From Relationship Management to Revenue Engine

[Speaker 1]
Thank you. Thank you. So, first and foremost, thank you all for joining me.

It's not slightly nerve-wracking having the last session of the day completely full, so bear with me if I stutter a little bit as we go. Before we get started, does anyone know who Xero are? We've got a few hands, that's always nice.

Okay, so just to give you a little bit of background, Xero is an online accounting product. We sell bookkeeping services, compliance services, well, products, and we also sell payments and payroll as well. So, we're a combination of SaaS platform and moving towards some of that consumption model that we heard a little bit about yesterday, hence why it's really important for us to change a team from this relationship management to revenue engine that we have.

So, in this 45 minutes, I'm going to ask you all to interact with each other. I do like a little bit of interaction, because otherwise it gets lonely when you're on stage on your own. So, I'm going to ask you to interact with each other.

You have some worksheets, and so there'll be two exercises that we work through, but as we go through, I'm going to take you through the journey that I took my team through over the last 18 months. Before we get started, I'm just going to ask you all to introduce yourselves to each other on the table, so that when we get to the workshop sessions, you can all speak to each other. Do I have a clicker?

Is there a clicker? Oh, sorry. Thank you.

Lovely. Do we all know who each other are now? Are we good?

Did I start you all off too early? Do I need to rock out a wolf whistle? Okay, guys.

I'm going to move on with our story, if that's okay with you all. No? Just a full workshop?

Okay. So, Jamie will tell you this. Jamie is one of our strategic partner success managers that works for us, and if this was in our offices in Milton Keynes, I would have cracked out a wolf whistle, but I'm very conscious that there's a microphone here, and I don't want to deafen you all.

It's my only party trick. So, I'm going to give you a little bit of context before we go into the story of Xero and our transformation in partner success. So, first off, you will notice that I am referring to partner success and not customer success, and the reason for that is that Xero operates through a partnership model and a direct model.

So, we provide accounting software to small businesses, but we also work through accountants and bookkeepers. And accountants and bookkeepers are by far our largest channel to market, and they're the largest channel to market for us, not just in the UK, but globally. So, when you look at our teams across the UK, what you'll find is we have global teams who focus on direct business, but all of those that report into the region actually focus on our partner channel, which is predominantly accountants and bookkeepers.

We use the term partner success in the same way that all of you may use customer success, so just bear with me when I use the term partner success. It's drawn into me. So, I came from a sales background.

So, I joined Xero just short of 13 years ago. I was a head of sales, then head of solutions consulting, and then head of success. And I think that gives me quite a different perspective on the way in which I wanted success to work at Xero.

And so, when I moved into solutions, I took over a team that had no KPIs, had very little commercial awareness. And so, the whole intention there was to build commercial awareness across that team. As I was heading up solutions consulting, I actually inherited a success team.

And that success team, I think someone said this yesterday, but that success team was very much, and no offense to your peers, Jamie, but that success team was the happiness team. They were all there for the teas and coffees and the lovely meetings and the nurturing. And they did have a degree of targeting.

So, they had targets, but they were very much on organic growth. They weren't actually driving revenue growth. And so, they were a fantastic team, and we've retained the majority of that team.

However, what I did see when I took over that success team was that actually there was a real opportunity for us to unlock revenue there. And so, I inherited the team. I finished the program of work we were doing in solutions consulting and then went deep into the success team about how do we actually evolve that team.

Now, we started off last financial year owning 20% of the revenue, and there were some quite obvious things that came out to play there. We had a team who took ownership of accounts from when they had 80% of their client base using our product. And in turn, this team looked after 20% of the revenue coming from the partner channel.

And it just felt like we were intervening too late. And so, that was one of the first things I identified taking over the team. As we started to delve deeper into the team, there was a few other indicators that came out.

So, there was three core changes that we made in our first financial year. One of those was around account teams. One of them was around how we use technology and health checks to drive revenue.

And one of them was actually about the point at which we intervene with our partners. So, I'm going to take you through all three of those today and then show you some of the exercises that I used as we were identifying some of the challenges that we faced. At this point in time, we currently own 40% of the revenue in the channel.

So, we shifted our threshold where we now engage with partners. But we also have a pot of shared revenue. So, we have around about 20% of the partner channel's revenue which sits in account teams.

