The Core to Every Successful Business is Trust | Fred Tsai

Katie Foote: Welcome to Revenue Talks. I'm Katie.

Justin Keller: And I'm Justin. And on this show, we get real about what it takes to build pipeline and successfully scale businesses.

Katie Foote: By having conversations with folks who have been there before, we explore what it takes to create strong, cross- functional alignment, how technology factors in, how different teams think about attribution, and so much more.

Justin Keller: If you're looking to win in the revenue era, you're in the right place to learn how. Welcome back to another episode of the Revenue Talks podcast. I'm Justin Keller. I'm the VP of revenue marketing here at Drift. And today, I'm so incredibly psyched to be sitting down with Fred Tsai, who is the vice president and global head of customer success at Liferay. Fred is responsible for the teams and programs that you might expect. So keep me honest here, Fred, but you're making sure that Liferay drives customer engagement, adoption, retention, but you've also built the customer success organization from zero to 40. And today, I'm really, really excited to have you tell us about what that process looked like, the work you're focused on to build brand trust back, and breaking down silos across, go- to- market functions. Because, like we were talking before we started recording, I think in the era of COVID and post- COVID, customer revenue is some of the most important revenue there is. So, cannot wait to dive into these topics with you, but first, Fred, thank you for coming on the show. How about you start off with a little bit about yourself? Tell everyone who Fred Tsai is.

Fred Tsai: Sure. Well, thank you, Justin, for doing this. And I'm always excited to join other revenue leaders in talking about customer success and sales and everything else that has to do with the industry. But as you said, my name is Fred Tsai. I'm currently VP of customer success at Liferay. We're about 150 million in revenue. We're a bootstrap company. And I came in to create customer success from scratch about three years ago. And as you noted, the company was already at about 100 million in ARR but had never built out a modern customer success effort. And the numbers showed, right? You only had break- fixed support. Therefore, retention numbers were in the 70s, engagement levels were pretty dismal, and I've spent the last three years helping build out the team and building out the talent bench to build out, really, a typical, modern customer success business that is now delivering high levels of engagement, higher levels of adoption, and never before seen levels of retention and expansion, so really proud of that. But I joined from the Salesforce, where I had led strategy and operations for the commercial customer success business for about seven years. Back in the day, we were working with five generations of GMs to really build out what we now all know as the scale customer success model. Back then, we were just trying to keep things afloat and run the business. And a lot of things have happened since then, but started off my career in investment banking a long, long time ago, and was at Dell for about a decade, everything from a sales strategist to the director of China strategy to a product GM.

Justin Keller: Wow.

Fred Tsai: So a pretty varied background, but been in customer success for the last decade and then leading the business for the last three.

Justin Keller: That's quite a varied background. Really, really interesting. I think really unique, though. You don't hear the story often of a leader coming in to build something from scratch at an already scaled company. You say,"$100 million," but you really started from scratch. What was that experience like? It was a mature business, but there wasn't this CS experience built out. What was your experience there?

Fred Tsai: It's interesting. There's so much goodwill now at the company, and I have, I think, a lot of lifelong friends from the company. But I will say, when you come into an established business as a new guy from the outside, you're going to have daggers pointing your direction from everywhere. So if you can imagine, not necessarily even at the highest levels, but the medium and even at the lower levels, you see opposition and roadblocks from sales, services, from support, all the different functions that over the last 10, 15 years have evolved. Those working relationships have evolved. And you'll see at very mature customer success- led companies like Salesforce, et cetera, the roles and responsibilities are clear. When you join a company that had never built out CS before, and obviously, CS is probably the most cross- functional all business units, you just have conflict, after conflict, after conflict. So, I spent a good year and a half to two years really spending probably more than 50% of my time dealing with things that ultimately lead back to conflict.

Justin Keller: So if you don't mind sharing for other people, because I think that's kind of a unique position you were in. But I also think that's an experience that a lot of people have had coming into a new place with an edict of" Build this, change this, we're not seeing the results we want from that." What kind of lessons did you learn as you went through that, that you might be able to share with other leaders?

