We interviewed Rohit Patni, the Chairman and Co-Founder of Lavanya Plus. Lavanya is helping to improve the care and wellness ecosystem through its digital care platform ensuring accessibility, coordination, payment and delivery of care, health and wellbeing services creates a future where trusted and quality health and social care is accessible to everyone – Connecting Care in Communities.
We really wanted to get perspective from Rohit, a member of our Tech CEO 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 Rohit and the questions and answers:
- What are the main causes for startups failing to grow existing accounts in your experience?
(Rohit) It comes down to people. There are two types of people in Sales. There are ‘hunters’ and there are ‘farmers’. The hunters are there to win new business whereas the farmers are there to manage existing accounts. The disparity between these two types of people and their behaviours comes down to compensation. The hunter or new business professional has a salary and an OTE, often double their salary, whereas the Account Managers often have a larger base but less earning potential from commission and more on bonuses.
Secondly, there is a difference in mindset, the hunter is hungry and normally outbound but the Account Manager or farmer is focused on building relationships rather than signing new accounts.
In terms of addressing this problem or gap, it comes back to your go-to-market strategy and what and how you sell. For example, if you are selling to larger businesses you are often needing to employ complex solution-selling individuals, where the customer will often want what is beyond the original product offering. If you are a product-led sale, you are normally addressing tactical problems within clients with features and functions. And furthermore, how you price your product will impact the function of your teams and the overlap between them.
Rohit mentions three great points here for addressing this gap by evaluating your compensation, mindset and go-to-market strategy.
- Why is there such a gap between Customer Success and Sales?
(Rohit) It comes down to lead time. What does the product adoption cycle look like? When do customers get value from your product? When you look back at your go-to-market strategy, you will understand the variances in what you selling and who you are selling to so that you understand if you are simply keeping and retaining the customer – to tackle attrition. Or how much are you upselling products and features during the customer lifecycle? This will help you understand who has ownership for certain activities between Sales and Customer Success.
(James) Can you do both?
(Rohit) Yes, I think it can. Often you see new business professionals wanting to sign a customer and get their commission and pass on the customer. An Account Manager is compensated differently and is more relationship-led. The sales approach can vary based on what you are selling.
Ask yourself, how are your customers buying your service? Is it subscription or SaaS-based for example? This then allows you to foresee what account management and sales efforts will be needed during the whole customer lifecycle
- How can you bridge the gap between Customer Success and Sales?
(Rohit) There’s an element of education for the Sales team. In a startup, you often won’t have a large back-office function seen at larger companies to support the account management function. Therefore, salespeople might have to bridge that gap in an early-stage company.
Often the Customer Success function is the second consideration after client acquisition.
Well, in the early stages, you are focused on client acquisition to gain funding. You want to prove that your product or service has value for your target market and hence your company is worth investing in. For an investor, this is a question of maths and ROI. I’ll put this amount of money and we forecast that the company will grow to this extent and go for a future round at this time and valuation and hence my return will be y.
- Who should be responsible for renewals, Sales or Customer Success?
(Rohit) It should be the job of Account Managers. Bottom line, it’s my job as an Account Manager, to lead client renewal and retention. As a CEO, I don’t want my top salesperson doing two days per week on account management, I would appoint one or two people to manage my existing accounts and reflect that in the compensation plans to drive the right behaviours.
Often for contract negotiations and renewals, it should be built into the original contract. For example, you can build in tiers or renewal arrangements into the original contracts. But it comes back to whether you are selling a product-led or solution sell?
Rohit mentioned a good point here, if your top new business salesperson is consistently selling to new customers, you want them out there selling to more. Otherwise, they perhaps could get distracted with ‘business-as-usual’ items that would dramatically reduce their selling time.
- What’s the link between Customer Success and Marketing?
(Rohit) It depends on your go-to-market strategy. How much do you need to keep awareness with the people you have sold to or the stakeholders? For example with some of our corporate clients, we do pop-ups, exhibitions, showcase events to keep top of mind in the eyes of the staff at that company.
There is a correlation between retention and marketing. You need to think about which marketing strategies are you going to use. Are you using social and digital marketing? Or are you using more traditional strategies like exhibitions or events? It certainly does vary if you are B2B or B2C. B2B is certainly more direct marketing and selling. It’s normally about maintaining awareness.
B2B will buy off track record and reference-ability first.
This is a key observation that Rohit mentions about buying off track record and reference-ability. What does this mean in practice?
This means that your marketing team needs to be focused on creating customer testimonials and case studies where references can be taken. Therefore in the eyes of a new buyer, there are speaking to someone just like them who wants to achieve similar goals and hence the buying decision is a lot easier for that new prospective client. This customer testimonial process is one of the most neglected areas of customer success and marketing in my opinion. You need to use your first customers to sell to other customers.
This is paramount with a tech startup where you may only have 5-10 initial customers to call upon to create case studies and testimonials.
- What type of attributes make a successful Account Manager?
(Rohit) My belief is if they are good at selling / account managing and have a proven track record then they can be adaptable to the business sector. In other words, they will learn the product/solution they sell.
As individuals, they need empathy and ability to listen. They need to be able to capture needs and assign the right solution and be bold enough to say ‘sorry can’t help you with this at the moment, but will let you know when I can’ – honesty plays a big role in building relationships.
Clearly a desire to have a financial (commission/bonus) upside needs to be there otherwise why apply for sales orientated roles.
They also need to be given a path to personal growth in the company – ‘executive’ to ‘manager’ to ‘head of’ etc. and at some point in time become team leaders. This will build personal motivation, ownership and drive.
- Any final thoughts?
(Rohit) Compensation is key. It has to be attributed properly to Sales and Customer Success. And then your go-to-market strategy is it a product or solution you are selling? This will then reflect on the selection of your sales model.
Over and out from the team at Sales for Startups. We’ll be interviewing other Tech CEOs and Customer Success leaders like Rohit, 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 on LinkedIn or submit a request on our website.