In Episode 07 of Scaling Success, Volition Capital managing partner Sean Cantwell invites Karen Flathers to the show to discuss the nuances of building a successful, scalable Customer Success function. Find out why she thinks a lot of companies do a great job of making their customers love them, but still fail at customer stickiness. “There’s some relationship that comes into it, but again, they’re going to look at their business and say, ‘What is the thing that it’s too painful for me to get rid of that’s going to have too big an impact on how I run my business, or how my people work?’
Check out the full interview here and on Spotify.
About Karen Flathers: Karen was formerly the Chief Customer Officer for Blackline, where she led all post-sales customer functions through a successful IPO, multiple acquisitions, and significant domestic and international growth. Prior to joining BlackLine, Karen worked in Services and Operations leadership positions at Zuora, a provider of SaaS-based billing software and as General Manager at Aclara Technologies, a provider of SaaS and on-premise solutions to the utility industry. Before focusing on SaaS growth companies, Karen spent 15 years in Professional Services at SAP, culminating in her role as SVP of Services for North America where she managed 1500 consultants and a $1 billion P&L. Karen holds a Bachelor of Arts degree from Brown University.
The Art and Science of Customer success - podcast
The Art and Science of customer success - Video
Sean Cantwell: Hi, guys. Welcome to Scaling Success, a podcast geared towards entrepreneurs where we discuss a range of topics that contribute to building a valuable and long-lasting enterprise. Our goal is to provide our audience with access to experts on a variety of topics that are critical to scaling a successful business. If you’re new to the podcast, please go ahead and follow us on LinkedIn and Spotify.
Today, I am very excited to welcome Karen Flathers to the podcast. Karen has had an illustrious career in the software industry in a variety of customer-facing roles. Most recently, Karen served as chief customer officer at BlackLine, a $6 billion public company providing cloud-based software for finance and accounting.
In that role, Karen was responsible for all post-sale customer success and delivery, including services support, customer success, customer experience, and renewals. She led the customer organization through a successful IPO with strong growth and revenue retention of over 110 percent. Previously, Karen held senior roles at Zuora, Aclara, and SAP, where she spent 14 years in a variety of leadership roles. Karen, welcome to the podcast.
Karen Flathers: Thank you, Sean. Great to be here.
Sean Cantwell: Karen, I mentioned a little bit about your background, but if you would, please take us back to the beginning. As a young girl, did you know that your career aspirations were to lead customer-success organizations?
Karen Flathers: Yeah, I did. I did … No. Sadly, in college, I was an international relations major. I thought I wanted to be a diplomat. Then I did my first internship and realized I was poorly suited because I had no diplomacy or tact. I decided I was poorly suited to be a diplomat, so that was a bit of an “Oh, never mind …” I kind of came to software by accident and have been there ever since. I was the one that wasn’t supposed to end up in software since I come from a family of electrical engineers but somehow ended up in software and in customer success.
Like you said, I kind of grew up at SAP. I started as a consultant and did every job along the way till I ended up running the North America consulting organization, which was kind of a big, ugly, hairy job of a billion-dollar P&L, 2,000 customers. I didn’t talk to you unless you were suing us, right? That was kind of a big ride. I started at SAP when they just first came to the U.S. After I left SAP, I just went through a series of smaller companies – three smaller – which was great. It was great to take that SAP experience and apply it to smaller places where it was a little bit less red tape to get stuff done. Yeah, that’s about it.
Sean Cantwell: Karen, your career journey is an interesting one because you started at a really big company back in the days where software was really sold in a license-and-maintenance way. You stopped, later in your career, at some younger companies, and then most recently at BlackLine, which is a large, successful public SaaS company.
Maybe talk to us a little bit, just to set the stage, on the evolution of the customer-success function. I’m sure, in your early days at SAP, it was more of a professional services, and almost consulting-type engagement, but you’ve really seen that whole journey of the birth of the customer-success function within SaaS organizations, and I’d love to hear it, from your perspective, in the context of your career journey.