And that's a shared pot of revenue between our success team and our sales team. And then the team that Jamie sits in, which is our strategic success team, is actually every single strategic account has a success manager as well as a strategic account exec. So, I just want to come back to the challenge that I was facing, because before I talk about any models, it's really important to say that the team that I had, as much as I may say they were a little bit like the happiness squad, they were working exceptionally hard.

And it wasn't the team that was broken. It was actually the operating model and the systems and processes that were in place. And so, we had this group of people that were just working their socks off and trying to do a good job and keep everybody happy.

But they were basically picking up any job and every job that came their way. And so, there were certain areas that we started to identify where things weren't working. And we noticed that we had signals.

We had signals left, right, and center coming out of every bloody system you could look at. No one knew what to do with them. They were scattered.

They were disparate. No one was actually connecting those signals together. We had this concept of moving a partner over to success once they'd hit that 80% threshold of share of wallet, which meant that actually people were quite far along in their adoption journey.

And so, we were missing the prime time to be engaging with people to actually then drive further adoption of product and unlock further revenue. We have multiple people engaged in every account, and we had solutions consultants. We acquired a company, and so we had their specialists involved.

We had an account exec involved who was really passionate about what should happen. You had a success manager come in, and there was just no real clarity about what everyone was doing. And so, you either had one extreme of no one did anything, everyone just stepped back, or everyone piled in, and there was too much going on.

And then we had what I refer to as human glue. We had people just acting with individual heroics, doing whatever they felt was right for those partners. And in turn, we ticked over with the revenue that we needed to bring in because we do target all of our CSMs with revenue targets, but realistically, we weren't optimized.

And so, the first shift we made was actually moving away from this reactive process into proactive management. And we weren't moving away from relationship management. It was really important that that relationship management stood, and that people still engaged and understood their partners.

But we also wanted to move away from this concept of someone's click delete, and we've got 30 days to save it, to actually, how do we actually prevent someone from clicking delete? And so, there was a number of different things we put in place. We looked for more meaningful signals.

We focused on what our next best action would be rather than just taking any action available to us at the time of engaging with people. And we actually just built systems. And a lot of this actually came from coming to different sessions at Pulse last year.

So, I was the first time Pulse attendee last year. We took a look at all of the different sessions, went back with a whole pack of information about these are all the things that we've worked out, what could we actually apply, what would be relevant to our business, what can you steal? And then use that to actually start building on the team and create a team that could generate revenue.

So, this is a really simple diagnostic that I used when we were looking at intervention and where the interventions were actually breaking down. And it was looking at four particular moments in time, because one thing we saw time and time again was that when I first looked at the team, it felt like there was little fires everywhere, and how are we going to solve for them? And we knew that there had to be a process in place.

So, first we started to look at signals. We wanted to know what was changing in people's behaviour, what was actually triggering an opportunity, where did we see risk, how did we identify what those signals were? And then we moved from there to start looking at, did people actually understand what was going on with those signals?

Was that maybe our biggest problem? Did we have all these signals, but maybe we didn't know what to do with the signals? And then we were looking at, can we actually still have a human conversation around those signals?

Are we able to actually go and talk to someone about what we're seeing in their account and whether or not it might be an opportunity or a risk? And then the final point that we looked at here was, are we taking the actual actions that we needed to take based off all of that information? And so I sat down and I thought, I'll work out which one of these is the biggest problem.

And as I sat down and did that, I thought, it all depends which person you look at, because each of these things was a problem dependent on who you looked at, because all different people approach things in different ways. And so rather than trying to solve each individual person's problem, we went all the way back to the beginning, and we took these step by step. And so we started off with signal, and we took all of our signals, and we built a dashboard.

And it's a lovely dashboard, and it had about 98 metrics on there. Lovely. I'm sure you like it, Jamie.

Fantastic dashboard, the partner health dashboard. Our strategy and ops team were over the moon with it. So we thought, that's it, we've nailed this.

We've got all the information, and we gave the team the dashboard, and we had complete and utter overwhelm. So you had all these signals, and people are going into meetings, and they're talking about the signals, and the usage points, and the adoption. And we thought, no, that's not really fixed things.

