Cloud News
CRN Interview: Cisco SVP Scott Brown On Walking Partners Into 'Customer Success' And Outpacing HPE, Dell EMC In Race To Software Value
Matt Brown
Cisco executive Scott Brown speaks with CRN about the company's unified strategy to help partners transition to a software-centric sales model.
Soft Skills
In the midst of a quest to refocus its sales strategy on software, applications and recurring revenue, Cisco Systems is also changing the way it relates to its channel partners.
The San Jose, Calif.-based company's multi-faceted Customer Success program was established within its partner organization about two years ago, and since then its portal has notched more than 30,000 visits from solution providers eager to change their sales strategies to fit a market that is rapidly embracing technology provided as a service and on a subscription basis.
Scott Brown, Cisco's senior vice president for global virtual sales and customer success, admits that the company didn't do everything right in the early days of its software evolution. Likewise, the majority of Cisco's partners, Brown said, have not made the transition to a software-centric sales model.
The Customer Success program, Brown said, is a unified strategy to meet both of those challenges by focusing Cisco squarely on providing value to customers while essentially walking partners through the steps toward becoming software-centric, services-oriented solution providers that count on recurring revenue for dramatic growth.
"We're making a big pivot," Brown said. "We're a $50 billion company pivoting from more of a hardware-centric, operating-system-centric model to an application, recurring revenue, software model. It's not a small undertaking. We've been working pretty diligently to recognize what needs to be done to make that transformation for us and our partners."
What convinced you that Cisco needed a program like this?
We didn't have muscle memory inside the company in this adopt-and-expand area. We started on this journey more than three years ago when we started selling things like Cisco ONE, Collaboration ELAs, a lot of the software assets we had available through acquisition or internal development. Suddenly, you get to the point where the customer is renewing, and we haven't done the kind of job we need to do for our customers to help them get the value they need to get out of what they purchased. The good news is we moved very quickly into the software business. The bad news is that some of the fundamental building blocks we and our partners need to be successful in that were a little behind where we needed to be. This has been a concerted effort at the company level.
What is Cisco doing differently than other large vendors when it comes to getting partners into the software sales, recurring revenue model?
To place this function inside the partner organization is unique in the industry. That was a design construct that [CEO] Chuck [Robbins, pictured] and [Executive Vice President of Sales] Chris Dedicoat put in place up front with our partners, not around or to our partners. A number of OEMs in the industry have had a challenge with that where they haven't included partners in this journey and made them a key part of this transition. When you look at the way we're going to scale, there are two big things we're doing differently: We're scaling through our partners as opposed to all the scaling being done by the OEM directly to the customers. We're doing a tremendous amount of work around digital and driving that digital interaction and providing digital platforms to our partners that they can use to drive interactions with their customers.
How big an investment is Cisco making in the Customer Success program?
It's over a $100 million investment, and that's on top of other investments being made in the company that are partner-enablement-related, digital-related. This was in and of itself a $100 million investment.
How does this help differentiate Cisco from competitors like HPE Aruba or Dell EMC?
The first thing that differentiates us from a design standpoint is that when we're developing platforms like Lifecycle Advantage, they don't see platforms like those coming out of other OEMs. They don't see a lot of the certifications they see on the Customer Success side. The ROI calculators. They don't see the type of high-touch approach we've had where we're doing seminars with them to help teach them about this. It's a pretty hands-on approach. We've hired hundreds of people who face up to the partner every day to help them build these practices. I don't see that to date from competitors. They haven't made those investments. They don't have those practices. They don't have the platforms. A lot of these people are big Dell EMC or big HPE partners, and their feedback is what we're doing is unique and they haven't seen it anywhere else, at least not at this scale.
Do you see this program as being part of partners' practices for life?
I think it will be part of their DNA for life. I don't think it's a journey where there's a beginning or an end. You become very skilled at this kind of engagement, and Cisco has more organic development. We have more acquisitions, like our intent to acquire BroadSoft. We keep adding new capabilities, and they can take this kind of practice and exercise it. It's about creating the capability for them to evolve the business like we're involving the business toward software and recurring revenue.
Some of Cisco's new software-focused product lines, like Catalyst, have had success in the early going. Is any of that success attributable to partners who are on board with Customer Success?
It is. We developed a team inside our business units called the Business Unit Solutions Success team, and their job is through the whole product development process to shepherd through the whole development organization, the adoptability practices. When it comes to my scaling engine with the partner community, those practices are well-codified and well-thought-out. When we had the new Catalyst switches and the new DNA Center launches, we had actually trained our partners and had codified the adoption practices well in advance of launch, which helped us to dramatically improve the speed of launch. In many cases, we were losing three to six months of time between development and going to scale with our partner community. The BU [business unit] Solutions Success teams get these things ready so that I'm able, from day one, to scale those offers.
What strengths do Cisco and its partners bring to the challenge of shifting to a software-focused business model?
We and our partner community are probably as good as anyone in the industry at landing new logos, new franchises. It's a tremendous sales organization and partner ecosystem that is very good at delivering value at a point in time. What we really are pivoting to is a much more nuanced model that delivers value continuously to our customers. Where in the past we used to ship a big pallet full of boxes and blinking lights and power supplies and operating systems, get all those up and running and then sort of move on, in this world you have to deliver value every day, every week, every month continuously over time. That helps our customers deliver better experiences to their customers, new revenue streams.
Has the program helped drive customers toward Cisco's software offerings?
