adlard has been both a gamekeeper and a poacher, you could say, in the CX world, as well as leading CX transformation programs at financial technology firms, Finestra and FIS. Chris collaborated on the creation of his book, The Customer Catalyst, which took a very practical approach to best practices in both customer success and customer experience. Most recently, he introduced the C-change diagnostic, that companies can use to evaluate their CX progress and receive extensive suggestions on the next action each major function should take. And it’s no secret that we’re big fans of that tool.
During our conversation, Chris emphasized the need for a company-wide customer obsession, arguing that customers are today’s growth engine, especially in the SaaS industry. Now, that might not be a terribly new idea, but I do think Chris brings both a fresh perspective and a high level of energy to this conversation; and some of the trade -offs that get discussed between being profitable in the short term and being customer driven. What is perhaps somewhat of a new angle on this discussion is his acute focus on ethics in business and the argument for a customer obsession as not just a profitable, but ultimately an ethical requirement for businesses.
Richard
Let’s start because people may not be familiar with your work around The Customer Catalyst and the subsequent work you’ve done around creating a whole series of analytics around this. So perhaps it’d be really useful just to kick off with what you would say to someone is the sort of key message of The Customer Catalyst as a methodology and approach and what you talked about in the book.
Chris Adlard
Sure, yeah. So firstly, great to meet you again, Richard. 2019, just before the pandemic started, me and a guy called Daniel Bausor sat down and wrote a book around customer transformation called The Customer Catalyst. And clearly there are hundreds of books out there about customer experience, customer success, customer transformation. There are a lot of things out there.
What we tried to do is think of a different way of approaching transformation within an organization, a very pragmatic view that brought together a lot of these ideas from across the market, that in some cases have existed for decades, and put it together in a way that would be easy to execute with really good case study examples of things that companies have done to deliver that change. So that’s the Customer Catalyst book.
We’ve sold a number of copies around the world, thousands of copies. It’s had great reviews, had lots of nice feedback. And generally, I think people have considered it to be a solid contribution to this whole area of customer transformation.
Richard
And bringing that up to speed, so based on that, you built the C-change diagnostic, which is a practical tool. And explain to us a bit more about what the diagnostic is.
Chris Adlard
Okay, well, I mean, a book is a book, of course, and people love to read books, but in this world today, I think people generally don’t have as much time and patience to sit down and read a whole business text, especially if there are hundreds of books out there that claim to do similar things. And the key thing, I think, is to turn insight into action and actually help people on their journey and give them kind of the set of actions that can help them deliver that change. The diagnostic is, you know, it takes the idea of the sea change from the Customer Catalyst book but turns it into a very simple set of questions that take 10 minutes to complete. And the result of that set of questions that anyone can fill out for free is a really nice report of around 10 pages.
That gives some recommendations about any company and what they might do to achieve that customer-centric transformation and growth. And so far, I mean, it was launched about three months ago and we’ve had several hundred people complete it already. There are different versions depending on whether you’re a partner or an enterprise organization. But the feedback we’ve had so far is this is a very useful tool to help people on that journey.
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Richard
Yeah, and I think a full disclosure, I think we’re very excited about this. Um, I think from our perspective, anything that starts to quantify, quantify these sorts of dimensions is really interesting because we’re data wonks and you know, very keen to understand what people are saying. But I also think it can be used as a prescriptive mechanism. At the end of the day, companies want to understand, okay, where are we and what should we do? And as you said, books, books provide a framework, but tools get it into the real world. Getting back to one observation from your book was you talked early on about how salespeople miss their numbers all the time, which I think is if we’re candid about it, and I’ve been in the B2B SaaS industry for 20 years, you would be shocked probably if you were in that industry or you were a venture or private equity company how many numbers get missed. Now, by the way, there’s a corollary to that, which is that most S&P 500 companies don’t consistently hit their numbers over a five-year period. So missing numbers is actually more the norm than the exception. And you make the argument, and I don’t want to put words in your mouth, but I think the essence of your argument is that acquisition is risky and difficult, and utilizing customers as a growth engine is underdeveloped in comparison. And so, this is a very fundamental level.
