Every company has to discover the meeting point between customer and product, what customers need, what they expect, and what sales and market strategy drive the best results. Even if you think you've figured it out for one product or target audience, the process could be very different for a different audience or market.
“If [customers] don’t trust you… they’re not buying from you because they want to buy. They’re buying because they have to… The person might buy what you sold them, but they don’t go away feeling good about it,” said Keith Dugdale, founder of I Owe U International and The Business of Trust, at the Strategic Account Management Association Annual Conference a few years ago.
You haven’t been able to put your finger on it, but you know something is off.You feel like your team isn’t making the most of its time and isn’t collaborating well enough. You also see that they consistently fail to reach their sales goals. They tell you that your expectations are too high, and after a while, you start doubting yourself, but you can’t help but wonder if improved account management efficiency could make a difference. At the very least, could it get them closer to the goals you set? We ran the numbers so you won’t have to.
Upsell talk in the business community is too often company-centric. After all, we all have bottom lines to increase, and the survival of our jobs and companies depend on how well we do it.
As a result, this company-centric approach means upsells can end up with a pretty bad rep. Everyone thinks the only ones benefiting from upsells are cold-hearted corporations out to milk their customers for everything they’ve got.
But while we’ve all seen companies like this, it’s important to remember that an upsell isn’t all that different from basic product sales. Like basic products, for an upsell to work, it’s got to solve a problem. It’s got to serve a customer need.
It’s got to make your customer happy.
So let’s take today to focus on what upsells can do not for our companies, but for our customers. As every smart executive knows, when we focus on how to make our customers happy, our bottom lines grow.
You’re out in the trenches, and you see how much easier your work becomes when your existing customers help you fill your new quotas with new purchases. It takes so much less work and effort, and you often manage to sell more expensive products than you do to new-to-you customers.
Existing customers are willing to pay you more because they love the experience of working with you and your product, they’ve already seen results, and they trust you to put their best interests first.
Your work experience, then, becomes more enjoyable too, which leads you to perform better on all metrics.
As successful entrepreneur Neil Patel writes, “upselling accomplishes three very good things: 1) deepens relationships, 2) raises the value that the customer receives, 3) increases the customer’s customer lifetime value (CLV). Upselling is a win-win. Customers get better stuff. You get more cash. And here’s the kicker: The customer is going to stay around longer.”
But go convince the c-suite that the vast majority of your time is better spent on building long-term relationships than on acquiring new customers.
To help you out, we’ve collected 39 upsell statistics and B2B case studies that you can take to higher management. Remember that different studies find different numbers, but the trends throughout the wealth of data we’ve found are pretty consistent.
Cost and Ease of Acquisition Statistics: New vs Existing Customers
1) It’s 68% more expensive to acquire $1 from a new customer than it is to upsell current customers (forEntrepreneurs) - Tweet this
2) It’s 4x more expensive to acquire a new dollar via upsell vs. through a new customer (forEntrepreneurs) - Tweet this
3) For SaaS companies, the median cost of acquisition of $1 from a new customer is $1.18. That means they’re losing money, at least for a while (more on that later). On the other hand, the median cost of acquisition of $1 from an upsell is $0.28 (forEntrepreneurs) - Tweet this
4) It’s 140% more expensive to acquire new customers than to renew current ones’ purchases. Every additional dollar you earn only costs you $0.13 (forEntrepreneurs).- Tweet this
5) It’s 9x more expensive to acquire new customers than to retain current ones (forEntrepreneurs).- Tweet this
6) 70-95% of revenue comes from upsells and renewals. Only 5-30% come from the initial sale (forEntrepreneurs).- Tweet this
Source: Totango via forEntrepreneurs
7) It’s 50% easier to sell to existing customers than to prospective customers (Clarity).- Tweet this
8) The probability of selling to an existing customer is 300-1,400% higher than selling to a prospective customer (Groove).- Tweet this
9) The probability of selling to a prospective is 5-20%, yet to an existing customer – 60-70% (Groove).- Tweet this
10) It’s 5-25% more expensive to acquire a new customer than it is to retain an existing customer (Harvard Business Review).- Tweet this
How Long it Takes to Earn Back Your Customer Acquisition Investment: New Customers vs. Upsell Statistics
11) Returning the investment in new customer acquisition takes over 1 year. Returning the investment in an upsell takes around 1 quarter. That’s almost a year less (InsightSquared).- Tweet this
12) If you only generate revenue from new ACV, expect to wait 2 years to return your investment. That, as opposed to only waiting 6 months to return your upsell acquisition costs (InsightSquared).- Tweet this
Source: Pacific Crest via InsightSquared
New Customers vs. Upsell Statistics: Which One is Up to 95% More Profitable?
13) Increasing customer retention by 5% increases profits by 25-95% (Harvard Business School).- Tweet this
14) A 5% increase in customer retention can increase a company’s profitability by 75% (Clarity).- Tweet this
15) 80% of your company’s revenue will come from 20% of your customers (Clarity).- Tweet this
16) Only 10% of B2B companies’ revenue comes from initial sales. 90% of the revenue comes from following sales (Marketo).- Tweet this
17) The average spend of a repeat customer is 67x higher than a new one (Chargebee).- Tweet this
18) The likelihood of a customer to make a second purchase is almost 30%. After they make that second purchase, the chance of a third purchase skyrockets to 50% (Shopify).- Tweet this
Source: RJMetrics via Shopify
Source: RJMetrics via Shopify
Upsell vs. Cross-Sell Statistics: Which One is 2,000% More Profitable?
20) Upsells generate 2,000% more sales than cross-sales (Convince & Convert).- Tweet this
21) Displaying slightly higher priced options than those in your visitors’ immediate view drives an average of 4.25% of the sales, 20x more than the standard cross-sales via recommended products (ConversionXL).- Tweet this
Successful vs. Less Successful Companies: How Do Upsell Stats Compare?
