Why Customer Success Matters More Than Ever
Early in the pandemic, acquiring net new logos was challenging, if not impossible, for many companies. Losing existing clients meant losing a significant revenue stream, which they couldn’t afford. Nimble, forward-thinking companies quickly shifted their focus—to their advantage—to retaining existing customers and expanding those relationships, the fundamental goals of Customer Success. Rather than resigning themselves to the gut punch of lost revenue and powerless waiting until conditions improved, it helped them survive massive economic shifts.
Now, businesses may have settled into their new normal and the threat of mass attrition subsided, but they face a new menace: inflation and the possibility of a recession. In a recent SBI Growth Advisory survey, 65% of CEOs indicated they are taking action to prepare for a potential economic downturn in late 2022. In this environment, executives are wise to invest in Customer Success both to stem attrition and grow revenue.
The Answer Lies with Your Current Customers
Your solution to securing your revenue streams in this environment lies with your customers. The data bears this out:
- Analysts estimate that existing customers represent 70-80% of company revenue
- Increasing customer retention rates by 5% increases profits by 25% to 95% (Bain & Company)
The potential for Customer Success not only to shore up your bottom line but to save the day looms large. If you don’t have a Customer Success practice, now is the time to get started. If you do, take this moment to carefully evaluate your practice. Do you have the essential elements in place to ensure strong, trusted relationships that endure? If not, where should you prioritize resources to get your program back on track?
The Pillars of Customer Success
Let’s start with the core Customer Success pillars:
Establish Strong Customer Relationships
Most Customer Success pros thrive on the honest connections they build and on empowering their customers to reach both their personal and professional goals.
Like any relationship, strong customer relationships start from a solid foundation. The adoption/onboarding phase is the single most important one in the customer lifecycle, yet 80% of failed new customer programs break down here.
You can achieve this through education, such as product training, addressing both how to use it and how to use it to its full potential. We customize the training for the customer’s needs and unique situation, provide supplemental education and resources where needed, and establish an appropriate cadence of ongoing training and relevant insights.
Another key customer relationship element is bi-directional feedback mechanisms, both formal and informal.
Another essential move is to get the Customer Success team involved in the pre-sales cycle (as a post-sales customer-facing organization). This allows your Customer Success team to establish a relationship with the potential customer and to learn their semantics, KPIs, and political landscape (including who has decision-making and budgetary authority). You also learn what their pains are, why they’re talking to you, how you can not only problem-solve for them but help them achieve their loftiest goals to evolve into a higher version of themselves. This positions the Customer Success team to earn the customer’s trust early on and form a solid relationship before kickoff.
This relationship foundation often drives deals to close sooner and at a larger dollar amount. It also ensures higher quality sales deals—deals that renew and expand at higher rates, have strong executive sponsorship, contain cross-functional stakeholder ownership, possess collaborative and transparent documentation and systems, and share value-driven metrics, KPIs, and outcomes. And, it helps the customer understand and trust that you have a shared vision for their success beyond your initial engagement into the foreseeable future.
How MarketSource Does It
That’s why we invest heavily in customer launches, from traveling to meetings, to assigning support staff, to documenting our learnings throughout the launch. It’s standard operating procedure for us to involve business analysts (BAs), and a wide range of representatives from learning and development (L&D), human resources (HR), IT/Innovation, Continuous Improvement, finance, and legal in every launch.
This in-depth, all-hands-on-deck kickoff can take several weeks, but this non-negotiable, critical phase sets us up to understand our customers’ deepest needs, their environment, and their challenges, so we can enable them to optimize the use of our products in ways that deliver them maximum value and ROI. Perhaps more importantly, this collaborative process is essential to building a strong customer relationship that can transcend this first engagement.
As we and our customers learn together, our efficiency and outputs grow. For example, if we’re able to deliver 5x sales in the first 90 days, this intentional onboarding process sets us up to grow sales to 7x during the subsequent quarter. It also sets us up to recognize when we’ve stopped progressing so we can address growth obstacles immediately.
How MarketSource Does It
We rely on quarterly business reviews to show customers where they stand against their goals and identify areas of opportunity to improve. And we constantly monitor and report on our success metrics. We review them daily internally and weekly with each customer.
We also work with each customer to create success plans that govern our engagement. These plans establish co-owned KPIs, metrics, and contract deliverables that include shared responsibilities. Only 10-20% of Customer Success teams are doing this, but we’ve seen them work because both provider and customer have a stake in them.
Put the Customer First
You wouldn’t exist without your customers, but if you don’t demonstrate and communicate their value to your company, the message gets lost, and you miss an opportunity to build an enduring, mutually beneficial relationship. How do you live that out?
It may seem obvious, but under promise and over deliver on customer expectations for your relationship. Deliver bad news as early as possible, and conservatively estimate ROI and the likelihood of reaching goals. This level of trust is only possible if you prioritize customer centricity over revenue or profits and by making decisions based upon what’s best for the customer rather than for your organization. This includes being transparent about your finances (what you’re charging, your margins, your business practices, and your organization’s challenges as they pertain to your customer). Also strive to:
Respond to all inquiries—including complaints—in a timely, complete, and thoughtful manner. Work to communicate in a way that conveys that their issues matter to you as if they were your own.
