Where Sales Ends and Customer Success Begins

By Kristen Hayer

I’ve already shared my opinion about customer success teams and selling in a prior post, and one of our guest bloggers, Loni Spratt, discussed the opposite side of that issue in a recent article.  There are great arguments on both sides of the issue, and ultimately every company needs to make a decision about who does what.  I thought that this week I’d write about some of the situations I’ve run into, what worked (and didn’t), and how to think about who should sell in various scenarios.

One thing I want to emphasize first is that the sales and customer success groups must function as a team.  Regardless of who is selling, both teams are responsible for making sure that customers have a good experience and that they are setting the company up for success.  Sales and success leaders who work well together, strong processes, and regular communication are critical for making any division of the selling function prosper.

New Business

A company I worked with several years ago hired me because they had attempted to do away with their sales team, and after about a year realized it wasn’t going to work.  Their self-subscriber business model was great for about 90% of their customers, but didn’t work for the 10% of larger customers who brought in about 40% of the revenue.  This situation is a good reminder that there is almost always a place for a new business sales function.  New business is where sales teams shine, and most of the time they generate a lot more revenue than would come in on its own.

Contract Renewals

I’ve seen contract renewals work in both sales and success.  There are several factors to consider:

• How long since the initial sale? The further out the renewal, the more likely the success team will have a stronger relationship with the client than sales.

• How strong are your negotiators? In many cases renewals involve a tougher negotiation than the initial sale. Do you have that skill on your success team?

• How complex are your contracts? If your document requires a minor in business law to understand, you might consider carving out an entirely separate team for renewals.

Upgrades

In general, I’ve seen the best upgrade results come from customer success teams.  A strong customer relationship tends to generate opportunities to discuss growth and creates a natural selling environment that isn’t pushy or artificial.  That said, I ran into an interesting exception recently.  This organization had been struggling with churn, and it was coming from customers who were not a good fit but were sold anyway to hit quota.  The company corrected the situation by allowing their sales team to earn commission for a longer period of time and to sell upgrades as well.  The motivation to close good deals returned, as did a focus on long-term customer relationships.

New Products or Services

Like upgrades, new products or services are typically most effectively introduced and sold by the customer success team.  Success groups are usually closer to the product and have a more thorough understanding of customer issues (and how the new product or service helps resolve them) than the sales team.  That said, you should consider two things:

• Is the new offering highly complex? If so, selling it might require the help of a sales engineer or internal sales consultant.

• Does the new offering have a different buyer? If so, this should be treated more like a new sale, since the existing relationship is less important.

Partner Products or Services

Your business development rep is closing partnerships left and right:  How do you make the most of these new relationships and generate revenue?  Some of the companies I’ve worked with have had blazing success with partnerships (one went from 0-33% of their revenue from partners in under 2 years!) and others never seem to get their partner programs off the ground.  The difference isn’t found in whether sales or customer success sells the program.  It’s all about training and communication.  Get the new partner in front of your team, provide them with solid enablement tools, give them a good incentive plan, and either sales or success can win deals.

Think through the scenarios you face in your business.  Once you decide who is selling in each situation, make sure you clearly communicate to both groups and set the expectation that they will be working as a team.  If you decide to put your success team in selling situations make sure you give them the same training and resources you provide to your sales team, as well as firm goals and quotas.  Selling expectations should carry the same weight across both groups.

Happy selling, and happy customers!

Need help training your success team to sell?  The Success League is a consulting firm that works with executives who want to retain and expand the customers their company worked so hard to acquire.  We transform support into success by building metrics, goals and processes that push customer success teams to perform at their peak.  www.TheSuccessLeague.io

Sales Resources for CSMs

By Kristen Hayer

I have to admit that I have a soft spot for selling.  I started my career as a salesperson, and find it fun to talk to people and help them find tools and products that make their jobs easier.  Plus, there’s nothing like the rush you get from closing a deal! 

That said, many Customer Success professionals are being asked to sell but don’t have any experience doing it.  Most CSMs in this situation admit to feeling uncomfortable with the idea of selling, and often don’t have formal sales training available to them.  If you’re a CSM who needs ideas on how to improve your sales skills, or a success team manager who needs sales training tools, here are my top 3 sales books for CSMs.

SPIN Selling, by Neil Rackham

“SPIN Selling” sounds like the worst possible collection of sales tactics, but SPIN is actually an acronym for a method of asking questions that helps uncover real customer needs.  This book was first published in 1988 but has stood the test of time, probably because it is based on so much real-world sales data.  Like most sales books, it is geared toward the new sale, but I like it because the methodology is simple to learn and can easily be applied to discussions with existing clients.

When to use it:  When you are new to selling, or when you have a team that needs to learn basic solution-selling techniques.

