Highlights

• Pivoting within CS as one motion won’t fit all your customers
• In CS play the ball in front of you
• Defining and measuring the key CS KPI’s
• Aligning CS with the Northstar of Growth
• Creating psychological safe spaces and managing imposter syndrome

Setting the scene

With a non-traditional path into tech, Pat Phelan has been right in the middle of the evolution of the Customer Success function. In this podcast, Pat discusses how Customer Success aligns with the vision of the business, and at the same time, the needs of the customers. How this is reported to the c-suite, and how this contributes to the northstar of growth is a real master class in how to build and lead a Customer Success team. Pat has an obvious passion for leadership, plus growing and developing his people, hence a must listen for the new and growing Customer Success leaders.

What took me to Dubai...

I did the pretty standard path of university. I was an okay student at school, fairly disciplined, but not crazy academic. I kind of phrase my academic life as ‘I knew how to just do enough to go under the radar and not cause any problems for myself, or my parents’. I'm proudly Irish, always will be, but when I look back to Ireland in the mid to late 80s, it's unrecognisable to what it is now. When I did my post grad the time had come to get a job, and I got this random call from a company in the wild west of Galway, who made handmade Irish carpets. I didn't know what they were, nor did I really care what they were, all I cared about was that the job was in Dubai.

I rocked up to Dubai for about a year and a half, and the goal was to set up a presence in Dubai. There was nothing there. We just found at the time that the carpets were selling well and Tony, who was the CEO at the time, and a phenomenal character, moved his family as well as myself and one other fella out to Dubai with him for the year. We literally sold carpets to people in Dubai- it doesn't get a lot more cliched than that, from an Irish perspective! But, it was an unbelievable experience and I don't know whether it was good or bad- it was just an experience. It was hard. I wasn't legal there for six months, which looking back now at the time was pretty risky, it was paid in cash. It's crazy! I did it for about 14 months and I realised it wasn’t for me in terms of the location. I came back to London and that got me more into a more traditional path. In terms of my career, I would never change it because I did 14 of what I would classify as the craziest, hardest, wildly exciting months of my entire life thus far. It obviously shaped a lot for me.

To give you an example at the stage where we were, we quoted for the Burj at the time, and we went on site to do a quote, and it was a building site. It was literally the shell of the hotel, the concrete was there. That was the period we were in Dubai, and it was the biggest thing at the time. It was such an evolving part of the world

Pivoting into tech

I came back to London. I just wanted to work in a buzzy fast paced environment because my previous two years were quite independent. There was a lot of self work and for a 23 year old lad, you want to be around people and you want the buzz. When I came back to London, I started going to recruitment consultants to look for jobs, and very quickly found that they started asking me about becoming one. It was a career I never even considered and never even knew existed, quite frankly, as far as a genuine career was concerned. But, I came across a company called Robert Walters, and I went in for an interview for a role through them, and then they hired me, and it ticked all my boxes. Again, it was a phenomenal experience, but I got to a point after a year and a half where I wanted to try something different. My friend at the time was a super smart guy from Ireland, and we figured we'd just go and do something ourselves. We started in website design, which I knew nothing about and he was reading a book about. We slowly picked up customers and started to get into that world, we expanded it into a little bit of bespoke software development. I spent basically six years of what I would classify as doing pretty much the wrong thing at the wrong time consistently. But we survived, we built up a little business.

I realised after that period, I'm a good right hand man, and am good at supporting the person with the ideas and the risk appetite. That's when I joined Verve at the time, because we figured we’d taken it as far as we wanted to, and honestly, our hearts weren't fully into that side of the business- that's where my technology journey started! It started with a sequence of phenomenally fortuitous career decisions. I've been so lucky from that point onwards, but I feel like it was, in some way, balancing my first chapter.

Evolving into Customer Success

As my career's evolved, I've become more comfortable acknowledging what I'm good at and leaning into that. I wish I'd done it sooner early on in my career, and (without sounding arrogant!) I wish I'd acknowledge the things I was best at! From that point of view, I knew I was pretty good at engaging with a variety of different groups of people and engaging with different types of companies. It naturally evolved from there. I knew where my strengths and weaknesses coalesced there. But I knew I could work, what we would call, ‘warm opportunities’ and nurture them and build trust pretty quickly. When I first joined Vurve, there was no such rule as customer success manager- Customer Success wasn't a thing! If you go back to your early success factor days, it was very much account management, which is where I started, and it's just been really interesting to watch all of that evolve over time, now there's multiple facets of it. But I knew that world was for me, I just didn't quite know how it would play out, because a lot of the roles that I was very successful in didn't exist when I started out,

Who was the company or person or that really invested in you?