We've put it all together. We've made it more confusing. It turns out we always had the signals.

They weren't the problem. They weren't in one place. And so the next step we took then was looking at the sense-making of those signals.

And this is where things started to get really interesting. And so as I sat in Pulse last year, we'd got to this point where we had this PhD dashboard, and I was quite excited about this dashboard. And I went to all these sessions about building a health score, and how am I going to go do that, and how am I going to go take that back?

And then I sat in a session. The session I went to was fall, and so I went to a session that was about customer service success operations, and sat there and thought, I'm not really sure that it's the health score that we need. I think we've got all that information.

Maybe we actually need to teach people what to do with that. And so that day, I went back from Dublin, and on the plane on the way home, I actually wrote a plan, and it was a business proposal that I took to our leadership team and said, I want to second one of our CSMs into an AI secondment, so that they can build an agent which will make sense of the partner health dashboard, that we can serve up all the information to our individual reps, so that they will know what are the top five risks on every account, what are the top five opportunities on every account, and how to go and have that conversation. And in turn, hopefully that agent would then mean that people are continually learning about the different signals they see, and why they're impactful. And so Amy, one of our CSMs, went into that role, and she built that agent, and it's been absolutely fantastic.

And so we're at a point now where we've ticked off signal, we've ticked off sense-making, and that's brilliant. And then we got to the conversation. So we're serving up these packs, and everyone's got the packs, and we're like, yes, we've got it this time.

We're in. We've got the pack. Everyone can go and talk about these signals.

They can see what the risk is, what the opportunity is. We know where we're going to get our expansion revenue. We know where our risk is.

And it turns out that people went in with the packs, and actually, there were certain aspects that they really struggled to then have the conversation on. So a couple of months ago, we went to our enablement team. We built all the enablement.

We've got people now working on those conversations. And I guess what I'm saying with this is that each of these areas all become an area of focus. So I'm going to ask you to think about this in your own instances.

If you think about your own teams and where you're losing time, where would you benefit most to find a solution and solve that? And just bear that in mind as we go into the workshop session, because that might help you as you go through and look at what we're going to workshop. So we're currently on action.

So I thought we were all the way through. But it turns out we've got to action, and we need to refine that a little bit now. And so on the 2nd of November, we'll get the team together.

We'll focus on that as well. And so this becomes almost like a cyclical thing that you do to build the systems and the process to help your teams. So I'm going to ask you all to bear that in mind.

And that was my example of my bottleneck, my original bottleneck being my signals and moving to the sensemaking. And talk amongst yourselves. I will try and interrupt you in eight minutes' time.

But there's some prompts. You should all have a worksheet that says this. There's some prompts.

So you can have four questions here. And I'd just like you to practically think about what are the biggest points of friction in your team? And where is the bottleneck for you?

And so that you can then take that back. And we're actually going to use that bottleneck in the next part of our workshop sessions as well. So please do try and find one.

Okay, folks. Are we about there? Have we got some bottlenecks?

Everyone got one? More or less? Lovely.

So as I mentioned, it doesn't need to be a sensitive bottleneck. I'm guessing that lots of you are from different companies on the same table. Some of you may be competitors.

So I'm not asking you to share secrets. Does anyone have a bottleneck that they'd be willing to share? I was, when I originally planned this, going to ask each table.

But I didn't know the size of the room when I originally planned it. And when I came in, I thought that would probably take up the best part of 40 minutes. So anyone?

[Speaker 2]
Is anyone willing to share a bottleneck? Anecdotally. So I'm Irina.

I'm from Tipalti. We're a fintech company. We use Xero.

So I'm very familiar with your platform. We have a lot of signals. But one of the signals that I don't necessarily like, I don't have control of, is when customers build their own internal in-house tool.

And what I was sharing with my table is that sometimes the champion is actually quite happy with us. So it's not a frustration. It doesn't come from frustration.

It comes from pressure from the CFO requirement from procurement to cut costs. So we are faced 30 days before renewal that usage metrics didn't drop. Everything was fine.

The champion was happy. And then they said, hey, our engineering team managed to create an in-house tool, and this is it. There's no signal for that.

Unless, of course, we train the team to be a bit more inquisitive and scope more during QBRs. Currently that is a signal that it's too late. It's within their notice period.

