Pandemic waning. End of a 4-Year run in a role in a company with a few weeks between gigs. Time to golf and enjoy the sun, right?
(Well, yes...) ...but also time to dive into conference season. This time, it was not walking 20 miles around San Francisco, but from the comfort of my cool new shared office space in Rochester, NY. So why would I spend my free time diving into the Customer Success conference of the year? What's Old is New There were tons of sessions that were really fresh, but what has not changed is a lot of the formatting of how we receive information. I especially loved the concepts of having some long keynote presentations which were more of a series of panels than a long monologue about product features (nicely done!) but also a ton of bite-sized sessions which covered a huge range of topics. The concept of on-demand Netflix for the three-day session was not only the sarcastic and ironic theme of the whole week, but also in reality was how I drove through the schedule, being able to jump around at my leisure, not fighting with why my conference badge was stuck in the escalator (again) OK, so the meat of this article.. As we all love, here's a list with a couple sentences on things to remember - wherever you are in your CS journey:
If interested in Pulse - check out Gainsight here Today: We have 3,000 customers and 3 staff available to support them, so let’s give everyone 1,000.
Next Year: We have 3,750 customers but still can’t afford to hire more staff, so let’s give everyone 1,250. ….and we continue the cycle and repeat. Oof. The answer to when you should segment customers is long in the rearview mirror, as this is an ongoing, forever, day one, into the sunset exercise. The “when” in this exercise is officially today. But, this is an extraordinarily challenging exercise to tackle unless every customer is the same value, with the same level of complexity, with the same desired outcome. That’s rare. When it comes to the HOW: it’s like most things in your business. Resist the temptation to focus inwardly and prevent yourself from using that to define how you can segment the customer base. Instead, look from the customer’s point of view. The functional question is: What is the servicing strategy my customer needs to achieve the largest, most immediate value from their interactions with us…EVEN IF that means that I need to create productive tension to deliver that with my staff or with my customer? Flipping back to some metrics from the challenger sale. Adamson and Dixon found:
In short, don’t create strategies to “deal with” the customers starting with your staff and retrofit them to fit inside the box. Rather, design for the customer outcome that is desired, and fit as many of the customers into the correct mechanism that you can properly, and work to build out the other bandwidth needed. Some examples here. Good looks like : We have 100% of our customers covered with our account management plan Better looks like: We have 78% of our customers in the appropriate model, and are working in the next 6 months to hire two new junior customer success reps that can work in a team strategy to take the remaining small customers and have room for expansion to reach 100% in the ideal service model. It’s been well-stated that everyone plays differently when someone’s keeping score. I’ve found very few instances where this has proven false, but for the business owner or small company executive - the question is: what and when do I score in the customer process? We could debate this for hours, but $2 million annually is a meaningful enough volume to really start thinking strategically, once you're over $150k per month in your business.
Some examples of what you should track include:
The critical step in determining metrics will always be to get your team on board, bought in, and understanding the underlying “why”. If you can’t sell the importance of what you’re measuring to your front-line staff, in terms of why it benefits them, you will rarely be able to move the direction you’d like to. So - when should you do this? Answer: You’re already late to the party. But, heed the following warnings Pick one to three things to measure and focus on. If you try to boil the ocean, you're going to need a burner larger than you have the gas for. As a reminder, when we overextend on priorities, we simply fall into distraction and execution risk. It's critical to lean into a couple key areas and knock them down, circling through and governing a backlog of "next up" items, only drawing them into focus when you have the bandwidth to do so. Don't fill up the stove with more than you can cook. You’re rarely going to lose when focusing on customer-first metrics It’s highly tempting to focus on sales results, financial statements, things that drive immediate happiness within your business. It’s not that you should not focus on those items. However, tuning your radio towards true measures of customer joy and making them ultimately successful with every interaction with your company will yield downstream sales, margins, and produce the cash to fuel growth and expand your operation. Leaning into net promoter score and customer effort will yield critical feedback and examples of where it’s difficult to collect your customer’s money Increased sales volume will (almost) always solve the more challenging problems While you may have capacity or supply constraints, producing responsible, profitable customer growth will produce margins and cash required to make additional investments you’ll need for success. It’s much harder to back into “how we’re going to deal with all these orders” versus “who is going to pay us to keep the lights on” - Be suspicious of anyone in your business who is not painting a clear and precise picture of what the sales forecast looks like - it’s a red flag if you are hearing explanations in terms of “a lot” or “looking good” versus “we’ve created $2.3 million of opporutnities in the last 90 days and expect $500k to close by the end of the month and here’s why” Simple data is better than feelings alone You’re going to want the data to be perfect, but you need to get comfortable in the “close enough” zone. If your business works in millions, being within $50-100k is close enough. If your business deals with smaller transactions, being +2-5% of correct is likely to keep you aware of your process without making a harmful decision. Start somewhere, start small, just start measuring. Be honest with your anomalies and your outlook/forecast will be honest with you in return As a final word, it’s ok to be reasonable with yourself and what you’re seeing. If you look back to sales or service data from last April, admit there “might be” a pandemic issue which influenced your information. If you look towards amazing recent results or big contract from MegaCo, don’t take the once-in-five-year windfall as a sign of your current trend. Humble yourself to consider outliers on both ends of the curve without letting postulation take over completely. You’ve been there before… *everyone* is bought in. You have the operations team, and you have the quality team on board. More importantly, you have them both speaking the same language for once. It’s basically a done deal. “90%+ committed” says your team’s pipeline.
