Sales & Marketing

Does your Software Business have “Stickiness” for Customer Upsells and Renewals?

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Are your company’s sales and marketing investments and tactics designed to grow a customer relationship? As your team communicates with customers, are they effective in helping them become more enthusiastic about your product or services? Do you fully understand where your company has opportunities to deliver more value to individual customers? “There’s a fundamental shift that is transforming software businesses. Customer intimacy is crucial, so software firms must find ways to get closer to customers,” says M. R. Rangaswami, co-founder and CEO of Sand Hill Group. But this shift is in its early stage, and many firms lack insights on how to succeed in building a customer success program. 

M.R. RangaswamiA cookie-cutter approach won’t work. “Software companies need to create lasting relationships with their customers but must do this in ways that each customer perceives as valuable to their unique business,” says Rangaswami. “A common thread among the respondents in our 2015 study on the outlook for the software industry is that the amount of change necessary in the shift to focus on customer success is substantial.” But so are the benefits. 

An example: A CFO among the surveyed companies in Sand Hill Group’s study revealed his company invested heavily in customer success messaging and customer data to refine their customer-facing communications. As a result, the company doubled its revenue last year and is on track for doing so again this year. Focusing on an individual company’s success with a software product leads to more sales opportunities with that customer. 

Some investments in a customer success program fail to deliver ROI 

In telephone interviews, executives participating in the Sand Hill Group study shared their most prominent concerns regarding their efforts to implement and sustain a customer success program. Some started their programs based on the wrong premise. Others talked about the need to reshape their talent and skills mix. Some also questioned how important it is to have dedicated resources in the program. 

Dalia AsterbadiEarlier in her career, Dalia Asterbadi, now founder and CEO of realSociable, served as the first customer success role at Eloqua (acquired by Oracle). She says a typical misconception is to implement a customer success program as a “graduation path or a premium extension of the customer support role.” This does not mean that promoting an individual in customer support to be the customer success manager will not yield the expected ROI. But she warns “it is very difficult to be authentic and create influence if you have not played the role of a customer/client in a previous work life.” 

Rangaswami notes that the Sand Hill Group study’s participants emphasized the importance of this “experience” perspective. A software firm CFO commented that “it is very difficult to find people who understand the whole customer journey and what customers need in order to be successful.” 

Asterbadi says the objective of customer success “must equal the objective of the customer. You augment your company’s priorities to the roadmap of your customer. Customer success reps must be trusted experts that guide customers into the ultimate target that made the customer trust in aligning with your company’s product or services in the first place.” 

She says a pitfall is treating a customer success program like a support mechanism, “an upsell play or a catch-all escalation point. It’s the wrong model and actually may add to the bottom line.” 

Are dedicated resources necessary for achieving ROI in a customer success program? If the company measures customer success by attrition rate (how much attrition decreases over time) or monthly recurring revenue (MRR) measuring growth over time, Asterbadi says dedicated resources can significantly influence those numbers. “The numbers become an extension of the customer and can augment into account management and product management organizations,” she explains. 

But she believes even if a customer success program has dedicated resources, the program needs a matrixed authority that ensures influence and awareness to all departments. “The ability to create lifelong value needs to be translated in the key areas that the customer considers ‘value’ and that the customer believes will make it ‘successful.’ This will develop true customer delight.” Her advice is to establish a segmentation model that not only considers customer success actions but also defines the service approach, management integration and communications style and efforts.  

How sales enablement/automation solutions fit into a customer success program 

Rangaswami says the Sand Hill study asked respondents to assess their company’s satisfaction with their ability to manage customer-facing communications across the entire customer journey. He says 60 percent reported they lack that confidence. “The 40 percent that responded they are confident of effective customer communications added that it’s because they invested in major initiatives in the past year to improve customer interactions and communication, and they’re already seeing ROI,” he says. 

In focusing on the customer success journey, software firms need customer intelligence that yields a customer’s intents, needs and priorities. And that intelligence must be integrated into the objectives of everyone involved in customer success touch points. Everyone needs full visibility into the customer organization so they can tap into key signals from the customer. 