[Speaker 1]
That's fair enough. Quite a difficult bottleneck to solve with. So bear that one in mind as we come on to our second aspect of the workshop.

So I mentioned that we made three changes. I'm going to dip into two of the other changes that we made. But the first one of those that I'm going to touch on is account teams.

And so I mentioned that Jamie from our strategic team is here. Jamie works specifically in the account team model. And what we did find, we went away, we redesigned exactly how success was going to work.

We took a look at metrics that they could contribute to. We looked at where we could get revenue growth from. We were adamant that actually we could have this team focused on upgrade, on cross-sell, on retaining revenue.

And so there was really solid revenue points. We built commission plans. And then we bumped into this little area where we noticed that we had a slight challenge.

And so if we look at it on our strategic team, our strategic team deals with the largest customers that we have, like with most people's strategic teams. I'm always sure it's in the room then, enterprise teams, because not everyone loves the word strategic. But we have, in those strategic partners, multiple offices.

And with multiple offices, what we were finding was that we could have a real extreme of adoption across those offices. So we might have a head office agreement. We might build a contract out.

We might build a service package out. And we might find that actually there's 50 offices in a group. And across those 50 offices, you have 30 of them that are well and truly following what head office says.

They have the mandate. They build the SOPs. Off they go.

They do the thing. But then across the rest of the base, what you might find is they've acquired someone that's actually already a fully zero practice. Or they've got people in there that just don't engage with us.

And so we found the need to actually have different roles focused on different partners at different points in time. And that's where the account teams came into play for us. And so the key thing as we designed the account team process was to make sure we put the partners at the center of everything.

And we extend this beyond our strategic partners. We actually have a pocket of our larger zero customers that have account teams on there as well. And originally, we just thought of this as a pod.

It was just a small pod. And I sat in Mick Weir's session last year, and he spoke about how pod accounts do better than pooled accounts. So we went back with all this probably confirmation bias, if I'm honest, saying, no, this is definitely the right thing to do.

And it was originally just a success manager and an account executive in a pod on certain accounts. But as we started to unlock some of this stuff in the strategic accounts, as we started to realize, actually, there's partners that have lack of engagement. There's partners that haven't deployed yet.

We started to introduce more roles into that account team. And so this has had a few false starts because what's really important with the account team is communication and the ability to share what's actually going on and identify what the signals are. So I come back to signals again on the basis that the signals that we're identifying across those pod accounts tell us what the motion is going to be.

And that motion then tells us who the right person is to engage. And we want to make sure that we have the right person engaging with the right partner at the right point in time so that we can drive the right outcomes. And so this has become embedded in ways of work, and it works particularly well in our strategic partners.

And we've now brought it through into the rest of our client base for those larger accounts. The other thing I touched on briefly when I mentioned about putting Amy into the secondment was the health checks and the agent that we built. So I'm calling this a health check.

You might refer to it as a QBR. You might refer to it as something else. We didn't want to call a health check a QBR because we didn't want to commit to them being quarterly for every single partner that we did these with.

And what the health checks have done for us is they've actually given us different lenses that we can look at partners. So we built the dashboard. We got the signals.

We ran that through the agent. The agent's given us the pack, which then tells us what the risk points are and what the opportunity points are. And then we've taught people how to have the conversations.

We've actually built scorecards into Gong so we can map out a good and a bad health check, and we can help people to continually improve on those. But as we've gone through, we've actually identified three different areas for these, and so we started to put three lenses over our health checks. Because what we're finding is that in certain partners, health checks were particularly good for showing us where the white space was, where our expansion opportunity is, how we can drive more revenue from that account.

But they're also good at showing us how people are actually utilizing product. We looked at them from a retention point of view because we wanted to see, were we at risk of churning partners or customers? With the subscription business that we've got, we regularly do churn subscriptions because businesses go out of business and we serve a small business.

So as we see business failure rates go up, then inevitably you see churn rates go up. And so we wanted to look at what were the bigger things that we could spot that could help us identify, was someone maybe stepping back from the product? A little bit like what you're saying with Tapalti there.

And then the other lens here was the engagement lens. Because what we did find with those account team partners, that it was a prime time for our CSMs to go in and actually do a health check to build their relationship and to build engagement with the relevant people in a partner firm. And so these have become really fundamental to what we do.

