customer satisfaction
Beyond the Hunt: Fueling Sustainable Enterprise Sales Growth
The software start-up world is obsessed with “Hunters” – salespeople laser-focused on landing new customers. Job boards are overflowing with companies in “growth phases,” desperate for new logos. Understandably, the revenue from each new customer can mean a 10-20x multiple in company valuation in the VC-fueled race toward an exit. What happens after the deal closes ultimately determines a company’s success. Sustainable growth requires a systematic approach for ongoing customer success and satisfaction.
The Long Game: Profitability and Sustainability
My experience leading a large business unit and running my own company has taught me that sustainable growth requires more than just a flood of new logos. Here’s why:
- Cash flow is King: Lines of credit can vanish overnight (remember Silicon Valley Bank?). Relying solely on external funding is risky.
- Not All New Business is Good Business: Unprofitable accounts, high-churn risks, and customers with limited growth potential can drain your resources faster than you can acquire them. Efficiency matters for scalability.
- Profits Drive Long-Term Growth: Organic, profit-fueled growth, especially when driven by innovation, creates a much more resilient and valuable business.
- The effort and costs associated with closing new customers can be high in many industries. Your install base business helps fund new growth.
- Churn negatively offsets growth (think net revenue retention, or NRR) and limits profits that fund growth.
The Power of the Hybrid Sales Model
To achieve sustainable growth, you need either an extensive, fully integrated organization that seamlessly transitions from sales to implementation (few companies can do this) or a hybrid sales team that excels at both hunting (50-70%) and farming (30-50%). Landing a new customer is hard work, but retaining and growing them is just as challenging and crucial. Customer acquisition costs are often too high to justify losing a customer only a year or two after the initial win. Treating new customers as assets (not commodities) is essential to long-term success.
Mastering Strategic Accounts: Turnarounds and Growth
Large, strategic accounts—Tier 1 companies with strong brand recognition and significant revenue potential—present unique challenges. In my experience, these accounts often fall into two categories: those I initially closed and then grew (ideal, as you have already laid the foundation for success), and those I inherited in a neglected state and had to turn around.
Turnarounds require a unique skill set. They demand as much time and sometimes even more effort than landing a new logo, blending aspects of both hunting and farming. It takes commitment, skill, patience, and effort to understand an organization and find new ways to deliver value. Relationships and trust take time to develop, and in this situation they are in question (or worse).
The lesson learned is that it is better to take a proactive approach to keep adding value for those accounts, rather than neglect them and spend a lot of time, money, and effort rebuilding trust and earning their business again.
Case Study: From Churn Risk to Multi-Million Dollar Expansion
Take, for example, a large Financial Services company I inherited when their Strategic Account Manager left. The account had been neglected for two years and was riddled with problems. We lacked executive relationships and higher-level visibility within the organization. They were evaluating competitors, and we knew nothing about it! Even though they were an existing customer, we were the underdog.
I started by organizing a day-long on-site meeting to understand their pain points and needs. We identified several immediate issues, shared our vision for the future, began building trust, and demonstrated our commitment to their success. Following this, we spent a few hours getting to know the team over dinner. It was an eye-opener for me, as they shared more about their needs, how best to approach them, and their disappointment with our company’s past efforts.
The result? First and foremost, we saved the account. Within three months, I closed a $500K expansion deal, followed by a $500K consulting engagement and then a $3.25M two-year cloud expansion and upgrade prepay deal. My team and I rebuilt the relationship, solved critical problems (even going beyond our product scope), and provided a clear path forward with our AI-powered platform. I became a trusted advisor who was valued by their executive team. It was a true win-win.
The Bottom Line: Building a Sustainable Sales Engine
Install base growth and customer retention are critical for long-term success, especially with larger customers. The approach has to be multi-dimensional. It is a team effort, and the Account Executive is the quarterback. Relationship management, customer success teams, support, and services all play a role. Effective communication is bi-directional, with the customer having insight into what is coming down the road and input into the direction of the products they rely on. This becomes a true partnership that adds significant value to both organizations.
Does this hybrid approach apply to every company? If you’re IBM or Oracle, your offerings are broad and deep, and your customers are largely locked-in. “Land and expand” is part of their DNA. And if you’re selling end-of-life products, your focus might shift towards maximizing the “long tail” through customer success and services to minimize costs and maximize profitability.
However, for most growth-stage Cloud and SaaS companies, the hybrid sales model is more essential to their success than they probably realize.
Call to Action:
- Evaluate your sales team structure and compensation plans. Do they incentivize both new customer acquisition and ongoing account growth?