22) The median SaaS company generates 16% of its revenue through upsells. This doubles to 32% for the second largest group ($40-75 million in annual revenue), with a slight decline for the largest SaaS companies out there (over $75 million in annual revenue) (RJMetrics).- Tweet this
23) The most successful SaaS companies ($40 million and more in annual revenue) generate 28-32% of their revenue through upsells, vs. only 11% in the smallest SaaS companies (less than $1.25 million in annual revenue) (RJMetrics).- Tweet this
24) The median SaaS company generates 16% of its revenue through upsells. The fastest growing companies generate more revenue through upsells than the median stat – 17-37% (forEntrepreneurs).- Tweet this
25) Top 50% SaaS growers generate 4-13% more of their income through upsells than the bottom 50% growers (forEntrepreneurs).- Tweet this
Source: Totango via SlideShare
27) Companies that generate $15M+ in annual revenue – and focus on upselling – grow more than twice as fast than those that don’t (Tomasz Tunguz).- Tweet this
Upsell Statistics in Action: B2B Case Studies that Show You How to Increase Your Revenue
28) Jeff Walker’s upsell formula: from a $5.99 book to a $197 product in 60 seconds, and onward to a $2,000 product within 10 days (VideoFruit).- Tweet this
29) Almost 50% of Hearsay Social’s revenue is generated through upsells (B2B News Network).- Tweet this
30) Salesforce generates 80% of its big deal revenue from top 10% of customers who buy 7 figure deals (Salesforce).- Tweet this
31) VideoFruit used upsells to generate over $30,000 in sales during a product launch (VideoFruit).- Tweet this
32) Boiler Supplies used upsells to create deeper and more valuable customer relationships (Innovative Marketing Resources).- Tweet this
33) AppDynamics is working toward generating 60-70% of its revenue through upsells, and is already enjoying more revenue, more referrals and more customer advocacy (Capterra).- Tweet this
34) VMware’s personalized upsell campaign generated 25% more prospects in the sales pipeline, as well as 45% more leads and conversions than a similar, yet non-personalized, campaign they did the previous year (Capterra).- Tweet this
35) A B2B company used predictive analytics and automation to increase 24% upsell wins (TSIA).- Tweet this
Despite the Statistics, Most Companies Aren’t Focused on Upsells. Stand Out of the Crowd Before They Do.
36) Over 83% of companies still don’t generate most of their revenue through upsells (Totango).- Tweet this
37) 39% only generate 1-20% of their revenue through upsells (Totango).- Tweet this
38) 13% of companies have seen the percentage of upsells remain the same or decline as a revenue source (Totango).- Tweet this
Source: Totango via SlideShare
39) The #1 challenge for 40% of customer success teams is gaining visibility into customer health and user behavior metrics, but less than 20% intend to make fixing it a top priority in 2017 (OpenView).- Tweet this
Don’t be one of these companies. Stand out and take advantage of this secret ingredient of top selling companies before your competitors find out about it. What’s the #1 thing you can do this week to take a step in the upsell direction?
We're happy to introduce the Team Dashboard. Our customers have been requesting this feature and we're excited to launch it. The team dashboard will provide insight to the most active performers and identify those that may need additional support. Here's how it works.
Now you can filter your members in one place
The new team dashboard can be filtered by the following metrics: number of accounts, time spent, activities, and the number of active or completed tasks.
See how your team is engaged in their accounts
The activities chart provides an in-depth look at how the account manager is interacting with the client. These touch points are tracked through Emails, Meetings, and a variety of Support Tickets. This ensures our customers have a quick and transparent metric for identify the level of engagement. Does this account manager favor emails? Has an increase in conversation increased the health of the account? Keeping a good track record will result in long-term success.
Team Dashboard tracks time spent on your largest accounts
One of the aspects of this chart is to quickly drill down to a particular account manager through emails and meetings. You can easily see which account has the most and least number of active engagements. How much time are your account managers spending with each account? Are they spending it on the key accounts?In general, we hope you find this new feature useful in your workflow. Ultimately our goal is to help you stay in the limelight and continue to add value in the eyes of your customers. If you're interested in this feature and not already a ContextSmith customer, why not schedule a demo and see how our software can change the way you manage your team.
[et_pb_section admin_label="section"][et_pb_row admin_label="row"][et_pb_column type="4_4"][et_pb_text admin_label="Text"]You’re convinced key account management and customer success is critical to your company growth, and you’re working hard to get company buy-in, but you’re not entirely sure what’s the next best step. There are plenty of articles on Sales team maturity, and customer success, being a new industry, hasn't been the focal point. In this article, we will discuss strategies to implement with your customer success and account management teams, so you can optimize results for both your customers and your company, and make the c-suite happy.To understand the best steps to take next, let’s analyze OpenView’s chart of customer success organization maturity. We’ll help you pinpoint where your team is right now, and share free resources that will help you move to the next stage.
Maturity Level – Stage 1: Ad Hoc Customer Success Management
This is when you realize the importance of customer success.
What Stage 1 Looks Like
With 60% of companies adopting customer success only in the last couple of years, stage 1 is where most companies are at. At this stage, there’s no one person solely in charge of customer success, even if you have customer service reps that answer customer inquiries, or a marketing manager that handles social media. Usually, everyone on the team is doing a bit of everything to help customers, and they’re mostly focused on putting out fires.Every business model is different, so there isn't one processes to help customers succeed. In addition, you don’t know which tools to use and what helps with your business workflow. You’re just trying to avoid making too many mistakes, so you can survive another year.
How to Move to Stage 2
It’s time to analyze what’s working and what’s not, and start implementing processes to do more of what already works. Start defining which types of people you need to make that happen. Set goals and work backward to figure out how to get there.Resource to help you get there: In this webinar, Emilia D’Anzica, VP of customer engagement at Walk Me, answers 10 questions about building a customer success program from scratch:
Source: MindTouch via YouTube
Maturity Level – Stage 2: Awareness of Customer Success Needs
This is when you start to figure out what would help customer success and company growth, and you’re on a mission to turn insights into reality.
What Stage 2 Looks Like
You’ve figured out your priorities, and equipped your customer facing teams with people who have the necessary skills to help you reach your goals. Now that you know what’s working and what’s not, you’ve started to set processes, so you can do more of what works to help customers succeed, stay longer and recommend to their friends.
Source: Gainsight via SlideShare
In addition, you’re starting to recognize which tools are a good fit per department, but still haven’t find the best way to create organization-wide collaboration. Your growth probably still feels new and fragile, but you’re working hard to step up your game.
