Customers + Success: #3 Inside Out and Upside Down: Tips for getting to know your customers

Good morning from Sydney. It's Kate Fleming here, the Head of Customer Success for Cloudflare APAC. We're having episode three of Customer Success series on Cloudflare TV. And our guest this week to talk about knowing your customers inside out, upside down is Cameron Pearson, joining us from Sydney. Hi, Cam. Hey, Kate. Hi, everyone out there. Thanks for your time. We were just talking about your lovely artwork in the background there. My floral dots. Very nice. I've got my flower on the background too. All right, so let's get started. Today, we're talking about customer experience journey. And the thing that's a little bit different about having you on board, Cam, is you're not, I mean, you are anyone, everyone is in customer success, I suppose, but that's not your designation. And you're actually a CEO, and you've been at C-suite for a long time. So we really wanna use your experience to look outside in, and maybe some of the traps that customer success teams or people that are facing customers can fall into. And also, I know you've got some really quite insightful experiences from previous organisations you've worked with on how you can flip your thinking and what we should be looking at. So before we jump into that, can I ask you just for the purposes of the audience today to just take us through a brief overview of your background? Yeah, sure, Kate. I kind of started off my career in a bit of a hurry. So I was kind of out trying to run businesses from a very young age, but realised pretty quickly that my unconscious incompetence was pretty evident. So I ended up going to work for Johnson & Johnson in the early 90s, which was probably one of the most influential parts of my career, because I don't know if anyone out there is working for a company like pharmaceutical or medical, but they are very disciplined, and they have a very strong brand management and kind of cycle, if you like. So most of my career, I've had sales and marketing facing roles, and in the Johnson & Johnson space, I ran sales and marketing for Australia and New Zealand. And not too soon after that, I joined a French assistance company that had purchased a local business in Australia called Mondial Assistance. And that's really where I've spent the last 15 or 20 years of my career in a assistance slash ancillary revenue travel insurance type industry. And that's kind of led me to where I am today, which is CEO of a startup business that was actually an IP that came out of the Covermore Group where I worked for just on 10 years, which was the last corporate gig I had. But I suppose relevant for today's discussion, the last 10 years of my career, I had roles with titles that were called growth, innovation and marketing, or chief strategy officer, which are all related to how are we evolving the value proposition for our customer, and how are we competing in markets to have sustained kind of advantage, if you like, which is, I suppose, topical for our conversation today about customer and how do you stay customer centric? It absolutely is. It absolutely is. And I'd like to draw, I suppose, on both your experience now as a CEO and founder of a small startup, and also your experience at large corporations, because I know there'd be people that, in our audience and with different backgrounds, and we're in very different size companies along the way, but can we just talk a little bit, I mean, you've talked about customer experience and customer journey. What does that mean to you? Let's just level set a definition of what we're talking about when you, as a tenured industry practitioner, uses those terms. Okay, so look, I'll apologise upfront for maybe being a little controversial on challenging terms, but things like customer centricity and strategy and customer value change and journeys, et cetera, are all widely used terms. And I think part of the challenge with that vernacular is you get, it's very generic by definition. So customer centricity, it'd be very hard to talk to any company or any executive that says they're not focused on the customer. So, for me, customer, or being a customer centric organisation really starts with a question that is, will the real customer please stick their hand up? Because there's many versions of customer in an ecosystem, and particularly sales facing executives have the challenge of, who exactly have I relationships or have I developed relationships with, and are they the appropriate people in order to make sure we're relevant and we're maximising the value out of a customer relationship. So the very foundation, I think, of being a customer centric organisation is really properly understanding that one customer doesn't define everyone. And if I give you an example, you might say inside a business like, I don't know if you're looking at servicing Apple as an organisation, depending on where your product hits, is it the procurement department? Is it the retail stores? Is it the people inside the retail stores you're servicing? Is it the end consumer that you've got to understand? I mean, it's a very simplified discussion, but the principle is there are many layers of that relationship with a customer that the definition of customer should start with. And I think once you understand that, then it's really about which part of that relationship with a customer do we want to understand and how well are we doing in that particular