Sixteen Ventures has driven growth across the entire customer lifecycle for more than 500 companies around the world directly, and thousands through speaking and publishing. Know more about Marketing, Customer Acquisition, & Churn Reduction Consulting for SaaS providers.
To design an effective onboarding process you must know what “onboarded” means or at what point a customer would be considered “onboard.”
“Onboarding Complete” is the first Success Milestone in the customer lifecycle, the time it takes to get there is TTFV (Time to First Value), and Onboarded is the customer’s new status as they move into the next phase of the lifecycle.
Your customers are considered “onboard” once they get actual value from OR (in more complex scenarios) see the real value potential in – outside of the promises made by marketing and sales – their relationship with you.
What those things actually look like will be 100% dependent on your unique relationship with your customers, but just from that simple definition, it should be clear that “getting value” or “seeing the real value potential” won’t be the same for each logical customer segment.
What “onboarded” is, the steps required to get there, everything involved in moving through those steps, etc. will most likely be at least a little different across segments, as well.
TTFV is a goal you can use to measure the effectiveness and efficiency of your Onboarding process, help determine appropriate interventions if that goal is or isn’t being met, and will also likely be different for different segments.
Oh, and TTFV can even be used as a metric for Sales, but that’s for another post on another day.
Customer Success starts with acquiring customers that have Success Potential.
Customers that have Success Potential are said to be good fit customers. This is the opposite of bad-fit customers that cannot get value from a relationship with us now or in the near future.
If you knowingly allow bad-fit customers to be acquired, nothing else you do in Customer Success will have the result you’re hoping for as those customers – no matter what you do – will never achieve their Desired Outcome.
To help you better understand and implement the concept of Success Potential in your business, here are some resources I’ve published on the subject.
Overview of Success Potential
This video is just under 6-mins, but could completely change your business.
Overview of Success Potential - YouTube
Deep-dive on Success Potential
This article on Success Potential has evolved over the last few years and is the most comprehensive resource on this subject anywhere.
How to get Sales to Stop Closing Bad-Fit Customers
How can you expect Sales to not close Bad-fit Customers in a repeatable, sustainable way if you’ve never communicated to them what a Bad-fit Customer looks like? This video tackles this very common, yet avoidable, problem.
How to get Sales to Stop closing Bad-fit Customers - YouTube
Salespeople: Work Less and Make More Money by Focusing on Good-fit Prospects
I made a video for salespeople and leaders that says WHY working with Bad-fit Customers is making them work harder for less money. Watch it and tag your sales team so they see it:
Salespeople: Work Less and Make More Money by Focusing on Good-fit Prospects - YouTube
Getting your customers to buy more from you is awesome.
Remember, you’re in business here and getting customers you’ve already spent money to acquire and serve to then expand their relationship with you – giving you more revenue – just seems like a super-efficient way to grow.
And it is.
But if you think for one minute you’re going to build a sustainable growth engine off the backs of unsuccessful customers, you couldn’t be more wrong.
Stop trying to upsell unsuccessful customers.
Unsuccessful customers don’t need – or want – to buy more of your stuff.
Obviously, right? Maybe… let’s explore this together.
Trying to upsell unsuccessful customers can have a lot of results, but none will involve you actually making the sale (without excessive concessions, undue pressure, and other things that don’t actually help the situation long-term).
Rather, by trying to sell more stuff to an unsuccessful customer, you’ll see results that range from simply pissing off the customer since you clearly don’t care about them, to causing them to ignore you in the future because you just don’t get it, or even causing them to churn or not renew because you’re so out of touch with reality.
No matter how you slice it, it’s a pretty big negative impact that’s 100% avoidable.
All that negativity and you didn’t even get the upsell. Nice work!
So take the customers that are not successful out of the contact list for Expansion (until they’re successful again); you weren’t gonna get the sale anyway, and now the damage will be avoided.
Now, if a customer is unsuccessful and you know it, don’t try to upsell them. Cool. Got it.
But that doesn’t mean you should simply ignore them!
Now you need to intervene to get them back on the path toward success.
Remember, expansion is simply part of the customer’s journey toward success. The longer they stay, the more they evolve and grow, the more their relationship with you will grow and expand, too.
I mean, you’re in business here and getting customers you’ve already acquired to expand their relationship with you just seems like a super-efficient way to grow.
And it is.
So when you have customers that don’t expand their relationship with you, it’s obvious that this is less-than-ideal revenue-wise.
But it’s more than that.
So much more than that.
Let’s dig in, shall we?
First, you must understand that expansion is part of the customer’s journey toward success.
Think about this… what do you sell customers on initially?
It’s most likely “do business with us, and you’ll become a better version of yourself.” We’ve all seen the Mario==>Super Mario meme.
So your customers come in assuming, since they bought your product or service, that they’re going to make that transformation.
But… most companies drop the ball right there. They don’t follow-through on that promise to make the customer a better version of themselves.
So the company ends up with high churn and within the customers that stay, very little to zero growth.
Often there’s contraction!