It’s hard to get stability in financial performance. Is that a fair way to frame it?
Chris Adlard
I think you framed it very well, Richard, and you clearly read that section of the book, or at least the whole book. So that’s great. But yeah, exactly. Let’s be honest, sales is a very blunt instrument. And I think it’s geared that way. It’s deliberately set up so that only 20, 30% of salespeople will really smash their number. The rest, you know, there might be a number of, maybe the middle ground that sort of bumping around, the sort of just about making it, but maybe not quite. And then there’s a load that just aren’t meeting it at all. It seems to me that’s a very expensive way of growing business. You know, the amount of money it costs to recruit a salesperson, to train them up. And if they don’t get the patch or don’t get the market or the set of customers or prospects that they feel is, you know, going to give them their return, they get bored pretty quickly and they’ll walk away.
So, for me, that is a very expensive way of driving growth. I think, you know, someone like Fred Reichheld would consider that a form of bought growth in the same way that advertising is and spending loads of money on marketing. The alternative to that is earned growth, which is, you know, where, as you said, your customers are your growth engine, they’ll recommend you, and that’s where the, from a sales perspective or a marketing perspective, it doesn’t matter.
And so, I think, yeah, it’s I feel like we’re at a point now, especially with SaaS, that customers are everything for your growth. You know, one of the biggest challenges is, how do you make sure you build a growth engine with your customers to the point where the customers don’t own your company and don’t own your roadmap? There’s a whole set of other challenges that come out on the back of that sort of ethos. So, you know, bottom line, yeah, I think customers are the growth engine today, 100%.
Richard
And I wonder whether or not one of the things that’s just changed, obviously, since 2008, we had a period of 10 years or so where cost of capital was very low. That translates into very easy investing environments for private equity and venture, which is predominantly where B2B SaaS lives. And that means that buying growth very expensively didn’t look as expensive because if capital’s cheap, then the equation, I mean, we’re seeing companies with, even though people may say a 1.0 CAC ratio is okay, intellectually saying it costs you a full year of customer revenue, let alone profits, it might end up into two or three years of profits, to acquire a customer still seems a very expensive acquisition, it just looks cheap when capital’s abundant. Now capital’s less abundant and the pressure is on.
So, does that give you optimism that the companies are going to pivot more towards customer driven growth?
Chris Adlard
So, I honestly don’t know the answer to that question. I’m not a fortune teller. What I do know is that the drug of capitalism is so powerful that most people are addicted to it. And let’s be honest, people have been reinventing customer experience, customer transformation since time began pretty much in the vain hope that this form of ethical, sustainable growth will kind of become the best way to build a business.
And I think it does come back to ethics. A lot of it, it’s about whether the business itself values the delivery of the solution, whatever it is, or the product, or the service to the customer so much that they want to make sure that it’s done really well. And they consistently do that. And then when they scale, they continue to consistently do it, which obviously gets harder and harder the bigger the organization gets, which I think is also a big challenge. And bottom line is companies just get lazy when they can milk. Profits from their existing customers and just kind of take that money and then just use it to spend and get as much, you know, throw stuff at the wall, and see what sticks, you know, there’s an element of that. I think businesses generally do get a bit lazy.
So bottom line is, I’m not sure in the future that things necessarily will change en masse, but what I do know is that those companies that do it well and look after the customers well clearly will succeed. I mean, like how many times do we have to hear people posting stuff about Jeff Bezos, you know, the ethics put to one side of Amazon and so on, I’m not even going to go down there, but in terms of its efficiency as a customer growth engine is unbelievable. And they’ve started from, you know, they literally started from blank sheet of paper, built the business up.
And now if you listen to Bezos, all he says is customer, customer.
Isn’t that proof enough to show that a really successful business puts the customers at the heart of everything they do, and they obsess about it? And by the way, just on that point, if you’ve got the CEO and the entire executive team and every, you know, middle management layer and everyone on the ground obsessed with the customer and they know that’s just what the company does. I’ve seen it in a number of examples with different business models, but in the end, the customer is truly at the heart of the business.