Something that's on my mind a lot at the moment is thinking about the next generation of customer success managers. Customer success has evolved; what we do is so subjective and so fluid depending on the kind of organisation, the kind of software, the level of implementation, how easy the level of what the commercial structure is? Is it freemium? Is it an ACV?

Where I struggle with a comparison to sales, is the software changes in sales, the value prop changes in sales, but there's fundamental principles that apply to a sales motion, that you can have confidence in if you do those things really well and you're super trained. For that, you will get an outcome, or at least you'll know at what stage you're at. Customer Success is so different, because it can literally be 20 different things on any particular day from dealing with an escalation to an upsell to a product issue and it's ongoing, it's constant. So, I think it's a big gap.

The way I learnt was, I always accepted that you've got to treat every customer individually, you can't necessarily apply a motion to a portfolio of 15 customers, because it doesn't work. You need to understand:

• What your parameters are
• What your outcomes are
• What you're doing and the impact of what you do has on those outcomes.

But more than anything else, you have to have the capability to pivot rapidly and freely and be super comfortable with that. As I went through my learning and customer success, I'm not saying I was self taught necessarily, but the culture I was in taught me more than the actual individuals, let's say, that I worked with, or that there was any particular structure around that. If you look at the experience at Bazaarvoice, and look at some of the deals that you were involved in at an early stage, in a fairly nascent market, where what we did was new, it was something that we had to create a problem as opposed to even solving a problem. That was the beauty of it. I love that and that's what excites me the most! That's why I'm a big advocate of CS. But, I'm a huge advocate of CS with that kind of view of it, as opposed to trying to put some structure around something that is fantastic because there isn't a structure around it and it lets the individual breathe and be themselves and try different things. I fundamentally believe in that as a kind of a principle of how I try and train my teams and how I try and develop my own teams in that regard.

The first time the term ‘customer success’ was used

I remember when I went to join Brandwatch, it was very explicitly customer success. It was a customer success leader. It wasn't playing services, which it was, as you recall it at Bazaarvoice, I think it finished as Client Services and then moved from community management to find services from Accountmate. It was Brandwatch that I first went into a role where that was explicit. I think it was probably in the early 2000s when you saw it externally in the market. To your point about recruiters coming at you, it was around that period that I remember seeing this kind of title start to take some prominence and it wasn't about client relationship or account management or community management, it was very explicitly customer success.

There is no fixed way of looking at customer success

I'm reluctant to see if there's a fixed way of looking at things because again, I will always advocate for that ‘local knowledge’. It's like when you buy property, there's a reason why investment property is more successful for people based on how close the purchase is. I applied the same analogy with customer success; you may not know the answers, you may not know the theory, but you know your business. I use the rugby phrase; you play the ball in front of you, that's the fundamental principle, play what's in front of you, don't worry about the next phase. I've always applied that kind of theory when it comes to an organisation because it's very easy to come in with notions around what you've done in the past, particularly in CSM and applying this to CS specifically. But when I think about the journey, I think about a couple of things very explicitly.

The first thing I want to see is the purpose and the vision

I'll ask 10 people, usually at the exact level, to tell me what customer success means to them, and 95% of the time I get a different answer from everybody. That gives me a good sense of where we're at. It doesn't mean that the intent is not there, doesn't mean that the willingness is not there, it just means that nobody really knows. Once you get to that point, I know where to start. It has to be real and it has to be connected to the purpose of the overall company. That's the other side that you have got to be careful about, I see a lot of CS charters being very independent of the company goals. That's where you see the silos kick in. At the end of the day, if we're not selling, then all the charges in the world are pointless. So, I'm a big believer in starting there and understanding what people's understanding of it are, and then really deeply understanding what the goals of the company are.

It's very important when kicking off CS to make it very clear that we're not here to be the police. We're not here to put up guardrails, we are here to support the development of the business. But, we're here to do it in a way that benefits our customers and makes our customers better. The evolution of the business and the development of the business is a lagging indicator of doing the former properly. Then I start to look at some of the areas where we can link these things together. So obviously, once I have the purpose in place, I start to think about the crawl, walk, run, simple model of how you want to develop stuff, because I believe in foundations and you should build on foundations. I want to be able to pressure test everything. I want to be able to go to you, Andy or Paul, and say, “here's a wonderful presentation about CSR at GoCardless. Now go ask anybody in my org, and they'll say the same thing”.