How to Move to Stage 3:
Start analyzing customer journeys to identify different lifecycle stages, what works in which one, and where you lose customers along the way. Figure out metrics for each lifecycle stage, and start exploring automation tools that will make your team’s work more scalable.Resource to help you get there: Watch this presentation from the Cleverbridge Networking Event. There, Martin Trzaskalik, Celeverbridge’s CTO, and David Walsh, a marketing director who has worked for Intuit, PayPal and eBay, explained how to successfully manage your customer lifecycle.
Source: Cleverbridge via YouTube
Maturity Level – Stage 3: Repeatable Customer Success Processes
This is when you feel like you’ve made it – you know what it takes to drive success.
What Stage 3 Looks Like
You’ve figured out what your customer lifecycle looks like, and you’ve got customer success managers in charge of optimizing it. With the help of relevant tools, different departments are just starting to collaborate in order to automate customer experience processes, so they can be reliably repeated with less effort.
How to Move to Stage 4:
It’s time to get to know your customers on a deeper level. Figure out which outcomes customers are already getting, and what’s stopping them from succeeding.Remember that “68% of customers leave because they perceive that you are indifferent to them,” yet “a 5% reduction in customer defection rate yields a 25-125% increase in profitability,” according to Referral SaaSquash. Numbers change a bit from research to research, but the principal remains the same:
Source: Referral SaaSquash
Therefore, make sure your customer facing teams are showing your customers some love. Once you get a deeper understanding of your customer journey, work backwards again to figure out how you’ll help optimize results. As you do that, keep putting an emphasis on organization-wide collaboration and process automation.Resource to help you get there: Dreaming of the big leagues?Big league companies know how to predict success because they measure everything. Here’s a discussion panel about customer success numbers from Totango’s 2015 Customer Success Summit.These customer success executives share how they measure customer success, customer health, product engagement, customer retention cost and more.
Source: Totango via YouTube
Maturity Level – Stage 4: Predictable Customer Success Processes
This is when you don’t only know how to generate success, but you know how to predict metrics, which enables you to invest more in growth.
What Stage 4 Looks Like
Your focus is on driving predictability on two metric – driving success for your customers and increasing your bottom line. You don’t only have a dedicated team of customer success managers, but a true organization-wide collaboration in real time, which gives you way more data on each customer, each lifecycle stage, risks and successes, and a much better bottom line. After testing and refining, you have finally created a predictable customer experience, and you’ve got the organization buy-in to make it work, because you also manage to accurately predict financial results.
How to Move to Stage 5
To scale it up, you need to understand the ways customer outcomes impact your bottom line. Now that you have predictable processes and results, focus on both acquiring new customers and encouraging current ones to become your brand advocates.Documenting your success and sharing it with the world can make a big impact on your bottom line. According to Content Marketing Institute and MarketingProfs’ 2016 B2B research, case studies are the most effective marketing strategy after in-person events and webinars.
Source: Content Marketing Institute
Their impact is widespread. In fact, when conducted interviews with 21 marketers from 5 countries (including a former White House executive and one of BBC’s Top 100 Women of 2014), I found that case studies increase sales and customer lifetime value, help organizations make the world a better place, position companies as authorities in their fields, build trust, humanize companies, prove the value of your work to employees, and improve customer success.Resource to help you get there: Gainsight’s 2014 conference put top executives from Box, Marketo and Salesforce on one stage to discuss how to scale customer success organizations. You can watch their panel here:
Maturity Level – Stage 5: Customer Success is Activated for Massive Growth
This is when your customer success organization is finally ready to scale big.
What Stage 5 Looks Like
For the first time since you started prioritizing customer success with your customer facing teams and beyond, you know exactly how customer outcomes impact business outcomes, and you know what it takes to get there. You’re stepping up customer acquisition, because you have the people, tools and collaborative processes to take on additional customers. Yet this might be when you hire new employees so you can scale faster.Alongside new customer and talent acquisition, you’re also aware that your current customers are probably the most important resource you have for future work. As we reported in the past, Jason M. Lemkin, former VP of Web Business Services at Adobe Systems, stretched that at the 2015 Gainsight Pulse conference, saying all big companies (including Google, Facebook and Adobe) “get 80% of their customers from their old customers.”That’s why, at stage 5, you’re setting up a customer advocacy program, documenting case studies and encouraging referrals. Resource to help you do that:Now that your customer success organization has matured, the sky’s the limit. It’s time to think bigger than ever. Check out this case study about how Eloqua scaled its customer success results from $0 to $1 billion.
Source: Amity via YouTube
One day, your company can get there too.What stage are you in now? What can you do in the next month to set the stage to stepping it up?[/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section]
It took you a lot of work, but you managed to secure company buy-in to invest more in your current customers. You’ve shown the c-suite the numbers, and everyone on your team is excited to secure up to 1,300% higher revenue.You work hard on your relationships with your existing customers, you make sure their experience with your company sets competitors way behind, but now it’s time to do good on your word and deliver that great revenue.How do you identify upsell opportunities?
Step 1: Set Upsell Goals
As in anything in business, before you send your team to identify upsell opportunities, figure out your goals.Some companies set monetary goals (as in, we want to grow our revenue by this or that amount this year). Some companies decide on products they want to get into the market more, or new products they want to launch. Other companies choose what type of customers they want to focus on – vertical, company size, geography, or any other metric that matters to you.Either way, make sure you’re not part of these scary stats the Harvard Business Review reported, where almost 50% of senior executives don’t know what their companies priorities’ are, and other team members know even less. To make sure you reach your upsell goals, get everyone in the company working together.Here’s how Rick Haviland, CEO of MarketSource, a company that has generated over $6 billion in sales, sets strategic corporate goals to ensure a holistic cross-organizational growth in the same direction:
Source: SBI TV via YouTube
Step 2: Analyze Revenue Sources and Account Potential
While goals are critical to staying focused, you want to make sure that your upsell strategy is based in reality. You might want to sell the premium subscription version of your marketing automation software, but your target audience might prefer getting more of your “do it for us” service. Or maybe the market segment you’re targeting is already max out on number of seats or services.That’s why it’s recommended to look at what’s brought you most revenue in the years, and how many times your customers have renewed. According to Harvest CFO Consulting, “analyzing sources of revenue can yield a wealth of information, which results in more targeted and more efficient deployment of resources, capital and decision making and, therefore, increased returns on investments in sales and marketing.”Analyze your client pie to find out which is your fastest growing customer segment, and if possible, segment it further to find out which products are making the biggest impact on which market. You’ll see that different upsells could work for different segments. For example, if you know that your account has 100 seats but you have only sold 50, you know there is a chance to double your sales through expansion. Perhaps the 100 seats is growing 20% year-over-year, then you can actually triple the sales over a two-year period.