Snap forward seven days, and in comes flying a 30-minute invite at 9am on a Friday morning titled “proposal update” and it’s only got one invitee on the customer’s side. Not necessarily the makings of the big contract kickoff you were expecting. The reality is that somewhere in the process, you or your team missed a key piece of the equation. You learn that the deal got jammed up in procurement, and they have sourced another vendor who took you out of the picture in one half hour meeting, and your so-called committed opportunity was lost without you having a seat at the table. Who’s been here before? I sure have. Your business is not immune to this, and I’ll refer to this trifecta as the cost, quality, and deliverability paradox. These are the three people in every deal, whether you know it or not. Sometimes (but rarely) there are people with multiple hats and personas in the conversation, but there are likely at least three silos brewing in any complex sale that you need to account for, or you will be in a position to lose when you think you’re on strong footing. Cost: at the end of the day, there’s some sense of established reference price in the marketplace. You need to focus on where you stand in relation to that reference, and if that will matter to a financially-leaning partner. If you can’t race to the bottom in your position, you should consider alternative strategies that bring value. Can you drive waste or cost out over three years? Is cashflow not a concern and you can bend on longer net terms? Is there cross-commodity bundling effects to take advantage of? Generate a back-end rebate versus a front-end discount? Can you drive savings in one channel and use it to offset value in another? The only piece you can’t afford to assume is that the other silos can talk “price guy” out of trying to cement a win? Quality: in regulated and manufacturing industries, this may sing a different tune than in a software or professional services realm. Either way, output quality will most certainly be measured, even if in a minor way, in nearly every deal. If you say “yeah, but not in this one” - you’ve either found the purple squirrel, or you are missing an influence. Resist the temptation to believe this is not a factor, because it is. Most people will leave the dented soup can on the grocery store shelf, but claim quality isn’t an issue. It is. Deliverability: can your team do what they say they will? In all seriousness…have you measured that…and would your customers agree and score them the same way you would assess your own company’s performance? There have been many-a-deal stalled because money has been saved, feature and function have been established, but the method, timing, and structure of delivery is all wrong. There’s a sale after the sale in most cases; if you aren’t deeply tied with P&L and operational owners, you’re likely not going to see the traction you expected after the initial commitment is made. Symptom: are your “commitments” or “bookings” materially higher than your realized conversion to cash? If so - there’s likely a deliverability gap in your process up towards the top of the funnel. Go and fix it. This is not meant to be a 5 paragraph essay or masterclass on everything within the complex sale. However, there’s a true health check warranted here. I’d encourage you to dig into some of your team’s engagements and ask these questions. “We give amazing customer service!”