Karen Flathers: It has really evolved and continues to evolve. I still feel like, in a lot of ways, “customer success,” even as a term, is pretty new as a function within an organization … Back in the SAP days, it was primarily professional services. When you talked about customers, you were selling them- it was like being a realtor selling a house, right? You were going to say whatever you could to get them to buy the house. It couldn’t be blatantly untrue, but once they made that big capital investment, they were locked in. No one was walking away from $10 million that they had sunk into software.
As you got into the SaaS world, it’s more like you’re kind of a rental agent working at an apartment building where your income now depends on them continuing to rent month after month, year after year. You’re less incented to say things if you don’t think you can hold up your end of the bargain, and you’re more incented to make sure they’re in it for the long haul. That’s been kind of the transition you see [CROSSTALK]
Sean Cantwell: Karen, that probably requires a level of interaction and engagement between customer success, product, and sales in a way that perhaps wasn’t so necessary.
Karen Flathers: Yes, it can. It’s a much more circular process, as opposed to a straight-line process. In the SAP days, some salesperson sold the deal. They dumped it. They’re like, “See ya later! Good luck with that.” It’s much more circular now because you have to constantly discuss it, and you’re constantly- people are constantly voting whether they’re going to stick with you or not. That’s a very different customer success.
I also feel like it’s … Back in the SAP days, you came in, in professional services, or on the support side, you were the expert. You’re like, “I’m the smartest one in the room. You should listen to me. I know how this software works,” right? I think that’s also changed, both culturally, and with software, in that customers are now like, “Well, no, you don’t know this. I know this. This is my business.”
You always said you were a partner, even in the SAP days, but it feels like it has to be much more of a collaborative partnership now between customer success and the customer. Whereas before, I think, in many cases, it was the experts coming in to tell you how to do it. I think that’s another key thing … That really changes the dynamic around how you interact with customers.
Sean Cantwell: In the modern SaaS context, you mentioned the term “customer success” is still relatively new, which I completely agree with, but if anyone is well positioned to define what customer success means, it’s you. So, I’d love, and I’m sure our listeners would love to hear your definition of customer success in a high-growth SaaS company, and really, what is that scope of responsibility and span of control for the customer-success organization?
Karen Flathers: I think this is definitely one of those areas where, if you go and Google, “What should my customer-success organization look like,” which I have done, as has everybody else, there’s no agreement. There’s still no agreement, in my opinion. It’s still a wide variety of structures you get and responsibilities you get.
Having gone through it a couple of times now, and when I was talking to somebody “Well, how should I structure it?” I’m like, “Look, people are going to say this, this, and this. I’m going to tell you I did this; it didn’t work. I did this; it kind of sucked. I’d go with this one,” because it is somewhat of a … When I look at it – again, back to that comment about it’s a circular process – I feel pretty strongly that you need to own all the post-sales customer interactions in order to truly drive customer success.
That means you need to have implementation, if you have some form of implementation, which everybody does. You need to have support. You need to have the traditional customer-success role that we can talk about, which is really driving the adoption. You need to have the training, which in my mind, especially in SaaS world, is really intimately connected to both customer success and implementation.
I think if you don’t have that entire span of control, it makes it really difficult to come up with what is a reasonable, scalable, and affordable customer-success model that’s going to work with these customers because everybody starting up is like, “It’s all about the customer. I’ll do whatever they want,” until it costs too much money. They’re like, “Whoa, whoa, whoa! I didn’t want to do that much for them.” I definitely think there’s a kind of a balance there, so I feel pretty strongly that you have to own that entire post-sale customer success.
I think renewals is another discussion, and you’ll maybe ask me a question on that, which I also have strong feelings about. If you look at the customer interactions post-sale, they pretty much need to be under a single person, in my opinion, so you can, as the company evolves, plug and play the different pieces and not feel like you have to stay in a single lane, if you’re a support person, or a customer-success person.
Sean Cantwell: You mentioned just during that description a couple perhaps measures of success, or KPIs – retention being one of them; usage; adoption. In your experience, what are the most important metrics for someone who understands, or really oversees the customer organization to understand the health of the customer base?