And just to give you an idea of how they've worked for us, over the last quarter, we've delivered 339 health checks. Now there's some acronyms on here because Xero love an acronym. Everything we have has an acronym.

We even have a glossary of what the acronyms are because people can't remember the acronyms. So I will talk through those. But we did 339 health checks.

We did that across a team of 13 people. We have quite a lean success team at Xero. Of those, in that quarter, 23 of them generated sizable revenue opportunities that were closed within the quarter.

They were identified in the health check. They were closed pretty quickly. But also, Xero isn't just a bookkeeping product.

We have other tools that we sell as well. And so payments is one of those things. SIFT is another.

And so those health checks were created. So we actually created 116 payment attachments. And bear in mind that these are the partners that we're talking about, not the individual clients that they look after.

And so that then becomes another channel to market for us. It also created 84 referrals to our SIFT team who deliver advisory services. They actually set up advisory products.

And then SDC and ABR are new functions that we'd released in product that we're tracking utilization of because they're base-level functions, which then you can build with more premium products on. And so what we were finding is that people are getting deeper and deeper into product conversation, not necessarily having to go into the technicalities, but they're actually partner-led conversations, which were becoming really rich and opening up a lot of opportunity, but also highlighting risk earlier for us. And that was the biggest impact for us, that we were seeing the risk earlier.

Now, it goes without saying that whilst those are human conversations I mentioned about the agent, AI definitely enabled this, but it isn't everything here. It's literally enabling a pack that allows us to make sense of things. It's basically a layer in this model.

And so we went through, we use the agent that then generates the pack, but then we insist on our reps going through and applying human judgment to all of the data that comes out. And then they have the partner-led conversations, and they go from there and work out what the next best action is. So AI's been really fundamental to what we do.

I don't think we'd have the scale to do the volume of health checks that we've done without building the agents and without doing those things. What we did find is we went from people spending days putting a pack together, where they could go out and speak to a strategic partner and say, hey, this is your utilization and how it compares to last quarter. So actually it took people about 40 minutes, including the check, to go through.

So it did make it significantly easier for us to do. So I'm going to come back to that point we made earlier around the bottleneck. I'm going to ask you to go back to your bottleneck.

And we're going to go through the second part of this workshop. And this is where I'm going to ask you just to work through, think about what your bottleneck is. And I want you to leave today with just a really simple thing that you can take back and change that will allow you to test a process.

So if you were to change one part of the workflow, then what would you expect to observe? How would you measure that? And what's the practical indicators?

And so you have the boxes on your sheet, so that you can do that. If you want to refer back to your bottleneck and then look at how you could actually test that, then please do. I'll give you seven minutes.

Is that okay? Got some nods. Okay, so we'll give you seven minutes, see how you get on.

But any questions, please just stop one of us. Okay, folks, are we about there? Has everyone got a workflow?

Okay, guys, are we all about there?

[Speaker 3]
Should we move on?

[Speaker 1]
Okay, so hopefully you've all found something small that you can experiment on, and something that you can take back and apply straight away. This is one thing that as we went through our transformation, we did an awful lot. We did a lot of experimentation.

We got lots of things wrong, if I'm honest, and then we went again. The one thing I would say, though, and probably the biggest challenge that we made, or biggest mistake maybe that we made in the first instance was we set off on some of these experiments, and our biggest way of measuring these was looking at the lagging metrics and saying, okay, let's see how our upgrade revenue is impacted by making this one change. The reality is that if you're looking at lagging metrics, they're called lagging for a reason.

They take a period of time to come through. And so one thing I would say to you is that if you're going through, if you're experimenting, if you're trying lots of little tests to try and change your workflow, to try and change an impact, then take a look at some of those learning observations that you can make that will actually help you track as you go, as opposed to fixating on the final outcome that you're looking for. So what we do now as we apply some of these tests, well, we actually do refer to them as experiments internally.

As we apply the experiments, we might look at a subgroup, and then we will look at what are the positive signs that we see along the way before we see the lagging metric change. And that might be that we see a shorter period of time between when there's a signal and when there's an action. It might be that we see more engagement across an account team, that we see more interaction across certain partners.