For Collaboration ELAs, AMP for Endpoints, one of our fastest-growing security products, and Smartnet Total Care, our usage rate before Customer Success was pretty low. If we look at it after Customer Success, we drove up the usage rate tremendously. We started with a control group of customers working with partners to see what the improvements would be. The renewal rates were low. On Collaboration ELAs, we were at 63 percent. On Amp for Endpoints, we were at 57 percent. On Smartnet Total Care, we were at 53 percent. Our goal as a software company is to be at a minimum 90 percent renewal on software. After we did the Customer Success practice, we jumped to today 97 percent on Collaboration ELAs, 87 percent on Amp for Endpoints and 65 percent on Smartnet Total Care.
Why has Smartnet lagged?
The theoretical maximum on Smartnet Total Care is about 80 percent because you have about 20 percent of your install base that falls off the network every year. A five-year useful life for your product means that your theoretical maximum is about 80 percent.
How has the program accelerated growth in those products?
We had upsell of about 19 percent on Collaboration ELAs, 6 percent on Amp for Endpoints and 12 percent on Smartnet Total Care, which means we were getting more than 100 percent of the original contract value. Our goal in addition to the 90 percent renewal rate on software is a 10 percent expansion rate on anything we do so that every year we're continuing to be above 100 percent of our current install base. As we worked through these processes with our partners, the numbers got better, and better and better.
What kind of revenue improvements can partners expect when they commit to the Customer Success program?
Customer Success practices are not a one-time event. They're very organic, and based on what you learn from customer interaction, they tend to grow and develop over time. We created a calculator that people can put on their Success Hub portal, and they can see their actual numbers and see what the improvement would be in their practice over time. You can see without a Customer Success practice, a $100 million business would grow to about $110 million in year one. With Customer Success, it grows to $147 million. The five-year return means the business would be a $683 million practice because of the addition of not just software renewal rates, but expansion revenue, closing more and a lot more professional, implementation and maintenance services. Then we have profitability programs. Lifecycle Advisor is one. We have VIP programs for activation and adoption, and we have programs that are there to enhance the profitability of the partner from a rebate standpoint.
Has Cisco seen a lot of interest in the program from partners?
Success Hub has had 30,000 visitors. It's a one-stop shop for everything about Customer Success. Videos, playbooks, e-books on how to build a practice. The codified practices. A lot of seminars. We've done 330 seminars for partners to help them understand how to build a practice. Who do you hire? How do you compensate them? How do you measure success with the customer? What kinds of services practices do you develop? That's where partners start to engage and make the decision, 'Do I want to go on this journey with Cisco?'
Who inside Cisco is helping partners navigate the program?
If people decide, yes, I want to do this, we help them build that practice. We have four distinct roles. The first is a high-touch Customer Success manager for the largest customers we have. The second is a virtual Customer Success manager, and that's an on-the-phone, inside-type person. The third is a digital Customer Success manager for all the digital campaigns in your customer base. The fourth is a partner Customer Success manager, and the partner Customer Success manager's job is to work with our partners to help them build their practice. They're partner-facing, and they wake up every single day helping our partners, helping them build out their Customer Success practice and walk them through the steps. As the partner hires new Customer Success managers, we pair them with our Customer Success managers at Cisco so they have a mentor they can work with every day.
How can partners earn a Customer Success certification?
We have two Customer Success certifications that we've put out. A foundational, and an advanced. People can take those online, or take them in classroom environments and eventually they will sit for an exam. If they pass that, they'll become certified in Customer Success, which I think is a first in the industry. Some people will even come from outside the Cisco ecosystem to take that certification.
What kind of traction is the Customer Success ecosystem gaining with partners?
Lifecycle Advantage is the platform we developed. We launched it two years ago and had 30 partners in the initial pilot. Over the last year, we have gotten 300 partners onto Lifecycle Advantage, and my goal this year is to get it to 600 partners. Lifecycle Advantage is a digital platform that allows our partners to interact with their customers to do all those Customer Success motions and more. It's everything from the landing motion to making sure you get services attach. It's the adoption motion, the expansion motion. It's the renewal motion and the install base refresh motion. They put their contact information in, and from there it's a co-branded campaign that goes to their customer that's got Cisco's logo and the partner's logo side-by-side. When we put the brands side-by-side we got a 5X improvement in the click-through rate. It's a huge improvement by us going to market together.
How do you communicate to partners about their progress, or results?
There's a tremendous amount of analytics that come in. We deliver telemetry to our partners about how they're using their assets, and we deliver that through the platform. It helps them exercise the entire motion from land all the way through to refreshing the install base.
What kind of revenue growth are top partners seeing with this program?
Lifecycle Advisor is our flagship program, and is by invitation only. They go through the certification process, and there's financial incentives. There's a lot of revenue growth for partners on the professional services side with Customer Success-related activities. People that jumped on this had an average 30-point improvement in their renewal rate, which is a lot of rebate money for them, a lot of top-line revenue for them. They had increases of 10 percent-plus in expansion sales, a lot of new adoption services. They do a lot of co-development with us on software, APIs, a lot of interesting work related to user training that are all services opportunities.
What kind of feedback are you getting from partners? Do they appreciate being walked through the process of adopting a new way of selling?
A lot of partners would never have the capability to build the intellectual property required, whether it's playbooks, troubleshooting guides, video work. All these different practices that we're building are on a build-once, use-many model. It puts a lot of arrows in the quiver to go into a customer and help the customer have success. They're very appreciative. The thing I hear from partners more than anything is there are well-established processes out there for people building Customer Success capabilities. Salesforce.com has a group, and that's very impactful for the end user, but it's not done with the partner. It's done around the partner. What they like about our approach is that from the very beginning, we developed this as something that was going to be done with the partner and through the partner. They know the move to software and recurring revenue is going to change the business model for them. The close-to-the-box services are going to change. What we do in the software model is going to be an opportunity for them, and it's very encouraging.