Obviously, it has to start with net revenue retention. In my opinion, net revenue retention should be a companywide metric just like ACV should be the companywide metric, and everybody should be comped on them. I feel like that’s pretty critical if you’re a SaaS company. Coming down from there, net revenue retention can hide a lot of retention sins if you’re doing a lot of upsell, so I think it’s important to go down to the next level of understanding the actual retention of the customer base, not just the revenue flow of it.
Those are obviously some of the foundational ones. As you continue to look down, I’m a huge convert and fan of usage, as I think probably one of the critical measures that most people don’t adopt until probably later on when they’re more mature, and I feel like it’s something that could drive change early, if people can get a handle on it. I don’t mean just usage like, “Oh, did you consume all the licenses you bought?” That’s one piece of usage, but it’s not just quantity of consumption, it’s quality of consumption. I think you have to understand …
This made a big difference at the last company I was at – understanding exactly the areas of the product that made the customer sticky. The ones that stayed with you, what were they using? Because you can use a product, and they can love you, and they can say, “Oh, we love you, we love you,” and they could still not renew. Happens all the time.
When people say, “Oh, I have NPS; everybody loves me,” doesn’t matter, if they’re not sticking with you, right? They can love you all they like … I think really understanding, at a detailed level, the adoption, and the usage, and being able to pinpoint the three or four things in your product that are driving the significant value that makes it sticky, which makes it hard for them to leave you-
Sean Cantwell: That’s an interesting point you just made, Karen. It has me reflecting on the many diligence projects I’ve done over the years. I can recall doing diligence on a company, where it’s a churned customer, and I asked them to provide the NPS score, 1—10, and they say it’s a 10. I’m like, “Wait, but you churned!” Really honing in on the use case is critical because, ultimately, what are you trying to do? You’re trying to facilitate and foster a long-standing relationship with your customers.
Karen Flathers: I hate to say it – this is not your family. This is a math equation, right? They could love you … I think there’s a lot of companies that do a great job of making their customers love them, but when it comes down to a math equation- COVID is a great example of that. When it comes down to a math equation, and people have to say, “I now need to stack rank what I’m using because I need to cut,” that’s going to be kind of a math equation for them.
There’s some relationship that comes into it, but again, they’re going to look at their business and say, “What is the thing that it’s too painful for me to get rid of that’s going to have too big an impact on how I run my business, or how my people work?” It’s hard to put a full- other than an ERP, which goes in that bucket, a lot of the other niche ones, it comes down to the specific use cases that they’re using it for.
Sean Cantwell: What have been the most useful ways you’ve seen to solicit that feedback from clients in a scalable way upon which you can draw some of these conclusions?
Karen Flathers: In a perfect world, and in my first non-perfect world, I did this on a big-ass spreadsheet across 2,000 customers, which was a horribly painful week of being locked in a room, going through it. I mean, in a perfect world, a SaaS product … Most have some ability to produce some level of understanding of what people are using. If they don’t, I encourage them to get there because you can start with the data and say, “Okay, I can see that …” Again, everybody has a hundred use cases, but let’s talk about the top 20.
Sean Cantwell: Yep.
Karen Flathers: Then, if your data can show you that- most SaaS companies can get to this data, I’ve found, even if it’s painful. They can say, “I know that these 100 customers are using this use case.” If you can get it to some level of historical detail, you can do a high-level tracking of who are the customers that consistently renew, that consistently upsell, that consistently add licenses? What are they using, and what are the commonalities? I think that’s a starting point, and most SaaS products, you can … It might not be pretty to get that data out, but you can get there by doing some sort of ugly dump to Excel, and starting to do … That’s how I started, right?
From there, it’s easier to then segment your customer base, and then start talking to them. A great way to do that is to say, “Look, we really think this feature is useful. We see people using it.” We did a series of webinars very targeted on, “We’re going to help you turn on this feature.” Then you can track did the customer turn it on? If they turned it on, did they keep using it? Then, did they renew? We saw strong correlations when we picked the right features that way. I think you can start with the data – objective data from your system; not having to start with customer feedback.
Sean Cantwell: When I asked you about metrics, you started with the big one. It’s where everyone focuses – net retention. I think anyone who leads a customer-success organization is measured upon net retention in some way.
Karen Flathers: I hope so.
