PartnerHacker Principles: Customers Don't Live in Funnels

The PartnerHacker P rinciples are the principles we live by. We don't care much for fluffy mission statements, but we do embrace principles as the foundation of our conduct.

Today, we're taking a deep dive with Allan Adler into the PartnerHacker principle: customers don't live in funnels.

Nobody wants to be crammed into a funnel. Customers included. We need to inhabit the ecosystem where our customers live. We build connections by interacting with customers on their terms.

We reached out to Allan Adler, managing partner at Digital Bridge Partners, to learn more about how he this principle on a day-to-day basis. Below are highlights from the interview.

This is the 7th article in our series exploring the PartnerHacker Principles. You can read more about the other principles here:

Customers don't live in funnels

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Customers live within their ecosystem, of which you are lucky to be a member. So they live in their world, and we want to be part of their world. – Allan Adler

We need to meet customers where they live, and that's not in the funnel. Customers don't trust the funnel. They want to interact with you on a human level, not be herded like sheep into a funnel.

Allan Adler: Customers don't live in funnels.

The funnel has been dismantled

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When I am truly in a giving-to-give mode, there is no way I lose, I only lose when I put the string on the back of it. – Allan Adler

In the past, the funnel provided an easy way for companies to track and trace their customers. But customers have become tired of being tracked. They want relationships with those they can trust.

Automation can be useful, but it can never replace building trust and relationships with your customers.

Allan Adler: The funnel as a metaphor is no longer useful.

We need to operate horizontally

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In order for you to be successful if you are a part of a horizontal system, is to focus on the horizontal system and not focus on the vertical plane. – Allan Adler

Most companies are still thinking vertically. Allan says we need to take a new approach and start operating horizontally.

Instead of thinking about a top-down, command-and-control approach, we need to start thinking about living where our customers live.

As we build nodes of trust in the ecosystem, our influence grows. Customers begin to trust us as they see our product integrate into the natural rhythm of their workflows.

Full interview:

Ella Richmond interviews Allan Adler about the PartnerHacker principal: customers don't live in funnels.

Full transcript:

Ella Richmond 0:00
All right, here we go. Perfect. Okay, well, first off again, thank you very much for doing this, Alan.

Allan Adler 0:06
Yeah, my pleasure, happy to have a chat about how the world will change when people wake up and realize that are delayed everything is the future.

Ella Richmond 0:15
I loved your, your partner episode with Jared and Isaac on f the funnel. And so we're doing kind of a deep dive into partnerships, partnership principles, and the partnership principle that we wanted to highlight with you was customers don't live in funnels. So I thought that that was pretty fitting. So first off, you're known for saying if the funnel customers don't live in funnels? If that's true, then where do they live?

Allan Adler 0:41
Well, they, they don't, they neither live with you nor for you. They live within their own ecosystem of which you are lucky to be a member. So they live in their world, we want to be part of their world. So the concept of we have a funnel and they are part of it is completely orthogonal to the reality and to the nature of people, commerce and humanity. Just complete aberration, it's it's a, it is a distortion of reality. Sometimes distorting reality is a good idea. Because it causes you to reimagine things. But when the distortion of reality is so divorced from how things actually are, it's mostly, it was most likely a distraction at best and toxic at worst.

Ella Richmond 1:35
Did you always believe and understand that customers didn't live in funnels? Or did you come to this realization.

