The Subscription Economy
Along with SaaS came the advent of the Subscription Economy. Nowadays, people get most services on a subscription basis. The best example of this is the Entertainment Industry that has split what used to be a simple cable subscription into various online streaming offerings that splinter content across various sources. Similarly, B2B platforms for Marketing, Customer Support, Goal Setting, Management, Human Resources and more fracture data across many different sources. The solution to all this splintering of data? – a Customer Success solution that brings it all into the same system! The CS platform has to have robust integrations capabilities, flexibility to easily reflect your business use cases, and the ability to accurately represent data and allow you to take action on it.
The first step in getting Sales and CS on the same page is a system that both parties can log into to view past actions, account history, and live customer health. If there is a system of record and planning for goals moving forward, everyone will be on the same page and accountable to each other for their part in pushing the agenda forward for each account. In order to garner the budget for a CS platform, support at the enterprise and executive level has to be aligned around the joint team initiative that will push retention dollars and accounts, increase annual recurring revenue, and improve knowledge of sentiment in each account in real time.
Before you go to the board and executive team to get their stamp of approval on your joint team initiative, you should decide on the form of the partnership. Who on which team is going to be responsible for what? There are three possible models that I will discuss that shift responsibilities between the Sales and CS teams. In Model 1, Customer Success acts as a trusted advisor to the customer, cultivating an intimate relationship with them. The customer looks at Customer Success as an extension of their team, and not as a vendor. Customers feels safe sharing details including pain points with the product, the organization, and everything else. The CS organization doesn’t own a quota, but they usually are in charge of training and support. In this scenario, Sales should leverage the CS team for insider information, and on how to structure conversations around upsells and expansions.
In Model 2, Customer Success is directly accountable for the number of renewals. There can be a bonus associated with their performance. Customer Success team members need to find a balance between acting as a trusted advisor and broaching renewal conversations. Customer Success also bears the responsibility of alerting Sales of expansion opportunities. In Model 3, CS is responsible for all customer touch points, not only retention numbers, but also expansion numbers. In this scenario, CSMs report to the head of Sales. Customer Success folks have to be opportunistic, and develop ‘farming’ skills like those from the account management era. In this arrangement, it’s difficult for customers to view CS as trusted advisors, so the relationship will be of a transactional nature.
Land & Expand – Continual Alignment
Regardless of the model chosen, Land & Expand is a strategy that should be jointly owned by CS and Sales. As it’s not just a sales tactic, the focus should center on onboarding the customer, making them comfortable with the basic product, and retaining them so that they increase their usage or buy adjacent products over many years. Start with a simple use case, and then expand by solving other problems or scaling with additional users. Sales should use Customer Success as an ally to expand, and Customer Success should capitalize on this opportunity to prove useful to the Sales team. In order to be eligible for an expansion proposal, the customer should have adopted the product extensively and performed well with it.
Customer Success efforts can maximize adoption by translating analytics into KPIs and alerting Sales of the expansion opportunities at the critical moments. A few examples of times that the CS team could alert Sales include when customers use all of the features of what they bought, when all of the customer’s users are active, and when customers have reached their license capacity limit. The way to to configure the Land & Expand strategy in partnership with Sales is to first work with Sales to define the criteria for success for the initial contract. Create a plan for maximizing adoption, and keep tabs on their sentiment with surveys to the customers every quarter. Share feedback with Sales, and involve them in the QBR/EBR meetings in which you make your case for value delivered. That way, it will be natural when CS participates in the Sales call during which expansion is discussed to answer any question that the customers may have. The best part of this arrangement is that any handoffs between teams are always to members with whom the customer is familiar.
Consequences of Zero Alignment
If CS and Sales do not align, there are few concerning trends that can occur. Sales will pass a closed deal to CS, but if they do not attend the first few meetings to make sure the relationship continues in the same vein, the customer will feel as if they’re speaking with strangers who may not understand everything they need. Furthermore, without proper alignment of the two teams, the pain points the customer wants to solve, the features they like about your offering, and the KPIs that indicate success could get lost in translation. If CS asks the same question Sales has already covered before, it will appear as if there’s no coordination in the hand-off, and that the Salesperson doesn’t value their business.
Starting off on the wrong foot like this will make customers question their decision to become your customer, as opposed to your competitor’s. Let’s say they stick this out to get through the onboarding phase, but face numerous instances of friction, that could have otherwise been avoided with a little diligence and investment of time from the Sales team. If so, they will have felt unhappy and unsure from the start, and at the first renewal date, may feel skittish and unwilling to sign a long deal. They definitely will not be a candidate for an upsell, and are far more likely to churn. This phenomenon can be magnified on a larger scale if all accounts are passed off in this manner, and set up the CS team for frustratingly high churn rates that could otherwise be avoided.
Tips for Great Relationships with Sales
Instead of having Sales only have the responsibility of closing the first deal, and Customer Success responsible for the rest of the account expansion, retention, and upsells, it’s better to share the accountability evenly. To keep Sales engaged in the retention process, CSMs should notify Sales when there’s a an opportunity to upsell within that account. That way, it’s in their best interest to keep up with the accounts they close. As such, onboarding and kick-offs are team events that maintain relationship continuity for the customer. Another way CS can nurture a positive partnership with Sales is to provide them help to close upsell and cross-sell with supporting data and analysis.
If CS can provide clarity into customer health and sentiment for the Sales team, they will feel grateful for the assistance and a bond will form between the two functions. Just like the goal is for CS to be a trusted advisor to the customer, they should also perform the same role for Sales, and help them remove obstacles. Keep an ongoing line of communication by attending and presenting in the weekly Sales meeting to report on progress in the already acquired accounts. Enable learning for both teams by share why some customers are successful, and establish best practices across the board. Build a referral ecosystem so people have resources to consult for every circumstance that can occur.
Benefits of Partnering with Sales
At the end of the day, if you are a revenue generator, and not a cost center, people are more apt to be open to your proposals. For this reason alone, it is much easier to get funding for Sales operations, than for Customer Success ones, because the benefit of CS practices can only be evaluated over time after the initial time and capital investment has been made. As a CS professional, you have to make your case for increased budgets each year by advocating your cause with the data points and reports that show how essential CS is to account retention and expansion.
By partnering with Sales, Customer Success initiatives get the added bonus of working with a team that most regard as the source of all profit. Even though in the long run Customer Success may come to bring in more revenue in retained accounts then all new accounts combined, there’s still time for CS to come into its own. A good first step is partnering in a joint initiative with the Sales team, to become the second half of the revenue generating duo.
Mark Pecoraro is a senior business executive and trusted advisor to leadership teams with a demonstrated ability in consistently delivering high customer satisfaction, client retention and operational excellence in a recurring revenue business model for both start-up and established businesses. He currently is VP of Customer Success for Conviva and is a recognized thought-leader in Customer Success. He has held a variety of executive roles in enterprise SaaS organizations including Appcelerator, SOASTA, WhiteHat Security and Accept Software. He also serves on the Board of Advisors for StrikeDeck and BlueNose Analytics, and is a member of the Standards committee for The Customer Success Association.