Reframing Customer Growth

One of the most important revenue levers in any business is Customer Growth. In a SaaS business it is even more important as it is the most cost effective and lowest risk revenue expansion for a company. 

Often, the focus on acquiring new customers is so intense that is overshadows the potential that lies within existing customer base. The prevailing view on customer growth in many businesses tends to prioritise customer acquisition and retention, neglecting the broader spectrum of growth opportunities that stem from existing customers.

The question remains: Why do businesses struggle to optimise customer growth? The answer is multifaceted, often embedded in the structure of customer support and services. Many companies inadvertently fall into patterns that restrain them from exploiting the potential of their existing customer base. Ultimately if you can flip to the customer base being the incremental growth engine, it will supercharge your business.

This blog is for CEOs, CROs, VP of Sales and Customer Success leaders thinking about how to grow their customers. It is based on my experience as a CRO and what I think really matters.

How are you set up for Growth?

Most companies are orientated towards not losing customers rather than growth. Have a think about your own organisation do you recognise any of the elements listed below? 

Customer Success is too broad a role

Customer Success Managers (CSMs) have broad responsibilities covering cross-sell, upsell, addressing customer service issues, and helping customers use the service effectively.  Making the role too broad and, at times, overwhelming. Typically, CSMs lack a sales-centric approach, focusing instead on customer service, which, while crucial, barely scratches the surface of the growth potential.

Do you have the right incentives in place?

CSMs usually operate with smaller commission pots compared to their counterparts in new business sales, causing a deviation from potential sales opportunities. Without proper incentives, expecting substantial growth becomes a paradox.

One alternative is that CSMs end up as opportunity spotters with the leads going back into New Business Sales. In my experience this provides limited returns. More often than not leads are not followed up, which in turn disincentives the CSMs from providing them in the future.

I have made my own mistakes here by focussing CSMs on Net Revenue of their customers. In many ways it is very effective, but it does not isolate growth as the focus. 

Do you know how you improve the customer?

To truly exploit the potential within customers, your team must have a clear understanding of how its service improves the customer’s business. Often, the lack of clarity in this area is a significant bottleneck to customer growth. To efficiently nurture customer growth, companies must have explicit knowledge of the impact of their services on customers’ business models, goals, and metrics.

Do you even record this information and verify it with the customer? In nearly every company I have worked with this is something that I have had to make this explicit. The benefit is that every element of the customer journey is then working towards improving the customer’s business.

In most cases we know what they need to do and how, but rarely “Why” they need to do it, let alone how it improves the customer. If you don’t know this you are severely limiting your ability to help them. How can you grow a customer if you don’t know how you improve them as a business?

Do you treat all customers the same?

There is a natural tendency to treat all of your customers in the same way, offering the same resources and time. However, this doesn’t make sense to me, as each customer is not only different but has a different propensity for growth. 

In my experience there are some very loud customers, typically low value, low growth that eat up 80% of the effort. It makes little sense to give these customers the same resources when there is a low or even no return.

The customers that are the closest fit to your Ideal Customer Profile will give you the best returns. These companies are typically already showing organic growth, have a more open relationship with you and are more inclined to hear how you can improve their business. Focus on them and find a way to move away from their noisy neighbours.

Service Doesn’t Lead to Growth

“If we could just solve this problem for this customer, we can get the rest of the business.” Sound familiar? This statement may be true but it rarely leads to growth. There is no upper limit on service satisfaction for some customers, this is a never ending road, and creates a barrier to growth. 

Gartner’s research into this area has shown that “most organisations are seeing disappointing Cross Sell and Upsell outcomes”. In their article “Why Accounts Aren’t Growing”, they highlight some interesting insights into why this is the case. Their position is that organisations have set their customer departments up in such a way as to” reduce the opportunity available to them by focussing on service rather than improving the business of the customer.”

The research showed that there was no connection between service and growth, it does however lead to retention. “Delivering service and driving growth are not the same thing, the additional effort put in by these teams to earn the right to sell is therefore wasted.” This is a significant insight. We are building organisations that are set up to fail at the objective of growth.

The Path to growth

“Growth is ultimately about asking a customer to do something different than they have done in the past. It is in effect a new business sale to an existing customer in that it needs a new analysis, consensus creation and budget approval.” 

