“Success is the sum of small efforts, repeated day in and day out” - Robert Collier
When you constantly take small, yet proactive steps to delight your customer, they will take notice. A study by Oracle indicates that 9 out 10 buyers are willing to try a product if they have a positive customer experience from the first touchpoint. For instance, a consumer satisfied by their free trial experience, or someone intrigued by a captivating email, will more often than not, be willing to purchase your product.
However, gaining that new customer isn’t as successful if you are losing old ones. A study from Accenture indicated that poor customer service costs companies across the US more than $1.6 trillion. Selling your product is important, but if your customers don’t stick around, the sale isn’t going to be effective.
Subscription based companies may nail the initial sale, but in order to generate reoccurring revenue, companies have to ensure that users are continually enjoying their experience, being delighted, and feeling valued. For example, thoughtbot found a 14% response rate when using IgnitePost’s direct physical mail outreach services as a way to maintain that valuable relationship with the customer. thoughtbot wanted to send mail to clients that they had worked with but had not heard from in the past two years. With a 6-month physical outreach campaign, they delighted consumers and gained traction.
What is Customer Success (CS)?
Customer success is the business solution to keeping customers loyal. While customer service may sound similar, customer success is vastly different. In customer service, you are reactive, whereas, in customer success you are proactive. Customer service is solely the process of resolving an issue. Customer success teams work with customer to achieve their goals so that those issues don’t arise. Therefore, customer service is much more short-sighted and customer success is forward-looking.
A cross-functional customer success team will be a revenue generating center and, on the other hand, customer service teams are usually cost centers. Essentially, customer success means putting the needs of your customers first, and not losing sight of those needs. The needs of a consumer may change throughout their journey with your company, so it is imperative to pay attention to evolving needs and challenges while they are using your product.
Reducing your Churn Rate
The idea behind investing in a customer’s long-term success stems from the logic that when they win, you win. Success metrics can be measured by tracking your churn rate.
Your churn rate is the rate at which you are losing customers and is calculated using the formula: customers who left / customers at the start of the month x 100.
For example, a subscription-based company may gain 100 new consumers this month - an increase of 20% new customers from last month. However, 5 customers unsubscribed. The positive influx of customers won’t be as promising due to the churn, also know as the loyalty plunge. This indicates that somewhere along the consumer journey about 6% of customers bolt. While the average churn rate for subscription-based companies is between 6-8%, finding ways to reduce the number of exiting customers should be a priority.
In some companies, however, short-term sales goals are structured to compensate for the loss of revenue from churn. Allowing your sales goals to rely on customer attrition is a vicious cycle. Strategies as such will ultimately fail due to the fact that most revenue comes from current customers continuing the service or even purchasing a type of upgrade.
As seen in in the funnel below, while 5-30% of revenue stems from the initial sale, a majority of revenue, 70-95%, comes from renewals and upselling. While a user’s activity stream remains stagnant until the sale is made, as depicted on the left side of the funnel, the initial sale will not carry the weight of the cost of acquisition (CAC). The cost of acquisition is the total revenue coming from sales and marketing / customers acquired within the period. Covering this cost comes from renewals and up-sells, a way to maximize the activity stream of a customer. To that end, minimizing your churn rate allows businesses, such as the subscription based company to focus on renewals and up-sells, rather than just acquiring initial sales.
Integrating Customer Success in Sales
Customer success starts in the sales process. Teams must work toward creating an all-encompassing experience for the consumer. Sales teams cannot think that a transactional relationship with the customer is enough. Sales must integrate excellent experiences with a quality product.
This is essential because buyers have endless optionality and they have more power than ever before. They are constantly hit with different products and services, and they hold the power to drop one product for a new one at any time.
On top of this, the most hyper-competitive markets right now are e-commerce and software products. It can be very challenging to remain champion in such a cluttered space without heavy differentiation. Moreover, sales teams need to act. Customer success starts when sales teams can make an early impression on the buyer. The stronger the connection you can make, the more authentic a customer experience is, and the likelihood of customer retention heightens.
As stated by Robert Collier, the process involves small, persistent steps. The first step is to gain an understanding of your customer’s problems and needs, and share the customer’s pain points with the entire team. Achieving this step will allow the company as a whole to be aligned with the true needs of each individual customer, and ensure a seamless team decision making process. For the sales team, this requires habitually communicating with customers and staying well-informed of their evolving needs.
Communication will go a long way. Speaking to your customers, listening to them, and taking note of what they say may seem simple, however, when trying to hit quotas with a deadline over your head, customer’s words can go in one ear and out the other. For example, Dollar Shave Club, a retail beauty subscription company, is described to have an obsession with its customers - from delightful packaging to free t-shirts, their focus is making the customer happy. With the company motto being, “we don’t respond to situations, we respond to people,” the root of their strategy is a customer success initiative that lowers attrition and heightens customer engagement.
The sales cycle must be continuous because opportunities for customer evolvement only just begin at the point of sale. When salespeople follow-up and check-in, they can learn many lessons from their ever-changing buyer. They are becoming engrained through the entire customer journey.
Customers need to feel valued in order to remain loyal. Customers feel valued when their promises are kept, their problems are heard, and their productivity is high. The best way to ensure that your customer feels valued is by integrating customer success across all aspects of your business - including your sales team. Some of the best KPIs to measure high performing customer success are rate of adoption, ups-sell rates, and customer referrals.
Improving your Sales
IgnitePost helps sales leaders and customer success leaders build relationships from the beginning of the sales process by doing direct physical mail outreach.
IgnitePost believes that relationships are critical to sales. We create the meaningful connections that enable more sales. We do this by providing the best highly personalized physical outreach services available.