Step 3: Analyze Customer Data Across Departments
Analyze customer data you already have across departments. See what complaints customer service gets, what tech challenges IT has been asked to improve, what great results customers told your customer success managers about.Use online data, too. Review discussions about your company and products on social media, review interactions with your social media platforms, blog comments, article shares, page views, email open rates, webinar attendance, questions your audience sends your way, etc.Here’s a webinar about online methods to find out what your customers really think:
Source: Mike Gingerich via YouTube
Doing this work will help you discover what customers still need from your company. If you segment your audience and can identify paying customers’ interactions with you, it will make it easier for you to identify upsell opportunities.Something else that could help you is discovering anything you can about client companies – especially any changes going on there, like hiring, firing, getting funding or otherwise expanding, changes in focus, etc. If they’re expanding their marketing team, for example, it might mean their marketing organization is maturing, and they might soon be ready for your premium marketing automation software solution.To find out what’s going on with clients, set Google alerts, so you can know when your top accounts are mentioned across websites, follow companies on LinkedIn, and make sure your customer success managers keep in touch with their top contacts at the client companies.
Step 4: Talk to Your Customers (But Don’t Upsell Yet)
According to Derek Halpern, CEO and founder of Social Triggers, a multi-million dollar company, your effort to communicate with existing customers needs to start right after they buy something from you.Specifically, he believes this communication needs to start with the question “Why did you invest? What’s the one thing you can’t wait to take advantage of?”Halpern explains in the following video that, even though we sometimes think we know every possible reason customers buy from us, “there’s always some weird reason why somebody chose to buy something from you, and when you uncover those weird reasons, it can be worth millions of dollars to your bottom line.”As you can see in the video, Halpern explains how you can leverage this new knowledge to gain new customers.
Source: Derek Halpern via YouTube
… but that’s not the only reason.It’s crucial for your team to understand what every customer is looking to get from the product, because it will impact the customer success metrics you’ll set for them, as we’ll discuss in a bit. When you get to know your customers and know what matters to them, it’ll be easier for you to track their progress and identify upsell opportunities that can actually convert into more sales. That’s much more effective than approaching them with a generic proposal that doesn’t align with their own goals. To make your upsell proposal even more accurate, stay in touch with clients and ask them every so often how’s the product working for them and if there’s anything missing, or anything they’d like help with.According to the Huffington Post, “only 1 out of 26 unhappy customers complain” and “91% of unhappy customers who are non-complainers simply leave.” If that happens, you’ll lose any opportunity for upsells.Don’t let that happen to you.Proactively reach out to your customers. When they respond, it might turn into an immediate upsell opportunity if you have an additional product that can close a gap for them. But be prepared for it being “only” an opportunity to improve their experience and results with the current product. Customers value companies that improve their experiences, so making the effort now could open upsell opportunities down the road. Remember, this is a long term game.Now, what if you have tens of thousands of customers?You can still talk in person with your key accounts, but if you want to identify upsell opportunities, strive to find ways to communicate with the rest of your customers as well. Pat Flynn, founder of the $1+ million a year Flynndustries (best known for his Smart Passive Income brand), ran a survey that got 5,000 responses. Through the survey, he discovered, for example, that 80% of his audience of entrepreneurs and wantopreneurs earn less than $500/month. That clearly impacts what products he can sell and upsell to most of his audience. But he also discovered which segment of his audience was open to which type of communication, and which types of products – including who would be willing to pay $1,000 for 1 day of in-person mentorship.
Step 5: Define Customer Success Metrics and Benchmarks
Once you know what matters to customers and what they want to achieve with your product or service, make sure they know what success looks like. Then, break overall customer success goals into milestones, to help you see where you can help along the way.Some milestones will mean they’re ready for an upsell. You can approach them and say that this is when most of your customers choose to add this or do that.Other times, if you see customers aren’t reaching their success milestones in a reasonable time, you could check in with them and see how you can help, to ensure their success, so they can reach upsell-worthy milestones. Alternatively, if you have an additional product that can help right away, it might be a proper upsell opportunity.Either way, Greg Johnsen, CMO of GT Nexus, which processes $100 billion a year, told Cornell University that he recommends that companies encourage customers to be the ones that define their success metrics, so they can own them, be proactive about them, and increase chances of reaching them:
Step 6: Ask for the Upsell
Chris Sanderson was once a realtor that needed to show a house to a couple. He wasn’t excited about the house, and couldn’t imagine who would possibly want to buy it. He assumed the couple felt the same way.But then he asked for the sale anyway – and this is what happened:
Source: Chris Sanderson via YouTube
You already have the “no” if you don’t ask. Sometimes, the best way to identify an upsell opportunity is to ask the client for the sale.
Bonus Step: Get Your Team Ready for Growth
Upselling is not just about growing revenue. It often means a greater volume of work for your company, or a higher level of service to premium customers.When you decide to step up your upselling game, analyze your organization, employee availability and skill, and cross-departmental collaboration, to ensure you can serve upcoming customer needs, keep providing stellar customer experiences, and preparing the foundation for your next stage of growth.How do you identify upsell opportunities? Share it with us in the comments.
What if you could increase purchase probability by 200-1,300%, and know that each purchase is likely to generate 33% more than your average sale, and increase lifetime value of your customers?According to CMO.com, if you go against common advice and focus on selling more to customers who’ve already bought from you, it’s very possible.CMO.com reports that “the probability of converting a new prospect… is only 5-20%.” On the other hand, “the probability of converting an existing customer is 60-70%,” plus “repeat customers spend 33% more compared to new customers.”However, most executives know that they’re measured by the results they bring, and, as CMO.com points out, acquiring new customers is the fastest way to see results, even if they’re not the most profitable ones. Developing long term relationships with current customers takes a lot more time.Therefore, according to Econsultancy, only 16% of companies are more focused on retention and increasing customer lifetime value than on new customer acquisition.