Sean Cantwell: We talk to companies all the time, and everyone’s trying to minimize churn, increase expansion, get to that Holy Grail of net negative churn.
Karen Flathers: Yes.
Sean Cantwell: In your experience, what are the tangible things a CS leader can do to try and drive improvement in retention? I heard you mention a few things. It sounds like training is a piece. I mean, measuring and monitoring is probably step one; listening to customer feedback, educating, and training. There’s probably an element, I suspect, of making improvements to the product. Given all these variables, I’m curious to hear how you, in your experience, have sifted through this to really drive meaningful change and improvement.
Karen Flathers: Wouldn’t it be great if there was a silver bullet? Because I always say if I wanted a silver bullet, I would be in sales because sales kind of always has a silver bullet – “The Big Deal” – right? Unfortunately, I’ve spent 30 years of death by a thousand cuts, as opposed to a silver bullet. Nobody wants to hear this – that’s really what customer success is. It’s actually doing the hard, detailed work. It’s creating a spreadsheet of all 500 customers with 40 rows across, if you don’t have it in your system, to really understand what industry are they in? When do they renew? What features are they using? What features are they not using? What training classes did they take?
It really is starting by doing not just the high-level monitoring, but at a really painful, detailed level. Nobody really wants to hear that because it’s a lot of work, Sean, and there’s no way around it, in my opinion. You have to start there. When you start there, you can then move quicker by segmenting and saying, “Here’s a group of customers that are similar, and their similarity is X, or Y. The way I get them to be more successful is have them start using the system this way. Therefore, I’m going to target them with a specific webinar. I’m going to create a special video for them.” At that point, you can get to a better way to digitally push the content.
I think the other learning I have there is customers in today’s world, and in SaaS world, they don’t want you to say, “Come to my week-long training class.” They’re like, “Are you kidding me?!” They want to say, “Give me an hour. What can I accomplish in an hour that I can do by myself without paying you to come on site at $300 an hour to do this for me?” That is really where I think you get your best success in getting customers’ momentum, who then may choose to do a larger project.
I think people miss that. They’re looking for the big rocks, and in some cases, it’s the little pebbles of get them to do these three or four little things. That’s going to get you the momentum to have an opportunity to do a bigger transformation, potentially. That takes a lot of work, right? It’s easier to get the one big deal, or the one big transformation than it is to try to touch a thousand customers in these little ways.
Sean Cantwell: I share your sentiment, just in observations across our portfolio. I think “Yes” is the result of doing a lot of little things well-
Karen Flathers: It is.
Sean Cantwell: -and an attention to detail, and then learning from that data, segmenting it appropriately, and then taking action. It’s a lot of common sense, but it’s also a lot of hard work.
Karen Flathers: It really is. It’s not rocket science. I do think training is underappreciated, I think because when people think of training, they think large-scale training. If people can really look at how they’re training their customers and how they’re delivering training content to their customers into what’s probably more reasonable, smaller pieces, a combination of video and online, I think that can also … I’ve seen that have a significant impact because customers really want to self-serve that way, but they don’t want to self-serve by sitting in a four-day training.
Sean Cantwell: Right.
Karen Flathers: I think we under-use that, and under-use the training technology that’s available to do it just in time and for very specific things.
Sean Cantwell: As I hear you describe the way you’ve managed customer-success organizations, and customer organizations, it sounds like at the foundation is a framework to track and measure interactions across the customer base with a variety of different features and functions of the product, upon which you can probably staff your team appropriately. You can create content, webinars, training, promotions to drive engagement.
As you know, the stage where we get involved, from an investment standpoint, Karen, it’s usually companies- they have product-market fit; they’re growing really aggressively; they’re probably focused, one and two, 1a, and 1b, on product and sales [CROSSTALK]
Karen Flathers: Acquisition. Customer acquisition.
Sean Cantwell: It’s like, wow, the customer-success organization, we need to build that. For entrepreneurs who would ask you, “Hey, what should I be thinking about, and what should I have in mind as I think about scaling the customer-success organization to really support aggressive growth?” what would you say to those folks?