audience? Right, so it's really about, if I was to paraphrase, and I think you're spot on, no head of a company has ever said, look, we really don't care about the customers. No one says that. Everyone says our customers matter, our people matter, but the differentiator is not the language, but it's actually then understanding who your customers are and gearing yourself towards that. And I think the other thing too that you pointed out, which is interesting is, when we talk about a customer, you might say a big company like Apple, but you're not even talking about Apple. You've got to segment that down into who are the buyers or the people who require our services and how do we tailor our messaging for them? But if I think about, and I know what your view is here, so I'm going to throw it out here. So I go, okay, well, I've got this great widget and it's going to save, it's going to really help people on the genius desk at the Apple retail stores. And I know it's going to be because it does these things. And so I know my customers. I know it's the people that run the genius teams in the retail stores. And I go to them, I'm like, look at this widget. It's amazing, it's going to help you. That doesn't necessarily guarantee my success. And that's not necessarily understanding the customer experience or the customer journey. So how do we take that more advanced? It's not just knowing who your customer is, is it? It's knowing, and you've talked about it before, it's like your value. It's knowing also what you can do for that customer specifically. Yeah, look, I really like some definitions. I was speaking with you last week, Kate, about the influence from an academic called Dr. Ian Phillips. And I think he does a very good job of changing the dialogue from talking about customer value to talking about being value delivery driven. So it's that notion of if you've got a widget and you're trying to sell it to the genius bar of Apple, the principle is saying that your company may have a range of value propositions that they're choosing, providing and communicating to target customers. The challenge really is how superior or profitable is that value proposition to that genius bar? And what type of experiences would the customers that touch on your product or service at the genius bar get? Are they measurable? What are the end consequence of doing business with Apple now that your widget's involved rather than before it was involved? How valuable is it? And then obviously, what monetary value am I prepared to assign to it? So that principle is about if I can't understand what value I deliver as an end consequence of my service or my product, it becomes very difficult to have a conversation with the genius bar customer to get them to say, well, why should I choose your product over an alternative if I can't have any tangible reason to understand the experience I'll get? Right, and then I suppose if I bring it back to a customer success professional and you say, great, so we agree with what you're saying academically, but how do I, give me a real world example. And I think you talked to me about one of the old freight companies. How, can you take us through that? Cause I think that's a really good way of thinking about how we message our value. Yeah, so I used to, I mean, it's a very old analogy now, but if you think that FedEx as a company is still highly functioning organisation, if you consider they made their bread and butter out of delivering packages overnight, if you consider that FedEx now operates in a world with email, they in their organisation DNA have got pretty good at understanding how to compete in a marketplace that changes. But back in the 80s, their principal would say, when you do business with FedEx, instead of one of the alternatives, I can't remember the name of Emory, I think it was in the US, you get guaranteed delivery overnight of your package we deliver it something like the measurable tangible outcome was, FedEx was 98% of products are delivered within the timeframe promised overnight compared to the alternative, the best alternative was 40%. And because they own their own plans. So that notion of, I can demonstrate what value you get, I've got clear consequences doing business with us, if it absolutely has to be there, then use FedEx, because I can control the value chain. So they kind of, I think the important analogy there Kate is that they link their ability on the features of their product to, why is that promise actually real? How can I make you believe that I will get that package there overnight? And their value proposition was equally as linked to that. Well, again, the vernacular that Dr. Phillips introduced me to was this notion of a value proposition has to have a compelling value delivery system. So I'm making a promise, how does that promise come to life? I think that's really interesting about the value delivery system. Sounds a little interesting value delivery system, but that notion of being able to quantify almost, it's not even an elevator pitch, it's even faster than that is to be able to say, my company stands for X or we do X and we've proven this over time because of Y or, and this is how we stand behind it. That it's like the fact-based, I'm the emotion with the reality, right? Yeah, look, I think there's a degree of pragmatism in this notion of customer centricity. And I think highly functioning companies today have a natural rub or an arm wrestle between operations