They’re always the ones that succeed. So, I think there’s something in that. And now we’re in this sort of really this rocky period. You know, we were talking earlier about customer success teams and what’s going on at the minute with customer success. Is customer success facing a downturn at the minute? Quite possibly. You know, there are definitely layoffs happening all over because, as you said, the cost of capital is a lot more expensive, and people are asking what do they deliver? In my view,
If the executive team and the leadership team within the business are absolutely 100% maniacally focused on the customer, you can have the best customer success teams in the world, but they’re only going to be as fit as sort of they’re only going to be given the latitude to do their job. If the exact team are absolutely 100% behind them. So, you can’t have one without the other is where I’m going. Right. And that was a very long answer to your question.
So bottom line is, I’m not sure in the future that things necessarily will change en masse, but what I do know is that those companies that do it well and look after the customers well clearly will succeed.
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Richard
Well, you raised a couple of really interesting points I want to pick up on. And I’ll take them in reverse order. So, I think that the risk of any function that says, we’re here and we’re here to save the day with the customer, is that companies can’t typically, and I’m not sure you’d agree with this, maybe you wouldn’t, companies can’t necessarily think of a team that owns the problem with the customer. At the end of the day, the company collectively has to own the customer outcome. And I think there’s two risks with an organization sticking a hand up and saying, oh, we’re, even the name customer success, we’re customer success. Is number one, you don’t get a free kitchen pass on being effective and efficient just because you’ve got the word customer in your job title, even if you’re a customer-centered organization. That’s not good enough air cover. Secondly, you’ve got to get the organization to solve the broader problem, surely, which is how do you essentially generate good outcomes across the entire value chain of the company? So, I let you respond to that, and then I want to go back and talk about the ethics point you made, which I don’t want to escape. But first of all, your reaction to the idea that customer success is fundamentally a problem is, in some ways, it shouldn’t be a surrogate for the entire company getting aligned around this.
Chris Adlard
I’m in complete agreement with everything you said. I think it’s the same thing. You know, if you’re saying, look, the solution to this problem is to hire loaded customer success people without the mandate, I think that’s a hiding to nothing, especially when capital, as you said, is expensive. You know that team can’t just be the only arbiters of the relationship with the customer. To your point, customer has to be in every team whether it’s a risk team or an ops team or a, you know, a sales ops team or a sales team, everyone has to be obsessed with it. So, unless that customer success team is kind of absolutely responsible for that end-to-end customer experience truly, and they are facilitators of the cross-functional relationship at the account level or the customer level.
Richard
Right.
Chris Adlard
I mean, that’s what they try to do, but often they don’t have the mandate to do it because every single team has got their own functional KPIs. And so, they’re not empowered to do that job, either from the top or just the way that businesses are built based on those functional silos. So, the worst-case scenario is you get the customer success team, you create another silo that doesn’t fix this cross-silo problem.
Richard
And I think a lot of teams end up in that place, Chris. I mean, I think they end up being a functional silo. And to some extent, that doesn’t solve the problem. That just actually represents a cost for the company. So, I think this is an interesting topic I like to pick up in a broader debate. I did want to come back to this ethics point because it really struck home with me. In the early days of customer experience, NPS universe, let’s say 2003, 2005, the adoption by companies was largely an ethical adoption basis, right? I would argue that, you know, Charles Schwab, not the company, but the individual Chuck took on NPS because this is how we roll. This is the family rules. We’re going to put the customer at the center of things. We should care about whether our customers are engaged with us, whether they’re loyal, we’re going to measure it because if we don’t measure it, how do we know?
It’s just opinion. And therefore, we’re going to do NPS. And leaving aside all the things we know that are problematic around the methodology, et cetera, the mission was ethical. It seems to me that over time, that’s become a bit fatigued. A lot of companies have said, well, the reason we’re interested in this is because we want more proof. We want more analytic. We want more financial linkage.
And I’ll give a very practical example. So, one of the top 10 insurance companies in the United States, who was a huge NPS advocate, have kind of lost interest in it because they’ve got a whole series of very sophisticated churn models that they really like. Now you could argue, well, that’s fine. You’ve got this very sophisticated approach to modeling churn. Why should you care anymore about measuring customer loyalty? Because all you really care about at the end of the day is churn. But to your point.
