As you hang up the phone, your heart races. You give yourself a fist pump, take the headset off and stand. You closed the sale! Your work is done, right? Not so fast.
Despite the traditional shape of the funnel in a typical sales process, your company’s responsibilities to prospects turned customers does not end the moment they sign on the dotted line. After someone has become a customer, it is absolutely in your company’s best interest to ensure this person remains a customer. Once a customer leaves, 80 percent of them are gone for good. Beyond that, 39 percent of these people will stay away for two full years before even considering your brand again.
If you are part of the customer success department at your company, there’s one question that needs to be buzzing around your head constantly. Why do people churn? For most people, the reason they depart your customer base is because of a negative customer experience. Great, we can avoid unpleasant customer experiences, but is that enough? Beyond avoiding negative interactions with your customers, you also need to consider how successful a customer is as a result of your product or service. Are you delivering what you said you’d deliver?
It Starts With Sales
Have you ever bought something at the store, and when you took it out of the package, it wasn’t at all what you thought it’d be? Did you return the product, or did a lousy return policy provide you a costly lesson? Sometimes, customers (and more importantly, their needs) are just a bad fit for the product or service your company provides. However, should a salesperson still try to sell to these people? While they might get the “closed-won” in the short term, having customers with differing expectations can have a ripple effect beyond them just cancelling their account. After a negative experience, 85 percent of people will warn other people from doing business with the company. So, how can sales help avoid this?
- Don’t over-promise: Quite simply, if your product or service does not quite do what the prospect is looking for, do not promise them that it does. It won’t take very long for a customer to figure this out and become incredibly dissatisfied with the product or service you’re offering. This should be the purpose of discovery phone calls. If you know that the product isn’t a good fit, do the prospect (and your company) a favor: Don’t try to fit a square peg into a round hole.
- Don’t under-deliver: While this is similar to the “over-promising” that many sales teams thrive off of, do not bite off more than you can chew. Is your product good for companies that are between 10-50 employees? What do you do if you get to have a meeting with a big fish – say, someone with 5,000 employees? Unless your company can reorganize and allocate around this big-time client, chances are you will not be able to scale up to handle such a large account. While a big-time client can be great (read: can deliver great revenue stream), if your company lacks the bandwidth to support them, you’re just creating a bigger problem for when your company unsuccessfully delivers.
- Don’t over-deliver: This one seems counterintuitive. Shouldn’t we be showing our customers that we can solve their business case and then so much more? Keep in mind that every business case is different. Some are very simple and will not use all the bells and whistles that your company offers. Providing too many unnecessary features for clients limits opportunities to leverage upselling initiatives in the future. Beyond that, having too much can actually lead to customers feeling like they are paying for a bunch of features they don’t need.
Perhaps the most important part of validating your customer’s success is to honestly define what success actually means. The problem with this is, as you know, success can and will change on a customer-by-customer basis. How do we know our customers are being successful?
- Desired Outcome: In any customer success environment, we have the notion of Desired Outcome, or DO. That is, what is it that the client wants from your company, and how do we know that we’ve delivered it? To reach back into the previous section, this process starts with sales during the discovery phone call or meeting. How does our product solve the user’s problem?
- RO vs AX: To add to the customer success alphabet soup, DO is comprised of two parts: Required Outcome (RO) and Appropriate Experience (AX). RO is what your product or service needs to functionally deliver in order for a customer to be successful. AX is how the customer gets there – as in, the interactions with your company that got them to their RO. If your customer is all set up with your product or service, but they had to go through hell and high water to get there, you would not consider this a desirable outcome.
- Happiness Does Not Equal Success: You might have heard management discussing the importance of happy customers. While keeping customers happy is important, it’s important to realize that the overall happiness a customer has does not equate to them successfully using your product or service. If you confuse these two ideas, you might spend excessive time, money and energy making unhappy customers happy, rather than unsuccessful customers successful. You might find, when you look at a customer’s DO, that your most “unhappy” customers are actually your most successful customers, and that the ones you thought were happiest have churned.
The Power of the Follow-up Call
Long gone are the days of “set it and forget it” customer acquisition. Your current customers are not only a trove of insights and improvements, but also a great opportunity for revenue growth – meaning, you are consistently following up with them and evaluating their experience with your company.
- Upsell: If you are keeping track of what needs your current customers have, you should be able to offer upgrades or additional services to your current clients. However, be wary. You should only be actively upselling your current customers if it helps achieve a desired goal of the customer. Upselling can spectacularly backfire if you’re giving the customer products or services that they don’t need. However, if done right, upsell, resell and cross-sell revenue can become one of your most important channels.
- Testimonials and Case Studies: Happy and satisfied customers provide a unique opportunity to tell their story to the marketing department in the form of testimonials and case studies. Not only will this allow them to more fully communicate their successes and opportunities, their positive feedback serves as great marketing collateral to help similar prospects move through the funnel to closed-won.
Customer Success Culture
Plenty of companies claim to have cultures dedicated to customer success. What does that really mean though? It turns out, there’s much more to cultivating a culture of customer success than just saying “we love our customers!” Developing a culture of customer success involves structural and procedural changes as well.
- Building Company-wide Buy-in: Having a customer-centric company should extend beyond the customer success department. Structurally and procedurally, departments should each make changes to better improve the customer experience and to get each customer to a desirable experience. Some examples of this might include:
- Marketing: Timely communications to current customers about bug fixes and product updates.
- Sales: Respond to prospect inquiries and questions in within a few hours.
- Customer Service: Beyond just responding to customer needs, institute a ticketing system that notifies the customers your progress on solving their issues.
- Learning the Product: Beyond just believing, as a company, that the customer’s success and happiness must be a central tenant, employees would do well to learn the product inside and out. This goes beyond the customer support representatives, too. Marketing teams should know a product well to advertise it accurately, so a prospect can see if your company is a good match. Salespeople should know the product details to sell accurately (and to screen if the product is a good match for the prospect). The more informed a company is about what they do and how they do it, the more informed the customer can be.
- Quantifying Customer Success: How do you “quantify” customer success? Much of this comes down to how you are keeping, sharing and storing customer data. In your follow-up calls, document which customers reached a Desired Outcome status. Beyond that, ask about ROI. Did they buy your product/service and see an ROI? Was buying your service a good use of time? As you collect this data, you can start seeing which kinds of leads landing in the funnel are more likely to have success, allowing your company greater insight into your best prospects.
Build an Hourglass Funnel
Does your company have an hourglass funnel? If you aren’t sure, check out my previous blog that highlights how your sales and marketing efforts don’t stop at the bottom of the revenue funnel.