Episode Transcript

Adam Avramescu  00:00

Welcome to C lab, the customer education lab where we explore how to build customer education programs, experiment with new approaches, and exterminate the myths and bad advice that stopped growth dead in its tracks. I’m Adam from sq.

Dave Derington  00:12

And I am Dave Derington. And today we continue our CEO series with another special guest, Michael harnam. Michael is the CEO of ESG, the Education Services Group, which is also a leader in the customer success as a service space. So welcome Michael.

Michael Harnum  00:28

Dave Adam Thanks for having me. I’ve been looking forward to this.

Adam Avramescu  00:31

Yeah, we have to and thank you so much for joining us on national weather persons day

Michael Harnum  00:40

is the ultimate forecasters day and now I know forecasting is a critical element of all of our jobs. And we do it probably with varying degrees of success. Just like the weatherman.

Adam Avramescu  00:51

some wonderful thinking on your feet. I don’t know if you’ll be able to do it. This is also a world Nutella day. Do you have any tie in there?

Michael Harnum  00:58

The tie in with the tele is it’s number one, delicious. And number two, I have a daughter who set out to conquer a hazelnut allergy with one sole purpose in mind to be able to eat Nutella.

Adam Avramescu  01:12

Oh my gosh,

Dave Derington  01:12

that’s a that’s an amazing goal.

Adam Avramescu  01:14

I wish I would do the same for the same reason. Okay, wow, I love I love that you just had a quick on your feet response to both day ofs. So to our listeners, since it’s been some time since we’ve done this format, where we’re engaging with industry leaders and CEOs in particular, this is where we’re really trying to gain their perspectives on where customer education fits into the market. So Michael, we’re excited to talk to you today about what you’re seeing as you lead esgs business, both in the customer education and customer success space.

Michael Harnum  01:45

Very excited about that, as well, Adam and the customer education market has been on a very accelerated evolution and look forward to diving into what that means and how education leaders can take advantage of the shifting grounds and the changing rules and how Customer Success impacts that and how those to operate harmoniously.

Adam Avramescu  02:08

Yeah, me too. And this is actually really good timing, because we’re in the middle of not just our CEO series as we’ve been doing, but also a series of episodes that are focused on both the customer education and the customer success market. So we’ve been looking at those from various viewpoints, we’ve had investors on the show, we’ve had other CEOs, we’ve had customer success, industry leaders, so really, really good timing, not just in the world, but on the show. But first, Michael, we usually start out this series by just hearing a little bit about your story. So I’d love to hear about ESG story and how you came to become CEO.

Michael Harnum  02:46

Yeah, happy to share that Adam. It’s a it’s a pretty interesting story. So the company is 18 years old now. And I’ve been there for four years and leading it. And the origins of ESG. Go back to, you know, the early 2000s when there was a gentleman in Cincinnati, Ohio, who was a partner at Arthur Andersen and his job was to audit the books of big tech companies. And so what he found when he was auditing these books was there was a ton of deferred revenue sitting on the books and notes hundreds of millions of dollars. So part of his job was, what is this deferred revenue? Why is it here? Why can’t we recognize it. And what he found was, a lot of these big tech companies were selling a tech solution. So hardware software, and they were bolting into the solution training and a couple 100 grand here. 500 grand there 50 grand here. And from an accounting standpoint, those companies were not able to recognize that training and education revenue until the services were delivered. And so he just took that away. And then when Arthur Andersen had some troubles in the Enron area, he found himself without a job. And so he started ESG back in the 2002 range and went back to these companies and said, Hey, why don’t you give me a list of the end users who have existing unused training balances, I’ll build an inside sales motion will call your customers will get them to consume your training, they will get more engaged and confident with your platform, you will get to pull some revenue forward and recognize it. And that was the simple sales motion guys that really formed ESG for 14 years until we began to expand the value prop into customer success. But that’s the background of ESG in terms of making sure that end users were getting the training and education that they were paying for

Dave Derington  04:50

it. Let me ask you, I’m really excited about this. Actually, Michael, because it’s really relevant to where I’ve been in my journey as an educational leader a couple of times. The question I’d like it to be back up just a little bit on. Because I think this is a topic that many people that are entering in our roles that are early on in their careers in education may not know about, can you tell me a little bit more can tell the audience more about what revenue recognition really means to them what and like I get it. But I want to hear in your words, so that we understand a little bit more deeply.

