Episode 9 Transcript

Moving From Financial Charters to Driving Customer Adoption w/John Ragsdale

    Matt: Hi everybody, welcome back to the Professional Services Pursuit, a podcast featuring expert advice and insights on the professional services industry. My name is Matt Finch and today I'm welcoming back John Ragsdale. John, how are you?

    John R: I'm doing very well. We survive the holidays and a new year is upon us, so it's fun to be back.

    Matt: I know, it's great to get that little break between Christmas and new year, that always fills up with really important things to think about. It’s a great place to take a step back and start to think about the new year. And for those of you that hadn't met John before, or didn't listen to our previous episode, John is a distinguished researcher and vice president of technology ecosystems at TSIA, one of our greatest partners. We love working with John and all of his team, a fantastic organization. If you're not a member of TSIA, we encourage you to do so and look those guys up and see what they can do for you. They can do an awful lot. We're happy to have you on the show again John.

    So rolling into the new year, I want to know all of the things we learned from last year. The show in Las Vegas seems so long ago now that we were all there together, but first of all, what a great thing to do to get back together in person again. From your perspective John, what did you learn from that show? And then coming into 2022, what are the things that professional services organizations should be focusing on? If you were sitting down and doing your offsite planning right now today, what would be the number one or number two things on those lists that we should all be thinking about?

    John R: Well, from a technology perspective, if we look at the year-over-year data, there has been so much spending on technology and professional services. But what I didn't see is the go-live numbers haven't gone up that much. So it seems like there's a lot of projects underway, a lot of investigations, a lot of tire kicking. And I'm hoping that 2022 is the year that the rubber's gonna meet the road because clearly there are some huge opportunities for automating the entire quote to cash cycle. Looking at changing as we talked about the last time we were together, restructuring the way projects are delivered, definitely driving up profitability. And I think today we're gonna be talking about the changing charter of professional services. And I think that is gonna probably be a surprise to a lot of people at your offsite. Kicking off 2022, you've got a new set of marching orders, a new set of priorities. And probably some new roles, some new technologies, a lot of new metrics we're gonna have to be worrying about. So I'm glad we're talking about this because I do think it's gonna be new territory for a lot of professional services, consultants and executives.

    Matt: Yeah, definitely. And it's these planning cycles that fascinate me because obviously, the thought that goes into them starts many, many months ahead. And I think that's why TSIA and TSW as an event is a great time of the year because it's winding down into the last quarter, starting to get our thoughts together ready for the next year. And then we're gonna head to our offsite with all of these wonderful and fantastic ideas. So you mentioned John, a bit of a shift in kind of priorities in professional services organizations. What would be the top trends that you've started to see build that we should be focusing on in 2022? If I was a services leader going into my offsite, what's the thing that I should be bringing up first and foremost?

    John R: Well, the biggest shift and we worked together on a technology summit on this topic last year. But when you go back a few years, or as long as I've been working with professional services, the focus has always been revenue, profit, margins, utilization rate. I mean, it's a very financially run organization. I have to admit, kind of shocked to find that over three hundred interviews that Bo Di Muccio and [Inaudible 4:25] on our professional services research team had done with company executives and PS executives. When they interviewed them and surveyed around the charter of professional services, the number one charter is now driving customer adoption and enabling customer value. Revenue margin and customer acquisition have dropped down the list.

    So to me, this is a significant shift. It not only reflects where the technology industry is in a cloud world, customer success becomes critical, but I also think it shows something that I have been saying for years, customer success is not a department, it is a philosophy and it's a corporate culture. And I think that more organizations are understanding the critical role they play in enabling the success of customers and professional services in my mind are front and center to making that happen. So I think that focus or that change in charter has some pretty wide ramifications on the way we approach projects, probably even hiring profiles, the interactions we have with customers, who's involved in the project. I think we're gonna rethink almost everything we do in implementing, integrating and customizing technology to generate rapid value realization and success for customers.