I’m interested in your reaction to this. Once you lose that ethical focus on making the customer center the business, even if you’ve got these mathematical models that can tell you about how your operations create churn, you’re losing that ability to align the company and engage the company in a more, let’s call it a more noble cause, a bigger idea, which is how do we become a company that truly delights its customers?
And that… as you said, I think that’s good capitalism, personally. It’s not, I don’t think it’s in conflict with capitalism, but it’s not quite the same as saying we’ve managed to figure out how to optimize our operations to create a better churn outcome. Do you see the distinction? Do you agree with the distinction?
Chris Adlard
Oh, 100%. I think that is part of the problem. We get obsessed with the numbers in order to drive change. Now, this is ironic. We’re talking about that, given the fact that OCX provides this incredible customer AI solution that analyzes statistical significance and all kinds of quantitative measures of that. But not withstanding that, which is an incredibly important piece of technology that we really all should consider.
I think you’re right. I think there has to be a fundamental kind of obsession across the business around this and it’s got to be part of the core values of the company. But again, you can’t make it the core values. You can’t come along and put a sticker on the wall that says we love customers and expect people to change. It’s too late. It’s got to be fundamental to the business itself or you need a leader or a set of leaders that are obsessed with it and almost prepared to decouple all the existing KPIs across all the teams and start considering how people’s goals, incentives, everything could change across the business to align around the customer. And by the way, that’s where the diagnostics sort of give some ideas about how to do that. And, you know, I think we do have to think differently now about how we, you know, really rewire companies to become focused on the customer. I’m not talking about just, as you say, analyzing the numbers and going after this type of customer because they’re the most profitable or whatever. It’s not, it’s obsession with the customer everywhere. In the same way that Bezos talks about it with his business. That’s what I’m talking about. And exactly as you said, you can’t be obsessed with the customer and then just say, oh, we’re only going after these customers because they’re the most profitable ones. That’s not being obsessed with the customer. That’s being obsessed with trying to find where the gold is, that’s different. It’s a different mentality.
Richard
Is it an issue of short term versus long term thinking? Because if you put what you just said in the context of how profits work, how companies grow, I mean, the argument, the economic argument for customer obsession is that in the end, the market will reward you. The customers will reward you; the market will reward you. The highly analytical counterargument in some ways, let’s call it the argument that whether a customer is loyal or not doesn’t really matter as long as economically we figure the formula to maximize them, is almost a short-term optimization perspective, which is how do we maximize profits over the next three months to six months? So, if you’re looking for an explanation in economics as to why this behavior exists, you could make a case, couldn’t you, that this is a problem of over discounting the future. And the reason historically that some companies have been great at doing this, and you quote Jeff Bezos, but you could equally point to Chuck Schwab and business like that, is because they had iconic founders who had that long-term perspective. It was their name on the door. When I was working for Michael Dell back in the 90s,
The company wasn’t called Dell Origins, it was called PCs Limited, which we now look back and I think most people would say that’s not necessarily a great name for a company. They made a smart choice. And by the way, spent a lot of money coming up with the name Dell. So, it wasn’t a cheap project, I suspect very much so. But at the end of the day, his name’s above the door and that created a sense of ownership.
Chris Adlard
Good choice to change it to Dell.
Was Michael Dell in the room at the time?
Richard
For him and because the founder of the company is still running the company, you know, somewhat, 1997, so 30 years later. Those kinds of leaders seem to have transcended this temporal trap and being able to say, you know what, these are our family rules, this is how we roll customers at the center of what we do, not because I can tell you it optimizes the next quarter, but because I can be absolutely assured it will optimize the next decade.
Chris Adlard
Mm-hmm.
Richard
So, is it a temporal trap? Is that why people fall into it, you think?