Allan Adler 1:43
In the past, when customers bought integrated suites from big companies and switching costs were high, it wasn't crazy to imagine that there was a funnel, where you could say, x, y percent of a customer spend in the tech stack goes to one company. So thereby thinking of that company thinking that they owned a funnel, and they own the customer was still a distortion of reality, but it was closer to how things actually worked. And in the 20 years, since that time, back in the day, when used to live in suites, we have been essentially, dis Suites have been disintermediated, dismantled by best of breed in cloud technology. And so now, when companies buy these discrete solutions from hundreds of different providers, what was partially true is now completely false, which is that you could imagine a funnel that you could put a customer in, but now think about a customer owning hundreds of solutions, and you're one of them. I mean, it's almost as stupid as saying, you drive a car, and someone is focused on, on, on on your relationship with the steering wheel. It's like, a steering wheel is important, but you don't wake up every day going God I love my steering wheel. And I'm, I'm really excited about talking to the steering wheel vendor about how I can make the steering wheel better, they do not think or operate in that model and think about the car and the experience of the car. So maybe, in that context, the model is a little distorted, because let's say you drive a Toyota to think about the car experience and then call it Toyota but, but in the world of b2b SaaS, right, where we operate mostly, each and every one of those parts, has got to fit together in some kind of way in order to be relevant to that customer. So the funnel is by definition, has to become end to end for it to be meaningful, and no b2b SaaS company, thinking today about an end to end funnel, they're still back to the steering wheel. So that was a long answer to the question of like, is it always been this way? And what changed? And a lot changed? We still using the rearview mirror to operate our business.

Ella Richmond 4:00
Yeah, that's amazing. I've never heard you I've never heard you say this particularly. So that was, that was really, really great. You're welcome. Um, okay, so the next question that I had is, how should companies think about, you know, marketing and selling to customers? If they're not thinking about the funnel? Like, how do you how do you take this, this idea of the funnel and start to transition to a new, a new belief, a new approach?

