Generally speaking, customers are introduced to your SaaS company through your marketing team, sold on your product through your sales team, and on-boarded and serviced by customer success.
Even though each team plays a critical role in generating revenue for the company, their purposes and processes are often unaligned. In some cases, they don’t communicate at all.
Sales and customer success are notorious for failing to work together. Traditionally, sales worries about closing deals and customer success worries about retaining customers. That seems like a clear and simple division, but it actually causes more harm than good.
In a survey by Act-On, only 37% of companies who reported a misalignment between teams met their revenue goals, and only 7% exceeded their goals. On the other side, 81% of companies who beat their revenue goal considered their teams at least somewhat aligned.
Aligning means the teams serve a common purpose. They have reason to work together because each team is driving the same metrics and supporting the same goal.
An isolated sales team has a simple goal: hit the sales number. They aren’t concerned about who buys the product, as long as they can turn leads into sales. Once the new customer is “in the system,” they are someone else’s problem.
Customer success, on the other hand, is tasked with retaining customers. They want customers to pay for the service again and again, which means the customer has to realize some value with the product.
There are some customers who will never find that value. It’s not your fault or theirs. Your service just won’t solve their problems. What happens if the sales team sells to someone like this? Eventually, the customer will wise up to the bad deal and cancels their service.
Sure, the sales team technically made a sale, but the company didn’t grow. Customer success was handed a customer they were never going to serve well. Sales and customer success teams have expenses too, so a quick churn may even cost the company money. That’s a poor long-term strategy.
This cycle can cause tensions between teams. Sales is frustrated because customer success can’t keep their customers (which might result in commission clawbacks) and customer success is frustrated because the customers that pop into the system aren’t right for the product and inevitably cancel (which wears down their retention numbers).
In some extreme cases, customer success recognizes a poor fit customer and deliberately prevents the sales team from attempting to upsell. Kathleen Lord, SVP of Sales and Customer Success Intact explains to Insightsquared: “A lot of times with CSMs, it’s less risky to keep the account small. The smaller it is, the less it hits their bottom line if it doesn’t renew.”
Here’s an example of disconnect: both sales and customer success are leaning on the product developers. Sales wants a new feature so they have more selling tools, but customer success is pushing app performance to save customers who have complained.
In this example, the teams have different goals that compete against one another. That type of siloing is no way for a company to operate.
To get your teams to work together, they need to have the same goals.
Make both teams responsible for sales and renewals. Customer success can support sales by giving the sales team information about what makes the best customer. Sales can support renewals by making sure they only sell to customers who fit the product well.
Customer success and sales leaders should communicate regularly. They should never be put in a situation where a lack of communication supports their individual goals. They should pass feedback to one another regularly and have honest discussions about customers that churn and customers that are pleased with the service.
(Check out this post I wrote on creating high performing teams.)
Often this is best achieved by having the customer success and sales leads report to a higher executive who is responsible for a customer’s journey throughout your organization. This person (perhaps the VP of Marketing or CEO) forces customer success and sales to work together.
I won’t lie: You’ll probably get some pushback here from both teams. They won’t be comfortable with unfamiliar responsibilities. There will be an adjustment period where they get used to working together. You might want to look into some team building exercises.
So how do sales and customer success work together? The first thing they need to do is identify what a well-fit customer looks like.
Growth isn’t fueled by the number of prospects that come through your door. Instead, growth is powered by customers who fit your product – customers with problems that you can solve.
Sales and customer success can align their teams for mutual success by identifying well-fit customers.
A well-fit customer is someone who can achieve the full value of the product in a reasonable amount of time. The customer should only have to make substantial changes to their business process if that’s normal for the industry and solutions your company provides.
Achieving a tight customer fit provides some major benefits…
1. More renewals – If a customer’s problem is being solved by the product, there’s a good chance he’ll renew his service over and over.
2. Lower churn – Customers who are successful with your product won’t churn. Retention, remember, is the secret to predictable revenue.
3. More upsells – A customer who finds real value with the product is most likely to upgrade their service level (assuming the higher service increases that value).
4. Fewer clawbacks – Nothing irritates a salesman more than refunding a commission. Keep your teams focused on selling by making sure their leads are as close to customer-fit as possible.
5. Higher lifetime value – Naturally, a customer who sticks around longer, will pay you longer, but you should also consider referrals. A well-fit customer who is happy with the service will refer you to other well-fit customers. This increases your profit from each customer and reduces your customer acquisition cost (because some customers are costing $0).
6. Fewer resources spent – If your customers fit your product, they will experience fewer obstacles and will need less hand-holding. This frees up your customer success and account management teams so they can work on growth-related projects, not putting out fires.
7. Growth – All of these benefits push the most important metric: growth.
The best source of information about the customer is the customer. Customer success has the most contact with the customer, so it should be their job to accumulate information about…
Furthermore, look to your metrics. Who achieves value quickly with the product? Who requests the least amount of help? Who spends the most time in the product, has the most user accounts, or works with the most data?
That isn’t to say the sales team is clueless. They pick up a ton of information during the sales cycle. All of this data should be compiled in a place that’s accessible to both teams. It’s actually a good idea to make this information available company-wide, too.
Turn this data into a clear list of features to pinpoint a well-fit customer. Sales should use this checklist as a way to identify prospects who are ready to buy the product quickly and will achieve sure and fast value from it. Not only will this checklist improve retention rates, but it will quicken the sales cycle.
Once you begin focusing on well-fit customers, everything gets a little easier. Growth begins to climb because fewer customers are leaving.
If you need some helping getting your sales team and customer success team on the same page, contact us.