Karen Flathers: Again, I’ve been on both sides of it, and like I always say, I would never be a sales guy, but I thank them for their contribution because I could never do it. I understand I don’t have a job unless they do their job, as much as I’m going to throw them under the bus, of course, the minute they do something. I’m like, “Really? You told the customer that?”
Sean Cantwell: “You sold them what?!”
Karen Flathers: “Is that even our product?” I think what you can do early … Again, I recognize, and I’ve talked to customers- companies that are small that have maybe two people in all of customer success. I think what you can do that is important is actually at least understand … Again, you mentioned it – the framework, and the process flow. I used to think, coming from a big company, I was a little bit uncomfortable when I came to a small company and tried to impose that stuff. I’d think, “Oh, they’re going to think I’m over-engineering it. They’re going to think I’m bringing big company [INAUDIBLE] …”
Sean Cantwell: “Here comes Big Company Karen.”
Karen Flathers: “Oh, here comes … She [INAUDIBLE] SAP now. She’s going to make us report our time every 15 minutes …” I think that spending the time up front to understand what the process is going to be, long term, and understand, okay, a customer is going to look at it as a person that helps me put the product in. They need to understand, oh, yeah, there’s an implementation function. There’s a support function, which is a break-fix function. There’s a customer-success function, which is more of an adoption function.
I think understanding the different components, even if it’s one person doing all of them now is critical so that, as you get bigger, you can decide which ones you’re going to spin off first. Because what I find is that it all gets mixed … You have one person who’s doing the implementation, who is the customer’s point of contact, who’s the interface to engineering for break-fix product issues, who’s trying to do training on the fly. Everything is kind of half-assed, as opposed to being able to say, “Look, it’s probably worth it at this point to get a person in training who knows how to develop content and can deliver it this way.”
Even if you’re not going to immediately go to having multiple people across those roles, understanding those roles, and the different roles that should be played, even if one person is playing them, I think really helps set you up to kind of figure out when you need, and where you need to put more focus, in terms of those different roles [CROSSTALK] Not a big company, but you’ve got to kind of put that framework and picture in place because you’re also training your customers early. If you’re training them that, “Hey, it’s Karen; just call Karen; she can do everything,” it is really hard to un-train customers on that.
Sean Cantwell: As you know, Karen, our portfolio cuts across software, and then also e-commerce, and internet. One of our big successes was Chewy.com. Really, the secret behind that company is maniacal focus on customer service. That’s certainly partly about engaging with your customer, but it’s mostly about delivering value to your customer, and give them a great experience so that they want to keep coming back.
I think we now are seeing that same sort of focus really bleed into the software world, where there’s this recognition of trying to deliver value every day to your customers. That all starts with the team that you have in place. How do you think about profiling, and hiring for a good team member in the customer-success organization?
Karen Flathers: Again, when you talk about a customer-success organization, I think it’s multiple components. You have implementation, which is a very specific skillset. You have support, which is a very specific skillset; training, same thing. If I look at a traditional customer-success manager whose job – again, by my definition – is really … A lot of people think about it as relationship management. Again, back to my comment, just because they love you doesn’t mean they’re going to renew, I don’t look at it as relationship management. I look at it as really driving usage and adoption.
Part of that is relationship, but I think a lot of people get caught up in just the relationship piece of it, which is not enough to keep a customer. If you look at the fact that their primary role should be understanding the customer base enough to drive usage, and adoption, and meaningful adoption – I always say that because there’s adoption, and then there’s good adoption – you really need somebody that has either competence, deep competence in what they’re doing, like in my last job, it was accounting, or deep product expertise.
Again, that varies depending upon the kind of technology it is, what’s more important. They’ve got to have that because other than that, they’re just another relationship and salesperson. The customer’s like, “Whatever …” It’s got to be somebody that can add value to that customer beyond just, “Let me show you the features of this product.”
That’s where I feel like renewals come in. In some of my early moves, I owned renewals, and I was like, “I need to hire people that know how to close the deal.” Again, those are two different skillsets. If you’re a customer, you don’t want to talk to the person who can close the deal. You want to talk to the person who can help you solve your immediate, fairly tactical problem with this product. That was one of the changes I made over my 10 years of doing it, starting on the relationship – Let’s get the renewal – and really moving towards a more content-based team, and I think, in the end, that’s been more successful.