Allan Adler 4:29
Yeah, the reason why PLX partner led everything or go to Ico, which is basically the same thing is a new way to think about things is it operates like to think about helping people think about horizontal versus vertical, right? Most companies are still organized vertically. And the funnel is a vertical thing. By that. I mean, it's like it's it's focused on the steering wheel, not the car. A horizontal model focuses on the car. So the way we like to help our clients think is that it is inevitable. And, and only a matter of time before more and more of the power spend influence the decision making the governance though you name it is going to happen horizontally, it has to happen right. And in order for you to be successful if you are a part of a horizontal system is to focus on the horizontal system and not focus on the vertical plane. So directly to market is the vertical part and let everything is horizontal says I am a part of something bigger. And thereby I will manage my relationship to all those parts. So, you can almost think of it as being like a bill from go from thinking like this to thinking like this go from thinking in terms of everything about the steering wheel to everything about how the steering wheel talks to the car. So as as companies reimagined, product marketing, sales, customer success, they reimagined the role of each of those departments in relationship to that horizontal layer called end to end. And they evaluate how they can get the parts outside of their organization to help them inside their organization. Like, it's not to say that we still don't have to make money for the steering wheel, we do. The best way to make money for the steering wheel is to not focus on the steering wheel, except in regards to how it influences the other parts. So it's kind of like a, there's a concept called invert the firm, which was introduced by platform business model experts as they started to see this emergence of companies who are getting other people to build and develop on behalf of them. So you know, if your Airbnb or your Uber, in the b2b, b2c space, you see the value of the homeowner or the taxi driver, become car owner who's now driving, doing all those things for you to help facilitate the person that buys the house for the weekend, or the person that takes the ride to pay. So this is flipping the firm, right? We've we we imagined now that the provider of value is no longer just sitting in the silo, the provider of value is outside of my company. So product thinks about how to get other people to integrate. Why, because when they integrate, I can now get sales and marketing to see the value of them bringing leads to me. So now the drive train makes the steering wheel better, the gas tank makes the steering wheel better, the everything makes my product more valuable, makes my experience to the customer more valuable. Because each and every one of those things is how the business works, how the customer works, how the market works, which is horizontally. So you know, it's still talking fairly conceptual, because you've, if you're going to change your hearts and minds, you have to, you have to give to give them a story, before they're going to change their metric, or they're going to change their comp plans before they're going to buy this next piece of automation, you really got to start with, with a with a religious order that says we used to operate like this in this horizontal silo, this vertical silo. Now we need to flip every single one of those vertical dimensions, Product Sales Marketing, on its side, and have it talk to all the other things that have nothing to do with what I thought I was doing. Because those things outside of me are where the value is created. And where I will find my source of continuity. The perfect example of this right is you take customer success, and you look at the way they operate, they still operate in this vertical toxic, you know, funnel, where they're told to go make that steering wheel really, really worked well. And every time they talk to the driver, the driver says don't care about steering don't care about the car, but then they don't want they don't do is they don't then say, you know, how's it going with the way that steering wheel kind of connects to the dashboard? Or do you know, on that steering wheel, you know, there's a button that actually controls the radio, or the CD player or the math and I think it would be a really good idea if you incorporated that button on your steering wheel because when you press it, guess what happens, your experience of the console of your entire car changes like press the button and the heads up display comes press the button and the and the map shows up plus the button and I get the My Favorite Spotify playlist, whatever it is. And now all of a sudden the steering wheel is like really much more valuable. It's not just turning the car. It's actually driving. It's it's creating the experience. But customer success. People don't think about that the steering wheel that they sold is actually a conduit to a larger and more robust experience. Guess what happens when they do? No one takes the steering wheel out and replaces it with a new steering wheel. Because on the steering wheel, or all those buttons that make the driving experience great. So what happens churn goes down, you know what else happens? They they buy more expensive steering wheels because the steering wheel with those buttons actually cost 50% more and the steering wheel company makes money every time those buttons get deployed, but again, customer success is still thinking about the little steering wheel, vanilla, not thinking about all these other experiences that are larger and more interesting. And this is the religious fervor that we need to have as partner people to tell the NEC to make the narrative more real for leaders so that leaders are willing to go through the hard work of changing the way they do things. And, you know, if I, if I tell if I tell the customer success leader, that you have neither option you're neither customer nor success. That's a that's a misnomer. What you actually are is product surcharge, you're the product surcharge group, your job is to get more people to spend more time on the product to buy more of it, they go product search term, just awful, want to be product surcharge, I want to be the customer success. Well, what is Customer Success means it means you have to think of who the customer for what their success was success, not yours. There's that as there's something wonderfully organic and beautiful about that story, because people care. But they're encouraged to shove their hearts off, to focus on the wallet of their boss or the VC, and to stop thinking about really giving people value caring about them. So if we start with this idea that we have to learn to care, we have to learn to reimagine our own hearts, and have our hearts show up in our work. And that when somebody tells us to stop doing that, we say no, I am not going to stop doing what I believe is core to my being which is adding value. Being generous, radical generosity and other one of the right principles, I have to be willing to stand up and put my badge on the table to the customer success leader and say, I am unwilling to continue to do this partner work, unless you are the head of customer success are willing to really give value to our customers, because you know what, my partners are demanding that I do a better job helping them win. And the way I helped my partners win is by helping you win. But if you're not willing to put your badge on the line, to your CRO, whoever you report to and say, we are going to be a true customer success organization. I'm walking, you walk in, we should both walk, how about we both walk eventually, if enough people walk, it doesn't matter if the CFO wants to fire them, they left already. Right. So it's this is back to the pragmatics of partner leaders. That's who we talk to all the time, getting the courage, and the willingness to say, Fuck you, either, you're either going to be about helping customers succeed, or anatta here, and I'll figure out how to pay my mortgage. But right now, I'm not going to work for a company that that isn't willing to stop being toxic and start being progressive. So it's like, I know that there's a certain amount of religiosity in my in my verbiage, but we have to get we have to be that way we have to be about the change we want to see. And if all partner people do is talk to each other, not going to work, we have to talk to the people that don't get it and have the courage and competence in ourselves to do it. And that's why pls was so important. Because it was trying to expand, extend the conversation out of the comfortable, you know, bubble, you know, ecosystem, you know, the bubble, what do we call it, the the, the, you know, the bubble of people who agree with you, it's really easy to stay in your bubble of people that agree with you, it's when you choose to walk across the aisle to talk to somebody who doesn't agree with you, that's when it gets really tough. But that's what partner leaders need to start doing is to have the confidence to walk across and talk to those other peoples who are, you know, operating in their toxic waste dump? And because, like, let's get out of this toxicity, let's let's be humans, let's be humans giving value to humans, rather than machines being disgorged of our of our life and our essential qualities of being human beings.