Fred Tsai: The first part is you have to go back to the fundamental DNA of who you are and who you are as a leader. And so for me, the first step is, now, hopefully, you're in the business for the right reasons, right? You're there for the sake of your customers. You're there for the sake of the company and for the sake of the people working there. So you have to make sure that's known and clear and that your values are clearly on your shoulders, that people can see them. And that your intent is obvious, so that's number one, that you're in this, not for yourself, but you're in this for a greater good. People will be able to tell if that's truly not your intent a half year later, one year later. That's first. Number two, it goes back to just being in customer success, where it's necessary for us to be people, people, right? We're talking to customers, partners, people internally, trying to be evangelists and advocates constantly. You have to simply get to the root of personal relationships, and that will be now with your chief revenue officer, with your chief marketing officer, with your support folks, et cetera. And so you're going to have to establish win- win. First off is to establish some level of trust on a personal basis, making sure you're going out of your way to have dinners and drinks, coffee chats, whatever it is with those people, but also establishing a world of win- win relationships. And people use that sort of phrase a lot, but what I mean by it is to understand what that other leader is trying to achieve, be it more expansion dollars in sales, more professional services, higher levels of utilization on the services end, and then trying to actually help them achieve those numbers without them asking. That means including sales metrics into your scorecards and into the variable comp that your people are driving towards, doing the same for services and professional services organizations, actually having attributable revenue or engagement or whatever the metrics are, CSAT scores that help drive their businesses as well. Do that secretly. Do it, not secretly, but do it without being asked. Make sure that other groups are a part of your annual planning process. Create an environment where you're delivering a win- win relationship, and you'll see the trust and all the goodwill will come after that.

Justin Keller: Yeah. I think it's so important. And I think it just got so much harder when we were all first working from home and then increasingly scattered all over the place working together. Building that trust is a little tougher to do from a distance. And so kudos to you for accomplishing that. Quick tactical question, and then we'll zoom out a little bit. We'll get a little more philosophical. But starting from scratch, where did you start? How did you start building your team? What were the first people you hired?

Fred Tsai: Well, the good news is that we had some people internally. And so we took a few folks from sales, who were some of the best folks in sales at being the advocate for customers. We took a few folks from support and combined them together. And then we hired folks from the outside. So the team initially was about half internal, half from the outside, and we went through a lot of transformation work to kind of merge all of these people together. From the outside, I had experienced CSMs. From the inside, folks who had not really done this before. And you start off with making sure that everyone has a very clear scorecard. They know exactly the kind of metrics and the KPIs that we're all driving towards, incentivizing them to make that happen. And then training them and enabling them. And, of course, then giving them enough of a leash to go on and make things happen on their own.

Justin Keller: Yeah. And that's great that you had internal folks, so you get some of that institutional knowledge right from the get- go that you could bring to the team. So, you're not really starting from scratch.

Fred Tsai: Yes. And a lot of people had already been talking to the same customers. The only difference is that they were within the guise of being an hourly support rep if you will. And as a CSM, we're asking people to be much more long- term, relationship- oriented, strategic with their customers. So switching it in terms of making sure that the KPIs were much more strategic. That we're looking at salaries as opposed to hourly sort of pay. And then, of course, making sure that the incentives are aligned with long- term strategic relationships. It all went a long way to making everyone feel really comfortable pretty quickly.

Justin Keller: Yeah. Yeah. Okay. I probably should get a little more philosophical. So we did some friendly internet research and learned a little about you. And one thing we found was through multiple interviews that you've said that," Building back brand trust, especially in the era of post- COVID, is the differentiation for financial institutions." What's your take on that? What do you think caused an erosion of trust, and how do you think that people should be building it back?

Fred Tsai: I look at it at a higher level. And I look at the various institutions in the country that have gone through ups and downs. It is interesting. The U. S. military is probably the only institution that has consistently been widely respected throughout, from before 911 through the 911 periods, wars abroad, et cetera, the military. As you know, Big Tech and Silicon Valley had a period of time, probably in the 2000s, where it was probably the darling of most Americans. And we certainly don't see that today as the CEOs and other leaders of big tech firms are paraded in front of Congress. We see people's trust in government, be it our leaders in the Executive Branch, or in Congress, or even the Supreme Court, kind of dwindle, depending on your own background. And in the financial services space, obviously, these are institutions that people maintain relationships with for a lifetime and, or many generations, with your financial advisors and your banks. And, oftentimes, many of our customers have customers who have been some way, shape, or form related to them for the last 50 years. And every one of the different iterations of the banks previous, through mergers and through acquisitions. A lot of that trust was lost in 2008, in the financial crisis, when frankly, the American economy and the entire global economy was put onto its knees because of various actions by banks and others. And so, for me, it's all about making sure that the core of a business is trust. These are all just people at the end of the day. And so when I talk to financial institutions, and by the way, since 2008, there's been enormous work that has happened by America's banks, investment banks, et cetera, to solidify trust, to win back that trust from ordinary Americans. And I think they've come a long way.