    Matt: Yeah excellent. Gosh John, as always, there's a ton to unpack there, but let's just reset a little bit on something you mentioned, which I think is really fascinating. Customer success is not a department, it's a whole company charter. I completely agree with the concept, let's unpack that a little bit and talk about that because most software organizations have some kind of customer success department. Sometimes they are part of professional services, sometimes they're separate from professional services. I've seen them be targeted on revenue, you know, renewals and upsell. Is that really customer success or is that just sales all over again? Or is it net promoter scores and things like that where we're trying to get people so well adopted, loving the technology that we have, that they then go and talk to their peers and recommend certain technologies? I think those are more functional areas and jobs to be done. But talk to us a little bit about the philosophy of like everybody in the company should be driven behind customer success. What does that really mean to you?

    John R: Well the concept of customer success was born when the industry shifted toward cloud technology. I worked for CRM vendors back in the late nineties, early 2000 and you would go through that two-year sales cycle, sell the product for over a million dollars, which was a lot of money back in the nineties and then you would implement it. And I worked in professional services implementing CRM and let me tell you, the day you went live, you were gone from that site. What they did with the product after that was not my problem and if the customer didn't get value, ultimately that was on them. And that meant I would say much more than half of the software sold was shelfware, never even got implemented and the customer paid 100% of the price upfront. And whether they got value or not was their problem to deal with.

    Obviously, the cloud and subscription technology has completely changed that because you don't even make money on a customer until they have renewed maybe twice because the cost of acquisition is so high. And so the customer has so much more control than they used to have. And if they have a bad sales experience, a bad implementation experience, if the employees are complaining about the technology, when it comes to renewal time, it's very easy to swap to your competitor. Very easy just to transfer your data over to a new platform and start again. So customer success started with a focus on what can we do to accelerate the value that customers receive from technology to make sure that they are renewing, they're buying more from us. And that we're growing that wallet share over time. So this organization called customer success started and they were tasked with adoption, consumption, expansion and renewals. And we continue to see that as the primary charters.

    So I think initially, there was so much press around this customer success organization. They got a lot of visibility, they got a lot of budget to buy anything they wanted. But after a lot of tech companies started digesting what that means, they suddenly realize it's more than a department. Because if the product is hard to use and doesn't have the features customers need, they can't be successful. If we're not implementing the product in such a way that it's meeting the business goals they had for the purchase, they're not successful. If we're not training them appropriately to use the technology, they're not successful. And ultimately if we're not supporting them when they have problems, they're not successful. So it turns out that, in my view, customer success is really an end-to-end strategy from the way you build products because it used to be the sales reps who decided what features went in the product because they needed that feature to sell it. Now the customers are doing ideation and a large percentage of new capabilities in every software release is generated by customer demand. So the customer is in control, there's a lot more transparency and they really expect you to understand the outcomes they expect to get and every touchpoint should be helping the customer get that outcome faster and more. And again, a lot of that comes down to professional services.

    Matt: I wanted to pick up on something you mentioned there around adoption. I think this is really interesting because there's a whole industry of technology, digital adoption platforms that are designed to sit on top of software to help you adopt them and use them. And it's almost like has that industry sprung up because of the lack of this in the past? The lack of this desire for people to adopt the software versus just sell it. I think you mentioned it's an entire company thing from the way that you design the solution to the way that you go to market, the way that you implement and then look after your clients.

    I think it's really interesting that there's this whole industry sprung up around adoption to drive that because for me, if you are not using a solution that you've purchased, what was the point in purchasing it? And gosh, for decades shelfware was a real thing, but who cares because you close the deal and you move on, but now you can't really do that. So do you think it's worth measuring adoption from a client, is that the number one thing to focus on?