Chris Adlard
I think, you know what, I think you, you’re on a very important point. It is a lot to do with the founding principles of the company and that being an obsession that starts almost from day one, but that’s not to say that companies that start that way carry on that way, even with a founder. I mean, I’m thinking, no, not, not to be negative about any organization particularly, but I used to think Workday for example, was a fantastic customer-obsessed organization. It turns out they were just a very innovative SaaS company, but like any SaaS work company, the product, the desire to develop new product features and functions kind of override sometimes, I think, the ability to deliver that technology, especially as you scale. So, by the way, I still think Workday’s a very good company, but I think they have the same challenges as every other SaaS organization. Similarly, I think it’s also possible that companies that have historically not done a very good job with the experience for customers that are very siloed can start turning a corner and actually, no, we’re going to fix this problem systemically and actually start driving that proper transformation. And that isn’t by deploying a customer success team at all.
It’s about the entire leadership team saying, okay, we’ve got to just… we’ve got to give a bit on these commercials in the short term, potentially, in order to gain more medium term and think more 12, 24, 36 months away before we make decisions about how we do things. For example, do we really need to respond now and build this brand-new product feature that actually everyone else is doing in the market? No, because if we deliver it now, just because we want to catch up with everyone else, we may miss out on the short-term opportunity.
But it means that we won’t deliver a half-baked solution, you know, just because everyone else is doing it. We’d rather get it right. And we’d rather get all our existing estate working A1 so that actually people start thinking, this is a great company delivers great products, great experience. They’re the kind of hard issues that have to be decided. And that when the rubber hits the road, they’re the tough decisions, but a good transformation leader within the business can make those calls and be prepared to defend the reasons for doing that.
That’s hard, but they’re the kind of things that have to happen, I think. Yeah, and so I hope we’re going to see more of that.
Richard
I think the software industry in particular, and you’ve got a lot of experience in that industry, in some ways it’s not a new idea that the software industry has been obsessed with features. over customers. I mean, it’s in some ways the origin of the industry, right? And there’s a reason for that. You know, if you go back to the 70s, 80s, 90s, when I know you and I were basically still in kindergarten, I’m sure, back then. But the software industry was created by engineers with really good ideas around how to build product. And so that origin story…
Chris Adlard
Mm-hmm.
And the reason historically that some companies have been great at doing this, and you quote Jeff Bezos, but you could equally point to Chuck Schwab and business like that, is because they had iconic founders who had that long-term perspective.
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Richard
I meant that to some extent capabilities and features were always at the center of the universe. I think it’s a relatively, Johnny come lately to the idea that customers really matter. You know, up until the early 2000s, the software industry was selling on-premise software where you got paid upfront, whether your product worked or not. And so, it’s only really been in the last 15 years or so that the industry has started to care about customers.
Then you could argue that frankly until very recently because acquisition was fundable, what the industry cared about was new customers. And so, we might be the first time in the history of the software industry where existing customers actually matter as a source of growth, as an engine of efficient growth. It might be the first time and who knows?
You know, the prayer of every venture capitalist has always been, you know, please God, give me another 1% interest rate environment. I promise this time I won’t mess it up. I think that, you know, if we get back to cheap capital, I think we might be right back to the races. But on the other hand, maybe it’s time, it’s time for a transformation and companies really will change their way of thinking about this.
And I’m actually optimistic. What about you? Do you do you do you think this is going to happen or? You want to take a counterpoint on this?
Chris Adlard
I really, what you just said really struck a chord with me. The idea that there’s been, and you’ve seen this play out very much, that whole history of how, for example, software has been developed and sold. Just reflecting on that, it just popped into my head that the classic video of Steve Jobs responding to the engineer… that asked him why a particular software development language had been pushed aside in favor of something else. I think it was Open Docs if I remember correctly. He’s actually in the book as an example. And it’s a brilliant response, by the way, not to bang on about Steve Jobs of Bezos and two most iconic people in this world, I guess. But, you know, his empathetic response was essentially saying, you’ve got to start with a custom experience and work backwards. And I’ve got the scar tissue to prove it. And of course, he was right.
