Although the title says “aligning”, the most important thing in this particular subject might be “defining”. Because so many Customer Success organizations grow up in the Services part of the organization, this means they sit right alongside the Customer Support function. Nothing wrong with that in theory, but in practice the differences can often be confusing. That problem is exacerbated in situations where Customer Success is viewed, or, worse yet, created as an extension of Customer Support.
In fact, we often joked that, after all that money and effort, if someone complained when we rolled it out, we simply fired that person. Not so with software as a service (SaaS). In the SaaS world, our customers have choices (and power) like they’ve never had before. Switching costs tend to be much lower and, because of the subscription model, we give them the option to say “no” long before we’ve achieved our hoped-for lifetime value.
All of this makes aligning Sales and Customer Success critical. Ensuring that your entire company is aligned in the quest to deliver the desired outcome for each customer is even more important. The long-term viability of a company in the subscription economy requires execution on all three of these key revenue drivers:
In the past, Sales really had just one motivation—acquiring new customers at maximum financial value. In fact, there are two questions we have to ask today as we’re approaching the close of a new deal that we never had to ponder in the not-so-distant past:
If those questions were asked (and they weren’t), the answer would have been delivered in milliseconds in the form of “who cares?” to the first and a resounding “YES!” to the second. But as the saying goes, “That was then, this is now.”
In order to set our teammates and our company up for success, we have to carefully consider both questions. If not considered, one often leads to churn and the other to downsell.
An important focus of Customer Success is product adoption. This is very different from a break/fix mentality. This is about engaging with customers to ensure that the ROI for your products is being realized. Customer Support pays no attention to, and has no responsibility for, customers who are not fully utilizing your products. Customer Support is largely a reactive organization while Customer Success strives to be a proactive organization.
In an ideal world, Customer Success is actively monitoring customer health and reaching out to customers who appear to be at-risk. There are many indicators of at-risk and they can vary from company to company, but some of the more obvious ones include negative usage trends, poor survey scores, # of Customer Support calls, and invoice history. A healthy Customer Success organization is monitoring these metrics and intervening accordingly. The result of this analysis is often a project designed to bring a specific customer back to full health. When your teams are aligned the following benefits will occur.
For many companies, the Marketing team is first in line when it comes to sifting through prospects to find and attract the most promising leads. When Marketing targets only clients likely to achieve their desired outcomes, the quality of prospects rises, and Sales has a much easier job. If the same way, the Success team has an easier time when you hand off ideal customers that are already poised to succeed, with appropriate expectations and even with a game plan in place for reaching their goals.
Essentially, when all three teams align, it’s a much smoother ride for everyone involved – and the customer’s experience is made all the better for it.
“From first interaction to closing the sale, the customer is sharing information that can not only be useful in ensuring the customer is successful, but in mapping out the account for expansion later on. Why they’re buying, what their Desired Outcome is, what the catalyst was for them that made them seek out your solution; the intel gathered during the sales cycle can be used to grow the customer over time.”
Tip: Successful customers are way less likely to churn. Investing some effort in aligning with Marketing & Success will make clawbacks a rarity. Customers that are achieving their goals are customers that want to stick around.
Customer Success can be a driver of significant account expansion.
Once Customer Success determines the client’s desired outcome, the CSM can suggest ways to reach it faster, often (but not always) through upsells. Depending on the company, the CSM can handle upsells directly, or pitch the client back over to Sales to hammer out the details. In many cases, Sales reps rely on CSMs to notify them of opportunities to upsell an account. Either way, when a customer is already seeing positive results, they are much easier to sell to again and again.
Most successful new companies have one thing in common: 20% of their revenue came from repeat purchases in their very first month of business. By the end of their first three years, the majority of their revenue came from repeat buyers.
“Customer success is where 90% of the revenue is.”
Tip: Upsells don’t work as well if you try to use traditional account management or sales principles that aren’t grounded in your customer achieving their ideal outcomes. Anything that feels pushy, or like a hard sell, or remotely manipulative won’t just fail, it will undermine the customer’s trust in you, the Customer Success department and your company.
Lifetime Value is a fascinating metric. It encompasses the entire value of a customer from the moment they sign on to the moment they leave, which includes the first time purchase, renewals, upsells, cross-sells, and value of their referrals. Companies may even see their Customer Acquisition Cost (CAC) metric fall since referrals don’t require any additional marketing spend.
But here’s the secret of Lifetime Value: It’s a low effort way to boost your commission check. Old customers are the ones who bring in the most revenue for the least amount of time and money. Increasing Lifetime Value isn’t just about keeping old clients around, it’s about expanding their business.
Tip: Start the ball rolling by reinforcing the successes they’ve experienced with your product. Work with Success to agree on milestones in the customer journey that warrant acknowledgement. Celebrating successes serves as a reminder that they are, in fact, reaching their goals (and it’s fun).
Bill Macaitis, CMO of Slack, former CMO of Zendesk, former SVP of Online Marketing and Operations at Salesforce, polishes every interaction prospects and customers have with Slack, taking a holistic view of UX that includes not just Customer Success and Sales, but also online ads and their legal terms of service. He says he’s not satisfied by prospects signing up for Slack, or becoming paying customers – the bar is set at whether they recommend it.
Tip: When Customer Success and Sales align to support your customers’ goals, they’ll support yours. A tight relationship with Success can mean ready access to referral sources. Loni Spratt, Director of Customer Success at Entelo, uses a Net Promoter Score program to identify customers who are brand promoters and ready to recommend your company to others. She immediately gives her sales team a head’s up so account managers can reach out for referrals.
McKinsey & Co. found that “Optimizing the Customer Experience typically achieve[s] revenue growth of 5-10% . . . in just two to three years.” The reasons why are many: lower Customer Acquisition Cost, more referrals and upsells, and increased Lifetime Value. With those in play, growth results.
Good customer experience starts with signing good clients. Clients that are a bad fit for what you are selling will help you hit quota in the short term, but actually can hurt the company in the long term by tying up Customer Success resources and being unprofitable. Bad customers can sink a ship, but good customers can help a company grow for the long term. If Sales signs customers who can’t achieve their goals with your company, they will have a poor experience and you could be putting your company’s long term trajectory at risk.
So, the path to growth isn’t lined with the number of prospects you can bring in, or the sales you can make. The path, really, lies with the right customer. Will the customer you are about to hand off to Success be able to get what they need out of your product?
Tip: Partner with Customer Success to define your ideal customer. Then you will be seeking and signing customers that are a great fit for the rest of their journey. To deliver positive experiences, you can’t go off on your own direction, pursuing your own, very separate, interests. Alignment around the customer is crucial. Put them first, and sales and success follow.
Why Certain Product Led Growth SaaS Companies Are Crushing It
The ultimate guide on how to adopt a PLG strategy for saas businesses.
Product Led Growth (PLG) is a go-to-market strategy where the product is used to acquire, activate and retain customers. This strategy allows SaaS companies to create a pipeline of users that can be converted into paying clients without a human touch.
Changing the way you do business, within the tools you already use.
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