    John R: It's a very tough topic. I naively assumed, coming from an on-premise background, that because you were building this cloud technology that every customer click is captured in a cloud that cloud companies had really infinite information about how people were consuming. What they were consuming, what they weren't consuming, who was consuming, what? Turns out not necessarily the case. And the last time we surveyed companies about this, the majority of companies could tell you if an account had logged in. They couldn't tell you who on the account logged in, they couldn't tell you what features any individual user was actually using. And so while it's all captured in click someplace in the cloud, being able to isolate millions of clicks into really the path that a user takes through a software application is a very complex thing to do. And then to link those clickstreams to a contact in your CRM system to understand who at the account is actually doing it is really hard to do. And that's why you're seeing so many new products coming to market that are able to take all of your endless clickstreams and put some reason around that.

    In fact, I recently saw a technology that's starting to put dollars on features and tell you the actual value your customers are getting from using specific features. So yeah, it's really interesting to see, but we are saying that more departments outside of customer success are investing in adoption monitoring technology, including professional services. Because if your charter is adoption, how are you gonna be graded on that? You need to be able to show over time that customers are adopting more of the product. And we could do another whole podcast on just the metrics around adoption, but who is adopting it? How often do they use a feature? How long does it take to find a feature and how much time are they spending on the applications? And ideally, you should be able to have a baseline, then as you start focusing more of the attention of professional services toward that, you should be able to see that needle move. That they are using more, they are using it faster, there are more people within the organization migrating to the tool in a shorter amount of time. So if your charter is adoption, you're gonna have to have some way to measure it, to prove that you are meeting that charter.

    Matt: So if you are a professional services leader at your offsite, like we were sort of painting the picture earlier on, do you feel professional services organizations are prepared for this going into next year? How do they become prepared? What should they focus on if this type of adoption and client success or customer success methodology is gonna be really at the forefront of their year, next year, or this year?

    John R: I think there are some companies that it is truly a core part of their culture, making customers successful and it always has been. But to be honest, I think this is a very new concept to a lot of companies, especially some legacy companies that are moving to the cloud. And I hate using the term launch and leave because it's not perceived well, but that has often been really the culture of professional services, you launch and you leave and it's not your problem. And that means we're gonna have to change the way we assign consultants to projects and how we measure the success of them on the projects. I think we're probably gonna be screening for a lot more communication skills and business acumen than just technical and project skills. And absolutely a lot more survey work and interviews about what did you like, what didn't you like? What could we have done better? Which unfortunately isn't even done half the time now. When we complete a project, we don't even ask how we did.

    But when we look at how they're going to change the way they do business, one fact for you, according to our benchmark, only 35% of professional services organizations have a methodology for developing PS offerings that are specifically intended to increase the adoption of products by customers. Now I don't know what that means, so I don't know what that offer looks like, but it's putting your money where your mouth is, right? So if you're gonna say our charter is improving adoption, what does that mean? Does it mean that you are creating these new offers? I do know that the percentage of consulting dollars coming from general consulting is going up. And that's a good thing because a lot of your customers are going to need some business process work and probably some organizational work to better leverage the technology. And the services folks are good at this because they've seen so many companies and so many different industries leverage the tools. They know how you should set up and organize and who's responsible for what profiles and capabilities.

    So I'm hoping to see that there is a little more shift away from just implementation and toward this general consulting, but also figuring out what these offers are that specifically equate to rising adoption. But it also means that there has to be a much stronger partnership between the customer success organization. And I know that's something we were planning on talking about, but just to open that topic, 70% of the time, the customer success manager is assigned to the account as soon as the deal closes. So they’re along for the ride on the implementation project, what role are they playing? And I'm curious, I haven't really done any survey work on that. Are they only acting as the escalation point? Are they actively involved in making sure the project's going well? But that's just an example of seeing these groups collaborate and work together for the benefit of the customer, it’s definitely a strong first step.