How can you do things differently?
6 Ways to Keep Customers Around, Buying More
Since so many companies are not optimizing, it’s easy to stand out of the crowd. Here are our top 6 recommendations to do just that, and relish in a better bottom line.
Prioritize Customer Emotions (Especially in B2B)
Common advice, it turns out, can only take you so far. A 2014 research discovered that while “most [B2C brands] have emotional connections with 10-40% of consumers… B2B brands elicit an emotional connection with more than 50% of their buyers,” reports Kapost.Why?Because there’s often a lot more at stake for B2B buyers than for B2C buyers.Imagine a B2B executive who leads his company to make a million dollar investment, and that investment turns out to be a corporate burden instead of paying itself off and delivering profits. That executive could be fired, with his reputation damaged across the industry, unable to land an equal job or advance his career without proper recommendations. That’s why, according to Kapost, “71% of [B2B] buyers who see a personal value will purchase a product,” and “68% of [B2B] buyers who see a personal value will pay a higher price for a service.”
Companies that want to shorten time to value have to remember this in customer interactions and retention campaigns that helps the buyer justify the purchase (and make him/her look good in front of the executive team).
Ask Customers About the Value They Got (and What’s Missing)
If you’re a manager or an executive, chances are you could climb the Everest faster than you can finish your to-do list. At the least the Everest doesn’t grow every day. And when you’re that busy, it’s easy to get distracted and neglect to notice how far you’ve come.Many of your customers experience the exact same thing. They’re integrating your solutions, but they’re swamped with responsibilities. Life becomes easier with time, or the company becomes more profitable, and it’s all thanks to your solution, but the growth is gradual, and sometimes it’s easy to miss. If they miss it, they won’t buy more and they won’t recommend you to their friends.It’s your responsibility to make sure someone in your company asks customers how they’re doing and what tangible results they’ve seen. As we stated above, be sure to ask how you’ve improved specific executives’ lives as well, not just the company as a whole. Have them affirm to themselves how much you make a difference in their lives. If you implement customers’ suggestions and improve things, let them know. It’ll show them you listen to them and appreciate them. As you’ll discover below, that sometimes matters even more than the quality of your product.
Develop Solutions to Help Customers Get Better Results: Upselling and Cross Selling
Some customers need more help than others to make your product work for them.A very common upselling strategy in B2B world is selling professional services or onboarding packages to customize the solution to fit customers' business needs. Tailoring the product will not only increase the product's effectiveness to solve business problems, but the engagement will deepen customer relationship. Throughout the engagement, field teams can also spot other new opportunities, such as new leads from other departments.Infographics below show how to boost revenue through upselling and cross selling.But there are other ways to help customers drive results. If you share a target audience with them (say, you have a marketing firm and they develop software for marketing managers), you could talk them up to your audience or do a webinar together, so that they’ll get more customers. If you hear of anyone who needs their kind of product, recommend them first – even if you don’t get any commission out of it.Become their brand advocate to help them grow and develop a better emotional relationship with them. They might even end up with a bigger budget that allows them to buy more from you.
Provide Better Service Across Departments and Platforms
Companies that increase customer lifetime value are companies that talk to their customers, do what they can to improve, keep their word, and give credit to customers for making great suggestions. Moreover, they constantly learn about customer challenges and the real reasons they want to cancel.As we’ve previously reported, most customers churn because of poor services. They expect top of the line service wherever they interact with your company, even more than they expect quality products.Smart companies create cross-department collaboration, so they can stay alert on what’s going on with the customer at every step of the way. When departments work together, it’s easier to create a cohesive brand persona across platforms, and to recognize fans and long-time supporters across channels and brands… even when they use a new-to-them touchpoint. There are tools for B2C companies to achieve this, but in B2B, check out ContextSmith.Want to learn more about going omnichannel customer engagement? Check out this roundtable by Jacada, featuring Informa/Ovum and Verizon.
Source: Jacada via YouTube
Build Relationships with Multiple Contacts at the Same Company
As mentioned earlier, emotions run high in B2B. To ensure you maximize deal revenue, humanize your company-to-company relationship by creating personal relationships with multiple contacts in your client’s company.You can do it with content marketing, but also remember to say happy birthday and congratulations when they got a job promotion – information you can easily find on LinkedIn. Create networking events where they’d benefit from meeting your other clients, or ask them to come with you to a conference you know will be beneficial for them.If they transition out of their current job, be on the lookout for new positions that could fit them. If you stay in touch with multiple contacts at the same company, you could end up with clients across multiple organizations as people change jobs or start their own companies.Remember – don’t stick to the superficial level of basic networking. As Jose Gutierrez, who spilled hot coffee on a potential mentor he tried to network with, explains in this funny TEDx talk, it’s about going deeper and connecting on a human-to-human level.
Source: TEDx Talks
How do you increase customer lifetime value? Share it with us in the comments.
“I know it alarms a lot of bigger companies. Customer success is viewed as sort of customer support on steroids. It’s viewed as a cost center,” said Jason M. Lemkin, investor and founder champion at SaaStr Fund, at the 2015 Gainsight Pulse conference. Lemkin was previously the co-founder and CEO of EchoSign, and became the VP of Web Business Services at Adobe Systems, after the latter acquired EchoSign.The reason it’s viewed as a cost center? Customer success usually requires a lot of investment up front, and a lot of patience to see results. You’ve got to allocate team members to nurture already-acquired clients, train your employees to collaborate with departments they only meet by the coffee machine, and transform company policies to create a holistic organization that puts long term client needs first.But according to Lemkin, you should evangelize the prioritization of customer success in your company anyway to generate growth. “There’s only one thing that’s guaranteed to work – it’s customer success… because if you make your customers happy, you’ll get more customers,” he said.Of course, to make customers truly happy, you need to make sure every department in your organization is committed to making every stage of your customer lifecycle an outstanding customer experience. Before we expand on that (and share some inspiring and funny videos to help you get the c-suite onboard), let’s talk about what you’ll get out of it.