Well, pressure test in Salesforce, if those metrics are there, the ones that I said they were and they will be there. I don't like anything that doesn't feel real, because then you start to see cracks a little bit. But I will look at areas such as, the engagement type is one of the big ones. Is it reactive? Is it proactive? How much on that scale does it look? And, what are the component parts of that? There's some other fundamentals around tribal knowledge versus knowledge at scale, ad hoc outcomes versus structured engagement, how siloed are the objectives. There's a blueprint, but I think about it in terms of pathways. There are multiple pathways from point A to point Z, and there are multiple ways to get there. It's up to me to figure out, do I really care about NPS? Or do I care about upsell, and not trying to do everything, because it looks good, but do the right things for the right time, and then evolve from that? So, that's very much how I look at the structure of CS.

Being a great leader comes from understanding who you are

It's a very underserved journey in many organisations in terms of really understanding the impact it can have on some on the immediate team and beyond. My first journey into leadership was at Bazaarvoice. Actually, I became a leader of the team I was in. So I went from a peer to a leader. Honestly, I don't think I appreciated it enough. I learnt a lot from that transition and I think some of the core aspects of that were around ‘how do you rebrand yourself?’

The question is, what kind of path do I need to take to be credible, to retain trust, to set boundaries or develop people? And to have people look at me and think, ‘yeah, of course, it's him’. The first question I'll ask folks when they’re asking for a promotion is, “if you tell your team that you're promoting this individual, what would their reaction be?” I do a lot of, I call it, ‘coaching moments’, and in my mind, when I see leaders and when I see young leaders particularly and I see things that don't sit right with me and feel right with me, I'm always trying find the opportunity to take them aside for two seconds at the time I see it and say, “Look, this is what that looked like (just as an FYI). How did that kind of feel to you? How would you do that differently?” That's born out of the fact that since I became a leader I've obsessed about psychological safety, and I still do, I don't overcomplicate this stuff and I try to be myself as much as I can. But, I understand that I have to make sure that I create an environment where people are safe, not safe in the context of under delivery or under performance, but safe in the context of having conversations that are uncomfortable. And knowing that whether it's to me or from me, it's not going to be career limiting. It's not going to damage our relationship, but it has to be said. That's kind of was born, I guess, out of that first step into leadership, because I had no other way to do that because these people were my friends. They were people that I was in the trenches with.

The key, and I tell everybody, is to stop worrying about what you can do for your team, as a leader. First time around, start understanding who you are, what you are, where your gaps are, and start to be very transparent about that first time around, then worry about your team. Most young leaders are never taught like that. You're not expected to have the answers. It's okay to fail multiple times in this part of your career, but just don't BS people and pretend like you’re something you’re not because that's where you lose trust, and then you will fail as a leader- that's never changed. It's still the philosophy I work with.

I love being in a position where you can actually make a decision that can impact people and positively challenge them and give them confidence. We have a new hire, and recently I had a really honest conversation with him about imposter syndrome. I've thrived in my career, because I have had enormous amounts of imposter syndrome. But, I've always seen that as a positive, because it's always kept me ahead of the game. It's always kept me sharp, it's always made me think and never get lazy. But, I feel it's also important to understand, for me as a leader, and for every other leader, that other people will have a tool, but they might react to it very differently. The safety of having those kinds of conversations is what I learnt early doors.

Developing customer success at GoCardless

When I think about customer success and GoCardless, it's probably the first situation I've had where I had developed a very good skill of coming into, or being part of, organisations that were somewhat mature in terms, for example, being aware of things like churn of retention and elements similar to that. Now, as an Operating Partner, you go in and just know where to point your focus; you tweak this, tweak that and things will go in the right track. But, when it came to GoCardless, I explicitly took the opportunity because it scared the crap out of me, quite frankly!  It was a different industry, it was a super smart group of people in an area that I knew nothing about. It didn't matter how clever anyone was, I kind of knew MarTech and I could blag my way through it, but now I'm fully exposed to it. Also, the customer structure was quite disparate, because GoCardless was, and to some degree elements still are, very much in a B2C mode when it comes to customer success or customer service. Insofar as the support team, it was very advanced, it was very reactive, because it had to be and very mature. Then the rest of the org was very immature from an evolution point of view; we had some CSMs, we had some onboarding and different functions there.

