We really wanted to get perspective from Karen, a member of our Tech CEO and leaders community, who can shed light on the question of “why do tech startups fail to grow existing accounts?”
With so much at stake when winning often landmark and enterprise deals, we often falter as Founders and leaders within tech companies to systematically grow the adoption and usage, and account spend within these hard-fought new customers.
So over to the interview with Karen and the questions and answers:
- What are the main causes for startups failing to grow existing accounts in your experience?
(Karen) It comes down to failing to implement and getting sticky with the client post-sales. If the handover process from sales to customer success is clunky then it can lead to failure. If the salesperson hasn’t educated the customer during the sales process on how to be successful when they implement their product then it can also lead to failure. I’ve seen customers signed before when they don’t have the resources to implement their solution. Then when you add an implementation cycle to that resource gap and even sometimes when a champion leaves, you can be at high risk of churn.
(James) Why don’t they have the right resources at the point of sale?
(Karen) Either they haven’t really appreciated it as they’ve been sold the product and haven’t realised they need resources to implement. So when people go through the sales motion, they should be looking to educate the customer on what it takes to go live and be successful. I recommend that you show the customer an implementation guide or best practices for implementations based on the previous customers. However sometimes it’s the customer pushing the buying timescale themselves maybe down to personal motive, price or timescale. So they can go ahead on occasions without the resources themselves.
In essence I’d say you have to ensure you are selling for success, not just for revenue.
Two really key points from Karen here: firstly, we need to evaluate our sales handover process with real diligence and investigating whether we have educated the customer on the resources needed to be successful. Secondly, selling for success not just for revenue. This comes from a collective effort from both Sales and Customer Success.
- Why is there such a gap between Customer Success and Sales?
(Karen) I think it comes down to the compensation structure and sometimes team size. Also the handover process too. Previously, at larger companies, I’ve seen the Customer Success team responsible for contract renewals and all upsells. If you are looking at a volume-based growth then you maybe you don’t necessarily need a salesperson to be involved?. Although if you have a new product to market or selling to a new business unit, then you need to joint approach Sales and Customer Success. To be successful, you have to have clear standard operating procedures between the two parts of the organisation (CSM vs Sales) to de-conflict potential cross over and to affirm roles in terms of account management and the customer contact is managed by the customer success person and the commercial terms are managed by the salesperson (as an example)
I really like Karen’s take on this topic of ‘new’ business should be owned by the salesperson and this should be documented in your standard operating procedures to ensure there is no conflict between the teams.
- Who should own renewals, Sales or Customer Success?
(Karen) I think Customer Success needs to own the renewals. The Customer Success person is closest to the customer and has a greater influence on retention. Also, the salesperson will normally be a ‘hunter’ in a new startup and would often prefer not to do some of the admin that is related to renewals. That said obviously it depends a bit of the size and and stage of your company. Maybe you need a swissarmy knife all rounder to start with who can adapt to both.
(James) Does it depend on whether it’s a complex a product-led sale?
(Karen) As you grow your product set it can vary. For example, if it’s a growth in volume or monthly tracked users then a CSM can price that renewal. If it’s a renegotiation of the original contract, a new business unit or a new product to market. You don’t want to conflict the priorities of the CSM, whose role is to ensure that the most value is gained from what the customer has already bought.
The conflict of priorities is a key point here to take away, as do you want your Customer Success Manager to be distracted with outcomes that don’t increase customer adoption and usage? This should reflect in your compensation but as always your go-to-market strategy and pricing should point towards ownership of renewals.
- How do you bridge the gaps between Sales and Customer Success?
(Karen) If there is no ‘net new’ business within the account, then a CSM can run with it. If there is a large enterprise customer that you want to expand within then a Quarterly Business Review (QBR) is the ideal way to gather the team and centre the communication back onto the customer and how they are reaping value. I believe that there needs to be some executive presence on the QBR too. So this could include the original seller, the CSM and the senior executive or Account Director.
I’d certainly like to see the content of QBRs improved to include the value that the customer is getting from the platform, how they are using it, how it’s helping them achieve their business goals and what additional use cases that your platform could fulfil to help them achieve additional business value (ie with one eye on the future)
I think the involvement of a Sales Director in both the preparation, planning and attendance in these QBRs would certainly close the gap between the teams.
Karen’s enterprise sales experience here was insightful as QBRs should be more strategic in their nature and a collective team effort to not only empower and ensure the customer is hitting their objectives but also those new business opportunities and therefore additional use cases are revealed in such important meetings by the sales team.
- What is the link between Customer Success and Marketing?
(Karen) There is certainly a link between Customer Success and Marketing. For example, Marketing will need to have the input of CS to find out who are the key personas, who are the users and who benefit from our platform. Then this can be used in the marketing content.
There’s also a link between Customer Success and Marketing with the creation of customer testimonials, customer advisory board and then personas on key accounts. Marketing can then form different stories and talk tracks depending on their persona, so they can market in the right way.
- Why do startups spend more time on client acquisition than retention?
(Karen) I think this is largely down to funding. The more customers you acquire and the rate of customer acquisition normally reveals to a funder if you are gaining traction in a (new) market place. You need to prove your business model and the value proposition, so client acquisition is one of the quickest ways to prove product/market fit.
- What have been the best backgrounds for hiring Customer Success?
(Karen) It’s all about people skills for me. I’ve seen a variety of backgrounds work both from Sales and non-Sales (from IT business analysts to IT consultants). It’s as much about whether they have a passion for wanting people and organisations to be successful, will own a problem and be able to bridge between internal teams. A CSM is much more of a team player and wants to see success in their customer base; alternatively, a Salesperson is often focused on revenue and their quota. In my experience the best CSMs have all shown compassion and wanting to be seen to be helpful and to enable their customers, whilst maintaining commercial awareness and balance to enable the company to grow profitably. They sometimes take it personally when they don’t solve problems for their customers, and creatively manage tension and conflict.
(CS interview question) How do you deal with that terrible customer and how does it make you feel?
(Sales interview question) What is the most disappointing sale that you didn’t make?
I like Karen’s take on the attributes that are needed for a customer success individual – compassionate, problem-solver and a team player.
- Any final thoughts?
(Karen) It’s certainly made me think. I always enjoy conversations like these that make you evaluate your own thinking and previous experiences.
Over and out from the team at Sales for Startups. We’ll be interviewing other Tech CEOs and Sales leaders like Karen Gallantry, and even examining the problem from a recruitment perspective too. This will enable us to see why we are missing the mark when it comes to growing existing accounts at tech companies.
If you’d like to be interviewed please comment below or feel free to connect with me here on LinkedIn or submit a request on our website.