So anyways, I'm passionate about this. So it's sometimes comes across as being a little bit impractical. But maybe that's what we're doing together, we'll figure out how to make it practical.

Ella Richmond 14:33
No, I love it. And actually, that was a follow up question the practicality because it is. It is impractical in some senses, but I think you have to have this lofty view you have to understand it as something that's deeply philosophical before you can like if you that this is how all change has ever occurred. Somebody sets their sights on something that is so good that they need to figure out how they're going to get there. And then through trial and error through experimentation. They figure out ways to get there. And I think that that's the thing that I'm learning as well with partner hacker and in partnerships is that there are a lot of ways to do it wrong. And there are also a lot of ways to do it right. And so there are a lot of people that are experimenting and trying to figure it out. I find that most people are in the state where you could convince them like you could convince them that customers don't live in fun. So you know, you see someone like Chris Walker doing a really good job about dark social, he's convinced a lot of people that dark social exists that you can't attribute everything. Yeah. What do you say to people who are in that in between period trying to understand okay, now that I already believe that customers don't live in funnels, I already believe that there's a lack of attribution. What, what next, like, Who do I go to? How do we actually change things?

Allan Adler 15:50
Yeah, well, it's really interesting. Thought Leaders can be very helpful. And they can also be very hurtful. I believe that Chris's perspective on dark social is actually partially helpful, but also partially hurtful. And the reason why is because dark social suggests that it's dark for everyone. Guess what second party data is. It's infrared glasses, to walk into a dark place and see what's actually happening. And when you put infrared glasses on, it's not dark anymore. It's weird looking, but it's not dark. Right. And if, if, if marketing people to use the to take the example, further, not so much customer success, but a marketing people recognize that they could, they could design infrared glasses into their marketing campaigns, they could unlock all the second party data. And then magically, it's no longer dark social nouns. So Chris is partially right, because it is dark. He also spends a lot of time talking about things like demand capture versus demand generation. He says most of marketing is on demand capture. This is also partially right and partially wrong. It's partially right, because he's correct that we're spending most of time with our demand, capture, but he's partially wrong, because the way you do demand generation in this horizontal model, is to get other people to do your work for you. How do you do that? How do you get other people to do your work for you, you give them a lot. Back to radical generosity. If there was one thing that every b2b SaaS company did that would fundamentally alter the trajectory of pls and accelerate. This time when go to Ico was the new way, and we stopped doing go to go to market, it would be this. I'm going to measure every single one of my customer facing people on how much they give to every other part in the car besides ours. How many leads do I give to the to the to the dashboard? People? How many leads do I give to the to the AVP to the to the audio visual people? How many leads do I give to the to the seat manufacturer, how many leads do I give to the people that manufacture the gas pedal and the brake, if I measured myself on how much I give, and I paid people on my team, to give things to other people that are not in our company, and they're not our part, they're not our customers, what would happen would be is that they would kick off a reciprocity cycle in which all the other people who they've been giving to would start giving to them. And so then the leading indicator is not a marketing generated lead MQL, the top of the funnel, the leading indicator is how much I give to the partner. It's almost like reimagining a funnel, if you're going to keep the funnel, one of the things Jared and Isaac and I talked about in our podcast was that you have to have something, you can't have nothing, right? If you can replace the funnel, to replace it with something having a more evolved funnels. A more evolved funnel would basically put the ecosystem and this horizontal on the top of the funnel, but the ecosystem went by and the leading indicator isn't an MQL. That's garbage. Right? leading indicator is how many leads did I give to the partners? And then you measure how many leads came on the back of the leads given? You also measure how many of those leads so that's that's that's an ARR net new revenue metric, right? Because if I give and get I get a lead back and then I drive net new logos in a recession. Fortunately, those aren't going to be quite as good because companies are going to want to spend money on things they already have are other than on new things. But here's another measure right? If I give a lead and that converts in was inside my company and I already sold some my customers you Then I am actually going to track. The