How Adobe’s EchoSign Got 80% of its Growth Through Successful Account Management
Lemkin’s company started tracking lead sources early on. “Even as early as 4-5 million in revenue, it was clear that 80% of our growth all came from… word of mouth, upgrades, viral,” said Lemkin at the conference. He added that customer lifetime value (meaning, their first 3-5 years with your company) and product upgrades are not sufficient metrics.“You actually have to count the second order revenue [like referrals]. And when you add in that, which could be another 100%... you realize that your customers are worth 6-8-10X the first year ACV… what you’ll realize [is that] … you’re grossly under-investing in customer success. You can’t get any higher ROI,” he said.“Not only is a customer worth 8-10 times his first year ACV, if you help the organization understand this, you realize that customer success is 5 times more important than sales,” he added.Watch Lemkin’s entire presentations, as well as others on the conference’s panel about driving growth with customer success metrics:
Source: Gainsight via YouTube
Why Successful Customer Account Management is an Organization-Wide Effort
According to Lincoln Murphy, principal owner and customer success driven growth strategist at Sixteen Ventures, “customer success is a customer lifecycle initiative.”Therefore, we want you to see account management as a holistic approach. Here, we’ll take you through the various customer lifecycle stages and show you how your company will benefit if you encourage an interdepartmental collaboration.
Step 1: Lead Acquisition
Truly successful account management starts at the acquisition stage. While many salespeople still do their prospecting themselves, a growing amount of companies are transitioning into content marketing and account-based marketing.Content marketing gives you the opportunity to nurture your leads without coming off as too salesy and turning them off. Content builds trust and emotional connections with your target audience, which leads to more satisfied customers who buy more from you down the line.“Aberdeen conducted a study and found that companies that put their primary focus on content marketing increased their website conversion rates by more than 5x… Those who didn’t… saw only a meager conversion rate increase of 0.5%,” reports Neil Patel.Developing content is usually owned by marketing. But a deep understanding of who your customer is and what they need to know in order to be ready to buy from you can only be achieved in collaboration with other departments.For example, sales can bring up objections that keep customers from buying from you. Customer service and the on-site training team can identify the skills and tools clients are lacking in order to get the best results from your product. Account managers can know which clients are getting the best results, and convince them to participate in case studies.As a result, marketing can develop accurate content that actually matters to your target audience, which will help position you as an authority in your field.Doubting the importance of content in your account management and customer success efforts? Watch this documentary from Content Marketing Institute, called “The Story of Content: The Rise of the New Marketing”:
Step 2: Closing the Deal
If your company is like most companies, your sales and marketing collaboration looks something like this:
Source: Lattice Engines via YouTube
But according to a 2016 B2B Sales & Marketing Collaboration Study by the Marketing Advisory Network, “marketers at organizations that exceed revenue goals are 2x as likely to participate in customer and prospects meetings as those that miss revenue goals.”That’s not surprising when you look at Nielsen’s 2015 Global Trust in Advertising study. “Owned (brand-managed) online channels are… among the most trusted advertising formats. In fact, branded websites are the second-most trusted format, with 70% of global respondents saying they completely or somewhat trust these sites. In addition, more than half of respondents (56%) trust emails they signed up for,” reports Nielsen.In comparison, how much do you trust that the telemarketer who just called you has your best interest at heart?According to the Guardian, research from Harvard Business School “reveals that when your brand has credibility, reliability, intimacy and low self-orientation – then you can expect an increase in satisfied customers and improved retention – loyal brand customers who come back for more and tell others about their experience.”Customers who trust you when they make the purchase are less likely to cancel, and more likely to give your company a chance through possible deployment and onboarding challenges. Therefore, trust at the point of sale is critical to successful account management that retains customers long term.Want to increase prospect trust even more?As you move toward closing the deal, introduce prospects not only to marketing team members, but to their designated account manager as well. “For millennia… we trusted people first and the company second,” reports Forbes. Let prospects build trust not only through marketing materials, but by getting to know the person who will be their direct contact in your company.
Step 3: Onboarding
As you know, closing the sale is only the beginning.“About 60% dropped off after the first day of trial” and “a lot of customers churned after their first payment,” shared Asa Nystrom, director of customer success at Buffer, during the 2016 B2B Rocks event in Paris. But combined efforts from marketing, sales, product, growth customer support and free trial onboarding (also called Happiness) teams led them to understand which trial length and plan converted better. Moreover, thanks to this collaboration, they were able to double their prices and increase monthly recurring revenue by 50%.Watch her presentation here:
Source: B2B Rocks via YouTube
Of course, the work starts before you start onboarding or deployment. Salespeople closing the deal need to explain to customers what deployment will look like in order to ensure expectations are realistic. They need to explain how long it will take, and what access to client team members will be needed.Then, you need to train customers on how to make the most of your product. This can be done through on-site account managers, through a knowledge center, or through an e-course that marketing will drip to clients via email.Either way, trainings will be most effective when account managers work together with product managers and engineers, to get the full grasp of the product’s features and capabilities – as well as with the sales and customer support teams. After all, salespeople know what these new customers’ greatest concerns about the product were before purchasing, and customer support reps get data every day on what’s keeping customers from making the most of your product.If you work together with marketing, you’ll be able to position deployment-related content in phrases, terms and a tone of voice customers can relate to and trust.
Step 4: Retention
Now that your customers are happily deployed, your entire organization needs to come together to make sure every account is retained for as long as possible. As we previously reported, “increasing customer retention by 5% increases profits by 25-95%.”As Lemkin told Gainsight CEO Nick Metha before the 2016 Gainsight Pulse conference, an increasing amount of companies are setting “quantitative KPIs [key performance indicators] for customer success that roll up into core goals and KPIs for the company.”Watch Lemkin’s conversation – and singing – with Metha in the following video. You’ll also discover which Game of Thrones character Lemkin thinks would make the best SaaS CEO:
Source: Gainsight via YouTube
To set company KPIs and goals, you need the c-suite and business development team involved. Then, department heads can work backwards to figure out which actions each team needs to take to ensure account retention.Account managers need to check in on customer product usage and progress, and talk to their contacts to see how they can help the customer get unstuck or get better results. At the 2015 Gainsight Pulse conference, Lemkin suggested account managers make 5 on-site visits a month, and encouraged CEOs to make on-site visits at key customers’ companies too. “We never lost a company that I as the CEO visited. Never,” he said.Your product team needs to work with customer support to figure out which milestones or events will trigger which messages, which will help marketing create nurturing content that’s personalized to customer needs and segments.Meanwhile, marketing will keep track on social media comments, review sites and media coverage, to make sure the necessary department has a chance to intervene with high-risk customers before they are lost.And all departments can come together to create a cohesive brand personality that humanizes your company and makes it easier on customers to relate to you emotionally.For Unbounce’s holiday video, that even meant involving the company dogs.