Michael Harnum  05:22

For sure, I think we’ve all been through Dave, budgeting exercises, and we’ve all benefited from a successful budget outcome and had our years limited by a constricted budget. So revenue recognition to you know, the CFO is ultimately the value of the services that your organization is providing. And so from an accounting standpoint, if you think about the overall flow of a transaction, right, there’s a sales booking that happens at the time of sale, right. And so that is a predictor of future revenue and indicator, but it really has no dollar value to it, it’s an indicator that something else is about to happen. That’s something else is the services that are represented by the sales booking, then turn into revenue at the time those services are delivered. So for example, if I sold you a training for $100,000, right, I would recognize closed one deal for $100,000 to Dave, and Adam, right? It sits there until you actually consume the training service that I sold you. And let’s say you consumed 20,000 of it in March, right? Well, now I get to recognize $20,000 worth of revenue, and then there’s another 50,000, consumed in June. Now I’ve recognized 70,000, right. And so you continue to eat away into the value of the deal. But the revenue is only recognized at the point of service consumption. Right. And so that is the revenue that the company is getting. And so as you walk into a budget discussion, it’s really important that you know, the difference of timing and the relative value of a sales booking and a revenue recognition motion.

Dave Derington  07:18

That’s great. Yeah,

Adam Avramescu  07:19

we’ve got a lot of listeners who I don’t think have gone down the path of education services yet. And you know, they might still have largely free programs. Maybe they’re marketing based. They’re not thinking about revenue recognition yet. So that’s a really, I think, important guideline to think about. If you’re going to move in that direction, how are you actually going to not just get your bookings, but recognize that revenue? Right. So, Michael, you know, you you mentioned, you came into ESG, you’ve been there for for four years. And one thing that I understand is that you kind of helped the company transition from that original use case, to add additional services. And in fact, ESG has been a pioneer in the idea of customer success as a service. So I’d love to hear a little bit more about that, and how you came in and made that transition in the company.

Michael Harnum  08:09

Yeah, for sure, Adam. So when I came in, I took a look around like any new leader would and you survey the business, you look at the balance sheet, you talk to customers, you talk to employees, and here’s what I found a stable, profitable business that really wasn’t growing. And so what I liked was the fact that our customers, were allowing us to represent them in the marketplace, right? So the ESG brand doesn’t necessarily exist, let’s say ABC Company hires us, I am calling their end user saying it’s Michael from ABC Company, I’m sending them an email, it’s Michael at ABC company.com. And we go native inside of these companies, that is a huge responsibility and a massive opportunity for any company, it’s an honor to have that privilege. But what I thought guys was what we were doing with that responsibility was selling a training transaction. Right. And while that is good, it is awful thin, right? I didn’t know how long that business model would last, it was unclear how that business model would grow. So the thought I had was, what if we can do more when I’m talking to my clients and user? What if we can do more with that conversation than sell them for $5,000 access to a three day training class in Charlotte, North Carolina. And, and so, we we just leveled up one level and thought about the customer lifecycle. Right And obviously, customer education plays a critical role in the customer lifecycle, but there are several other motions that are hyper critical to the success of a Customer Relationship that extend beyond training and education solely onboarding as one example. And so really I took the nucleus of we’re going to call your customers and, and sell them training to, we’re going to proactively engage with your customers and perform Lifecycle Management Services. That will include selling training and education, because obviously, a trained and educated customer is more independent, more confident, more capable, more engaged, there are healthy markers all over the place in connecting the training and education consumption of a customer, to their likelihood to buy more and to stay with you and renew. But it was really an expansion of the value prop from that nucleus starting point of selling training and education.

Adam Avramescu  10:51

So were you able to land and expand your own services companies that you are already working with selling, selling seeds, selling learning subscriptions, and then say, Hey, hold on, this is great that we’re doing this together. But I can actually help you scale out your, your lifecycle function, your customer success team, by offering these additional services as well, or did you have to go out and find an entirely new market.

Michael Harnum  11:14

So it was both, we did go find a net new market. But we right away, we were not able to immediately, like expand our value prop inside of our existing customers. And I’ll tell you why we have since then. But right away, it was not an immediate occurrence. And our ability to do that is proportionate to the progression of maturity of the training and education department of our client. And here’s what I mean by that. If we are selling transactions for one of our clients in a transaction, meaning access to a physical class typically is what it was when I started. That transaction has a certain value, but the change within the marketplace from a transaction purchase to a subscription purchase. And my customers embracing of that reality. And some are super progressive. And I’m sure we’ll spend more time on this in moving to a learning subscription model and others not so aggressive. Where our customer success services began to quickly make sense, are aware I had customers that said transaction selling Okay, great. Continue doing that. But now I want you to sell learning subscriptions. Well, the moment that you begin selling learning subscriptions, that sets up the entire post sale need that many companies don’t have in place. And so that was really the intersection of these businesses was that I will do an inside sales motion. But when my inside sales motion results in placing a subscription in the marketplace. Now, how are you thinking about post sale? Lifecycle Management? Do you have an onboarding strategy? Do you have an adoption strategy? Do you have a customer Health Index, all of those staples that sit behind that? The alternative to that is you just sell a bunch of subscriptions. And we had a customer that did this hundreds of millions of dollars worth of subscriptions, and didn’t think through any of the post sale activities that I just outlined? And you wind up with a single digit renewal rate. And so literally, you spent all this time and effort and 92 cents out of every dollar goes away? Because the customers don’t renew the next year. So yet yes, we found a new market specifically for customer success. And then we helped Shepherd our existing education customers into the learning subscription model with that appropriate post sales support.

