If you are a SaaStr reader, you’ll know how passionate I am about Customer Success. For one simple reason: Second Order Revenue.
Upsells. Renewals. Word-of-Mouth. Champion Change. What it all means is that if you do it right, you’ll make 6x or more the revenue from your customers after the sale itself. The details on that math here.
And I passionately believe about measuring things. Churn, upsells, renewals, and all that, and compensating against it. And about measuring and identifying Almost Churn. And I’m very pleased next generation tools are helping us do a lot of this with software now (kudos to Gainsight for its recent $20 million venture round in the space!).
Having said all that, there’s one thing everyone that’s sold into the enterprise knows — the personal touch still matters. If you really want to close that big deal, you’re probably going to have to get on a plane. At least, to maximize the deal size and odds of closing.
And it works just the same with your customers after you close them — only more so. You have to meet them. Talk to them. Hear their concerns. Share your vision and roadmap. And show them respect for having chosen — and often risked a bit of their career on — you.
Generally, as founders we do a pretty good job of doing whatever it takes to get a big deal closed. But often a suboptimal job of everything after that. Because we’re often off then to help with the next fire, the next drama, on the Next Big Deal.
But let me suggest that once you hit $1-$2m in ARR at least — that that is a mistake. Instead, you need to implement the 5+2 Rule. For not just your customer success team, but yourself as well.
The 5+2 rule is simple:
- Every Co-founder including especially the CEO, plus every Customer Success Manager, Must
- Meet On-Site with 5 Customers a Month, Every Month, or 60x a Year
- And Get 2 Customer Badges. Every Year for a Bonus.
I’m guessing you are failing this test, as is 80% of your customer success team, however big or small it is. For the CSM team, it can seem like there are just way too many in-bound requests every day to get out into the field 5 times a month. And for the CEO and co-founders, it can seem like just getting the new customers in is all the bandwidth you have.
But trust me. A phone call is not a meeting. You know this. A phone call does not build attitudinal loyalty. A big customer event every year can help (you need to do this, too). But everyone, every month, should pick 5 of your best customers — and go meet them. Especially the ones that are within a drive.
What if I have nothing to say, you say? No problem. Just show them your roadmap, and ask for feedback on it, and on issues they are having today. That alone will fill the meeting.
And you’ll learn something magical:
- First, customers love to meet the CEO. Even if it’s just a CEO of a 10 person start-up. They love it. They never get to meet the CEO of their own company. But they get to meet you.
- Second, they’ll never churn as long as they are reasonably happy and you go visit. If you don’t let them down, and they get to know you personally — they will never churn. At least, almost never.
- Third, you’ll learn which customers are actively using your product — but are unhappy and at risk. It’s easy to see risk once usage or log-ins decline. But usually, that’s too late. What about if your customer is angry, but a prisoner, stuck still actively using the product — for now? They may not tell you on the phone. You won’t see it in the metrics. But they will tell you in person. It may not be a fun meeting. But — you’ll then be able to save them. If you visit.
It all builds Attitudinal vs. mere Behavioral Loyalty. And beyond the above benefits, Attitudinal Customers are worth about 3x those who only use you because they are stuck with you.
And if your CSMs do their job the right way — at least two of their customers will give them a Badge by the end of the year. A real, physical, get-into-the-front door Badge. Because they won’t want to have to check them in all the time — once they’ve become part of a team. So don’t require this. But pay a bonus for it.
So net net, once you have a bunch of customers — it’s actually a much more lucrative use of your time to spend time with the ones you’ve closed, not the ones you are trying to close.
I know the squeaky wheel gets the grease. I know it seems you need to spend all your available customer bandwidth getting more new customers in the door. But enforce the 5+2 rule. For your Customer Success team — and just as importantly, for yourself.
I guarantee you’ll see huge results 12, 24 and 36 months out.
(Cross-posted @ saastr)