But if you actually follow-through on the promise made during the initial sales process, at some point down the road, your customer changes. They evolve. They grow. The customer’s Desired Outcome changes.
This is by design (or should be!).
That means you need to evolve and grow your relationship with them to meet this new Desired Outcome.
In order to meet their new goals, they will likely need to consume more of your offering: add-ons, additional capacity, services, other products, bring in users from other parts of their company, etc.
This isn’t really an “upsell” in the traditional sense as much as it is simply giving them what they need to continue their journey toward success.
If customers aren’t buying more, it is a sign they aren’t truly successful.
This means 100% retention at the same level isn’t actually something to celebrate. Sorry.
If you want to grow fast, don’t do what most companies do!
When most companies want to eke out some quick incremental growth, they’ll often have their sales people turn to their existing customer base to make some sales.
After all, you have a captive audience that you can sell to with little to no real effort, right?
Yeah… and you’ll get little to no real results, too.
Look, your existing customer base IS incredibly valuable… assuming you leverage that asset the right way.
Most companies handle Account Expansion poorly and therefore experience very poor results.
If you don’t want to be like most companies and to actually grow fast, leaving incremental growth for the other guys, and doing so in a customer-centric (and therefore sustainable!) way, continue reading.
This post could change your business. Seriously.
Want to grow fast? Have one team dedicated to bringing in net new Good-fit customers and a different, separate team dedicated to growing the relationship with those successful customers.
Now you have a two-pronged growth engine.
This customer growth team could be your CSMs (Customer Success Managers), CSMs + AMs (Account Managers) for more complex situations, or for really complex situations it could be CSMs + ADRs (Account Dev Reps) + AMs.
If you don’t have sales or success teams and everything is self-service, cool… just think of new customer acquisition as something different from customer growth and operationalize, design, and develop each in their own appropriate way.
Anyway, if you have your “new business” salespeople also handle upsells in addition to bringing in new logos you can watch your business grow… slower than you’d like.
If you only have one team doing both new business and expansion sales, at best it divides their focus, resulting in slower growth.
But if that ONLY cut the time dedicated to both of those functions in half, while it would slow growth considerably (kinda the opposite of what we’re trying to do here), no further damage would be done and it wouldn’t be so bad.
That’s just not reality, though.
You see, one of the main reasons having “new business” salespeople handle expansion is bad is that it breeds laziness and teaches customers to ignore you.
Instead of having to go out and prospect (that’s hard, you know), the salesperson can just turn to existing customers to hit their numbers, which is much easier. The problem, of course, is that they treat them as if they’re prospects, not existing customers we already have an ongoing and oftentimes complex relationship with.
I’m sure some amazing, rockstar AEs that do both new logo and expansion sales can code switch from cold prospects to existing customers and do no harm, but the reality is most people can’t. Or won’t.
So you’ll end up with an existing customer being hit with overly-aggressive sales tactics, for offers that don’t resonate, all while not considering whether the customer is successful or not.
And in far too many cases, the original AE isn’t the one that totally “owns” the customer, so other teams will probably be trying to sell them stuff, too.
Now they’re over-communicated with in a negative way and just start to ignore all comms from you – not just sales and marketing, but those intended to help them move toward their goal – while cultivating hatred for your company in the process.
Is this all the fault of the Salesperson? No. I mean, yes, they should know better as professionals (or even just grown adult humans), but most of the time it’s a leadership issue.
Someone put a process in place that almost ensured your valuable customers would be treated in a very negative way in an effort to get more money from them.
So yeah, leadership is to blame. Pow!
If you want to grow FAST, focus one team on going after good-fit, net new customers, and have another team dedicated to growing the relationship with those successful customers.
I always say, “If you want to stay a small company, have the original AE also handle Upsells” and it’s almost always met with frustration and push back. From sales.
Why? For starters, it’s “easier” for the AE to tap into existing customers to hit their numbers like I said above. But it’s more than that.
The way AEs are measured, managed, and compensated would be negatively impacted (and might actually be short-term; take this into consideration because it’s real) by the changes I’m talking about here.
That doesn’t make what I’m saying less valid, it just means the knee-jerk reaction is to push back on it. Some leaders frankly don’t want to deal with that pushback even though they know it’s not what’s best for the business as a whole.
Those aren’t actually leaders, by the way.
So in order to make these changes – which often means changing org structures and process that are years- or decades-old – this takes leadership buy-in and a dedication to making it work. Sometimes you have to get messier to get out of a messy situation.
But the exponential growth possible from doing Expansion the right way vs. the incremental growth that comes with the status quo should be enough.
Now, forcing products or services on customers when they don’t need, aren’t ready for, can’t be successful with, or otherwise don’t want them is a great way to hurt trust with your customers.
This usually happens because someone came up with an Account Expansion goal the same way they come up with New Business (logo) sales goals – pull it out of thin air (or somewhere else) – and then trying to hit that number without giving any thought as to HOW you’ll hit it or if it’s even possible given the characteristics and Success Vector of your customers.