on it, if you like. And I think when that balance is still harmonious, there is rub between how an operation or a finance mind thinks about delivering a particular service compared to how a marketer wants to promise to win preference over alternatives. And I think if you're not clear on, if the promise is compelling, great, but if the promise is not married up to the strategy to deliver the promise, you get real issues around disconnect on the brand. So, so then that makes perfect sense. I'm a customer success person, perfect. And I might say, look, this is, this makes perfect sense to me, but I'm not setting the strategy for a company. I might be an influence, but I'm not, I'm not setting it. So what's something practical, like if we drink, if we bring it back to people on the ground, say you run a portfolio of accounts, you're a customer success manager and account manager, and while you're like advocating for change at the strategy level, and we're going and knocking on the doors of people like you, Cam, going, excuse me, please, Mr. Chief of Innovation, can you help us with this? Yep. What could we do to get to understand, even understand what value we deliver our customers? Well, to me, everything that you do should be orientated around the principle of spending a day in the life of your customers. If you don't actually properly understand what's happening in a customer's life, and the reason I think it's relevant to say, the notion of, will the real customer please stick their hand up? Because that means spending time with elements of customers across the value chain within that account, if you like, would be a more generic language, because it's only then, if you sit behind the desk of your customer, where you properly understand where those pain points are, or the opportunities for your particular product or service to have an influence over an outcome. So before you go near selling, or before you go near giving feedback to the company about what's good or bad about the ability for you to go to market and set budgets and do all those things that are normal, if you don't properly understand where are the opportunities for you to make an impact in a particular customer, or where are the likely pain points, both sides of that discussion become very dictated by price. So in the absence of having compelling value, you end up talking about commercials, which tends to have either margin erosion, or, again, it's interesting in the Zoom format, but I'm sure if I had a show of hands, the amount of people that would say, the reason I haven't met a sales budget, or the reason my product's not competing is we're too expensive. Particularly anyone that's dealing with a big brand. So, I spent 10 years of my life at Johnson & Johnson with sales teams telling me the reason that we're not winning is because Johnson & Johnson is 25% more expensive than the nearest competitor and the product's not that much worse, that kind of mindset. But until you understand, prices always has a role to play in any marketplace, but if you park price as a known influence, what are the other factors that are likely to impact your ability to convert a sale or your ability to have someone who's selling your product convince someone else to buy that product if you're in a B2B to C market, for example? And so, it stems on that principle of not going and talking to your customers from a sales perspective, but actually becoming your customer. Sit behind the desk of a customer, learn what goes on in their world, and there is where the richness comes from insights that will help you understand how to evolve your value proposition. And I think that's really pertinent, and I mean, especially, gosh, especially at the moment, so many conversations for organisations, it is margin, it is price-based, people are just looking at cost, cost, cost. And I know from my own experience, it's almost once that's opened, it's very hard to steer the conversation back to that. So, it's almost important to be establishing that from the beginning, it's the value, it's the emotion part, right? So, it's what the warm fuzzy part that I can deliver to you for one of a better way of describing it, and that wasn't pretty good, but if I go back, let's go back. So, I'm Kate Fleming, I've got a customer success team, I wanna go and find out what value we're giving to our customers. So, the first thing I do is I say to my team, hey, let's go and pick a customer, and then go and spend a day in the life of them just to go and data gather. And it sounds great in theory, have you seen that happen in practice with good results? And the other thing I'm gonna ask you is, what if someone comes back and says, look, I'm not gonna go with that customer because they're our top customer, they've been with us for years and we don't need to worry about that. Should we just focus on the ones at risk when we do this exercise? Or would you focus on your ones that you feel very- Yeah, so look, I would, let me answer it in two parts. I think the reason I'm such a strong advocate of the principle is in that notion of, a progressive thinking organisation, we ran a business, and if I give you some relevance of time, in say 2004, 2005, we ran a business. So, if I'm sales and marketing director of multi -country P&Ls, we ran a business that was greater than 40% market share in all three market segments that we competed in. So, when you think about what's the five-year horizon look like, what's the 