    Matt: And I think as well, I mean, let's expand that a little further and think about these methodologies, their outcome is what we call it here at Mavenlink would be an outcome that gets delivered and everybody orients around that. I think it's bringing in the sales team as well. You know, we need to be setting the client up from the moment that they first talk to us as a prospect. These are the things that you can possibly achieve by using our technology, but let's set you off on an achievable path. Let's think about your maturity levels, what is gonna be adoptable in a certain period of time. You're not gonna boil the ocean and do everything at once and implement a thousand features of some software set. What are the outcomes that you are selling to? What are the outcomes that the client is buying? What are our PS team delivering to and then what are our client's success team then driving them towards from an adoption perspective?

    I feel like it's almost kind of customer journey style lift in mindset on how we think about these things. I think that's so true. What we don't want is the launch and leave; I love that phrase. Although it is actually, like you said, very old school, it’s an old way of thinking about it. Everybody just throws it over the fence. Like I've sold this, good luck PS, I hope you can implement it and then PS say all right, well we've implemented it, good luck clients, I hope you can renew this in a few years. Good luck. We’ve all gotta come together and oriented around these outcome elements and these methodologies that you mentioned earlier and these PS service offerings that are gonna be delivered. I think that's an excellent point.

    John R: I think we've made some progress there, but there's definitely some work still to do. So on the positive side, something that I tend to see now is companies have standardized on a single CRM platform across marketing sales and service. There is a single account, there is a single contact record, so don't see these five different systems and nothing's integrated. I rarely see that anymore, but what you said continues to be the truth, the data that they're collecting every time they talk to a customer doesn't necessarily make it into that customer master. And the best example is what you just said, during the sales process, you understand what are the business challenges they're trying to solve with your technology? What are the metrics they're trying to move? What is the expected ROI that they're hoping to get?

    And then once the account gets thrown over to professional services, they have none of that information and they have to start from scratch interviewing the customer “Why did you buy it?” What do you wanna get from it? Who's gonna be using it? And then very often, none of that gets translated into an account record either, so success or support pick up the issue. They don't know what it's integrated into, they don't know what customization has been done. So I think that we've made a lot of progress and at least standardized on platforms, but you are right, that end to end customer journey still seems to be an outlier that we're storing a lot of information we collect about a customer in a project plan or in a sales opportunity or in a support case. And it's not really being leveraged in an end-to-end way to better understand the customer.

    Matt: Yeah and you know, first impressions count, right? So you have a great first impression in the sales process, because everybody's all over you looking to create this amazing sales experience so that you buy the solution. What you don't wanna do is then repeat all of that same stuff like “Oh well, I'm gonna ask you a whole load more discovery questions.” “Well, your sales team asked me all of that three months ago when we first spoke to them, they should have it documented. Didn't you hand it over?” Like already that first impression of working with the post-sale, working with this software company or technology company. If that's a bad experience, it sets the tone for the rest of the relationship. And you are constantly trying to play catch up to the fact that those first few weeks you were asking those same old questions all over again, because you didn't hand it over properly. Or you weren't oriented around the same outcomes, the same plays, the same playbooks and so on and so forth.

    John R: When I would do workshops on customer experience, I would start on day one and say, “Do you have an end-to-end customer experience strategy?” Every company said yes and yet when I would say show it to me, I've never seen one, ever. So the good news is we do even have some data on this. Because customers’ success that the organization is tasked with this, they are doing end-to-end journey exercises involving the entire organization (product, sales, service). Everybody is involved for really the first time. We always did that in the consumer world, I mean you talk about Nike or Coke, they do all this end-to-end customer experience stuff, but B2B didn't really do that. We are seeing that, so I do think we're making a ton of progress and if everybody can understand their role and how they can contribute to the ultimate success of customers and doing that journey analysis is really gonna help iron that out.

    Matt: Yeah definitely. Just to ask more of a tactical question, but on the same subject, talking about onboarding and go-live. I feel like you've got a technical part of onboarding and go-live, setting up the solution and making it talk to other parts of the ecosystem. Then you've got training and sort of train the trainer models and different kinds of roller and then you've got cultural change. Where do you feel those three things sit in the responsibility matrix of a company now? I know everybody's responsible to get the customer to a happy place, but who owns technical go-live versus training versus cultural change and adoption? Where do you think that sits in this journey?