Justin Keller: Yeah. Yeah. I agree. I agree. And I think in such a digital- first environment, it's tough to trust, right? And we'll get into this. I do want to talk about how data plays into that skepticism, especially when we're talking about financial data, but first, I want to learn a little more about how you and how Liferay is going about building that trust back with buyers.

Fred Tsai: The great thing about Liferay is that we've always been a very different company. So, Liferay is completely bootstrap, which means that we funded our own growth over the years. We started off as a consulting firm about 15 years ago, became a software company, then a subscription and cloud company in the last five years. So it's been an evolution, but nevertheless, we've never taken outside funding. Therefore, our objectives have always been aligned with the long- term health of customers and making sure that they're successful. So, I think Liferay has always been a very special player. During COVID- 19, for instance, we made a strong commitment, both to our customers as well as to our employees. To our employees, we said that we were going to guarantee jobs all throughout the greatest emergencies of COVID- 19. And instead, many of us, executives especially, took significant pay cuts in order to keep everyone employed, so you saw that from the employee side. And the same thing from the customer side. For customers in the industries that were devastated, we made significant concessions and ones that we didn't try to crawl back funds later on. These were truly in partnership with our customers. So, I think it goes a long way when you not just say that you're a partner, but you actually are a partner either to employees or to customers. And I think the good news is that Liferay is very unique in the enterprise software, where many people have not heard of us, but you'll see customers that have been with us for 5, 10, 15 years. These were large Fortune 500s and financial institutions and things like this. And it's been a great thing to be a part of.

Justin Keller: That is really impressive. Customers for 15 years, I think, would be the envy of so many different SaaS professionals in such a high- churn part of business. So you've got such a great install base. There's a lot of data, I'm sure, going through your platform with your customers. I'm sure having those customers is something that makes your marketing team drool. How does Liferay customer success partner with Liferay marketing to benefit one another? Because I do see those two ends of the life cycle as being the most vital. There's such like a, what's the word I'm looking for here? Like, a virtuous cycle that's generated between those two ends of the life cycle?

Fred Tsai: Well, one way is as we've been working on providing, and obviously, we're not perfect. And as I said, when we walked in, we had levels of revenue retention that we had to improve. We simply lost touch with many of our customers over the years. We had not provided the coverage or the investment of having an actual human CSM and the programs related in order to deserve that business from a certain segment of our customers. We solved that pretty quickly, I think. And what we saw coming out of that investment was a large number of our customers who wanted to, who proactively asked, to be references. And, of course, references are the lifeblood of any business, especially a recurring ARR business. And so, we worked very closely with marketing to develop those case studies. So the case studies, if you will, we started running it almost like a sales business. So, I had someone in my team who was the administrator, if you will, who is the owner of the pipeline, the product manager of case studies, if you will. But working closely with marketing and making sure that we were selecting the right customers who are representative of our story, the right capabilities, et cetera, the right international sort of footprint working hand in hand with marketing, through all the different tactics of first identifying, then copy editing, and everything else, and then just letting them go free. And so we saw folks in customer success and marketing go out into the world and talk to dozens of companies about writing up case studies. And, of course, it's harder than that, especially when you're dealing with Fortune 500s. It can take six to nine months after they've approved it to go through the legal paperwork to make sure that the numbers actually sync. Whatever numbers you're putting out there, they're publicly known, and they want to make sure that this isn't proprietary data, et cetera, et cetera. But we did this hand in hand with marketing, and out of talking to dozens and dozens of companies, we now have either completed, call it a dozen, in the last, just six months.

Justin Keller: Wow.

Fred Tsai: And we've got a pipeline that persists this year and into next year. So, we've had a lot of great partnership opportunities marketing, and we've taken them by the horns, and we've executed.

Justin Keller: I think you've made many, many marketing leaders that listen to this very jealous, right now, having that like pent- up demand for you telling their story. That's amazing. And I love what you said there about just kind of like setting them free. I think that is such an important but scary thing for, we'll call it revenue leaders, to do because you feel like you need to set up a framework. You need to have really rigid guidelines for people to follow. But I think the trade- off that you get out of that is you lose the humanity. You lose the creativity. You lose the ability to personalize, really, because you have to follow such a strict guideline. So, I love that approach to it and that you guys have been able to achieve that. Give me your thoughts on how, generally speaking, not just for Liferay, but as someone who's seen so many different corners of a revenue of a business. How can marketing, sales, and CS teams work together for the benefit of customers through the customer life cycle?