next thing I'll track after the lead given. Again, this is going to be completely crazy for CRO is like, what are you talking about, but this is how it has to work right? First I give a lead and then I, then I actually, I actually measure the conversion of that lead for the partner in my account. Right, I'm actually watching to see, okay, I told the I told the, the gas pedal, that there's an opportunity because the customer wants a new gas pedal, right, because I've got the steering wheel, right, I own the steering wheel on the gas pedal, the customer has new gas pedal or the customer doesn't have one, I don't know, if he's got a car with no gas pedal. Maybe it's a weird car. But anyways, the gas pedal is now uniquely tied to the steering wheel because we have an integration Right. Or better example would be the steering wheel guys got a button on the steering wheel that drives the drives the car talk. And I found that that customer really wants that button on the steering bill that push the push the button in the car talk comes up or the you know the apple thing, right and then a car, I'm going to track how well that button is going is the button being deployed is the button that the button actually result in a in a lead opportunity to the opportunity closed and an ad actually finished it did professional services, install a button. And then I'm going to track all the way that back to when my customer says thank you very much for the button. I remember you told me about the button a while ago. And now everything I've just describe right has zero revenue impact to my company. But guess what it does? The first thing is it does is it kills churn. Because as soon as that happens, the churn goes way down, or retention goes way up. The other thing that happens is the steering wheel gets bigger because now once that button is deployed, I need a bigger steel wheel because I got to have a space with a button. That means my my my NRR which is the recession metric, measure net retain revenue, which is a function of not churn and cross sell and upsell goes up. So when NRR goes from 150% to 170%. The vcsa Yeah, that's great. I mean, you're more profitable. Yeah, margins went up. Yeah. Why? Because simple math, right. If the, if the customer is spending more with me, and my costs stay the same, I get more margin. Wow, that's profitability. So we need in a recession, right. So all the things that I mentioned, those, those leading indicators, were all about what I did for you, or for someone else besides my company. But when they show up in lower churn, and higher cross sell, and upsell, then my investors thank me for having installed all of those partner metrics that preceded anything I make money on, because that's what it's all about. So that's the new normal for for b2b SaaS is to sort of drive all these partner activities that have nothing to do with my revenue, because there is a correlation and causation between those leading indicators, and the things that my investors care about. correlations. Because if I provide you with 100 leads, and you provide me with 100, back in the reciprocity, it's quite difficult to to causally relate one of those leads that I provided you with one of the ones you've provided me, it's correlated. But then there's the causal relationships that when I deploy that button on the steering wheel, no one replaces the steering wheel, no churn. That's causal. That's why starting with customer success is such a good idea. Because it's one of those partner data points that is universal. Everyone says, oh, attribution, we can't attribute partners to anything. That's fucking bullshit. Right? If three buttons are deployed on the steering wheel, it will never be taken out. What do you what more could the customer success leader want, then to guide the customer on incorporating many buttons on their steering wheels to make the steering wheel so much better for the customer? To make the customer think about the steering wheel all the time, because look at how much while driving dispenses Magneto. That's customer success. So this whole BS about pole partner, I don't really know if it's scalable, I don't know if it's efficient, predictable, and it's like start with the cause. Right? It's actually an interesting segue because CROs oftentimes are really really big on sourced revenue because they think that's really what partners should do partner should give me leads so they turn to their partner leaders and they say Go get me partners to bring me leads so we need to teach them that that that the lead is a lagging indicator on the funnel would be as almost a stupid to say that as it would to say I don't want any marketing qualified leads only one sales qualified leads. Well, how are you gonna get them? What higher 4000 bd BD ours? No, no, I have have a marketing department right marketing departments. The ones who make all the messaging and the stories and the ads, and write the PDFs and do the web webinars and the webcasts, and the this and that. And then from that comes all these opportunities for BDRs to reach out and turn them into SQL and then make happy little closed ones happen, right? It would be really stupid to not do marketing, right? You want to do sales, it's just a stupid to ask for partners to provide us with qualified leads when we've done nothing to earn them.