He was absolutely right that that’s proved itself. So, to answer your question about being optimistic, again, I go back to my earlier comment, which is I’m not a prophet I can’t predict the future because I don’t know what the economic environment is going to play out. But I suspect you’re right. If capital becomes cheap again, which based on the economic cycle over decades at some point will then people will probably go back to what they’ve always done. If I’m honest, however.
The companies that do get it right, I think will be successful now. And in that period as well, if they keep doing what they’re doing. I just think it goes back to ethics. It goes back to, just on that point, by the way, one thing that really bugs me is when companies, they do a big splash about community initiatives and CSR and all that kind of stuff, and they do a lot of greenwashing and so on.
Richard
Yeah.
Chris Adlard
And that’s a minute portion of their total revenue firstly. But more to the point, it’s just, it really is just a bit of a cosmetic activity to show some form of, you know, kind of supporting the environment. I’m being very cynical. I know that in some cases, it’s very motivational for employees and there’s lots of benefits, et cetera, but it’s not really what they do as a core business.
I think it’s a lot more ethical to say, hey, give the customers a great experience. Get your company obsessed with the customer so that when your employees go home, they can say, you know what? I was part of that cathedral. I laid that brick that then became the wall, that then became the cathedral. I was part of that. And people proud of the company they work for. I think that’s just as important, if not more so, than spending loads of money recycling paper in the office or whatever it is.
For me, that’s more ethical actually than something that actually is just a token gesture.
Richard
I think that’s a great perspective. The issue of what appropriate business ethics are, what’s the balance? I mean, if you think about Milton Friedman, the purpose of the corporation is to make money for shareholders. Okay, I think in some way that’s too narrow, that’s too harsh of you. I actually think that at the end of the day,
Chris Adlard
Right.
Richard
The fundamental logic of capitalism is that to make money for shareholders, you make customers successful. I think that is an intrinsic idea that is at the heart of what makes capitalism systems work. I think if Friedman was here today, I think he would subscribe to that point of view. So, I do think that this sort of ethical vein of good business runs right through customers to shareholders.
Chris Adlard
I agree.
Richard
And I think that’s on very solid ground. Now, once we get off that ethical vein and we start to see businesses having alternative roles in society, I think, you know, look, it’s people’s choice, but you’re certainly getting further and further away from that core role of business in society, what makes a good society. And maybe we ought to revise Friedman’s philosophy and say, look, at the end of the day, the purpose of business is to create outstanding rewards for shareholders. By creating outstanding results for customers. And there’s a position which I think is hard to argue with personally.
Chris Adlard
I’d agree. I think all the great, you know, business academics, people like Theodore Levitt have always put that forward, that it’s about customer obsession. There’s nothing new with the idea in the in a sense that you and I are saying it’s just it gets lost over the years and it gets buried into customer success or this initiative or that initiative. But the fundamental approach to capitalism, as you say, is customers at the heart of what you do in order to achieve those numbers that you’re going after over a sustainable period of time.
Yeah, I mean, I completely agree with you. Yeah.
Richard
Oh, yeah, not much of a debate today between us. But Chris, I really enjoyed the conversation. I love the direction it went. Thank you very much. And we look forward to hopefully having another conversation just like this in the near future. Thank you, Chris.
Chris Adlard
Hahaha. No problem.
Get your company obsessed with the customer so that when your employees go home, they can say, you know what? I was part of that cathedral.
ABOUT THE CX ICONOCLAST(S)
Richard Owen is celebrated as a leading figure in the Customer Experience industry, primarily known for his contribution as CEO at Satmetrix, where he and his team, along with Fred Reichheld, developed the Net Promoter Score methodology, now the globally dominant approach to customer experience measurement. His efforts further extended to co-authoring “Answering the ultimate question” with Dr. Laura Brooks, establishing netpromoter.com, and initiating both the NPS Certification program and a successful conference series. Owen’s diverse 30-year career has seen him drive technology-led business transformations at Dell, lead software companies like AvantGo to a Nasdaq listing, and Satmetrix to acquisition by NICE Systems, while also engaging in venture investment and board roles. Today, he spearheads OCX Cognition, leveraging machine learning for real-time NPS and customer health analytics.
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success@ocxcognition.com
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