Eric Chernoff, Co-founder & CEO
With customer acquisition costs through the roof and more than 75% of new revenue coming from existing customers, how your team interacts with customers over the next 5 years will make or break your company.
On the exec team at LiveRamp (NYSE:RAMP), I was fortunate enough to see the transition from small startup to multi-billion dollar publicly traded company. A few lessons stand out:
- Each quarter the new revenue we were generating from new logos was a fraction of our total recurring revenue from existing customers
- Customer experience is much larger than our front-line “customer-facing employees” – i.e., product, marketing, engineering, sales and the entire company are responsible for customer outcomes and success
- We never truly understood the behaviors we were doing for our customers across multiple teams of the entire org, and more importantly, we didn’t know what was working
At Retain, we partner with customer success leaders at the largest enterprises in the world. We work with leaders at companies like Nielsen. I love working with these executives and innovators because they exist in a world that is rapidly changing and all of them are visionaries in how they are leveling up their functions. Here’s what we’re seeing:
First, customer success departments are now the growth centers for a company. As mentioned above, established enterprises generate more than 75% of new revenue from existing customers. In fact, companies with a higher Net Retention Rate (recurring revenue + expansion revenue – churned) receive higher overall valuations. For example, a company with a 110% net retention rate receives, on average, a 7x higher valuation multiple than a company with a 100% net retention rate.
Without customers, we don’t have a business for long. And who owns customers? We find at the largest enterprises, it tends to be customer success (sometimes known as relationship managers, account managers, support rep, customer service and more).
Stated simply: the team that is responsible for keeping customers happy, creating value for customers, and much more now has an even larger charter – they are the drivers and gatekeepers of growth for the business.
Second, customer success is a science that relies on data.
If I were writing this 20 years ago, first it would be on my AOL profile, and second it would likely state that sales and marketing are “an art and not a science.” Having the luxury of being 20 years past 2002 (and no longer using dial-up), we know more than ever that sales, marketing and all functions across the customer lifecycle need to be grounded in data and science.
Customer success is a company-wide initiative. While customer success owns the customer relationship, they also have to coordinate with a variety of teams (e.g., sales, marketing and product) and units (e.g., support and renewals) that touch the customer, and all of these employees are working across 100s of systems and locations. As a result, the number of workflows and touchpoints is exponentially more than what you would find in sales and marketing – and remember, the customer is more important than ever.
Third, we can’t hire fast enough or scale headcount to keep up with the needs of the business. Customer Success Manager is one of the top 5 most listed roles companies are hiring for on LinkedIn, right there with engineers and data scientists. However, the model of growing customer success headcount based on a list of accounts and revenue simply doesn’t scale. I spoke with the CCO of a publicly traded company last week and she stated, “It took us 8 years to get to $1B in revenue, and we’re going to get to $4B over the next two years. We can no longer throw bodies at supporting our customers and we have to find ways to scale.”
The challenges don’t stop there, however! Historically software vendors have targeted Sales and Marketing functions by offering leaders robust platforms to scale, optimize, and glean insights across these operating units.
Customer Success as an industry is still evolving rapidly, so leaders are also missing the instrumentation and tooling that they need to meet the expanding requirements demanded of them to accomplish their growth targets. The leaders we talk with realize this and stress the fact that they are flying blind, and cannot afford to continue to do so. One of our customers at a Fortune 100 company with an org of thousands of employees said, “My team is doing 50 things, and I don’t know what those 50 activities are. More importantly, only 5 of those activities actually matter. I need visibility to know what we’re doing, what’s working, and what we should stop doing.”
This is precisely why we work with executives at the largest enterprises in the world; they have an urgent need tied to the direct success (and existence) of the business, yet they have been flying blind until using Retain.
Retain provides customer success teams with instrumentation they need to drive retention and growth. We provide workflow intelligence that combines all account and engagement-related work into a full view of your customer activities, across all people who participate in the customer lifecycle. The platform provides true visibility and insight into what’s working and what’s not. This allows leaders to not only know what’s happening but helps them optimize their efforts, grow non-linearly, while finding moments of genius and turning them into habits.
With existing customers generating more revenue than ever before, we no longer have to fly blind and can now identify the behaviors that matter.
Want to identify the 5 activities that actually drive customer value? Email us @ email@example.com