The Challenger Sale, by Matthew Dixon and Brent Adamson

This book is the hot new thing in sales, but definitely not just a passing fad.  Based on a tremendous amount of research on what makes a top salesperson, this methodology provides reps with a strategy to elevate their message above competitors.  Again, the focus is on new sales, but you can easily apply the tactics to create a more valuable vendor-customer relationship.  It does assume some sales ability, so if you are new to sales I’d start with SPIN Selling.  There is also a fantastic chapter on what it takes to be a good sales manager that I think applies to success managers as well.

When to use it:  When your sales skills need a boost, or when your success team is asked to take on more complex sales.

Getting to Yes, by Roger Fisher, William Ury, and Bruce Patton

This is another older book, but it is still popular for teaching the art of negotiation.  I’ve taken many sales and success teams through this book to help them learn to create agreements that work for both the company and the customer.  Many times the renewal is a more difficult negotiation than the initial sale, and it is made even more challenging by the fact that you want to maintain a great relationship with your client.  This book can help you navigate that scenario.  Bonus: It might also help in negotiations with your significant other!

When to use it:  When you deal with lengthy or complex renewal negotiations, or when you have a CSM team that discounts too quickly.

Book Clubs

Many of the companies I work with are startups, and don’t have the time or budget to implement formal training programs.  A great way to deal with training when resources are slim is to start a book club.  If you’re a customer success leader, consider carving out 30 minutes a week to discuss a book your team reads together.  Are you a solo CSM?  Find like-minded success professionals at other companies to join you for drinks and a discussion once a month.  One chapter a week is a pace that most people can keep up with, and group discussions help everyone understand how to apply what was read. 

Do you have a favorite sales resource?  Comment to share that with the group.  Wondering whether your CSM team should even be selling?  Here are two recent posts on the Pros and Cons.

The Success League is a consulting firm that works with customer success leaders who want to unlock the retention and revenue potential in their team.  We partner with success teams to gather and present customer data in a way that allows them to advocate for customer needs and drive true change in their organization.  www.TheSuccessLeague.io

Why CSMs Should Not Sell

By Loni Spratt

The Customer Success Manager (CSM) is the closest interface to the end user and succeeds through establishing relationships built on a foundation of trust and rooted in partnership. Though there isn’t a one size fits all definition of the CSM role, what can be universally agreed with is that an effective CSM, regardless of the product or service offering, is both provider and voice of customer simultaneously. The art of being a successful CSM is the intersection of clarity of purpose, detailed customer needs understanding, and mastery of the product culminating in a world-class customer experience. This recipe, executed appropriately, results in increased sales but is not a sales function.

Maintain Clarity of Purpose

The fundamental purpose of the CSM is to ensure that the customer is successful, and it is critical that this focus isn’t clouded by motivation for up-selling to satisfy the allure of high commissions. Driving customer value is the number one priority. Negotiations, pricing tactics and the nuances of the sales process can easily detract from maintaining this clarity and ultimately have a negative effect on the customer experience. A poor customer experience easily translates into customer churn, specifically logo churn. Pursuing increased sales may help in the short-term to mask revenue churn but very quickly turn into a numbers game in which the success of the customer is never achieved; the purpose of the CSM is undermined.

An Advisor Relationship Rooted in Trust

Customer intimacy is categorically critical to making customers successful. A detailed needs analysis and understanding of your customer is required to be able to perform as a CSM. They understand how their customers define success and strategically work cross-functionally to deliver results consistent with this definition of success.  In order to achieve this detailed understanding, the CSM must not only be able to walk in the shoes of the customer but be skilled at being an advocate for what the customer needs before they know they need it. Advising customers of new product offerings that could help them achieve their goals is very different than leading them through the sales process. Built on a foundation of trust, this relationship puts the CSM is in the perfect position to identify opportunities to up-sell but those opportunities should be passed to a closing rep to complete. Effectively, CSMs are lead generation for the sales reps when it comes to existing customers. The trusted advisor role is never compromised and the CSM’s intentions are never questioned.

Product Masters not Sellers

Mastery of product is also an important characteristic of the successful CSM and energies should be focused in that area instead of sales. In the customer’s eyes, the CSM is the go-to person, completely knowledgeable about the product; ready to help them navigate to success. Day-to-day activities can include training and onboarding, sharing best practices, leading quarterly business reviews and promoting advocacy, while an account manager or sales role is focused on meeting sales quotas and driving renewals. Though they operate complementary to each other, the skill sets and DNA of CSMs are different than those of their sales counterparts.

The CSM-Customer relationship is all about trust. This relationship is sacred and shouldn’t be clouded by sales quotas or the appearance of disingenuous motivation. Establishing and nurturing this relationship ultimately translates into high revenue retention and low logo churn. As a CSM leader, my primary objective is to ensure that there is no conflict of interest within the team. One sign that a CSM gets “it” is when he or she embodies the voice of the customer so much that it spills over into internal company debate and lines between user and provider are blurry at best. 

