It’s exciting to acquire new customers. There’s the competitive-spirit rush on the sales floor, being celebrated by peers, and ringing the sales bell. These external motivators along with the promise of commission drive sales professionals to make those pitches and close deals. New sales, however, are only a very small slice of the pie. Looking at the big picture, Tim Riesterer, chief strategy officer at Corporate Visions says 70 percent to 80 percent of all revenue and growth come from existing customers. During the earlier days of the pandemic, this was up to nearly 100 percent due to so much global uncertainty in business.
According to Riesterer, resources are disproportionately weighted toward acquisition. The thrill of something shiny and new wins out every time. Salespeople tend to favor finding new clients over working with existing customers who aren’t a large revenue source. These less lucrative customers get handed off improperly when they really need to be nurtured by the sales team member who has disregarded them. It’s time to break these habits because according to George Leith, chief customer officer at Vendasta, it is far less expensive to keep a client than it is to find a new one.
Ranking existing customers
One of the most difficult but important parts of managing a sales team is ensuring they are connecting with all of their customers. This includes both prosperous accounts as well as difficult ones. Leith shares his contempt for salespeople who don’t do a thorough job of touching base with all of their existing customers.
“If you look at successful companies, at a high level they’re talking about net dollar retention, but you don’t manage a sales team on net dollar retention because it leads to unintended consequences. For example, if I have a book of 75 customers, I can hide the fact that I haven’t contacted some of those customers with what I’m bringing in from my high-growing clients. This is the classic 80/20 rule, 80 percent of your business comes from 20 percent of your customers. By measuring or celebrating lagging metrics like net dollar retention, the day-to-day activities of that team can be masked. I could have one customer knock it out of the park and have 10customers that I didn’t spend any time with. So it comes back to business management 101, you have A accounts, B accounts, which you’re working to make A accounts, and you have C accounts that you’re really trying to figure out, but you have to touch them all.”
Net dollar retention is a metric that shows changes in recurring revenue such as churn, upgrades, and downgrades. As Leith describes it, net dollar retention is the destination, but as a sales leader, activity and contact metrics, as well as the amount of time spent with each account, should be your leading metrics.
Next expert introductions
No one likes to be passed off to the next customer service representative because what you need isn’t technically “their department”. If customers are just handed-off after the deal is closed it’s likely they will be dissatisfied with their experience. Many require frequent check-ins to ensure they aren’t on the verge of churning due to pain-points they’re experiencing. Kalungi found that Software-as-a-Service (SaaS) companies that target small- to medium-sized businesses (SMBs), will commonly have a monthly churn rate between three percent and seven percent. Overlooked customers will undoubtedly churn and switch to competitors who offer similar products and services. To mitigate this risk, there should be an overarching objective among all experts involved in the customer journey.
“If the onboarding team is not aligned with the promise that has been made by the rep that closed the deal, you’re going to have big problems. You might spin a lot of cycles, you might have a very frustrated team on either side of that equation. You really need to go in as a team,” says Leith, “Depending on the complexity of your solution, it usually takes a village, meaning a team approach. You need to have a level of communication between all parties and a clearly defined cadence of how that team approaches the customer.”
Think back to your most recent check-up at the dentist. Every step sets the stage for the next expert to enter. From the greeting to the cleaning, to the assessment, and payment, there is a congruent flow. You probably had a good experience, at least as good as a trip to the dentist can be because there was an expert at each step. These experts communicate information during the transition and ensure that you’re comfortable before leaving you.
This is similar to many larger sales teams. There are the initial contact teams who drum up clients with cold-calls. Then you have a team who has done more research into your company. Once a sale is made there is usually an onboarding team who trains new clients and gets them comfortable with the software. Your team is winning when they’re seeking to understand the customer and build that trust daily. The brand experience needs to mesh with the brand promise made during the acquisition. If the message is disjointed you’ll experience churn, keep the message consistent based on the multi-team objective.
How to talk to existing customers
Everything from the tone of voice to frequency of reaching out and down to the words used really matters in the customer journey. Riesterer says the talk track or script that is used to speak with existing customers can’t be the same as what would be said to new acquisitions. The story has to be told in a different way than it would with an acquisition. Leith focuses on the details, “I find that words really matter,” he says. “If you look up the definition of communication in the dictionary it isn’t just saying words. Communication is delivering a message that the audience can understand. We have to be very careful because a simple phrase like ‘passed’ or ‘handed-off’ has unintended consequences.”
Once you’ve been working with a client and prove that you’re able to help them, it becomes about leveraging that trust.
“The first thing is to establish impact and investment, document it, and show them that. Then the second thing is you tell them you have this unique perspective that competitors don’t, you have an inside view. Here are the things going on on the outside and the other companies we work with and we see these things inside because we work with you. Here are our thoughts moving forward. Identifying emerging trends talking about the hard truth”
Grow existing customers
“Your cost to grow that existing client is much less than acquiring a new customer," says Leith. "It’s leveraging the trust, having a regular cadence with the customer, understanding what further pain points they’re experiencing. It’s an iterative process because you’re working with them regularly. You have a deeper layer of knowledge and proof points if you’ve been working with the customer for a long time.”
The small details in building relationships with all existing customers make a big difference on the sales floor. By focusing on the expansion of A, B, and C customers, businesses can more easily capitalize on that 70 to 80 percent.
Three questions to ask yourself:
- How do you measure the success of your sales team?
- Are you allocating enough resources to nurturing existing customers?
- Is your sales team making the effort to connect with all of their accounts?
“The motions salespeople go through are the same, regardless of the prospect,” Leith says. “The difference in working with existing customers is leveraging trust. There is an enormous opportunity in growth and expansion of a customer because you can leverage previous wins and you’ve built that trust.”