Become their strategic advisor on things that go beyond the scope of your engagement. Proactively monitor and pass along information and insights on what’s happening in and shaping their industry.
Offer to guide them in their budgeting and planning for the upcoming fiscal year and assist them with staffing projections (which skills they should be hiring for) and staff development (where leveling up skills could be beneficial and talent gaps exist).
Provide Customer Value
Go beyond just helping the customer use your product (although that’s fundamental). Help them get their optimal use out of it. Ensure that they know how to use it in ways that meet their unique needs.
One way to do that is to solicit use cases from them in the pre-sales process and then map your products or services to those. We continually do this by running tests with control groups and measuring the outcomes throughout the customer lifecycle.
Conduct continual education for the organization. Make sure you’re reaching all the audiences within their company that can benefit from your product. Conduct ongoing customer interviews (through a mix of verbal and email communication) to continually assess product adoption levels and surface if/where they’re lacking. Set a regular cadence for adoption and education touchpoints, whether it’s daily, weekly, bi-weekly, monthly, or quarterly.
Keep up and stay in step with your customer’s dynamic priorities and goals. Monitor their industry by doing your own research. Supplement the information they provide you about their business and market with insights they might not be monitoring. “I see these challenges are occurring in your industry. Is this going to affect you?” “We have relationships with analysts who tell us XXX. Does this align with what you’re seeing?” It’s another strategic way to provide genuine value.
Help your client strategize for the future. Be proactive and offer ideas that align with their goals and priorities and strategies that can help them achieve them. Or, in terms of a forthcoming recession, strategies to help them weather economic changes.
Help them run a risk analysis. It can be as simple as suggesting scenarios that get them to think about catastrophes and business continuity, i.e., “If you had to__________________________ (cut X% from your expense budget, go 100% remote work overnight, lose 20% of your staff, deal with a company scandal), what would that look like?” Encourage them to figure out where they’re vulnerable and envision how they could rebound from those. Help them outline something they can quickly activate. Figure out what their non-negotiables are–what’s vital to them that they’re unwilling to compromise on.
Become the Voice of the Customer
Work to listen to and understand your customers—both as individuals with personal aspirations and dreams and as the organization they serve working toward collective goals. You can help them feel heard by conducting formal customer interview surveys and creating feedback loops that ensure their input goes back into the organization. Automation works well to operationalize and streamline these.
Encourage your customer-facing staff to include their subjective views and instincts about the state of the relationship in the interview notes. This ensures a human element remains part of the relationship and helps the entire Customer Success team glean the nuances of the relationship. Enter the input into a system that can aggregate the feedback. Then, share it cross-functionally across the organization. A simple spreadsheet works, or you can store and track it in a CRM or Customer Success platform. The best tools will provide customer health scores, playbooks, and documentation and tell you where to concentrate your efforts.
Create a Voice of the Customer program. Core to this is the feedback loop you’ve already established. Synthesize the feedback, document it in your CRM, and map out all the ways you can both address it and drive additional customer value. This all becomes part of a collaborative developmental plan that should include a roadmap of how you’ll implement improvements.
A core role of Customer Success is to advocate for your customer. The most constructive way to build actionable advocacy on behalf of your customers is to organize and flag categories of common customer requests, issues, challenges, and wins in a spreadsheet, your CRM, or a Customer Success platform. Next, prioritize and rank your organization’s resources and activities available to address each of these by dollar amounts, strategic accounts, value, and results. By attaching quantitative data to subjective customer feedback, you can compartmentalize qualitative and emotional bias that might hinder progress.
Secure executive leadership buy-in and sponsorship for recognizing and incorporating customer feedback. You’ll need internal cross-functional feedback channels to process positive and negative feedback, which will require periodic meetings between departmental stakeholders. A shared technology platform or tool can help keep internal stakeholders on the same page.
For more mature Customer Success programs, formal Customer Advocacy Boards or Groups can be an effective tool and a natural next step in building and maintaining your Voice of the Customer program.
It’s Time to Increase Your Customer Success Spend
While it may sound counter-intuitive to invest more in Customer Success with a possible recession looming, the cost of not acting now is much higher. It’s more cost-effective in the short term and more profitable in the long term to invest in your current customers than anywhere else in your organization. Just a 5% increase in retention leads to more than a 25% increase in profit, according to Bain & Company. And, during times of economic uncertainty, it’s even more important to secure your source of current revenues and maximize their potential future spend with you.
While it varies between verticals, Bain also finds that repeat customers spend up to 67% more in months 31 to 36 of their brand relationship versus the first six months. In apparel alone, a customer’s fifth purchase is 40% larger than their first, and their 10th is 80% larger than their first.
Don’t worry! Your investment doesn’t have to be an all-or-nothing proposition. To assess your areas of opportunity and gauge the right investment level, try running playbook tests with your existing customer base. Ask some of your Customer Success staff to dedicate four to eight hours per week to testing new/upsell/cross-sell/retention offerings to see how they perform. It’s a low investment of time and money that can deliver a fast analysis of where to deepen your Customer Success investment and that will deliver returns.
The power of Customer Success to 1) solidify your existing customer base, 2) insulate your revenue streams, and 3) provide cost-effective and high probability wins for potential expansion, no matter what the market brings, is more appealing than ever.
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