Adam Avramescu  14:02

Yeah, cuz now if I if I get this, right, you’re no longer in the world where say you’ve, you’ve got an implementation, and you’ve sold this much training and it’s a one time transaction. And you’re just responsible, making sure that that training actually gets consumed. And then and then you’re apt until the next time, you know, a new a new customer is on board. Now when you’re actually talking about subscriptions. Well, now you’re you’re actually talking about the same motion as as like subscription software, you have the opportunity to continue renewing that customer. But if you haven’t done the right actions, proactively upfront and basically planted the seeds for churn whether it’s the product itself or whether it’s for the learning subscription, they work the same way.

Michael Harnum  14:43

That’s 100% correct. And so, you know, my view of customer success is it in almost every example. Customer Success requires the presence of a subscription. Right and next description can have a variety of flavors. In our model, in some of our engagements, we are placing that subscription and creating it. But regardless of who is doing that the presence of a subscription then necessitates the customer success motion that sits behind that, we give you an example of how we’ve deployed that in one of our larger legacy customers. So got a customer that says, hey, we’re selling all these transactions, that’s great, we’re going to completely flip the switch. And we want 85% of our 2020 sales bookings to be learning subscriptions, right? That is Cannonball, in the deep end of transformation. There are parts of that, that I love. There are parts of that, that create challenges, but it was a very progressive thinking leader. And so we went and we sold a ton of learning subscriptions on their behalf. And I think the actual results were somewhere between 70 and 80% of the sales bookings, in the first year of offering a learning subscription, where these learning subscriptions. So what we needed to set up behind that were a couple things. So and and i believe learning subscriptions lend themselves incredibly well to a customer success lifecycle management process, just by the nature of a learning subscription. And I’ll explain what I mean in this example. So phase one is an onboarding cycle. Hey, Adam, I see that you got this new learning subscription, wanted to welcome you to the platform, wanted to make sure that we built a learning plan that made sense for you that you knew how to access the platform and create a username and ID and all of those essentials that happen in an onboarding section, right, and then you’ve move on to adoption and consumption, which if I have a learning plan in place, and I have the ability to see what training classes you’re signing up for, what percent completion you are and how many classes you have completed, I can now build a customer Health Index, that red yellow greens, every single learning subscription based upon what they’ve consumed. And so if I see that, you know, you said, Hey, in the first quarter, I want to take these three courses, because I’m trying to achieve this outcome, by the end of the 12 months, great, I can see that you’re green, I may check in with you, everything’s good. But I also may have a customer that says, You know what, I want to do this, and here’s my training plan. And then I noticed 90 days in, they haven’t completed a single course, or they haven’t signed up for a course, or they signed up for a course and completed half of it, but never finished it. Right

Adam Avramescu  17:40

Red account, red account, red account.

Michael Harnum  17:42

Correct. That will turn from green to yellow to red on my scorecard. And now, I had a customer success manager swing in and say, you know, hey, let’s, let’s make sure we get this back on track. And he wanted to revisit your training plan and all of those things. And so if you understand what that learner is trying to accomplish throughout the year, and you have these natural engagements that happened in a proactive and informed way, and those are the two key elements of any customer success, motion, proactive and informed. And then the renewal almost becomes assuming that you’re supplementing your content throughout the year, which is another key attribute that we can discuss in more detail. The renewal almost becomes a non event because you have shepherded that learner throughout the entire process.

Dave Derington  18:32

Yeah, that’s, this is this is fabulous. I really love this story where you’re coming from, I’m focused on education, but now you’re superimposing the customer. This is resonant with some of the themes that we’ve been seeing throughout customer education. It’s Customer Success emerges out of customer education, which emerges out of customer success. It’s kind of like iterative loop. And yeah, but but but what you’re talking about, it’s a systemic strategic way to do things. And and that’s what’s exciting, I think, to all of us to say, Okay, this, this subscription model is the thing, this is what Customer Success is all about. I need to keep you engaged it. You know, we’re talking about this a lot at outreach now, because we have this concept of sales engagement, sales engagement. Actually, it’s funny, because I hadn’t been in sales directly for throughout my career. And now I’m learning how critical it is to have that, like we come up with let’s let’s frame this up. I’ll frame it up in terms of what I know. And outreach is. We’re focused on the sale, but our salespeople have now learned that learning and education is so much more important than that relationship over time is way more important than just the sale. So we’re keeping customers engaged and growing and learning over time and that journey together is what’s really important. And that’s hard. And I’m really interested in seeing what next like what, how how you have technically implemented a solution to that.