10-year horizon look like with a market that has an appetite for growth? Where's it come from? So, you really are, you're a major market player in all markets you're operating. And if you don't have an understanding about where are opportunities, then it becomes very difficult to see growth in perpetuity. So, we implemented the principle of an executive stepping out of a direct P&L for sales and marketing and focusing on this notion of growth innovation. And part of that exercise, we implemented this methodology of partly value proposition, value delivery system type logical strategy, if you like, but it was centred on the principle of spending a day in the life of the customer to validate thinking. So, if I give you some example of the metrics on that, from 2004 to 2010, that business went from, we went from running two countries to running six countries across Asia. Five of those countries were losing money in 2005. All six of those countries made a profit in within two years of us taking over the operation. But in terms of revenue, we doubled revenue and double profit across the region. And in the context of scale of that business, that was $145 million of EBITDA profit, not an insignificant business. So, whilst there were lots of things that go on in a business and lots of strategies and disciplines, fundamentally, we used to go into markets and do that very thing. Understand from sales and leadership teams where they were operating, what was their promise to market, what made them compelling, and then we would go and sit with the customers. And it was through that process that we understood where their weaknesses were and whether it's the backend of the business or the products that they sold. Equally, we were able to identify where there were opportunities for us to evolve. But that was kind of, let's say that was in an infant stage. And in 2011, I joined a business called Covermore Group, which was, it had operations centred in, you know, really in Australia and New Zealand with businesses in UK, China, and Singapore. But 60% of its profit came from one country, sorry, from one customer in Australia. So, private equity, we came in as part of a private equity leadership team. We were making $30 million of EBITDA, and that business was making $30 million of EBITDA for the last two and a half years. So, it was flat with exposure to one large customer and one large segment in a marketplace. And so, the example I can give you is, we had something, and I'll just generalise here. That was like a 30 year relationship with that large customer. It was highly evolved, highly successful. It was, you know, it was like a harmonious marriage. Both parties loved each other. And so, when we came in, there was this notion of, we need to understand where there are opportunities for growth. And the kickback was always, there's nothing more we can get out of this relationship with our retailer because we're so close. They love our products. So, we embarked on a day in the life of the customer exercise, just to see what the reality of that relationship was. And the conversation would start along the lines of, how is our product? Your product's amazing. We only sell it. We love it. How's the relationship with, you know, how's our service, blah, blah, blah, blah. All of that kind of exercise, all related to a general feedback of, this is amazing, nothing to change. We love you. Fast forward to spend a day in the life of the customer, sitting behind the desk of a consultant that was selling the products. And the reason that's relevant in the context is, we were spending all of the time in that relationship with head office, leadership people, because we didn't spend any time with consultants or frontline staff, because they didn't make a decision on the account. But sitting with a consultant, we had some data, which all of these projects should centre back to tangible metrics, not emotion. But the data said the larger the stores were, less their conversion was, which didn't make much sense. But spending time with the consultant, we quickly established, it was taking 45 minutes for a consultant to quote and book a travel insurance policy through the system integration. So, and they were making $5 commission. The head office made a lot more commission than that, but it wasn't, you didn't have to be an early candidate for NASA to establish that that consultant, when they got busy, was not gonna sell that product. Right. So we implemented, as a result of that conversation was had over many customers, not just the one, but that was a reoccurring theme. We implemented, it changed, I think we spent $100,000 re -engineering the process of the booking engine. And I think the net result there was something like a 12% increase in sales, which was tantamount to about $20 million of revenue. But it started in the, the lesson I think from it is that it matters when you get down to specifics. Right. When you say, tell me the, show me the last booking you did. Walk me through the system. How did it take? And you go from, we love it to, oh yeah, look, this is a bit cumbersome here. It takes time. Here's the example. I have to go in there and adjust X, Y, Z. So the point is, day in the life should be about becoming the customer, but become the customer on very specific examples of how your product or service interfaces with that particular audience. And so if you think about that in the context about how we started the conversation, if you're having