Loni Spratt - Loni Spratt is the Director of Customer Success at Entelo, a SaaS platform that leverages predictive analytics and social signals to help organizations find, qualify and engage with in­-demand talent. Prior to Entelo, Loni co-founded IntelliTalent, an online recruitment company powered by both technology and a team of expert recruitment sourcers. 

Thanks to our guest blogger Loni for providing this wonderful counterpoint to the post "Why CSMs Should Sell". The Success League is a consulting firm that works with executives who want to unlock the retention and revenue a top performing customer success team will bring to their business.  Unlike traditional approaches to customer service, we transform support into success by building metrics, goals and processes that enable customer success teams to perform at their peak. www.TheSuccessLeague.io

Customer Success as a Revenue Center

By Jeremy Gillespie

The other day, I was having a discussion with a leader in the Customer Success field and I heard something alarming: "Most companies still look at customer success as a cost center, not a revenue center."

For SaaS, eCommerce or brick and mortar businesses, the majority of their revenue comes from recurring revenue or repeat buyers. In my opinion, customer success should be seen as the largest generator of revenue in a company. Not only is that team responsible for retaining existing customers and increasing the revenue they pay, it also impacts new customer acquisition. Let's look at the economics of customer success and quantify the true impact customer success can have on the bottom line.

Fundamentals

Growth is a function of both customer acquisition and retention. Up and to the right growth does not happen without strong customer retention. Unchecked, SaaS churn scales with the customer acquisition rate. The result is what's called a growth ceiling. Growth ceiling = customer acquisition rate / churn rate.

From Chaotic Flow by Joel York

Value of Relationships

The good news is that a strong customer success team can raise the ceiling, so let's take a deeper look at how customer success can be a revenue engine for your business.  Customer success is rooted in building strong relationships with your customers. As one of our contributors, Amin Akbarpour, recently wrote, customer relationships have value. This value is quantifiable because creating relationships creates loyal customers who:

• Have a lower likelihood of churn (increase LTV)

• Are willing to spend more (increase LTV)

• Are open to trying other products (cross-sell and up-sell revenue)

• Become brand advocates (referrals = increased acquisition)

The net result of building relationships with your customers is increased revenue and decreased costs.

Revenue Components of Customer Success

1. Reduced Churn

One of the first and most critical impacts customer success can have on revenue is through reduced churn. As companies grow more revenue comes from existing customers, which makes minimizing churn vital to the business.

To improve retention, it is important to implement customer engagement strategies. Make sure these strategies are tailored to specific groups of customers and mirror customer behavior. A common approach is to create high-touch and low-touch engagement models based on differing customer journeys.

2. Expansion revenue

The second phase in growth maturity is expansion revenue. Expansion revenue is developed through building relationships with you accounts, understand their definition of success, and engaging them in the proper manner. Once you understand their needs, you're able to approach up-sell and cross-sell conversations in a thoughtful manner with their real needs and goals in mind.

3. Advocacy

Happy customers are more valuable than average customers... If you make them. When customer success identifies brand advocates and empowers them to influence new sales, it's a win for both the retention and acquisition teams. The brand advocates have a greater sense of brand loyalty, and spend 2x more on products and services. In addition, when advocates influence new sales, you increase your acquisition rate and lower your cost of acquisition. Like I said, win-win.

 http://www.slideshare.net/GainsightHQ/gainsight-forresterwebinar-v3

The results will speak for themselves. If you want to expand growth, customer success is where you should focus your resources. As your company grows, more revenue comes from current customers, which places a greater emphasis on customer success driving revenue. The largest quantifiable impact will come from:

• Reducing churn through building an engagement strategy

• Expanding revenue with up-sell and cross-sell opportunities

• Empower customers to become advocates of your company

Make sure customer success is not looked at as a cost center in your organization. Yes, customer success is rooted in building relationships, which doesn’t sound quantifiable, but the numbers don’t lie. Use customer success to raise your growth ceiling and scale revenue growth.

Need help planning the metrics and goals that drive customer success revenue?  The Success League is a consulting firm that works with customer success leaders who want to unlock the retention and revenue potential in their team.  www.TheSuccessLeague.io

Jeremy Gillespie - Jeremy is a growth-oriented marketing geek, technology enthusiast and customer evangelist. He loves using complex data to build creative retention solutions. By leveraging technology, Jeremy excels at creating scalable retention marketing programs.  He works for LinkedIn, holds a BA in Communication from the University of Pittsburgh and MBA from Point Park University.  He is a proud former Pittsburgher, but currently lives in San Francisco, CA.