Michael Harnum  19:56

Yeah, I would just say before we get to that, like if you think about Where we were as a company and expanding the value prop, and that all sounds really good four years later looking back on it because it worked. There were some really challenging times in there in in that we had our existing edgy customers that would come to me and say, Oh, so you know, you’re getting out of the education business or going into the customer success business. And my response was, I don’t see them as different businesses, I had our employees looking at like, most of our employees were inside selling, training subscriptions. Oh, so now now we’re doing customer success as a service. And you spent the time and money, Michael to get that trademark. That’s great. But that sends a message that maybe I don’t have a long term future here. And so I have been preaching exhaustively for three to four years that the Training and Edu business and the customer success business have way more in common than they do differences. And there is a natural fit between those organizations. And ultimately, that becomes one motion in the marketplace. It was a theory, right like anyone else. And so now to see that theory playing out inside some of our larger customer engagements has been, you know, really validating for us,

Adam Avramescu  21:17

that probably felt like a big risk taking a pivot like that going to the board and pitching Hey, you know, you’ve been doing consumption planning for, for education services and transactions, and inside selling you now we’re going to do customer success as a service. It’s a really big pivot.

Michael Harnum  21:30

It is a big pivot Adam, and you’re 100%. Right. I’m very thankful to our investors and our board of directors who had the patience to hang in there. Because I had an idea I had a PowerPoint, I had a theory and I had zero customers and zero revenue for any of it. And we just built a team that had the courage of our conviction that these two things are going to merge. And we’ve got to be in front of it right? If we’re going to meet the need, let’s say forget about customer success for a minute, let’s just say we want to meet the needs of our install base of customers, which were all inside selling educational engagements. How are we going to do that, right, I can’t lay out a three to five year plan, even with the existing customers. Without projecting some of the accelerated changes that have happened in that marketplace, we would have been led by the marketplace to a customer success outcome regardless, right? I just decided to get in front of that and build it as a destination, and then Shepherd our customers towards that destination. But it took a lot of work and a lot of convincing.

Dave Derington  22:39

That’s this is a really good story. And I have to say I love most of all is like how you’ve approached this intertwining between customer education and customer success. But But perhaps we go a little deeper. So can let’s talk about the how now. So you’ve developed this customer education maturity model. And that seems like it helps your clients think a lot more deeply about their strategy and solve the right problem. So can you walk us through this model? I mean, we really want to learn about what it is and how you’ve gone about developing this so that you could serve your customer base?

Michael Harnum  23:15

For sure. Yeah, happy to Dave. So our Maturity Model efforts reflect our desire to bring simplicity, simplicity, into an environment of chaos. Right? If you think about the training education marketplace, it was it was on a slow evolution curve for a period of time, right? It went from almost all instructor led to a mix of instructor led and online that balance shifts over time, you know, and then a pandemic hits, and now everything’s online. And then the subscription economy comes in and says, everything’s gonna be a subscription. Like, just think about that. And it creates a world of confusion and chaos, that we hadn’t perspective on that we would try and simplify that. And we felt we owed our customers, that level of consultation and a window into, you know, our cross functional capabilities across other engagements Meaning, if you if you hire ESG, I should be bringing to bear best practices from other engagements. That’s part of the value that we can provide. And so this is an effort by us to do that. And so we start with three simple categories, you know, one is building and that is, you know, all of the training modalities, your learning content. If you have certifications, and all the reporting and things like that, so the building, getting your foundation done correctly, and then we move on from there to operationalize and inside of operationalize, you know are things like you Know your delivery model, marketing your services, getting your class schedule, right? Taking your survey, having a solid financial model, and then also the organizational design and structure. And then finally, from there, we move on to transform. And in the transform tier, we think about things like, you know, building a journey map, what is your subscription consumption plan? How do you cross sell, effectively? How are you leveraging automation? And do you have a scalable model or as your business grows, are you just going to have to throw people at it. And so as you can see, as we move from build, to operationalize to transform your lead right into the world of customer lifecycle management, and it makes sense to have a strategy that is in line with or that drives your customer success strategy, as well.

Adam Avramescu  25:57

So if I’m running, you know, some sort of education services team or customer Education team right now, and I, I wanted to know where I am on on the model, how might I? how might I figure that out? And how might I figure out where I where I should be relative to where I am?