Sean Cantwell: I think that’s a great point you made, Karen. I think a lot of people do immediately default to relationship when thinking about customer success. “Oh, Mary at Company ABC, she loves us! We have a great relationship!”
Karen Flathers: Oh, yeah.
Sean Cantwell: But if they’re not using the product, and they’re not getting value from it come budget time, there might not be available dollars. I also like the point you make, and I think … You were talking about your time at BlackLine, where your scope of responsibility extended from implementation all the way to renewal, and there are a variety of skillsets required to effectively deliver on all the objectives within the organization. You’ve seen a lot of growth at different points in different companies you’ve been at. What changes as a company matures, from the early stage to, you know, you’re a big public company? How does that change perhaps the focus and key objectives of the customer-success organization?
Karen Flathers: When you’re young – both personally, and professionally – when you’re at a company, like I said, you may have two people that do that entire function. They are very good Jacks of All Trades, or Jills of All Trades. They can do a little bit of everything, and that helps … That’s why I say it’s important to lay out what the different roles are because, at some point, that generalist is going to stop being effective, and you’re going to have to go to specialists.
That’s a really hard transition, I think, for companies to make because typically those generalists were probably early employees at your company. They’re really smart people. They’ve worked their butt off to help the company get there, but when asked to pick a major, they maybe don’t want to pick one, or don’t have one … Major, like, “Do you want to implement, or do you want to support?” “Well, I want to do everything.” I think that’s the painful point for both the employees, and the company to make that jump from generalists to specialists, and that will have to happen. To me, that’s the first big thing that happens.
The second thing is not all customers are created equal. When you have 30, they’re all created equal. When you have 3,000, guess what? They’re not all created equal, and you’ve got to figure out how to segment it and decide how you’re going to spend what is now scarce dollars and scarce headcount. So, to me, that’s one, and two. Then, the third is to charge, or not to charge. Everybody’s going there. What things do I charge for? What do I not charge for? And how that plays out … To me, those are the three things, as you scale, that tend to happen.
Sean Cantwell: You touched on renewal and expansion earlier, and I’d say every high-growth SaaS company, at various points in their evolution, wrestles with the question of where should renewals, and expansion reside? Perhaps this is linked to your point of being a generalist versus a specialist, but I think it’s common perception amongst some folks that, “Oh, gosh, well, CS reps, I want them to just be the point of contact and the customer advocate.” That might put them in a tough position to negotiate a renewal, and an upsell, so at certain points, I will bring in sales to manage that negotiation. I’d love to hear your point of view, from your career, of how you’ve managed those discussions at the renewal, and upsell points in time.
Karen Flathers: I’ve owned it; not owned it; owned it; not owned it; owned it; not owned it … I’ve followed that trajectory of who owns it, who doesn’t own it? Do you own the number, or do you not? What I’ve concluded- what I’ve come to at the end is I think it’s very important for the customer-success team to not be afraid of renewals, and to understand that they should be talking about renewals with their customer and making their customer renewal ready.
People on the customer side – and I can fall into this, too. You’re very focused on making- you don’t want to have that awkward conversation, right? That’s why you’re not in sales – you have to have the renewal conversation. You have to say, “Hey, you’re up for renewal in two quarters. I’ve noticed that you’re not using this feature, or that feature. I think it’s going to add a lot more value …” I do feel very strongly that the customer-success team is responsible to make the customer renewal ready – understanding their renewal’s coming, understanding how they’re using it, and what features, and functions they’re using, and not using, and getting them to use more.
When it comes to the actual mechanics of doing a renewal, that skillset does not sit in the customer team. They don’t like contracts. They don’t know contracts. They don’t know how to push back on a procurement person. I feel very strongly, at the point when it comes to … I was always a fan of actually having a renewal rep, who did these over, and over again; not the classic sales reps because, let’s face it, the sales reps don’t care. This is boring. I was a fan of that model because I think, again, 90 percent of these things is just paperwork.