Hiroki and Carlos were just phenomenally ahead of their time in acknowledging that they needed to do something pretty drastic. For some reason they felt that I was the person who could help to do that and that was the first pivotal moment that got me across the line of GoCardless. Since I came on board, we've built out a pretty significant model now where the organisation has, I'd like to think, a lot of credibility as a customer success group in a relatively short space of time. I talked about my blueprint, but a huge part of it was bringing the folks that were there on board with that blueprint. The next pivotal moment for me was when we first went out with the purpose and the vision to the customer success group as a whole, because up to that it was a concept. It was like an email from Hiroki saying, ‘hey, Pat’s the new CCO, and you're all reporting to him’. You have to back yourself, because you're coming in with this idea and concept that took a bit of time to land. Luckily, the team bought into it, and that was a trigger point when I saw just people being able to connect to that. The little bit of swagger, which I look for, starts to kick in and people feel they are part of this group, part of something that is ours to own, shape and be responsible for.

As we have evolved, we’ve rolled out various significant things that are having, and will continue to have a huge impact on the customer. We became very clear about our customer journey, but have that underpinning every activity that we do. It's really tightly linked together, there's no stragglers, there's no elements of the process that goes off in tangents. As you implement these things in stages, the level of change management just becomes less and less, because it's understood. One of the things I have to be super careful of is how fast versus how slow I run with these things. Assessing the maturity of an organisation has a huge part to play in, for example the things we've done in two weeks now, that would have taken four months, two years ago- that’s really critical in terms of the pivot points that I've seen there. It’s also about the small things like people using the terminology I use. I love when you start to hear people using consistent terminology like ‘value pathway’ or the success packages that we've just launched. It's a language now that's understood. Underpinning all of that was the real commitment from Hiroki, particularly in the function. He's a brilliant guy and I've learnt a tonne from him, but more than anything, I've just really appreciated his consistent challenge of the group

Defining and measuring the C-suite KPI’s

There wasn't an expectation in terms of what the initial KPIs were going to be, because we were very early on the enterprise journey on the committed revenue. So, traditional concepts, such as revenue retention rates, we're very much in the mode of, in the same way as Amazon for example, would use the term ‘churn’ or ‘attention’ rather than an enterprise kind of B2B SaaS. So, that's evolving over time. We're starting to get comfortable with the net revenue retention, construct quarterly yearly churn, what it actually means from a logo and a revenue perspective. But, they are super consistent. The challenge is not the consistency of the KPIs as it relates to customer success, it's the understanding of those KPIs outside of the world of customer success. That's one thing that I've always advised lots of people, including myself, to remember that we live this whilst so many other people don't. When I talk about logo retention versus revenue retention, net vs.gross, it's interpreted in many different ways. There will always be charting in B2B SaaS at the levels that I've worked at because it's just natural. It's not about, will there be no churn? It's about:

• How do we control it?
• How do we minimise it?
• How do we make sure that the expansion of the customers that are being successful more than mitigates that churn?

That's been a really fascinating journey for me because I've had that discussion a lot. I never take it personally and I think in my world you can't. My job is to communicate, to educate, and to make people aware, particularly as you go on this enterprise B2B SaaS journey. There are certain rhythms that will never change, there are certain things that will happen and in my job it is to predict those things, and to get the business ready for those things. Also, to support whatever the business needs us to do to grow. But, that's been an interesting journey for me. They're the core kind of four or five metrics that I'll always lock on. It's important that at least the exec team align around the understanding of what these metrics mean, and not get into panic mode, when, for example, one quarter might be lower than expected. It's a peak and trough game sometimes.

Customer success has multiple components but one fundamental aim

There's so many modes of customer success. If you think about it from a more commercially oriented mode, to a more strategic mode, to a more technical mode, to a more support mode, there's so many elements to it. Fundamentally, it'll always be driven by the product. The product to me is always the starting point of what kind of customer success you're trying to build, because it's just going to determine the type of profile, the type of people and the type of organisation that you're going to develop.