- Invest in training and development for your sales team. Equip them with the skills needed to excel at both hunting and farming. It can be a difficult transition, but it is worth it in the long run.
- Need help building a high-performing hybrid sales team or turning around strategic accounts? Let’s connect!
Diverse Testing for the Best User Experiences
Long before I began consulting, I was developing new applications for a Marketing company. Nearly everything was built from the ground up then, and there was very little reuse. That changed over time as I developed reusable functions and eventually created a “standard system” that significantly reduced development time due to reuse. Throughout this multi-year period, I had an unplanned but valuable assistant – “Wendy”
My user interfaces were generally well received for their layout, workflow, help screens, etc. But a new hire on the Customer Service team consistently ran into problems. I was young, and one of my first interactions with her probably went something like this: “Why would you do it that way? That doesn’t even make sense? Have you ever worked with computers before?”
She began crying. I felt like a jerk as my frustration began to wane. Days later, I realized Wendy was a gift and not a problem. She had an incredible knack for finding obscure flaws and breaking things. I embraced it, bought her lunch, and asked her to help improve my software. She was excited to help, and eventually we laughed about our initial encounters.
Wendy and I had become allies in a quest to create custom software that provided a better, problem-free user experience. Nothing was taken for granted. Everything became more robust. Surprisingly, everyone appreciated these changes, not just Wendy. She helped me become a better programmer and analyst, and I gave her an experience that helped her become one of the first Quality Assurance Analysts in the company. It was a win-win.
There is often a considerable difference in the expectations and ways that Gen Z, Millennial, Gen X, and Baby Boomer users interface with applications. Creating a one-size-fits-all application is far more challenging today because of this simple fact. But it is essential to success.
People today tend to move on when their experiences fail to match their expectations. Investing in your system’s “Wendy-proofing” can become a competitive advantage. I have long believed that “People buy easy.”
If one person encounters a problem, others will likely follow unless you implement a remedy. It is more work, but the result can be increased satisfaction, usage, and loyalty. That seems like a good tradeoff to me.
What are your thoughts?
What are you doing to improve CX today?
In challenging times, minor frustrations can lead to harmful, long-term negative sentiment. Your approach to Customer Experience (CX) matters more than ever during this pandemic crisis. Your business needs to protect relationship capital and see this as an opportunity to appeal to your next generation of loyal customers.
Recently, I sold a few gold coins on an auction website. The transactions were great and concluded quickly. However, the payment arm of this organization appears to have a bug in its tracking system for USPS Registered Mail. The transaction status displayed “shipped,” but when you clicked the “Tracking” button, it was clear the package had been delivered a few weeks earlier. Still, they were holding a significant amount of money without a clear release date.
While that was a little frustrating, what happened next changed my feelings about this company. I sent several emails to Support and received canned responses. I used their chat option and spoke to a couple of “people” who were either chatbots or should be replaced by chatbots, because no matter what information I provided, the response was always the same and not helpful.
Now, think about tens, hundreds, or even thousands of customers or prospects having problems getting information about your products and services, getting assistance with questions or support for problems, and working with your company in general. In times of increased stress, uncertainty, or competition, the customer experience for each anticipated archetype must be as ideal as possible to increase engagement and loyalty.
Consistently positive interactions, from interactions with branding and marketing, to the customer journey, to onboarding new customers, to successful implementations and support, increase lifetime customer value, repeat business, and overall business growth. Every touchpoint should increase your emotional connection with that customer.
I’ve always told my teams that “People buy easy,” so, as a group or organization, we aim to make it as efficient and frictionless as possible to conduct business with us. By doing that, being fair, and acting with integrity, we earn loyal customers who support our business’s growth.
Relationships develop over time, and each interaction helps determine the eventual outcome. Understanding what differentiates your company and products in your customers’ and prospects’ eyes can help you create more meaningful, consistent, and valuable interactions. People appreciate a positive customer experience, so those efforts may ultimately lead to developing Customers for Life.
Now is the time to evaluate your end-to-end processes, procedures, guidelines, and interfaces. Be extremely critical as you ask yourself, “Is this how I would like to be treated as a customer?” By making CX a strategic priority, your business or organization will eliminate friction and ensure customers are treated well and feel valued. Moreover, as you increase install base loyalty and engagement, you will be rewarded with renewals, expansion, references, referrals, and suggestions to improve your products. Everyone wins.
Investments in CX today can deliver an immediate payback and increase long-term growth.
It’s not Rocket Science – What you Measure Defines how People Behave
I previously wrote a post titled “To Measure is to Know.”