Michael Harnum  26:13

Yep, good question. And so we take this model that I just laid out, you know, topically, and we would, you know, set up some time at the end, these are, these are paid consulting engagements, and we deploy an expert, and there’s probably somewhere in the neighborhood of seven to 10 hours of discovery work that we do, okay, and we do that work through interviews with the leader of the team, and any key stakeholders identify with that leader, right. And so we gather a ton of information through that Discovery Series. And then what we do is across the, so each of the build, operationalize and transform level have five sub categories. So there’s 15 dimensions by which we measure your maturity. And then we’re able to plot your maturity against best in class, and able to identify the gaps. And so there’s a, you know, a detailed report that we publish at the end of this, which is a classic gap analysis that shows here’s where your weak spots are, we often have a lot of companies that tell us, I don’t need a maturity assessment, I know I’m immature. We still encourage this process. Because if you’re immature, perhaps you’re a little overwhelmed and not quite sure where to start. So rather than assessing your maturity, we encourage our customers to think of it is a prioritization exercise, right? You can’t do 15 things well at once, right, but let’s isolate where to start. If you have limited budget and limited resources, let’s make sure those calories are pointed at the areas that will maximize impact. And that’s probably going to start in the build phase or perhaps in the operationalize, you know, but we’re not going to prioritize spending a ton a ton of time together in transform yet, but we would build a roadmap to get you there.

Adam Avramescu  28:07

Yeah. Cuz like you don’t if you’re if you have nothing in place right now, and you’re thinking, Oh, I want to, I want to spend my time, I’m gonna choose an example doing a bunch of like deep journey mapping and operational automation. Well, how am I supposed to automate any of my operations if I don’t have operations? So So I see why in the build phase, you’ve got really, it’s the nuts and bolts it started starting with your catalog? What’s, what’s in your program? What are you teaching? How are you teaching it there? What modalities? How are you assessing it? That That makes sense as a starting point? What I’m curious, Michael, is I know, you know, there are many teams who have some of these modalities and programs in their mix, but not all of them. And sometimes that might be just because of the nature of their business. But sometimes it might be because they haven’t seen the need yet. Do you? Do you feel like you encounter customers where they might be in the operational operationalize or transform phase? But they’re kind of missing some pieces out of previous phases? And if so, is the priority then to fill those previous phases in? Or is it’s kind of like, keep trucking and keep moving with what you have?

Michael Harnum  29:19

Yeah, it’s, it’s really the former there, Adam. So yes, I do see both and, and we’ll see people that are, you know, somewhere in the middle of a maturity, thinking of a customer that it is spoke with this morning, and they want to, you know, advance their offerings, sell more subscriptions, but you know, they haven’t thought through the ramifications of moving to a subscription model across their organization, which is pretty significant. The ramifications and we can spend some more time on that. But I also have customers that are extremely progressive, and they look around inside their big old stodgy organizations and say, I’ve got to put have a stake in the ground, the market is demanding learning subscriptions, and I will not be left behind. And so I declare that here is the learning subscription. Here’s the package. Here’s the offering, go sell it, right. And so the price point is roughly correct. The content of the subscription is roughly correct. And you don’t have to be precise, you don’t have to get it exactly right. Right. But a lot of the operational elements behind this package were not necessarily in place. But this leader wanted to use their entry into the subscription market as a way of pulling his organization forward. Meaning if we start selling this, everything else is going to have to advance it’s a risky proposition, right? Because if you don’t balance that seesaw out correctly, you could be selling a lot of things in the marketplace, without the ability to execute on them, right. In the case of this customer, they did invest some operationally behind the scenes, and then we were able to help them with that post sales motion. Because the last thing you want to do is put a lot of learning subscriptions in the marketplace and not have the ability to follow up on them. That customer from a maturity standpoint, hadn’t thought through any of that. And that was the role that we played to help them build that out.

Dave Derington  31:29

I’ve got a question that’s kind of coming out of where what you’ve been talking about, actually, too. So. So Michael, you mentioned big, big old stodgy. I’m curious to see, because I’ve actually talked with shake at my last job part of your team. And he came in an early phase startup that I worked at. And we had some great talks about, like education and success, and it was really good conversation, but we really didn’t have much of an engagement is more like a partnership. What kind of organizations are you usually seeking out or seeking you out? for help? That’s the first part of my question.

Michael Harnum  32:04

Yeah. So Dave, yo u’re probably talking to Sheik Ayube he’s my Vice President of Business Development and a true superstar over here.  Shout out to Sheik! So we are typically in our new pursuit, we are leading into the market with our customer success as a service offerings. And so for new prospects, we’re spending a lot of time talking to Chief revenue officers, Chief customer officers, VPS of customer success, those types of people, kind of inside our existing accounts, you know, we are still rolling up to, you know, Vice President of training and edu. In our more progressive clients, we’re seeing those organizations align as well. So we’re seeing a VP of customer success report to the VP of I’m sorry, we’re seeing a VP of education report to an E VP of customer success, which is a really significant declaration inside of a company that these two things belong together. And that organizational alignment really helps us out.