Sean Cantwell: Yes. You’re really talking about the tactical exercise of executing the renewal, but it sounds like those CS professionals are definitely responsible for whether or not they renew because [CROSSTALK]
Karen Flathers: They should be compensated on that. They should absolutely be compensated on renewals, or net revenue retention, however you do it. They are, and they should be, and should understand, in their portfolio of customers, what is their renewal rate? That absolutely is on them. I think where we get confused, as we say, “That means they should be forecasting the number. They should …” No because that’s not their strong suit, right? There’s people who do that for a living, whether it’s in ops, or in sales. It’s not these guys. I like to look at it as renewal ready. The customer-success team should make the customer renewal ready – put them in the best possible situation to renew.
Sean Cantwell: Karen, you mentioned the customer-success function is a generally new term, which I agree with. You have also held the role, chief customer officer, which is a newer role.
Karen Flathers: Yes.
Sean Cantwell: I think there’s this general shift towards customer focus that everyone thinks they should have, but fewer actually live it and embody it. I think there’s an understanding that if you are customer-focused, you’re probably going to be a successful organization. Are there ways to evaluate, from the outside, or even if you think about different stops along your career, without naming names, or companies you’ve evaluated, or entrepreneurs you’ve advised on, what are the commonalities that a customer-focused company really embodies and has, relative to others?
Karen Flathers: It’s a good question because everybody says they’re customer focused, right?
Sean Cantwell: Right.
Karen Flathers: Consumer, everybody … “Oh, it’s the customer first,” which is almost never true, for the record, as a consumer myself. It’s never true. I just had a plumber here. I can tell you, it’s definitely not true in the plumbing. You’re three hours late; then, you don’t come. I’m like, “This is not customer first.”
Again, I’m a bit of a data geek. I admit that. I do think if you talk to a company that’s truly customer focused, and you start diving in and asking really detailed questions about the segmentation of their customers and understanding, at a detailed level, they know that. If I say, “Oh, you have 300 customers. How many fall into Fortune 1000? How many are small, and medium? What industries are they in? Do you understand, if you look at, you have three or four products with …”
If you dig in, and they really know that, they probably are customer focused because they did the hard work to understand it and can talk to it. Most people can’t. You’d be surprised. They’re like, “Oh, we have 300 customers, and 20 or in the Fortune 1000, and our overall renewal rate is this,” but they can’t break it down. To me, if you haven’t done the hard work of understanding the details, you may think you’re customer focused, but you can’t really prove it because you don’t really know that you’re providing the right value at the detailed level for your different kinds of customer segments.
Sean Cantwell: That is an aspirational place to be. Many times, young, high-growth startups are running a million miles an hour, and sometimes, the revenue scale might be more mature than the infrastructure-
Karen Flathers: Absolutely, yes.
Sean Cantwell: I think it’s a really good thing for companies to think about, and I also think it’s a sign of the maturity of the organization-
Karen Flathers: I don’t think you have to over- I think people over-complicate it. I talked to somebody, who shall remain nameless, a couple of weeks ago, and they’re like, “Well, our systems don’t hold that yet. We’ll have to re-implement stuff …” I’m like, “Guys, it’s a spreadsheet.” It’s taking the time to sit down in a room for two days because that’s probably all it takes, frankly, to get a first pass at this.
I think people think it’s this huge rock I’ve got to- No. It’s actually sitting down. Go into Google. Look up your customer. Oh, they’re about to be acquired by somebody. We should note that. That’s important, right? A lot of it, I think people think it’s this huge thing, and I think there’s basic things that people can do that really advance that without it being, “I need a huge system implementation; I need a huge team to do that.” People shy away from doing some of the basic stuff, which I still think can make a difference.
Sean Cantwell: Yeah, just give me a spreadsheet. Give me a PowerPoint slide.
Karen Flathers: It sounds so basic, but I think, as software technology people, we get caught up in, “I must have a system to do that.” I’m like, “Okay, guys, this is not going to solve it. Sometimes, it actually is just a process, and data, and discussions.
Sean Cantwell: Karen, you are at a point where you’ve accomplished a lot in your career, and I know you actively mentor a number of folks. What are some of the biggest learnings from your career that you pass along to those who solicit your wisdom?