Step 5: Upsells, Cross-Sells & Referrals
If your organization adopts such a holistic approach to account management, customer experience throughout their lifecycle will undoubtedly improve. According to Clarabridge, “maximizing satisfaction with customer journeys” has a direct impact on your bottom line.If you “increase customer satisfaction by 20%, [you] can lift revenue up by 15%, and lower the cost of serving customers by as much as 20%,” reports Clarabridge.One of the ways you can lift revenue up this way is by upgrading and cross-selling to satisfied customers. As we previously reported, you have a 200-1,300% better chance to convert an existing customer over a new customer, and when you do that, you’ll likely generate 33% more from the sale.Another way to lift revenue is to charge more for a better customer experience. Depending on which research you read, 55-86% of customers are willing to pay more for a better experience, according to Clarabridge.But it’s not just about getting a bigger chunk of your current customers’ budgets. It’s also about inviting their friends to the party.“If you talk to any… company that’s at scale… any of the big ones – Adobe, Intuit, Google, Facebook… Salesforce – you’re going to hear one metric that’s common to all of them, which is they get 80% of their customers from their old customers,” said Lemkin at the 2015 Gainsight Pulse.But for this to be your reality too, you have to have all your departments working together – or you’ll find yourself waking up in cold sweat like this executive:
Source: IBM Watson Marketing via YouTube
Think about it – a referral program alone requires the collaboration of a referral program team with account managers, salespeople, customer support reps and marketing professionals.So never forget…
The Term “Team Members” Has Never Been Truer than in Account Management
Clarabridge also reports that “89% of companies with the strongest omnichannel customer engagement strategies retain their customers, vs. 33% of companies with weak omnichannel strategies.” True omnichannel success requires an omni-department strategy across the customer lifecycle. If you want happier customers, that stay longer with your organization and tell their friends to do the same, get department heads together as soon as possible.Together, figure out what each department needs from the others to succeed, and how everyone can work together to create holistic collaborations that give your customers a much better experience, and a much better chance at reaching their goals.What interdepartmental collaborations have worked for your company? What challenges have you seen in creating holistic account management?
Recently, I talked to a wife and a husband who run a company together. Every morning, they get up to a pile of calls and emails they need to take care of.The husband thinks answering prospective customers first is the way to go to grow the business. The wife thinks taking care of current customers first is more important.Who’s right? Let’s do the math.
Not Maximizing Customer Lifetime Value? You Could Be Cutting Your Revenue in Half
To answer this question, we first need to figure out how much it costs us to get paying customers in the door. Customer acquisition costs (CAC) vary from company to company and your average CAC can sometimes be challenging to calculate, but if you track your marketing, advertising and sales efforts, you’ll eventually come up with an average CAC.Let’s say that you invest $1M dollars every year in customer acquisition. Some of it brings you results right away, like salespeople who do cold calling, and some is a long term investment, like building an audience on social media.But if you invest $1M every year in customer acquisition, and get 1,200 new customers a year, every customer acquired costs you an average of $833.3 ($1M divided by 1,200 customers).If every customer pays $700/month, that’s $8,400 a year per customer… which cost you $833.3 to acquire. That’s about 1,008% return on your investment!Even if you get a 15% churn rate and every customer only sticks around for 6.7 months, you’ll still make 5.6 million dollars from the customers you acquired this year – and all it took you to acquire them is 1 million dollars.One business approach is to go out and invest another 1 million dollars in customer acquisition, in order to make another 5.6 million dollars in revenue. But check out this graphic from Punchlime. According to the graphic, this approach actually leaves lots of other millions of dollars on the table.See, if you pay more attention to your already-acquired customers, and manage to cut the churn rate by half – meaning, only have a 7.5% churn rate, and keep each customer around for an average of 13.3 months instead of 6.7 – you basically double your revenue from 5.6 million to $11.2M for every $1M you invest.So basically, the wife was right!
Increasing Customer Retention by 5% Increases Profits by 25-95%
… because existing customers are easier to sell to, and when they buy, they buy more than new customers do, reports this infographic from Invesp:
Infographic by- Invesp
Top 5 Ways to Reduce Customer Churn Rate and Become the Admired Revenue-Driving Superstar of Your Company
Customer churn is unavoidable, and you’ll likely never be able to avoid it entirely. Some customers outgrow your product, others run out of budget, change goals, or find a more accurate solution for their needs. But if you’re leaking customers, you’re leaking revenue, so it’s important to do what you can across the company to increase customer lifetime cycle.The good news? According to the infographic above, it’s cheaper to do it than to acquire new customers. Here’s how.
Understand Why Churn Happens in YOUR Company
According to Charles Kim, head of Americas media at Bain & Company, most companies get the reasons their customers churn completely wrong:
Source: Bain & Company
We’ll give you a bunch of great ideas today, but it’s important to reach out to your customers and ask about their specific situations.HubSpot recommends finding out “what the customer expected to get, what the customer thinks they’ve actually received (or not), [and] if there’s anything that might get them to stay.” Then, HubSpot recommends looking for patterns.There are many ways to get this information: trigger a survey form when they cancel online, have your customer service representatives or account managers ask customers directly when they ask to cancel on the phone or via email… or have higher-level a manager reach out with individualized emails, that sound like they come from a real, curious human who wants to improve, not a corporate template.
Optimize Customer Onboarding
As Bain & Company’s Kim concluded the above video, companies that focus on “delighting their customers will find it far more effective than trying to bribe customers to stay.” To be effective, delighting your customers needs to start the moment they purchase something from you. In a guest post for Intercom, Patrick McKenzie, who’s responsible for content and communications at Stripe, said that software applications lose 40-60% of their users after one attempt to use their software.According to McKenzie, this happens “because they do not perceive value from interacting with the software. We can decrease their abandonment rate by a) making our software better and b) communicating better with our users,” especially in stages where we see large abandonment rates.McKenzie’s suggestions for improvements can be applied by both product and service companies – provide a quick win and a positive feeling.You’re not going to solve all your customers’ problems in that first interaction, but they need “to feel awesome right now,” wrote McKenzie. Show them you can make a small difference right away, and they’ll stick around to meet their bigger goals.