Of course you do. So what. So does your competition. You can win with what you measure, and it’s a rare instance that your company will deliver mind-glowingly fast and selfless service, but also have a product/service lacking depth and functionality, and also is at a price 3x the competition and you still win. Enter - the realities of critical support. And, support starts well before the sale. I’d define customer support activities as “any interaction with your company that influences a sale that happened or might happen” So what’s your letter grade executing on five out of the five below? Customer Effort - How difficult are you to do business with? If you’re not already asking your customers how much of a pain it is top achieve what they are trying to achieve, it’s time to start. You can do so, today, for free - with a service like Delighted. The entire premise of this measurement is the customer’s ability to answer “Acme made it easy for me to achieve what I was trying to today”. This is a measure which acts A) as a source of truth and B) tells a story over time. Humble yourself to get the details. It’s best used around a specific interaction or moment in your customer journey, but can be holistic, too. Check out CES, or customer effort scoring - there’s a warehouse full of opinions on the topic. Turnaround Time, or SLA (Service Level Agreement) - How fast are you ? This can be tricky - you have a sense of what you need to accomplish, and so do your customers. Do they line up? Have you asked them explicitly? In a recent engagement, I learned an important lesson - your sales team, customers, executives and data all disagree on the right timing. Open a discussion today, and prepare for opinions to surface. I’ve found that data and feelings need to become unified in this situation. Consider quoting: too slow, and you miss a lot of transaction opportunity. Too fast, and you either over invest in technology or people, and eat operating margins. Capacity Across all Channels Customers don’t interact in a binary manner these days, and wish to float across email, web tools, phone, chat, and self-service options. The best in class experience is where there’s as close to zero interaction with humans in your business possible. The more technical and configurable, the less likely technology touch solves all, which drives a specific desire to align people to problems. You should be looking at all channels of volume, and structure a plan against both history and forward-looking budget. If you fail to consider one or both, you will experience a service gap. Cost Per Resolution The ultimate measure of efficiency is to drive down the transaction cost of solving a problem at the same time as keeping #1 and #2 in balance. Say what you will about the novelty of balanced scorecarding, but there’s a well-founded time and place to anchor turnaround time or resolution success against the cost of running your team. When considering this, also don’t give in to the temptation to remove or adjust costs. In reality, software, management, travel for training, etc. are all in the loaded cost of running your group. P&L Expenses divided by # of resolutions in total is the fair and balanced way to calculate this. Whether you’re at $2 or $12 - there’s something to be gained here. “Internal” NPS We frequently go to great lengths to appease customer demands (and should) but there’s a great wealth of support teams who work internally for sales and success partners to delegate transactional responsibilities to. As a result, there’s bound to be channel conflict within the business depending on the size. Humble yourself and your leadershjip team to survey internal business partners if this is not a practice you take advantage of. When you ask your peers and colleagues if they would pay for your team’s service privately or recommend to a friend or business associate, the answers may surprise you. Unless you’re crawling the web as a small company executive, trying to teach yourself sales science, you likely aren’t super intimate with your sales velocity. You may have even entrusted your sales leader to know what’s going on. They might. But, their role in addition to hitting the number, is to present the most rosy-colored picture of the sales opportunities they can. How many of you have heard some version of the following in an internal review meeting?
The reality is that the two extremely direct questions you should be asking are “How much are we getting committed per day on average” and “does the forward looking pipeline tell that same story, or a different one?” Enter: sales velocity. I’ll credit G2 with this image, as they are universally understood and trusted - but there’s 1,000 different resources on the web which give their opinions on the matter. I’m here to break down some of the succinct insights around this for you. Definitions and Traps:
Velocity = I like to think of this as the average daily bookings rate your current pipeline is running at. Bookings become realizations, which become profit, which becomes cash. I can’t think of a more direct line towards success. # Opps = This is defined as the number of opportunities you have in the sales pipeline. I like to put a few criteria around this. How many are in the “proposal or better” stage? Don’t measure anything with a pulse. Also, don’t measure anything more than twice the average sales length that you couldn’t run though what I call “Honesty Friday” with your team $ Deal Value = This is defined by the average size deal, or ACV in your pipeline. What are we looking at, on average? % Win Rate = This one can be tricky. Focus not on wins versus losses, but wins divided by all total opportunities created in a given period. L Length of Sales Cycle = This is as clean as your team’s litter box. If they are sandbagging opportunity creation, slow rolling deals in, creating only deals with high probabilities to close What You Need to Know: In reality, you can pull any of these levers to impact your forward looking forecast, with knocking on more doors as the easiest to command and control. In reality, a savvy team looking to address a forecast knows how to drive the balance between all of the factors. #: Identifying strategies to direct team members towards responsible volume increases (not piling 1,000s of dead leads into outreach or HVS or my new favorite, Saleswhale) $ Value: Working with your team to segment ideal customer profiles and target higher value deals can have a fast and material impact on your forecast % Wins: This is all in coaching and development - sometimes with the coaching and development being to work with your sales leader to know when (and when not) to upgrade the team in general L Length: A huge driver to forecast recovery or scale can be working to control the deal process with customers. While they have their own timetable, effective question asking and mutual congruence can shave an average of 5-10 days off deals, on average. Don't Try It Alone: Looking for a health check on your pipeline, without your sales manager’s nightly news spin? Contact me, and I’ll let you know the data we need to take a fresh look at things. |