Dave Derington  33:14

That’s great. So So predominantly larger organizations that you’re working with, at this time, where do you dip into the startup universe? Like where, like I’ve been in early phase mid phase outreach now is a very late phase startup, I would say.

Michael Harnum  33:27

Yeah, we do both and, and the relationship there is we tend to, you know, we take off some some really big engagements with some global enterprise customers. And we do some really heavy lifting and strong work. But we also learn a lot and document a lot. And we take that repeatability that we we got in that engagement. And we’re able to offer that into the mid market in a more standardized way. So, yeah, there’s some synergy there in terms of our customer base. But yeah, we work with startups and large companies, primarily,  because the problems that we’re talking about solving exist across the entire market stand.

Dave Derington  34:09

You’re absolutely right. And why I asked you this question is, Michael, that, you know, as I come into companies and Adam and I’ve been in the same place we come in, we’re usually like, 150 200 people, by the time we arrive, the company’s in a groove, they’re really starting to ramp up. But the educational, the work we have to do is often just profound. It’s a profoundly transformative, I feel like I’m, have you heard the the analogy of, I’m moving a battleship with a tugboat? Yeah, cuz it’s a transformation. It’s a process where I have like, when I came into outreach, I was talking a lot with my SVP of customer success. I report directly to him at the time when we’re talking big stuff. And the programs that I was trying to develop by myself with a small team were dramatic. So that’s what I’m talking about to our audience. At what point could they reach out to you and say, Hey, You know, I need some help, an example. And something I wanted to dive into, because you mentioned Ops, in particular, and atomies, you may see something different from me. So please, please offer your things I’m this, I gravitate to operations, because I feel like one of the strengths that that I bring to my organization is I’m a data person. I’m a scientist by education, I’ve been a DBA. I like to work in transformed data. So I’m thinking, not just about education, I’m always thinking about operations. But that is really substantially hard for a lot of people to get their minds around, for example, they will come in, we’re going to build the content. But you know what? And I’ve had this conversation transparently, manager VP saying, Hey, can I see the data for this? I go, I can do this. I can get it for you. I can manually assemble it. But the operational side of things is so hard to write to end. And also like when I was in smaller companies as easier as I started to go up into larger enterprise grade companies where I have to, to work. And it becomes political at that point to get data into a data warehouse and move stuff. move stuff around. I’m just saying it’s a very tight problem space.

Michael Harnum  36:12


Dave Derington  36:13

I’m just curious about your thoughts on that? And what kind of things that that you do to help organizations to get over that hump?

Michael Harnum  36:20

Yeah, it’s a great question. And I would love to tell you that we’re really smart. And we figured out that need ahead of time and had a plan to solve that problem in the marketplace. We just ran headfirst into that wall is what we did. And what I mean by that is, when we started our customer success as a service offerings, right, so ESG, as a whole, we have and this is all under the C SAS umbrella. We have four service offerings, we have the maturity assessment, we have a customer success plan. We have virtual Customer Success managers in our success centers in Denver, and Cincinnati. And we still do training education inside sales, right. But when we started, all I had were the people portions of that solution. So if you wanted to buy Customer Success services from ESG, it was a people value prop, we will hire virtual Customer Success managers, we will dedicate them to you. And we will help you extend your reach in the marketplace. What we found out and we had a bunch of companies that said yes to that simple value prop. Our discovery was that people only solve a really small portion of the problem. And we had a bunch of companies, Dave, that were saying things to us, like, I need your help. I don’t need your people, my people or any people, I don’t even know what I need. But I know I need help. How can you help me? Right? And so from that anks, like a lot of service offerings was born. Well, why don’t we do a maturity assessment? Why don’t we just like, let’s break down where you are. And let’s just understand those gaps. Great. Well, now we’ve done a gap analysis, and that person says, You told me where all my problems are, but you didn’t fix any of them. Right. So from that eggs came our customer success plan, which is like a one to two year engagement, where we come in, and we bring operational experts, program managers, we dedicate it to the engagement and when we say we’re going to build your customer success practice, and we were just hired a few months ago by like a fortune 10 global company to build their global Customer Success Center of Excellence. It’s not pie in the sky consulting theory, it is I’m going to come in and I’m going to segment your customers, I’m going to import your data into your customer success tool. If you have one. If not, I can recommend one and help implement that. I am going to build your customer Health Index, I’m going to document your playbooks, I’m going to build your journey maps, we’re going to build your digital automation capabilities, we’re going to write the content for your customer outreaches. And you wind up at the end of the engagement with an incredibly powerful toolkit of capabilities is all in the operationalize bucket upon which you can now do a lot of things in the marketplace. And so our initial service offerings maturity assessment, customer success plan, then you get to the end of the plan. It’s like Okay, great, I have my plan, but I need help executing it. Now we begin to layer the people in so we got a little smarter, because the market forces us to about how we sequence our services together to solve those problems.