    John R: Well it's a really good question. And I do think onboarding has taken on this genericized kind of connotation, but I agree with you that there are multiple onboardings. And onboarding is not a one-time event, it is an ongoing event, but we've got conflicting data on this. When we ask customer success, who's in charge of onboarding, they say 70% of the time we are 30% professional services. But when we ask the same question in the professional services benchmark, it's reversed, 70% of the time professional services is doing the onboarding. So I think when you're dealing with complex technology and enterprise implementations, the professional services consultants in my mind are the ones doing the technical onboarding. They're doing the training of the system administrator, probably the power users, whoever the admin is that's gonna build all those dashboards to make the executives happy. And I suspect that the onboarding being done by customer success is not as much one-on-one training, it's prescribing online training for all of the users and monitoring how many people are taking those courses. How many are completing those courses? And then comparing that to the adoption data.

    I mean, if you've got 500 employees who are supposed to use the application and only 50 have gone through training, you know you've got a problem. So I still think that professional services, because they've got the technical skills, they've got the business acumen of how people use the tools are really best poised for the technical training, the technical onboarding, the power users. But in the past, at that point it was kind of well PS does train the trainer and then it's up to the company to train the employees. So now at least you've got a success manager tasked with, if they're not actually doing the training, at least prescribing the training and monitoring how people are consuming that training content to make sure that we're doing what we can to set them up for success.

    Matt: You know, from an organizational perspective, thinking about professional services, client success, this real blending of the worlds as we've been discussing here and orienting around outcomes and the client being happy and successful versus specific roles. Just from an organizational perspective, are you seeing a trend towards professional services and client success ultimately being in the same organization? Reporting up to a specific sea level person, or do you feel they remain separate parts of the organization? Where do you see that going in the future?

    John R: About a year ago my executives did a lot of publishing on this topic about services convergence. Some early examples they were seeing of really anybody who touched the customer, starting to break down the silos. So they were sharing technology, they were sharing even the fungibility of resources and ultimately reporting up to the similar or same executive. And I thought this was pie in the sky, but we've done probably half a dozen webinars in the last six months with companies who have done this. So it absolutely is happening and happening pretty quickly. And the fact that a lot of tech companies created a role for a chief customer officer as part of launching a customer success organization, I think was sort of the driving force behind this convergence. Because now you've got someone who, in their title, owns the end-to-end customer experience and they've got the influence to change the way sales works, PS works and support works.

    So ultimately, I do think they're gonna be reporting up to a chief customer officer or something similar. And I know of one very complex technology company that has a complete converged services organization. One week you're answering support calls, the next week you're on-site implementing a project and the next week you may be doing a field service call. So the skills and experience are so portable from group to group to group that they're really breaking down the barriers. And boy, talk about cultural change, that one's gonna be a really tough thing for some companies to swallow. But when you look at smaller cloud companies, that's just the way they started. They've always been that way and that's just logical to them.

    Matt: Yeah, it's almost back to the start-up of like right, everybody surround this client, make them successful. You know, this customer has to be happy, go-live. We've sold them the right technology, we need them to be happy. It doesn't matter what your role is, that's your job and that's a startup mentality. You're all in it together in a tiny company, trying to get something off the ground. And then you go through this maturing phase where everybody then goes into their various silos. And then I feel like what we're saying here is that the real spark cutting-edge companies are gonna reconverge back into that same mentality. You know, it doesn't matter what the previous silos and boundaries were in our old company or in your old role or in your old employer, our company is oriented around making that client successful. So it doesn't matter what role you perform within this certain group. I think that's a really powerful maturing of the SaaS market from these tiny startups that just get things done through the big silos. And now back into really focusing on what matters, which is getting the customers happy because they’re the ones that are spending the money, that's keeping all of these companies alive.