Investing in CRM, sales enablement and sales/marketing automation solutions enables companies to tap into customer intelligence that builds a deeper view of a customer. There are nuances in the types of intelligence the solutions gather. Three examples:

  • Oracle Eloqua enables customer-relevant messaging in cross-channel marketing.
  • Pramata focuses on complex relationships where multiple products have been sold; it extracts actionable customer intelligence from contract data in disparate systems.
  • realSociable extracts customer triggers that influence interactions and real-time conversations with customers, enabling companies to stay engaged with their customers. 

Praful SaklaniPramata’s CEO, Praful Saklani, says data buried in customer contracts can help companies understand what motivates their customers and thus help them retain and grow the most valuable customer relationships. 

“The core information you need to understand about your customer relationships is not just within sales and marketing systems; it extends across all functions that affect the relationship,” Saklani says. 

He adds that companies need to take a holistic view of a customer and not just focus on trends over time. “You need practical information from inside the sales process before you engage with a customer. How many deals has your company done with this customer? What was the pricing model in each deal? What areas are the same or different from other customers’ deals? Where are the opportunities to deliver more value to the customer?” 

“These pieces of information are essential, but they’re often inaccurate across an organization, Saklani says. “And inaccurate data is a real problem for growing a customer relationship. Pramata examines contracts for this information and then presents a reliable consolidated view of the customer in a single repository.” 

“With this view, they have a better understanding of what motivates the customer,” says Saklani. “And that understanding helps salespeople know how to position new products and also give a consolidated view of products.”  

The “stickiness” factor 

Rangaswami notes the Sand Hill Group study found some software firms starting to focus on the customer success journey realized they needed to improve their ability to help customers better understand their technology and how it benefits the customer. Otherwise, there can be resistance when trying to renew or upsell a customer. 

Asterbadi observes that a company’s manner in approaching a customer for renewals, upsells and referrals should stem from the key attributes that the customer success team defines as a particular customer’s stickiness and affinity to the company. She believes stickiness begins with the software firm’s business model. 

Her recommendation is to define the business model to ensure that the product or service adoption phases meet a customer’s expectations and have an appropriate pricing model for each phase. “If you, in fact, can deliver what you say you can, and do it in an intuitive and natural learning curve, it will result in stickiness and customer satisfaction, says Asterbadi.

The benefits of a successful customer success program are significant, as the Sand Hill Group study reveals. Rangaswami recaps the phenomenon: “In telephone interviews, we questioned participating CEOs and CFOs on their company’s performance due to their investment in a customer success program. One executive commented it made a major impact on their business, and 55 percent reported a highly significant impact on company performance. Another 36 percent (whose programs are still in the early stage) reported some or limited impact on performance to date.”  

Asterbadi points out the ultimate ROI from a customer success program. “When you help your customer achieve its objective and its definition of success, that satisfaction naturally creates a community of champions for your products or services.” 

For insights on how to lead and scale a customer success program, click here to read an article by Lincoln Murphy, customer success evangelist at Gainsight.  

Click here to read and overview or purchase the report on Sand Hill Group’s study, “Software CEO /CFO Outlook 2015: On the Customer Success Road in a Perfect Storm.” 

Dalia Asterbadi, a pioneer in technology-driven marketing communications and sales analytics, is CEO and founder of realSociable, a company focused on social insight for deeper engagement with customers. Engineer, inspirational speaker and author, her latest book is titled “The 21 Immutable Plays of Prospecting: The Truth Behind a Winning Culture and Bridging the Gap between Sales and Marketing.”  

M. R. Rangaswami is co-founder and CEO of Sand Hill Group and publisher of SandHill.com. 

Praful Saklani is co-founder and CEO of Pramata. He has deep expertise in the artificial intelligence technologies core to Pramata and experience in delivering enterprise process solutions to large corporate customers. Prior to co-founding Pramata, he founded and served as CEO of Yatra Corporation, which leveraged artificial intelligence and Internet technologies to optimize travel management processes. Previously, he was co-founder and managing partner of consulting firm, Invotech Systems, and a key executive of Waterhealth International, a social startup focused on bringing affordable drinking water purification solutions to developing countries.  

Kathleen Goolsby is managing editor of SandHill.com.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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