Adam Avramescu  39:42

It’s really interesting Michael to see the way that your customer success maturity model and your customer education, maturity models reflect each other because you’ve got the same three categories build, operationalize and transform, which is great, keep it simple, three stages, but seeing how those layer on each other is quite Different in a way. Right with with the education Maturity Model, you’re really starting with content and modalities with customer success Maturity Model, you’re really starting with things like segmentation and right metrics and reporting. So it’s kind of interesting seeing what the core components of each of those are. But then in operationalize for both of them, that’s where you start to have just like you said, like playbooks and journey mapping and and, you know, process process automation, where Finally, by the time you get transformed with both of them again, now, you’re talking about how to really scale those out. So it is it’s interesting seeing the parallels between those two disciplines.

Dave Derington  40:37

Yeah. I’m sorry, I was going to say it’s also really, really cool to see how you’re doing it with an education first point of view, because one of the things that I’ve seen, and again, I’ve been at gainsight, and I’ve been now I met outreach, and I’ve been in other big companies, I usually see, I see some of this Maturity Model kind of stuff to kind of fall out, you know, gainsight had some of it. But what I don’t see as an is education first meaning, I mean, I just had a really good conversation with with a few other executives, and you know, C level folks about like that, that big arc of like, well, it’s not just about me having a CSM to fight fires and help people solve problems. It’s more about what’s the flow. Right. And and that’s what I like about the way that you structure your maturity model, because you’re slowing things down and really looking at the gaps. And then you’re building back up. That’s, I think, the things that somebody some people miss.

Michael Harnum  41:32

Yeah. And I think it’s important to know, like, where we think the destination is here, and you know, that there’s always going to be a journey. So we can, we can say where we think we’re going at this point in time. And our current thinking there is, there’s a phase where, you know, once you get things built and operationalize you, you’re going to need people power to some capacity. But over time, the one question that we’re asked in, regardless of the department that we’re talking to, is how do we scale this? How do we scale? Right? And that is a, it’s almost become like a de facto question in every meeting. And we spend a lot of time thinking about that. And looking at that, and building financial models, because our theory there, and we’re testing this out in some of our larger engagements pretty successfully is over time. If you build, operationalize and get into transform, and you do it in a disciplined way. A key element of that is your both for education and customer success is your digital practice. And a lot of companies are under invested in their digital practice pointed towards their installed base of customers. And if you would say something like digital customer success, too many people don’t even really know what that means. our point of view is, that is a key element of creating a scalable and efficient organization, because today’s model might maybe you’re gonna have 50 accounts with each CSM and very little automation, right. But as you automate your customer communication in an informed way, and you have a meaningful and relevant digital Customer Success motion into the marketplace, that a human when needed, is triggered to follow up on. Now, instead of managing 50 accounts, could I manage 75? Could I manage 150, because I’ve got a human and technology working in a compatible manner. And over time, you see your cost to serve declined. That’s our definition of scale over time, as you add customers, can your cost to serve decline? And if you’re only throwing people have it at the problem? The answer to that question is now.

Adam Avramescu  43:55

Yeah, and and you know, that’s one big reason, Michael, why we we kind of say, customer education is the scale engine of customer success. But I think what you’re saying goes even further than that, which is, I think there’s a misperception sometimes that you have high touch, customer success, and then tech touch customer success. So that’s not actually true. Those aren’t two different things, you can have a tech touch, within your high touch, you just have to figure out what humans are most effective at doing and then what technology is most efficient at enabling that that’s right,

Michael Harnum  44:27

and, and, and the importing of data to make and if again, you go back to those two anchor principles of customer success. It’s proactive, and it’s informed. Right? So if I’m going to have a digital approach to my high touch customers, what information Am I importing? That is personalized to them? It could be hey, here’s a monthly summary of your utilization. I noticed that you took these these training classes I hope they went well. Click here if you have any feedback or would like to, you know answer a survey, I noticed that you had for trouble tickets that were open on these issues, they seem to be resolved in a timely manner. And those tickets have closed out. If that’s not the case, please let me know. So those are just examples of things. When I talk about a digital campaign, it’s not a flyer for a new feature, right? It is something that goes into the marketplace that through automation creates a personalized impact on the recipient, and then is followed up by a human, very powerful,

