And also because Jenna was referred by Kate Forgione to shed light on the question of “why do tech startups fail to grow existing accounts?”
With so much at stake at winning often landmark and enterprise deals at tech companies, we often falter as Founders and Customer Success leaders to systematically and consistently grow the adoption, usage and account spend of these hard-fought new customers.
So over to the interview with Jenna and the key questions and answers:
- What are the main causes for startups failing to grow existing accounts in your experience?
(Jenna) No.1 is that a lot of startups are thinking about themselves and not about their customers. For example, when they are launching new pricing, features or changing their subscription model from monthly to annual; startups will display an inward focus most of the time and so their initial customers will experience these growing pains. There’s only so much tolerance that customers have to this type of pain.
I’ve seen this a lot with fast-moving startups where they expect large and traditional businesses to work in an agile way and at the same pace as them. This works when servicing a customer that is just like you, an agile startup, but has serious challenges when managing more traditional businesses who don’t experience the same frequency and magnitude of change. This inward focus is often the cause of annoyance when changing the pricing model, the customer feeling that you oversold and under-delivered and many other causes of dissatisfaction in the customer journey. Startups, in my experience, often expose the customer to a lot of internal pain as we build our tech companies.
You need to draw the value-line between their need and particular use case matches with your product.
(James) Why do you believe there is such an inward focus at startups?
(Jenna) Everyone is building a plane while they fly it. With a startup there isn’t always a play book if you are truly innovative. The scaling problem often comes up from those initial successes…ok something’s worked- hooray! Now how do we scale it? Not necessarily does the price, solution, product and approach for the first 10-20 customers actually match the market on a macro scale. It also begs the question, are our initial customers early adopters or are they really the representation of our best or most typical customer and target customer? If something worked, the pressure to reproduce and prove out growth is heavy, and often startups are following the path of least resistance as it’s resource-light and worth the experiment (if it works).
(James) How does the mindset and approach change within Customer Success to customers from the first few years to the next stage of their journey?
(Jenna) For businesses that have had customers for 1-2-3 years, this initial research period of early years doesn’t necessarily tell you what’s going to happen in years 3 to 6 and beyond. You need to think as these as totally different phases in customer maturity. It’s the same when scaling the business as a whole, for example. The first couple of years of a business is going to be different from the later years in terms of appropriate blend of resources, product focus, and mindset. This will develop and change, so if you try and scale exactly what you did in the past, it won’t work for the customer as they mature and their needs from you change too.
- Why is there such a gap between Customer Success and Sales?
(Jenna) Often it comes down to how they are motivated, and their beliefs accurate or inaccurate about the other role. In my experience, the people who are attracted to Customer Success are Project Managers and consultants, they are customer-focused and they want to fix problems for customers. They don’t often think that Sales has the same mentality.
I think that greater connection between these departments can be fostered by enablement and aligning compensation plans to customer outcomes. If you incentivise the salesperson on say consumption or adoption or other health scores after the sale, and whether the customer they sold ultimately became successful and an ideal and profitable customer for the business, they would really adjust their focus and activities. Despite what CSM’s think, it’s not because sales doesn’t care whether customers are successful, but traditionally that hasn’t been their charter- their incentives haven’t been customer outcomes focused. CSM’s who have a blended role for adoption and renewal/growth are a rare person who has to be responsible for both, and you see very different behavior in what and how that blended CSM sells when they know they A) have to deal with it after and B) have seen what happens when they over/under sell the wrong product. (A classic CSM vs Sales gripe)
(James) Why is there such a delta in talent between people who are both commercial and customer-focused?
(Jenna) I think there is an assumption in the market that you can only be commercially focused or customer focused, and they are inherently exclusive, and that being commercially focused and having a growth mindset is misaligned with value for customers and only focused on dollars for the business. I think the complete opposite. I don’t think there’s enough conversation around a growth mindset for CSM’s, and I do believe that commercial success with a customer is the sign your are building the right product, and the customer is articulating the value of your partnership through their financial commitment. A truly successful customer actually pays a company more as they realize value from the relationship. There is no greater customer proof point than that. If you take the metaphor that people vote with their dollars, they are voting for you product if they are willing to pay for it, and grow their engagement. However traditionally teams feel like you can only be one or the other. I say a truly good customer advocate is both.
- How can the gaps between Sales and Customer Success be bridged?