Karen Flathers: I just said to somebody yesterday, and this is a stupid one, and you’re not going to appreciate it because you’re a guy, but I’m going to say it, anyway, as a female [CROSSTALK] said something like, “Oh, well, how do you get there?” I said, “Look, I’m just going to say it. You know the guy uniform of khakis, and a button-down? You need to have your own uniform, and it’s not that.” I hate to say it, but it’s kind of a basic thing, when you’re a young female. It sounds silly, but I’m like, “Guys, it’s black pants, and a sweater. Get the uniform, and just wear the uniform.” It sounds silly, but [CROSSTALK]
Sean Cantwell: Practical stuff. That’s what matters.
Karen Flathers: It’s very practical … I’m like, “I wore the uniform for 30 years, guys. Just wear the uniform.” Anyway, that’s an aside. I think some of the other stuff, the learnings are you’re not going to win every battle, so focus on winning the war. As a long-term butthead, as my family will tell you, it’s like, “But I’m right, but I’m right, but I’m right …” It doesn’t actually matter. You have to understand that balance of-
I got it from one of my early bosses. “Yeah, Karen, you won that battle. Now, you’re going to lose the war because now you’ve made everybody mad.” How do you balance … Understand what your long-term goal is and understand along the way what things you’re willing to give on to get to that long-term goal. That’s a hard thing to do, especially in cases where you’re right, but [CROSSTALK]
Sean Cantwell: Which is all the time, right?
Karen Flathers: Of course, for me, it’s all the time, so it was really a challenge for me … Again, I think that’s a hard thing to learn early in your career that I think is important. As part of that, again, as a natural introvert, making small talk, establishing relationships with people – not my strong suit. I’m like, “Can we just get to business?” As part of that winning the war, you realize, you know what? You’ve got to take the time to do that. That’s important to a lot of people, and it will get you a lot farther.
I think those are some of the things you don’t think about that get you to those A-ha moments [CROSSTALK] The third thing is just, it’s funny, you spend a lot of time focusing on what you’re not good at. When I finally got to the point in my career where I’m like, “I am not good at these things, I am never doing them again. These are the things I’m good at,” I became much more successful.
I was like, “You know what? Yes, I will walk into a room, and I will take over,” and it irritates people, but you know what? It’s what I’m good at because I came with the data, I came with the presentation. I can facilitate the discussion. You kind of fight that in yourself sometimes, and at some point in my career, I was just like, “This is what I’m good at, I’m just going with it,” rather than thinking, “Oh, I should get better at this.” I’m like, “It’s too late. I’m not getting better at that. I’m never going to be good at that …”
Sean Cantwell: You know, people enjoy what they’re good at. I think recognizing what you’re good at and doubling down on that can lead to a level of job fulfillment and enjoyment [CROSSTALK] I think there’s a lot of wisdom in that.
Karen Flathers: It can, and even if you joke- I would walk in room, like, “Okay, just to set the stage for everybody, I’m super bossy, and I’m going to take over. If it’s starting to irritate you, just let me know, or throw something at me.” Also, just kind of acknowledging, like self-awareness. “Yes, I’m going to be bossy, and I’m going to talk loud. I’m not going to take it personal if you throw a pencil at me and tell me to shut up. I just want to set that right now.”
Sean Cantwell: That’s good. You just lay down the law. Let them know how it’s going to be-
Karen Flathers: I lay it out there. I come from a large family. You’ve got to lay it out there, or you’re never going to get through.
Sean Cantwell: Well, Karen, this has been awesome. Thank you so much for taking the time to chat with us today. I’ve really enjoyed getting to know you, and I think as someone who’s really been at ground zero of the birth and evolution of Software as a service, as an industry, and all that entails in terms of how companies really need to interact with their customers, you’ve been right there on the rock face. I know our listeners, and the entrepreneurs that we talk to will certainly enjoy hearing your perspective. Thank you again for taking the time to chat with us.
Karen Flathers: Great. Thanks for having me. I enjoyed it.
Sean Cantwell: All right. Thanks so much, Karen. Take care.
Karen Flathers: Bye.