Dave Derington  45:28

Yeah, this, this really is evocative to me of Gainsight. And you know, the other platforms in the world to Totango, Strikedeck, etc. Where you have a dashboard, and you have calls to action, and you’re very proactive, or what I’m dealing with and working with now is more of the outreach world where you have the same kind of concept, you’re being proactive. You’re subsuming a lot of data sources and personalizing that approach to the customer, which it’s it’s super powerful, but it but one thing that I also see happening, and this happens at Outreach a lot is we don’t take the human out of it, we amplify the human. And we allow it basically, it’s like being a cyborg in a certain sense, you have all these other capabilities and, and you have this web of technologies around you. But all of their technology is used for one goal. And that’s that outcome of a, it’s not just a happy, cold customer. It’s a customer that’s adopting and a fan of your brand. And that’s this web of it’s like an orchestra, right? You’re, we’re all we’re musicians, so we think about that, but everybody’s playing a different instrument, but we’re all working together towards that goal. And we’re doing that systemically. So that’s really amazing.

Adam Avramescu  46:36

Dave, you’re gonna have to bring that metaphor back next time, we talked to Donna Weber about the orchestrated onboarding, orchestra metaphor. He will have her on soon. Michael, I want to be sensitive to our time here as it as it draws to a close. But what I really feel like has been super enlightening about this conversation has just been your your observation that customer success and customer education are not are not different, right? They’re there. They’re one in the same as far as a strategy goes. And so right maybe before we wrapped up, I’d love to hear just any final thoughts that you might have on where customer education and customer success are starting to intertwine and how you see the evolution of those industries, especially with customer education being sponsored within customer success in many cases,

Michael Harnum  47:23

right? I just think there’s some undeniable sea changes happening that are uncomfortable, and they can cause disruption and chaos. I believe that inside of disruption, and chaos and transformation exist a ton of opportunity. And I would rather have changes that create opportunity and a little discomfort than stagnation. And so I would implore if you’re a education leader to embrace those changes to the best of your ability, seek community seek to learn, be an advocate inside of your company. Because there are subtle differences, of course, between customer education and customer success. But my thesis is the similarities far outweigh the differences. And so embracing a couple things to see changes are, it’s almost all virtual learning. Today, Ed, you have the subscription economy, right, which is forcing a change in the way you’re selling, the way you’re managing the way you’re recognizing revenue. And then the third sea change is the moment you begin placing subscriptions in the marketplace, your responsibility in that marketplace to that customer has fundamentally shifted. So understanding what you need to do post sale, getting the help you need getting the organizational alignment. I’ve seen this happen inside of organizations where they do all of the hard things that I just said. And it is very difficult to do what I just said, I’ve seen people struggle to do it. But I’ve also lived on the other side of that struggle. And I’ve seen the 30 40% increase year over a year. And when you think about the value that you can provide back to your company, right? If you are creating a subscription, a learning subscription revenue stream, right, that happens month after month after month. And you building a post sale motion that leverages best practices from the world of customer success, that will lead to a high renewal rate. And if you fast forward a few years, you have now created an annuity stream of revenue for your company that is undeniably valuable. And I would imagine that in doing that successfully, there would be some personal gain for you as a professional as well.

Adam Avramescu  49:55

Sadly, that’s the dream. So Michael, we will post some links in our show notes. To ESG success.com, including the customer success and customer education maturity models. Is there anything else you’d like to share with our audience? Before we wrap today,

Michael Harnum  50:10

I appreciate the opportunity to share our experiences, our experiences are a culmination of our customers experiences. So happy to have that opportunity. If I can be of any assistance, I’m easy to find reach out and let me know where I can help.

Adam Avramescu  50:24

That’s great. Michael, if people want to get in touch with you, where should they contact you Twitter, LinkedIn,

Michael Harnum  50:31

email LinkedIn is, is an easy one. And email is m harnam at ESG success and that’s m h a r n u m, at ESG success.com.

Adam Avramescu  50:44

Perfect. And listeners if you want to learn more, we have a podcast website at https colon slash slash customer education customer dot education I should say where you can find show notes and other materials, including the ones that we just talked about today. So listeners, thank you so much. Special thanks to Alan coda for our theme music. And if this helped you out, you can help us out by subscribing in your pod catcher of choice, or leaving us a review on Apple podcasts. It really, really helps us out. So thank you, Michael, for joining us today.

Dave Derington  51:18

And I’ll take the tagline out again. Thanks. Thanks, Michael, this, this is a really great conversation. And the last thing I’ll add is we’re really trying to go up market with a message and help our audience of people that are new to this and are learning and are growing, to really connect with the business and the thought leadership that they need to know to be successful. So thanks again and to our audience, get out there, educate, experiment, and find your people. Thanks, everybody.

Adam Avramescu  51:46

Thank you. Thanks, Michael.

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