Fred Tsai: So, Justin, it's a great question because that's where a lot of the tension comes. I think people talk a lot about the partnership in three groups, but oftentimes, you don't actually see it in practice. So, the first thing is going back to the DNA of personal relationships and ensuring that I ask my leaders to make it a point to be a part of the leadership teams of the marketing sales, services, and other people's work threads. It means that they have to now add 2, 3, 4 more meetings to their calendar every single week, but I think it's critical to be there every single time, not just simply there at the end of a quarter when they need someone else to blame for a number not being there. So that's number one, ensuring that the personal relationships are there. I ask that also of my peers in places like sales, et cetera, to bring me on, to bring my leaders on as working groups, as part of their own teams. That's first. The second thing is genuine alignment in terms of metrics. This kind of goes back to what I was talking about before, where I had a newly created group that needed to establish itself in terms of working relationships, et cetera. We didn't have as clear of an OKR process or V2MOM process, whatever framework your team uses. I come out at Salesforce, and obviously, V2MOM is stamped in our minds, right?

Justin Keller: Oh yeah.

Fred Tsai: And in our souls forever and ever, and I love it. And so, we were going through a V2MOM process internally within customer success, and I wanted to make sure that sales, marketing, and other groups had a method or two. That there was a clear key result that we're trying to achieve, that it was a method that was locked into our plans. And then, people's scorecards, what they were driving towards on an individual basis, had that number as well. And this was not a request from any group. This wasn't a top- down request from my CEO. I just thought that was a natural way to align our business. And over time, our company began to really embrace OKRs in a set process on a given annual basis. We saw a lot of alignment kind of come together. And you saw their groups using renewal metrics, for instance, as a target for sales, marketing, et cetera, other teams at the same time as we were creating things such as sales qualified opportunities as part of our scorecards that perfectly aligned with, say, the Salesforce. So again, it just goes back to those basics, right? It's about human relationships first, and number two, it's about delivering those win- win relationships. And yes, you can use OKRs and V2MOMs, all the nice fancy words, but you got to always just go back to the fundamentals of leadership.

Justin Keller: I totally agree. Could not agree more. It's got to be people first, or it doesn't work. But you're right. The V2MOM, when you get it appropriately latticed or matrixed, or whatever the word is, across departments, it can become a really powerful tool for that. Fred, this has been amazing. We've got one question that we always ask our guests at the end of every episode. And that question is the signature Revenue Talks question, which is what is the number one thing that your team is focused on to accelerate revenue this year?

Fred Tsai: Well, obviously, it's to ensure that our customers are successful for life. And obviously, the answer is that we're trying to drive business value for every one of our customers. It's something that's really hard to do, frankly. And it requires an enormous amount of homework. It means that your people have to start becoming experts in the businesses that your customers are in. So, last year we reorganized our team into verticals, as opposed to geographic regions, so that they become experts. So, they start attending the right conferences, start reading the right books, start becoming intimate with those industry leaders so they understand what good looks like. And that they can, as part of their process, really help drive real business value and understand the key KPIs that matter to that business and help them achieve these goals. So, we've seen a complete change in the type of conversations that the CSMs have been having. This has naturally led to more revenues for us. And again, not as a revenue first initiative, but as a business value first initiative, that then has led to deeper conversations about other projects and other ideas that the company has. And they've led to qualified opportunities that the CSMs have delivered to the Salesforce. So yes, we've been able to drive higher levels of expansion revenues, but it all started off by being able to talk about business value with customers.

Justin Keller: That's amazing. I love it. Everybody, Fred Tsai, who is the vice president and global head of customer success at Liferay, and consummate people- first leader. I love that it kept coming back to that, Fred, was that people are the most important piece here, and I could not agree more with that. Thank you so much for joining us today on Revenue Talks.

Fred Tsai: Awesome. Thank you, Justin.

Justin Keller: Thank you so much for listening to Revenue Talks. We'd love it if you left a review wherever you're listening and hit subscribe so you never miss a new episode. You can connect with us both on Twitter @ KatieJfoote, with an E, and @ JustinKeller. And remember, revenue it's everyone's business now.