The other side of the coin is that what you measure defines how people behave. This is an often forgotten aspect of Business Intelligence, Compensation Plans, Performance reviews, and other key areas in business. While many people view this topic as “common sense,” based on the numerous incentive plans you run across as a consultant and compensation plans you submit as a Manager, that is not the case.
Is it wrong to have people respond by focusing on specific aspects of their job that they are being measured on? That is a tricky question. This simple answer is “sometimes.” This is ultimately the desired outcome of implementing specific KPIs (key performance indicators), OKRs (objectives and key results), MBOs (Management by Objectives), and CSAT (Customer Satisfaction), but it doesn’t always work. Let’s dig into this a bit deeper.
One prime example is something seemingly easy, yet often anything but: compensation plans. When properly implemented, these plans drive organic business growth through increased sales, revenue, and profits (three related items that should be measured). This can also drive steady cash flow by closing deals faster and within specific periods (usually months or quarters) and focusing on models that create the desired revenue stream (e.g., perpetual license sales versus subscription license sales versus SaaS subscription sales). What could be better than that?
Successful salespeople focus on the areas of their comp plan where they have the greatest opportunity to make money. Presumably, they are selling the products or services that you want them to based on that plan. MBO and OKR goals can be incorporated into plans to drive positive outcomes that matter to the business, such as bringing on new reference accounts. Those are forward-looking goals that increase future (as opposed to immediate) revenue. In a perfect world, with perfect comp plans, these business goals are codified and supported by motivational financial incentives.
Some of the most successful salespeople are the ones who primarily care only about themselves (although not at the expense of their company or customers). They are in the game for one reason—to make money. Give them a well-constructed plan that lets them win, and they will do so predictably. Paying large commission checks should be a goal for every business because properly constructed compensation plans mean their own business is prospering. It needs to be a win-win design.
However, suppose a salesperson has a poorly constructed plan. In that case, they will likely find ways to personally win with deals that don’t align with company growth goals (e.g., paying a commission based on deal size but not factoring in profitability and discounts). Even worse, give them a plan that doesn’t provide a chance to win, and the results will be uncertain at best.
Just as most tasks tend to expand to use all the time available, salespeople tend to book most of their deals at the end of whatever period is used. With quarterly payment cycles, most of the business tends to book in the final week or two of the quarter, which is not ideal for cash flow. Using shorter monthly periods may increase business overhead. Still, the potential to level out the flow of booked deals (and associated cash flow) from salespeople working harder for that immediate benefit will likely be a worthwhile tradeoff. I pushed for this change while running a business unit, and we began seeing positive results within the first two months.
What about motivating Services teams? What I did with my company was to provide quarterly bonuses based on overall company profitability and each individual’s contribution to our success that quarter. Most of our projects used task-oriented billing, where we billed 50% up-front and 50% at the time of the final deliverables. You needed to both start and complete a task within a quarter to maximize your personal financial contribution, so there was plenty of incentive to deliver and quickly move to the next task. As long as quality remains high, this is a good thing.
We also factored in salary costs (i.e., if you make more than you should, you’re bringing more value to the company), the cost of rework, and non-financial items that benefited the company. For example, writing a white paper, giving a presentation, helping others, or even providing formal documentation on lessons learned added business value and would be rewarded. Everyone was motivated to deliver quality work products on time, help each other, and do things that promoted the company’s growth. My company prospered, and my team made good money to make that happen. Another win-win scenario.
This approach worked very well for me and was continually validated over several years. It also fostered innovation because the team was always looking for ways to increase their value and earn more money. Many tools, processes, and procedures emerged from what would otherwise be routine engagements. Those tools and procedures increased efficiency, consistency, and quality. They also made it easier to onboard new employees and incorporate an outsourced team for larger projects.
Mistakes with comp plans can be costly – due to excessive payouts and/or because they are not generating the expected results. Backtesting is one form of validation as you build a plan. Short-term incentive programs are another. Remember, without some risk, there is usually little reward, so accept that some risk must be taken to find the point where optimal behavior is fostered, and then adjust the plan accordingly.
It can be challenging and time-consuming to identify the right things to measure, the right number of things (measuring too many or too few will likely fall short of goals), and the incentives that motivate people to do what you want and need. Anything worth doing is worth doing well. Hopefully this post provided ideas on how to make that happen.
Acting Like an Owner – Does it matter?
One of the biggest changes to my professional perspective on business came when I started my own consulting business. Prior to that, I had worked as an employee for midsize to large companies for ten years and then as one of the first hires at a start-up technology company. I felt that doing hands-on work, managing, selling, and helping establish a start-up (where I did not have an equity stake) provided everything needed to start my own business.