And so we try and look at those different things so that we can actually track progress as we go. So I think we all know that when you feel like you're not getting somewhere, you're trying to change something, you're constantly looking for a change in a metric, it can be a little bit demoralizing. So that would be a key piece of advice for you.

So one thing, as we're coming to the end, I'm conscious I am the last thing between you and going home, by the way, so I will not overrun. As we put our tests into play, as we've been through and we've looked at those learning moments, then I think it's worthwhile saying that we should take a look at what we would class as go-to-market structure at zero. So we would look at the go-to-market learnings and we constantly follow a particular cycle, and that is that we experiment, learn, refine, scale.

And so as we go, yes, we track those positive measures along the way, but also we're not afraid to say, well, actually, this is our learning and this is how we'll refine until we get to the point where something actually works and is fundamental for us. So bringing back to where we started, my key thing today was for all of you to walk away from this session and have an idea of one small workload that you could go back, that you could change, that you could iterate on, and that you could use to actually take you towards a different outcome. The outcome that we set out to was to try and change our relationship team to a revenue engine.

And over the last 18 months, that's something we've worked towards, and we have fundamentally changed the structure of the team and the way in which we work. And now we have a very lean team that performs particularly well on revenue expansion and revenue retention. It wouldn't be without all of those individual little experiments that we would have got there, and there's certainly things we've done along the way that we've got wrong.

There's certainly things we've done along the way that we've started and thought, you know, well, this just is not worth carrying on with. And so be brave, take some of those opportunities, and look at some of the small things that you can take away with you to apply in your business. Because my view is that if you have better commercial outcomes, then you've got much better human interaction with your customers.

And at Xero, there's one thing that we say in our success division, and that is that every action that we take, we want to impact not just our partners, we want to impact our partners, their customers, and Xero. So we work in that trilogy along the way. I hope this has been a useful session for you all.

If anyone has any questions, please feel free to come and call me. I'm not sure if there are any on the slide, if you wanted to. Oh, there are.

I'm quite surprised. So I will quickly answer these, and then I will get you on your way in two and a half minutes' time. So are health checks done regularly or following a signal with your partner?

Is it addressing one client or many customers to review? So health checks form 25% of our meeting targets per individual. So yes, they're done on a regular basis, but they're not necessarily repeated with customers unless we feel like there is a need to repeat them.

So in Jamie's world, where it's strategic accounts, they would regularly be repeated to show someone's progress and further adoption. In regards to is there a signal, when we run the partner health dashboard that identifies a number of partners that might be prime for us to go to, and it might be because they're high on the risk for churn, or that there's a potential white space for opportunity. So the people that we indicate to our ASMs, well, they actually do make the choice of who they want to have the health checks with and who they feel it would be most relevant to, because they have context.

Would you be able to share a high-level agenda of the topics you cover in each of these health checks? Do you conduct business reviews? So the health check forms the agenda, because the agenda would be different each time.

So we run the data through the agent. That tells us the opportunity and the risks, and that forms the agenda for us. I don't know whose question that was.

Do you want me to grab you afterwards? But it does form the agenda, and they're differentiated based on those three parts that we put in, whether it's retention, whether it's growth, or whether it's engagement. Did we need to rehire?

So this is an interesting question, because if we're being really honest and transparent, there were some people who did end up leaving the business. That was due to skill set and us needing to actually change the shape of the team. We did hire, but it wasn't necessarily rehiring.

We hired a completely different profile, and we reshaped the team. So we have eight office-based partner success managers in our Manchester office, and we've got a manager there. The manager for that team was a new hire, because previously we had everyone all together in one pot under one manager, and it felt like we needed someone actually in the office with that team.

And then we actually stole a few people from different departments, which we're not massively popular for, if I'm honest, but we have a few solutions consultants that moved over. We have a few people from our support department, and then we brought some external people in as well. So again, this comes through the agent that we built.

So the question being, how do you weight those metrics to identify risks? We went through to look at what the risks were, where we saw people churn, what patterns we saw, and we built that into the agent, and we continually refined the agent so that we're looking for reasons why people might churn, and that's then how we identify the risks. It can always be improved, as I think it can in every world.

I think that's me done. So thank you all. I appreciate your time.

Have a safe trip home.