But again, it's like, we need to send many of these CROs and the CMOS, they need to go spend 40 years in the desert, because they need to, either they either need to quickly come back, it's a no no, you don't need to pastor me, I'm really going to get it or they need to retire. And new people need to come who wake up and say, Oh, wow, it's really cool. If I if I give, I get an even better, if I stopped thinking about the getting, and just keep getting. I get even more. As soon as you ask for the sushi look for the GET YOU subvert the generosity and Trinsic. In giving to give, we have prayed this idea called giving to give right versus waiting to take in between giving to give and waiting to take is something called giving to get which is a concept of enlightened self interest where if I say, Gee, I really want Ella to give me something. So I'm going to give her something in the back of my mind, it's a gift with a string attached to it. And we all know from human nature and relationships, if you're in a relationship in which you're giving is transactional, or what we call a quid pro quo. There's no natural generosity in a quid pro quo. Because it's all got a string on the back of it, it's a you pull the string and you find greed. Oh, it was greed dressed up as generosity. This is why giving to give is so much better. Because once you are trusted, as a person that truly cares. You don't have to worry about getting it back. People go out of their way. You know, this is partner hacker, right? Because it's partner hackers, pretty much have a giving to give kind of culture, you know, all the time when people are like they go out of their way to come to partner hacker to give you back what you've given 90% of the time, you'd even have to ask for it just comes back. And this is this by the way of bringing it full circle. This is the the the kind of transformation of consciousness that is necessary to to move from the very beginning from this funnel, this toxic, narcissistic, you know, self centered, it's all about me, too. How do I become part of something bigger? Is the sort of relaxing, the greed and relaxing the What about me? What about me? What about me, and realizing that when I am truly in a giving to give mode, there is no way I lose, there's no way I lose that I lose that I only lose when I put the string on the back of it. Looking for the you know, I mean, part of the reason why the planet, humanity is in such deep trouble is because the string is wrapped around everybody. And everyone, everyone's pulling on the string. And so you almost can't wake up and walk out the door without having a 12,000 strings attached to you where people are trying to pull you into quid pro quo relationships. So we almost start to imagine like it's normal. But the reality is an aberration, it's actually a violation of the nature of human nature and natural systems to have all these strings. Everyone needs to let go of the string and relax. The will will result in fewer people becoming billionaires. But then on the other side of that will be the planet won't kick us off. Because we've destroyed it. Because our greed and our our toxic need for growth at all expenses is going to wipe our species out. I figured like maybe before that happens, we can learn to love each other. Which is why I'm doing this at my ripe old age. I mean, I shouldn't be retired by now, because but I realized that you know there's a there's a legacy legacy is that business needs to learn giving to give if it wants to contribute to the survival of our species. Maybe don't put that part into the videos because people get like little upset when I talk about catastrophic collapse and things like that. But the reality is is that whether it happens in my lifetime or your lifetime Gotta learn to cooperate, we have to learn to collaborate, we have to learn to be good to each other, we have to learn to lead from love, not fear, to be generous rather than greedy. That's the only way we survive. It's the only way anything works. And it's the only way all the strings get let go of strings. So it's like, you know, that's my philosophy.

Ella Richmond 30:22
I share your philosophy, thank you for sharing it. I really, really appreciate the work that you do with digital verge because I think that you see the world in a very, very interesting way you see systems you see, you know, cause effect processes and then because of your background, you have very specific experience that allows you to offer a lot of value to the space