First Published: February 12, 2018
In a previous article, I discussed journey mapping and how it requires a shift toward cross-functional operations to have a serious impact on your organization. Take expansion revenue or upgrades, for example. They often fuel a debate as to which department should take ownership. I believe there is a shared responsibility because at the end of the day, the determining factor that drives a customer’s decision on renewing or upgrading is their ability to realize the solution’s value month after month, year after year. And that takes an “all hands on deck” approach.
According to Invesp, customer acquisition cost (CAC) is five times more expensive than retaining an existing customer. In order to offset CAC, it’s important for your organization to continue upgrading and expanding current contracts. Cost savings and higher customer loyalty are two of the immediately recognizable benefits, however there are far more, less obvious advantages as well, which is why getting the right teams engaged is so critical.
Many companies suppress product features for existing customers. For those many end-users who were not engaged in the sales process but will use your product, understanding features that may be available to them is critical to adoption. Unfortunately, if those capabilities are hidden, these end-users may never know what they’re missing. Customers usually don’t know they need something until they see it or have an opportunity to try it out. In my opinion, hiding features is a no-win and can lead to decreased value for those consuming your product.
That’s why it’s important to take a product-driven approach to disseminating information. Show customers exactly what is available to them and allow them to test it out temporarily at first. This has a psychological effect: if the customer is already using the product and a pop-up appears asking, “I see you’re struggling with this problem, did you know we have a solution for that?” you’re not only better educating your customers, but putting the extended value right in front of them.
It’s an easy trap for companies to fall into a “complete solution” model, and package and price their solution accordingly. In my experience, this leaves little to no room for growth and limits a customer’s ability to get the most value out of the solution. To maximize pricing and help fuel expansions and upgrades, you need to ask a few key questions: Is your product priced in a way that allows for upgradability? Do you have a structure in place that makes it easy for customers to go from one level to the next? Can they easily plug in add-ons? Can they buy only what they need so they don’t feel they are being oversold?
There’s no need to overwhelm a customer with solutions that have no relevance to their business. Not every customer is created equal, and each one will recognize value and success differently. This should be reflected in the way your product is both packaged and priced.
The more accurately you measure how customers engage and use your product, the better you can determine what features are actually delivering value. You can deliver a product that offers a million features, but if your customers utilize only five consistently, that’s where you should spend your time. You also need to measure where your customers are running into trouble most often, so you can deliver solutions and features that better meet their needs and encourage regular upgrades. The best people to help drive your product roadmap are your existing customers. Listen to them! Build a deep relationship and provide ways for them to give feedback. Building your product based on customer feedback will not only benefit your existing customers, but it will allow you to find other customers who look just like your successful ones, something called your ideal customer profile (ICP).
Customers need to not only see the value of your product, but also feel valued themselves. Here at Lifesize we have made it a focus to acknowledge our existing customers through various promotions and rewards. When customers find certain features on their own or hit thresholds, we award them with points that can be spent in our online swag store. Even simple programs like this make a big difference in the overall feelings customers have about value and support. The more positive customers feel about the product, the more confident they are in using it and the more fun they have engaging with it, the more willing they are to upgrade or expand their contract down the line.
Even if you’ve created a more collaborative cross-functional effort to fuel expansions, customer success managers still play a major role in helping customers realize the value of a solution. They work alongside marketing to bring messages that the customers need or want to hear to fruition. They work with customer support to confirm that issues are properly reported and addressed, and they ensure the customer is properly trained at both the initial business install and down the road as new features or updates are released.
At Lifesize we feel each customer success manager is unique — just like our customers — so we create opportunities for each individual to play to their strengths. For example, two of our customer success advocates (CSA) led our journey-mapping program. One of the outputs of phase one of this program was to appoint a CSA to lead the revamp of our current upgrades/expansion motion. Today, CSMs, expansion reps and renewal reps work hand-in-hand to ensure customers realize the full potential of our solution. Our CSAs know our product better than anyone else and enjoy working with customers to make sure they know about any new features and to provide best practices. They get out of bed every day and ask themselves, “How can I make my customers happy today?”
It’s my philosophy that CSAs are “built” differently than sales reps, who generally wake up asking themselves, “How can I make my number today?” Because of this clear distinction, it’s important that our CSA team focuses on delivering exceptional value to customers and not have a number over their head. Treat customers well, advise them and be their champion and they will stay and expand. And when your CSA team is operating at this level, a customer renewal is more of an order processing activity and expansion opportunities are discovered by both CSAs and expansion reps. At Lifesize, we see CSAs as value creators and problem solvers, who day after day ensure that our customers are realizing the full benefits of our products and eliminating roadblocks.
Again, they aren’t alone in that mission. By bringing the different facets of the business together to create a cross-functional collaborative effort to encourage upgrades and expansions, customer success managers will be able to do their job and ultimately bring greater revenues back to the business.