The activities that Gartner identified as driving growth include;

• Providing the customer with unique, critical perspectives on improving their business
• Lay out a vision of improving the customers business
• Outlined the ROI of the commercial relationship  

The crucial factor for customer improvement is “a focus on the customer’s future not the supplier and the past. Customer improvement doesn’t necessarily include you, it is focussed on the customers capabilities and the value of products already bought.”

Offence is the best defence

What was surprising is that Gartner’s analysis shows that customer improvement is nearly as effective as Products and Service in driving retention. “If Customer Success managers were to go from below average performance on customer improvement to above average they would be 94% more likely to retain their customers.” Another critical insight.

Far from undermining renewal efforts, customer improvement gives the customer a powerful reason to continue their commercial relationship with you.

What would I do?

The best customer growth organisations I have worked with have 3 key elements in common

Make sure you understand how you improve your customers business

In my experience it is rare for organisations to have a clear view of exactly how you improve the customer’s business. This is not an easy thing to do, as in B2B sales there can be 7+ stakeholders each with their own view. They are often not clear on how they improve their business, rather they are focussed on a feature that they need to make their lives easier. 

Comprehensive knowledge of how services enhance the customer’s business is crucial. It has led to me developing my own approach called the Value Map (full post about Value Maps can be found here), which aims to establish a consensus with the customer on how the proposed services will address their challenges and improve their business. Such strategies ensure the alignment of the team’s focus on customer improvement rather than just service.

The challenge is not only in summarising this onto a single page, but doing so in such a way that all of the stakeholders can agree.

You now have the stake in the ground from which customer improvement can be measured and proven. The approach ensures your team keeps their eyes here, not only on service.

Create distinct customer service and Customer growth teams

To address the inbuilt tendency towards the renewals, my approach would be to split customer service and consumption roles, from dedicated account growth. 

This doesn’t require you to build two large teams, it can be achieved with the same or similar headcount. You can budget for an increase in growth from the customer base, which may find you some more investment funds, and move about some of the headcount to create at least a single role for growth sales.

My recommendation is to start with your customers who have the highest potential for growth, note I didn’t say your largest customers, although they could be the same. Part of the objective is to align resources with the customers with the highest propensity to grow. 

By having a Customer Service team focussed on managing tickets, improving capabilities and in turn usage of your product you can address the factors that affect retention and satisfaction. Incentivise them on that, and your customer sales person, ideally a Hunter, can then focus on developing new opportunities. You will quickly start to identify broader opportunities across the base which can be pursued programmatically as campaigns. 

Qualify for ICP & Reassess noisy customers

Review your customer base to highlight those that use up valuable and limited resources and don’t provide the growth needed. Map this to your Ideal Customer Profile (ICP) and decide if they are aligned. 

Noisy customers will be easy to find, they are the ones with the most support tickets and the ones that the Customer Success team shake their heads about. Double down in acquisition on ICP to prevent further concentration of noisy customers. 

I would go one step further, if you identify misaligned customers that are loss making, address them directly. There is no expectation on your company to run customers at a loss. Most customers will be able to handle a reasonable conversation. If they don’t and are happy for you to lose money on them, then the choice is that much easier.

You are supporting your team by addressing these customers and freeing up not only time but the stress related to serving them. You are getting your team out of a service at all costs state of mind too, which is a key step in building growth.

Summary

In the competitive realm of SaaS businesses, refining the approach to customer growth is not just a necessity but a strategic imperative. A profound understanding of customer enhancement, coupled with structural adaptations and a focus on ideal customer profiles, can create a fertile ground for sustainable customer growth. By embracing these insights, leaders can steer their companies towards a future marked by sustained growth and enhanced customer relationships.

By altering the perspective from product usage and performance to enhancement of the customer’s business, companies can elevate customer perceptions and unlock substantial growth.

This shift doesn’t just advocate for acquisition of new business but recommends an alteration in business approach, focusing on customer improvement rather than solely on service satisfaction. The real growth is harnessed when companies help customers believe in the possibility of business improvement, and not just on past performance.

Incorporating these strategies has proven to significantly amplify customer growth. By adopting these principles, companies can transition from mere service providers to genuine partners that drive customer improvement and growth, in turn supercharging their business.

Gartner Objectivity Disclaimer

Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner’s research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.