Personally, I'm a huge believer in separation of responsibility when it comes to how customer success evolves. When I look at the evolution, originally it was, I think Rav Dhaliwal, he talks about it as ‘the everything department’- it's a good phrase for it. It started out like that. As an account manager, you're given a 200k upsell target and ‘oh by the way, can you please retain your portfolio of 40 customers as well, and deal with lots of their support tickets’. I'm trying to move it into a world where we have real specificity of activities. So, if you're a retention person you retain, your job is to make sure the administration, the process around that is there and it works. If you're a CSM, your job is adoption, your job is to identify pipelines and nurture that pipeline. Whilst, if you're an AM, it's about closing that pipeline. I believe as the org evolves, it's going to get into a mode where there is a lot of clarity around role and responsibility, but it's underpinned with a consistency that is always ‘what is the customer expecting from this relationship?’ That's the thing that very quickly is lost sight of in many places and I'm guilty of it too. We talk about KPIs, but customers don't care about those they truly don't. The amount of times I've seen orgs, including my own, sometimes trip ourselves up over these metrics, without actually thinking, ‘what does this look like externally?’ - I'm always thinking about this!

Customer success is here to stay. I feel like we're always in justification mode in CS. I'm not, because I think that's very distracting and it can drive the wrong behaviours and the wrong activities. I'm more interested from a cultural perspective as to how Customer Success is perceived. Hiroki will challenge me on headcount every year, as he should, but I don't feel right now that he would ever challenge me in terms of the value that the customer success org brings to the customer. When you go down the rabbit hole of ‘how do you prove the value of one CSM versus a salesperson or a support person?’, it gets into dangerous territory and you get into inside out thinking. That's the thing I fear the most, quite frankly, because that's where you start going wrong.

What I'm always fascinated about is how it splits out with the go-to-market. So, I'm part of the go-to-market executive at GoCardless; there's myself, the Chief Revenue Officer (CRO) and the Chief Growth Officer (CGO) and we're part of the go-to-market team. As I look at the evolution of CS, I see that as a huge opportunity, where we are a GTM team first and foremost of which there is customer success, sales and growth. The more CS can align ourselves to go-to-market rather than trying to prove our own independent value to the organisation, the more that function is going to flourish, and most importantly the more interlinked it's all going to become.

I've never enjoyed a job as much as I do right now, I've never been challenged as much as I do right now. Honestly, I’ve never felt like I'm more part of the team as an executive than I am right now, as part of that GTM team.I would encourage anybody to always lean into these things as opposed to pull away from them. That’s how I see the motion moving and the concept of growth, as opposed to retention, churn bookings, which are just components of that Northstar of growth. The more we can go towards that, the better we're going to be as a function.

What’s inspiring you right now in the tech world?

I love SaaS! I'm always obsessed with SaaS. The thing that I'm thinking a lot about at the moment, and we are as a business too, is product led growth. I'm interested in it conceptually, not necessarily specifically in terms of how it relates to GoCardless, or how it relates to anywhere else. I'm interested in how that concept can be applied in so many different ways. A good example is, we've recently launched our advocacy strategy of GoCardless and we're applying a PLG lens to that concept of growth loop that our CGO talks about a lot. We're applying that to case studies right now. For example:

1. You start at the onboarding point
2. You get customers with the right expectation that they're going to be part of this exercise.
3. They do the case study
4. Other people see that case study and they want to do one
5. It starts again

This is something I’m really fascinated by. How we apply that to even the enterprise motion is the other side to it. It's not independent of enterprise selling. I heard a great podcast with a16z about app dynamics, and how they applied PLG and freemium to their enterprise selling motion. The combination of those two things is really fascinating.

The other aspect that I'll always be obsessed about is leadership. By that I mean, just really trying where I possibly can to learn as much as I possibly can, about what I can bring to the table to make the people like GoCardless and the people in my team feel that in 10 years time this was a really pivotal moment in their career. I always use the analogy, ‘if my head of onboarding was in a pub in 10 years time, and he was talking about me, what would I want him to say if I wasn't in the room’. And that's something that genuinely has my brain buzzing constantly because the war for talent is so huge right now. The cultural aspect of a business is something that people are just so obsessed with, and so they should be. If I look at my career, the biggest single impact in my entire career has been the culture of the organisation that I've joined. It hasn't been the learning or the development or the product, it's played a part in it, but the culture and being able to be part of a culture that acknowledged that I was good at something and gave me a shot at it was just critical. I'm always trying to figure out how to create that culture here so that when people leave they feel like they were part of that. Making sure that the mistakes that I've made are great learning opportunities for other people in the way that I wish to some degree when I was 21/22, somebody would have kind of put their arm around me and said, “listen, this is not going to work. Here's why.” I