(Jenna) I’ve worked in several blended roles of customer success and account management. And my experience and technical capabilities with the product certainly helped me gain credibility with our customers and have the right conversations. But it also means I understand both sides of the coin- I have empathy and understanding of the sales workflow, motivations, and challenges, and I also understand the adoption and customer enablement side and challenges. That understanding and empathy helps tremendously. Facilitating more conversations across the quote “divide” I believe would help everyone row in the same direction. Discuss each of your roles, how you are compensated, how do you prioritise your work, what pitfalls and workflows work best for you. That fundamental understanding of how each other operate and where you will align and diverge I believe really helps multi-functional teams work more effectively and reduce friction. You can then come together as one team.
- What are some of the best practices to link Product and Customer Success?
(Jenna) Firstly, leaders have to understand that Customer Success can provide direct access and represent the voice of the customer. It’s maybe one of Customer Success’ highest potential values in a company. Whatever your process for logging feedback, getting customer testimonials, or understanding where you fell short, it’s an invaluable feedback loop that should inform product and steer the product development in a company. In my company currently, we have a great connection to Product- we log every piece of product feedback from our customers and often bring product right into direct conversations with customers to help inform their tests and betas. I encourage anyone else to foster that kind of connection of product to customers through CSM’s and Account Managers.
- What’s your opinion on Customer Success owning renewals?
(Jenna) In early days, I do think it’s the best option. You have to wear many hats at a startup, and this comes back to having that CSM who really can be a dual advocate customer and commercial focus. The right CSM with a commercial mindset and customer mindset will help you find the best product fit and also feedback when things like pricing or new developments/strategy are or aren’t resonating, and with granular detail. I do say however that you need someone in that role that does have commercial interest or experience, because in renewals you will be dropped in scenarios that require commercial skill and acumen and understanding of negotiation,and even procurement practices depending on the size of your clients, is critical. It’s something you can learn, but you have to have an interest in it to be successful.
- What’s the link for you between Customer Success and Marketing?
(Jenna) What I’ve seen happen most is that Marketing are starving for customer quotes and value stories. Often Customer Success individuals who can provide these get more resources to enable customers. I often don’t see a proactive relationship between these two teams.
I think there should be a more bi-directional relationship and cadence between these teams. The value stories, key use cases, customer behaviour and best practices should be coming from Customer Success, we are closest to the customer and can really have a big impact on driving forward the marketing engine.
I often think that there is a greater focus on demand and customer acquisition within the marketing team rather than existing customer growth. It would be really valuable for us to inform the marketing team on what markets we should be going after, what customers work best and hence inform the tactics, strategies and approaches they use to drive business value.
There is so much focus on acquiring new customers by Marketing. What about existing customers? I think there’s a lot that they don’t do for existing customers. How do we build loyalty, how do reward awesome behaviour? Furthermore, how much time is spent on account-based marketing?
In contrast, examine the number of touchpoints to get an initial sale and compare and review how many marketing touchpoints post-sale it would take to grow the account?
- What attributes do look for when hiring great Customer Success managers?
(Jenna) The number one attribute is curiosity followed closely by flexibility. It’s this agility that is so important within growing tech companies. You need people that are interested in wearing a few hats, building relationships with internal and external stakeholders and being able to pull yourself out of the weeds and think about something programmatically.
I look for someone that has proven they can manage multiple stakeholders, a large book of business, worked in different industries, and had oversight of extreme change within customers, the industry and maybe even in your company. Certainly within Series A there is no typical day. I think that sometimes there is a change of talent when you move from year 3 to year 4 or 5. Some of the earlier employees are averse to change and don’t like documenting processes to scale the company.
From our experience, we find it is very difficult to examine your behaviour and practices without documenting them. You need qualitative and quantitative data to make quality decisions. Often we need to educate others on why we need to employ more data-driven practices and how that will help the scale the company. Often this communication step is skipped.
- Any final thoughts, Jenna?
I’ve really enjoyed our time together, it’s been an amazing therapeutic talk!
In summary, I’d certainly encourage breaking out the function of Customer Success into account management and customer support and onboarding if it’s right for the maturity of your business, but would encourage leadership to really focus on building a framework and incentives to work together.
Over and out from the team at Sales for Startups. We’ll be interviewing other successful CS leaders, Tech Founders and even recruitment leaders 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.