SALES MANAGEMENT

Sales tales: your customer success team target is customer references

Today’s tale: 4 lessons learnt counting reference-able customers

By Stephen Allott, Venture Partner, Seedcamp Sales Tales

Measuring sales team performance is easy. First you forecast a booking. Second you win the booking by entering into a legal contract with your customer. Third you invoice the booking and collect the money. You measure sales by counting bookings.

But what about measuring the delivery and customer success function? This is a frequent question at my Seedcamp Sales Engine Build workshops.

And what is the difference between delivery (customer on-boarding) and customer success?

Delivery is getting the customer into production (meeting the delivery specifications in the sale). Success is delivering the ROI in the customer’s internal business case over the next few quarters. So delivery is getting the customer using your tool. Success is exceeding their expected results.

And finally, should Customer Success also drive (be targeted and paid on) sales into the base? Or should Sales drive sales into the base? This issue can lead to a heated discussion. So let’s take these questions one by one.

So here are my 4 lessons:

  1. Target your Delivery/Customer Success function on reference-ability. Only.

The simple performance metric for both delivery and customer success is “Reference-ability”. We are in the same area as Net Promoter Score. Time and again the biggest source of lead generation is word of mouth from existing customers. Reference-ability is the key driver of word of mouth. Get them happy!

The metric to count is the number of reference-able customers at the end of each quarter. It’s that simple. We call it “closing reference-able customer count.”

2. There are 12 ways to define reference-ability precisely

What is your current definition? When you pay some-one on achieving a goal you need a clear definition. This topic is always a fun session for the Sales Engine Workshop. I ask the class for suggestions and we usually get to over a dozen. We then group them under public and private headings.

Public references

Private references

These can easily be measured for paying quarterly bonuses. Treat the global delivery / customer success function as one global team and pay them on the total reference-able customer count worldwide. This enables teamwork. Don’t divide these into territories in the early days.

Decide which of the 12 definitions of reference-ability is the one that triggers payment. Acceptance of a private reference call or email is often a good choice.

3. Track the status of the 12 dimensions of reference-ability for every customer

Create a Reference-ability spreadsheet with customer name down the left and these 12 states across the top. Make the cells Red Amber Green and watch them fill up. Make a note of the status in each cell and what you have to do to move the status to Green.

This is your Reference-ability Forecast. Just as you use the sales forecast to drive sales action, use the Reference-ability Forecast to drive customer satisfaction.

If customers are not paying their bills on time, this is a clue that they are not happy. Ask “what do we have to do to get paid?” Once you are paid, start asking what you have to do to get a reference.

Reference-ability can be traded. If a customer asks for a discount, offer a discounts in exchange for hosting showcases, speaking at seminars or taking reference calls or indeed any of the 12 attributes.

4. Evangelists inside customers are what you really want.

Add a column to your sheet with the number of evangelists you have in each account. Will they make prompted or unprompted referrals? If not why not. Ask them. Will they refer externally or only internally? Invest in keeping your evangelists current on your product and keep them feeling part of the family. Invite them to webinars and face to face briefings.

And a final question: should customer success be sales people as well?

This discussion in a Seedcamp Sales Engine Workshop always prompts a question about whom should drive sales into the customer base of existing accounts: the original (“hunter”) rep who opened the account, a separate existing (”farmer”) account rep or the customer success function.

“Crazy” said a seasoned CEO to my face recently. He told me my suggestion that the same sales rep should keep an account to grow it after opening it was “crazy”. Strong words and so often wrong. People have heard about “hunters” and “farmers” and think that a minor optimisation of mature business territory design should be used from the start.

To see why it’s so often wrong, imagine you have landed in a huge global account with a small early deal which took 6 months to close. There could be dozens of follow up sales. Why would you swap reps? Sounds crazy to me.

You can count on your reference-able customers to drive sales by word of mouth.

Tech vendor scale upper. Decide market strategy. Plan the numbers. Hire the people. Hit the numbers. Solve the problems. McKinsey, MUSE, SUNW, XROX,

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