Ensure Long Term Customer Success
As you understand by now, optimizing the onboarding process is important, but you can’t leave it at that. To maximize your customer lifetime value and reduce churn rates, you need to be there for your customers long term.Let’s say you sell sales training. In an interview with Pipedrive, sales coach Mike Weinberg said that “the No. 1 issue that gets in the way of developing new business [is that] people in charge of selling don’t spend enough time selling.” They have too many non-sales responsibilities, like customer service and shipping. That means that no matter how great your sales training is, your customers will have a challenging time implementing what you teach.Talking to your customers about the challenges they’re facing implementing your training can help you uncover deeper challenges, which you can either help them resolve with the help of your team, or refer them to someone who can.After all, customer success managers aren’t only here for upgrading and upselling – which can’t happen anyway if the customer is not seeing results. Customer success managers need to make sure your customers know how to get the best results and best return on their investment from your product or service, so that they have a reason to stick around longer.In other words, says Cliff Cate, SVP of Customer Success at ToutApp, in the following video, customer success is “really all about fulfilling the promise that we made to customers when they purchased.”Here’s more from Cate about how he sees customer success, how to measure customer success, when companies need to start investing in it (spoiler alert: very early), and what kind of people you need hire for this role:
Get Every Customer-Facing Team on High Alert
To ensure true customer success, you need to create a collaborative culture in-house. In today’s world, customers communicate with multiple employees across multiple teams at the same time. If you don’t create systems that make cross-team communication easy, you’ll miss great opportunities.First, you need to make sure every customer-facing team is on high alert for potential customer abandonment – customers who don’t finish setting up their accounts, don’t use the product much, experience a lot of challenges with your product, about to grow beyond their current account, or going through a management overhaul.Awareness is the first step toward change. Once your company gets this data from any of its departments, it can start delivering solutions – like an executive who emails customers after they interacts with support:Want to take it a step further?Get your teams looking for high value customers – those that buy more, refer more or advocate for you on social media – and make sure every department in your company gives them the VIP treatment.
Provide an Outstanding Cross-Channel Customer Experience
In 2013, a Walker Info research predicted that, by 2020, quality of service will be more significant to customers than price or even product quality.95% of customers use multiple channels to communicate with companies, and they expect companies to know who they are and what their history is right away – no matter which channel they use or which team member they talk to.Most companies are now active on multiple platforms, yet each platform operates on its own, and other teams have no access to the data accumulated there. Companies that create in-house collaboration and data-sharing systems, which allow them to create a continuous, top quality cross-channel experience, will be the ones to win customer hears for the long run.What’s your #1 challenge in reducing customer churn rate? What’s helped you maximize customer lifetime value? Share it with us in the comments.
When managing B2B and Enterprise accounts, email is the most prevalent form of engagement. In fact, a number of business email is increasing 7% year-over-year as more and more tools automate sending emails (who says email is dying?). However, when we make business decisions everyday about our multi-million-dollar strategic accounts, we're not leveraging this engagement data even though we're sitting on mountains of it - 116.4 billion new emails per day, to be exact. The customer could have been dropping negative hints throughout its lifecycle, and usually, when we notice, it's already too late. Organizations rely heavily on personal assessment by the sales rep and account managers, and we ignore the facts – the hard data – that is sitting in our inbox.One of my personal experiences as a consultant highlights the importance of proactive account management. Even if customers love the product, they will still churn because they dislike the service. But how do we objectively measure account engagement quality? How do we know if a customer is about to churn based on daily interactions? Most importantly, are we even getting the full picture of our accounts in the first place? In this post, we'll explore best practices that we use internally to measure our B2B account engagement.
Managing an enterprise account is like managing a large, long-running project. There are deadlines, tasks, owners, milestones, and most importantly, a lot of communications between the teams. The most important questions to ask right now about your accounts is "where is it at?" and "who has the ball?"; if the answers are unclear, there is some work to do.The next couple of question to ask are more strategic and require historical data to benchmark with other accounts - "how many touches does it take to close a deal?", "how many people and how much time is involved in expanding an account?", or "which teams and who were involved the most?". These questions are great for strategic planning and process improvement in order to become more productive and effective at account-based management and selling.Above screenshot is a chart we use to measure how every team from the whole organization is interacting with our large accounts. If any of the engagement is significantly skewed towards a certain team (compared with other similar accounts), it's a potential signal of risk. In addition, knowing who, when, and what the last touch was, tells a lot about the status of an account (not shown in the screenshot).
While managing customers, all kinds of events can be a root cause of risk: dislike service, dislike product, a spike in support tickets, a spike in emails, customer not responding, sponsors leaving, and the list goes on. While there are a number of Customer Success tools out there that help measure quantitative metrics like support tickets and renewal dates, we measure engagement and quality of the engagement throughout the organization. A risk in our system is essentially any of the metrics above mentioned in the text of an email. The risks tells us what we need to take care of right now, as well as a benchmark analysis of how particular accounts compare to others.Screenshot above shows the risk score trending over time and the volume of negative sentiment that surfaced throughout the same period of time. It gives a quick overview of what happened before with the account, the root cause of a fire drill, and how to prevent it from happening again.
A key activity is a milestone or customer interaction tagged as important. Typically, it is something more granular than the CRM "Stage". One of our customers use it as a metric to track number of "key activities" to determine account health or risk of slipping deals. Internally at ContextSmith, we use key activities to separate signals from the day-to-day noise, such as customer status and updates. For example, how many "key activities" does it take to close an account, complete onboarding, or renew? A screenshot below shows how key activities are tracked.Key activity is also what helps our machine learning technology get smarter. It works exactly like your priority inbox when you tag and email as important in Gmail, separating from rest of the less time-pressing emails. What's great about this feature is that not only email, but any activity within Salesforce can be tagged, further improving productivity of the account managers.