Well, guess what? I was only partially correct. I was prepared for the activities of running the business but really was not prepared for the responsibility of running a business. While this seems like it should be obvious, I’ve seen many business owners whose primary focus is on growth/upside activities and not the day-to-day. That type of optimism is important for entrepreneurs – without it, they would not bother putting so much at risk.
People tend to adopt a different perspective when making decisions once they realize that every action and decision can impact the money moving into and out of their own wallets.
Even in a large business, you can usually spot the people who have taken these risks and run their own business. I was responsible for a Global Business Unit with $60+ million in annual sales and ran it like a “business within a business.” Having P&L responsibilities meant the decisions I made mattered to my success and the success of my business unit.
It’s more than just striking out on your own as a contractor or sole proprietor. I’m talking about the people who have had employees, invested in capital equipment, and gone all-in. These are the people thinking about the big picture and the future.
What do these people do differently than those without this type of experience?
One of the biggest things is they view business as “good business” and “bad business.” Not all business is good business, and not all customers are good customers.
There needs to be a fair commercial exchange where both sides receive value, mutual respect, and open communication. You know this works when your customers treat you like a true partner (a real trusted advisor) instead of just a vendor, or at least do not try to take advantage of you (and vice versa).
A business is in business to make money, so if your work is not profitable, you should not do it. And, if you are not delivering value to an organization, it is very likely that you would be better off spending your time elsewhere – building your reputation and reference base within an organization that was a better fit. While that may not be true for all business endeavors (think how long it took Amazon to become profitable and where they are now), it generally is true for employees at all levels.
For example, “bad” salespeople (who may very well regularly exceed their quotas) typically do the following:
- Only care about the sale and their commission – not profitability, fit, customer satisfaction, or the effort required to support that customer.
- Selling products and services people don’t need.
- Making promises they know will not be met is a typical sign of a person who does not think like an owner.
- Their primary focus is on personal short-term benefit, and not on growing accounts or the success of the business.
These are examples of someone who does not think or act like an owner.
How you view and treat employees is another big difference. Unfortunately, even business owners do not always get this right. I believe that employees are either viewed as Assets (to be managed for growth and long-term value) or Commodities (to be used up and replaced as needed – usually treated as fungible and easily replaceable). Your business is usually only as good as your employees, so treating them well and with respect creates loyalty and results in higher customer satisfaction.
Successful business owners usually look for the best person out there, not just the most affordable person who is “good enough” to do the job. On the flip side, you need to quickly weed out people who are not a good fit. Making good decisions quickly and decisively is often a hallmark of a successful business owner. The saying about hiring slowly and firing quickly makes even more sense when you are running a lean operation that requires every person to contribute to the company’s success.
Successful business owners are generally more innovative. They are willing to experiment and take risks. They reward that behavior. They understand the need to find a niche where they can win and provide goods and/or services tailored to those specific needs. Agility can be a significant competitive advantage. My company often contracted with Fortune 100 companies for this very reason. We could attempt something faster, for less money, and with less scrutiny than could be done internally. Those companies were outsourcing innovation.
Sometimes, this means specialization and customization, and sometimes, it means personalized attention and better support. Regardless of what is different, these people pay attention to the small details, understand their target market, and are good at defining a message articulating those differences. These are the people who seem to be able to see around corners and anticipate both problems and opportunities. This can be a learned skill, developed out of necessity.
Former business owners are usually more conscientious about money. I created a “my money” policy on expenses. If someone felt something was important enough for their success that they would spend their own money on it, then they had my blanket approal to move forward. This approach created understanding and accountability.
Every dollar in the business provides safety and the opportunity for growth. Most owners are not the people who routinely spend hundreds or thousands of dollars on business meals or who take unnecessary or questionable trips to nice places. Money saved on unnecessary expenses can be invested in new products, features, or marketing for the benefit and growth of their company.
While these are common traits of successful business owners, you can develop them even if you have never owned a business. Hence the title, Acting like an Owner.
When selling, are you focused on delivering value, developing a positive reputation within that organization and with your customers, and profiting from long-term relationships? When delivering services, is your focus on delivering what has been contracted – and doing so on time and within budget? Are your projects used as examples of how things should be done within other organizations? When leading, are you being fair and transparent with your team? Are you spending money on the right things – not wasteful or extravagant things?
These are things employees at all levels can do. They will make a difference and help you stand out. That opens the door to career growth and change. And it may get you thinking about starting the business you have always dreamed of.
Awareness and understanding are the first steps towards change and improvement.
Where Ideas, Experiences, and Lessons Learned Intersect 