day in the life of the conversation, practices across in that retail example, consultants, area leaders, team leaders, state managers, people that own particular parts of that relationship with head office and the boss, each of those stakeholders have different things that worry them about their particular world. And your service inevitably is going to be a small part of that person's day or, so that's where the real nuggets of gold happen. And in almost all of the occasions that I've done this across almost every continent that I've worked in, the same result happens. You will never not find something that you can't address. And it almost never results in you having to change your product. This isn't a product exercise about, how do I go and tell product departments to put another widget in? It's really about, what do we need to know? And product, if that's your business may evolve, but it's not an exercise in, our product's broken, go and fix it. It's an exercise in, how do I improve the experience my customers get? And what are those tangible outcomes that we could change as a result of knowing my customer? It's the old adage of, I don't know if this is a myth or whether it's true, but it's something you hear around business school is, the person that invented the big green dot on the photocopier machine, or the fax machine or whatever it was, it was, I mean, it's the photocopy, it's great. Like everyone wants one, it's fantastic, but they weren't using it because it was a pain in the neck and there's all these issues and actually, actually saying, okay, this is go and this is stop. And I don't know if it was a photocopier or some other device, but I do remember the story of it, had nothing to do with the technical capabilities of the product. It was just- I'm sure, talking in a tech environment, procurement is the scourge of life. But if you think about it from that perspective, I remember a conversation with BMW back in early 2000s where there was this big arm wrestle between pricing at Mondial Assistance and the procurement department of BMW. And it was around something really simple, like the number of kilometres that they wanted in their policy for towing, if you broke down. And it was like an Armageddon debate. The Mondial Assistance people were saying that we'd all go broke if we gave them another 10 kilometres of towing. And BMW believed that their whole customers would buy a Mercedes if they didn't have 10 kilometres of towing. You know, it was that kind of, that orthodoxy had become so entrenched in the procurement of the service. We spent some time with BMW drivers and the sample size was enormous in this day in the life exercise. Not one customer even knew they had a towing benefit. You know, so, you know, that principle is, even on both sides of that equation, neither BMW or Mondial Assistance really understood what we were trying to provide to the customer. They were so determined to get more value on both sides of that negotiation that the person they were negotiating on behalf of really didn't, one didn't understand it, but didn't care. I love that. That's a great example, Cam. And in fact, we've got about two minutes to go. So that's a nice little wrap up. So if I was just to summarise, you know, some of the main points, and I'm a habitual note taker, so I've got plenty of time. You know, just talking the talk is not gonna work. Customer sensitivity doesn't really mean anything. Understanding your customer means actually understanding the different levels of users. So it's procurement, it would be the buyers, it's whoever needs to get something out of your product. But at the end of the day, it's the people, the business users, right? How easy to use compared to the alternative? How much better do you make their lives? And by spending time, and it can be at a company level, but even at a small level, as an individual level, getting into your accounts and understanding over time how they're using and interacting with your product. You can get a better sense of how you can fix that experience and also where you're delivering value. And a quick question, which is gonna stand out is, you know, you've worked in really large companies and you're now working, you're in a smaller company, you found it. Is it different? Does it apply across the board or are you doing things differently? Well, you know, apart from my, I remember I had this practice where I would automatically blind copy, I would automatically send all of my copy emails into another inbox and never read them because it used to drive me insane. And now I really pray for an email. You know, be nice to someone, just email me. And I'm happy even if it's, you know, a retailer trying to sell me something, I'll read it. So apart from the scale change, look, I think there's a universal competition for resources. So what should I spend my time and money doing? How do I make sure that that exercise is creating value for myself and my customer audience? And I think whether I worked for global organizations or I'm working for Virgil as a startup, you know, that dialogue doesn't change. Certainly the complexity of the dialogue shifts, I think that's completely reasonable, but it's very easy to get into rhythm and it's very easy to just spend lots of time doing things that are relevant, but they're not helping necessarily expand that customer audience. Awesome, that is brilliant. And we are at time, spot on. Right. Thanks Kate. Great talking with you.