Over the years, I have worked with lots of great sales and service organizations when they were implementing CRM systems. We spent a lot of time mapping out sales stages, defining sales activities, and building sales tools.
Most companies have a process for closing the initial sales
What was clear is that they have invested lots of time and money in creating a sales organization that knows what it is doing and can close deals. That is, they could close new deals.
But what about retaining customers?
But they don't have a plan for what happens next
The rise of SaaS and subscription pricing means that customer renewal processes need to evolve too. SaaS vendors need to identify what needs to happen to make the customer choose to renew year after year. And they need to look at this from both their perspective and the perspective of the customer.
The image below shows the typical approach many SaaS companies take with renewals. Vendors tend to focus solely on the initial sale and then waits for the renewal period to come around. Sure, they will provide some customer support and will focus on maintaining the relationship with the buyer, but they do little to ensure the customer is getting value from the system….which is the main criterion on which customers base their renewal decisions.
Typical SaaS Renewal Process
And they lose a lot of customers at renewalsThe problem is this: the customer has a different renewal process.
That is, driving effective and sustainable user adoption and (therefore) getting measurable value/ROI are on the customers’ critical path for renewals.
If they don’t achieve these two things, they don’t renew. Period.
IT User Adoption & ROI are critical path for customer renewals
Including Customer Success Management activities after go-live is critical to renewals
Sustaining user adoption and achieving measurable ROI has always been the Achilles’ heel for IT projects. Prior to SaaS software, these problems fell 100% to the customer. Now, for the first time, the SaaS model means the vendor has a vested interest in helping customers solve these problems.
So, what is a SaaS vendor to do to help customers? Establish Customer Success Management (CSM) teams to help ensure customers achieve their goals and renew they software.
Quite simply, profitable SaaS vendors recognize CSM is on the critical path to customer renewals. And they must continue to provide CSM services over the life of the customer relationship, for once, a customer stops getting value from the system, and they stop renewing.
OBSERVATIONSo you formed a partnership with another company, but it is not providing as much value as the effort you invested. In a prior blog article, “To Partner or Not To Partner” we discussed the pre-screening factors that you should consider before forming a partnership. Assuming now that you have already formed a partnership, what do you do if it is not bearing fruit? Instead of debating whether or not to continue this partnership, consider the following assessment.
CONSIDER THISThe following questions will help you gather concrete information to have a fact-based conversation with your partner, with the goal of improving the partnership.
- What is the amount of time (in hours) and money that you (compared to your partner) spend developing the partnership on:
- Joint-Marketing Collateral & Events?
- Joint-Client Deliverables and Methodology?
- Educating each staff on partner’s value?
- Is the amount of client work appropriately divided between each partner? Is the allocation of work justified by the differing skill sets of each partner?
- How much time do you spend repairing the partner relationship vs. expand partner accounts?
- Does the partner’s actions change to reflect your suggestions to improve or do they continue with the status quo?
THINGS TO THINK ABOUTPartnership should require considerable investment – especially in the beginning – to ensure each party gets the most value. Should you find your partnership is not providing you due dividends, what is your plan to assess the situation and improve the partnership?
RELATED RESOURCESCheck out these other resources for more information related to this topic:
OBSERVATIONConsulting firms often debate whether to apply their business development effort toward building a partnership vs. seeking direct client opportunities. One key benefit of forming a partnership is the ability to expand sales opportunities while sharing marketing and sales costs. As tempting as it is to form a partnership with the goal to increase revenue while mitigating marketing/sales effort, you also should consider factors that could add frustration and internal cost if there is no alignment between the two companies.
CONSIDER THISWhile no one can predict the success or failure of a new partnership, there are some key considerations when evaluating potential partnerships:
1. Similar Company Values – this may seem nebulous and non-relevant to a business decision; however many business relations falter because one party valued a particular method of conducting business in place of the other party’s preferred value (for example: Party A pursues business sales no matter how the sale is achieved. Party B pursues business sales within ethical and legal parameters).
2. Matching Customer Profile – increasing sales in general is tempting, but if the new customers do not fit within your identified profile, you may not have the skill set to satisfy that new customer base. The result hurts not only your reputation, but also your new partner’s!
3. Balanced Workloads – just because you formed a partnership, you cannot afford to assume the workload to building and maintaining the partnership will be equal among partner companies. There are many instances where one partner ended up doing most of the internal, infrastructure work for the partnership (marketing collateral, sales outreach, IT systems, document management, etc.).
THINGS TO THINK ABOUTIn addition to the above considerations, it is helpful to monitor the amount of business each partner generates for the other. If you or your partner is delivering an unequal and disproportionate amount of the sales opportunities, you both need to look at the numbers and evaluate why this is occurring.
1. How often will you monitor joint/shared sales leads? Examples: 2. In addition to evaluating the raw numbers, what other factors will you examine? Examples:
- Customer type
- Customer demographic
- Pre-determined criteria for justifying contract is not for other partner