    John R: Well the survey work we did on this topic, the majority of companies recognized that there were definitely some skills and resources that could be shared. And 75% of tech companies say they're actively pursuing initiatives to find cost synergies across existing service lines, but the holdout or the stumbling point is usually these intractable budgets. Nobody wants to give up their technology budget, their resource budget, so it's kind of these fiefdomsthat are gonna have to change. So I think we're recognizing it, even legacy companies are taking some small steps, but I always make snarky comments about retiring aging executives. And frankly, some of those older executives are gonna have to retire before we see some huge dramatic changes happening in some big companies.

    Matt: Well John, fascinating stuff as always. I feel like we could dive deep on another 10 of those different topics, but time is marching on for us on the show today. If you were to sort of summarize and again, let's think about us being these services leaders going into our offsite this week or next week. What would be the couple of things we should take away from our conversation today?

    John R: Well, I think if you are an executive or a consultant who has always been judged on the key projects that you were given, how busy you are, how much revenue you're generating, we're never gonna get away from those metrics because we are making money from services and that's important that we continue to do that. But I think that everybody just has to take a step back and think, what does customer success really mean? And that is gonna be a different answer for different companies. And then what can you personally do in your role to accelerate that success? And I think that consultants have a very unique position because not only do they know the product probably better than anybody in the company, including development, but they have been in the trenches seeing people use it. Which nobody other than field service ever gets an opportunity to do.

    So I think that professional services have an amazing opportunity to really inform what the model should be of using PS to accelerate adoption. And I hope they have a seat at the table for that conversation because I think it could really raise their visibility and influence within the organization. Not that they didn't have a good one already, but I think that they are of the most critical elements to customer success. And the sooner people realize again that this is a culture and a philosophy and not a department, the more successful their customers will be.

    Matt: It just makes so much sense, doesn't it? John, that's a hugely unique part of any organization. Just think about the physicality of that. I'm getting on a plane, flying to a customer, spending three weeks there and really, truly being the face of the company on-site with a particular client or remote these days more so. But that is a very unique part of any business, whether you are marketing it, you are selling it, you are doing client success. If you are actually traveling out to see someone and making something work in front of their very eyes and getting them to see, love and gain the benefits of what you are doing, that's a very unique skill and experience you have and value within your organization. I love it John, that's a great takeaway for all of our services leaders that are listening to us today.

    So John, thank you once again, great conversation. I always feel like we could go for hours and hours on these ones. So what we'll do is we'll save it up for another couple of episodes. We're definitely gonna have you back on, this has been once again an amazing conversation and I'm really pleased as always to have you on. Any final thoughts on your organization. What would be your call to action for our listeners to work with you at TSIA?

    John R: Well, we are gearing up for our next in-person conference in May in Orlando. And it is our first time at the New World Congress center. We have the entire world Congress center in Orlando. We had to work some kind of atrophied muscles doing in-person in Las Vegas back in October, but we are ready to see everyone and welcome them and collaborate and hope we will see you there.

    Matt: Wonderful, fantastic John, thank you. And if you'd like to dig into the topic of client satisfaction a little bit more from a Mavenlink perspective, please feel free to head to our Kantata blog, which is kantata.com/blog. Click on the client satisfaction filter for a whole host of articles about keeping your clients happy, engaged and retained. All things that we spoke about today John, so hopefully we can converge and help everybody out there with some great content, great support for our fellow services leaders around the world. And finally, as always, please feel free to reach out to us at podcast@kantata.com with any follow-up questions or suggestions about future episodes. Get in touch, connect with us on LinkedIn, come and talk to us, we'd be delighted to do that.

    John, thank you once again for being on this show and I look forward to seeing you next time.

    John R: Thanks Matt, always a pleasure and I appreciate everything you and the Mavenlink team do.

    Matt: Thank you John. Take care everybody. Bye-bye.

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