So then quotas are created for whoever is responsible for expansion: “we need $500k in new Annual Recurring Revenue (ARR) from our existing customers in the next 6 months. There’s 5 of you, so that’s $100k/ARR each. Go.”
FML! Now what?
Blast. Spam. Pitch. Divert conversations to the (usually generic) offer. Spray and pray, baby.
This method has many side effects, from teaching your customers to ignore your messages and stop showing up for meetings with you because everything is always a commercial pitch, to causing them to full-on churn because they hate you now.
Oh… and when they ignore your sales pitches, they also end-up ignoring your important messages or skipping meetings that would actually help them be succeed… leading to a failure to achieve their Desired Outcome and then… churn.
There’s got to be a better way, right?
The way you avoid hurting trust with upsells is to remember this: as our customers evolve and grow, our relationship with them should evolve and grow, too.
Expansion is simply a PART of the customer’s journey toward their ever-evolving Desired Outcome. Understand the customer’s evolution and growth and figure out a way to put the right product or service in front of them at the right time.
Once you have that figured out, start planting the seeds for these Expansion opportunities with the customer early on so that the conversations that must take place to facilitate the expansion aren’t just expected… but anticipated!
Now it’s not a sales conversation but simply a discussion about the next logical step in their journey to success.
But, when it comes to operationalizing account growth, where do you draw the line between sales and expansion?
Good question, let’s dig in.
Well, if you want to remain a small company, have your New Business Sales team also handle Expansion (Upsells, Cross-sells, etc.) sales.
However, if you want to grow fast, sustainably, and predictably, you need to have people dedicated to bringing in new Good-fit customers and other, separate people dedicated to taking your successful, evolving customers and growing their relationship with your company.
And if you don’t have people handling sales or expansion but everything is done self-serve, great…. same rules apply; you must approach these two business processes differently.
There are many reasons for this, but the simplest is focus. Be deliberate in your growth.
But there’s more to it.
Those people dedicated to Expansion (I’ve talked about this before) must have a well-designed process created specifically for growing existing relationships. Companies that fail to realize this tend to stay small or when they grow, that growth is less than what it could be, slower than what it should be, and FAR more painful than it has to be.
Think about it… New Business sales is all about the unknown and is driven by made-up stretch goals. Salespeople need to go out there and literally pull revenue out of thin air to reach those made-up goals.
The things that are REQUIRED for New Business Sales to be successful – quotas, a pipeline with enough leads to hit your quota based on your close rate, aggressiveness, relentlessness, hustle, etc. – are the things that will absolutely KILL a real Expansion strategy.
I’m not saying anything negative about New Business sales here, it’s just that those things aren’t required for expansion and are potentially very harmful to your existing customer relationships.
In fact, putting a quota on Expansion often LIMITS growth potential while also HURTING the relationship with customers.
Rather than analyzing the customer base and uncovering real opportunities for expansion therein (I’ve talked about this before, but will elaborate in a future post), this quota-driven “New Business” approach to expansion almost always leads to mass email blasts and indiscriminate phone calls to all customers, or repurposing existing meetings already on the calendar to blindly pitch products they don’t need, when they don’t need them, and for some, when they’re not even successful as our customer!
And because expansion in this way is such a painful process, once the quota is hit – if that even happens – it’s over. We’re done here.
The reality is, we know so much about where our existing customers are on their journey with us, whether they’re successful or not, what their goals are, AND we have a relationship already, that expansion should be easy. If you’ll take advantage of this amazing position you have in your customer’s world and create an Expansion strategy that looks more like “Ascension” from their POV, it kind of is easy.
As our customers evolve and grow, their relationship with us should evolve and grow, too!
Let’s talk about Customer Engagement, specifically the Communication Model.
We communicate every day, all day.
We communicate with friends, family, co-workers, industry peers, customers, vendors, celebrities, trolls, politicians, restaurants, airlines, etc., every day.
We communicate more today than we ever had in the history of the world, and tomorrow, we’ll do it even more.
Yet despite all this communication going on, we really know very little about how to communicate effectively.
We think, since we do it all the time, we must be good at it, but as with most things, frequency should not be confused with proficiency.
So let’s dive into this whole Communication Model thing and figure out how to more effectively engage our customers by simply communicating better. Join me, shall you?
Customer Engagement Basics: Communication Model - YouTube
The History of the Communication Model
Going back a long time – I think in the 1950s – there was the Shannon-Weaver model, created through the coming together of two different people.
Over time, the model evolved. David Berlo expanded on the Shannon-Weaver concept in the 1960s. But since then, the Communication Model hasn’t really changed a whole lot.
But communication – type, frequency, etc. – has changed in so many ways.
I didn’t invent the Communication Model. Obviously, people before me had modeled this out.
But what I’ve done is taken that and simplified it, made it easier to understand, and figured out a way to apply it to Customer Engagement.
So the Customer Engagement Communication Model, if you will, has six different pieces.
Communication Model: Goal
First of all is the goal. What is the goal of the communication that you’re doing, the message that you’re sending, and the meeting that you’re setting up? If you don’t have a goal, then why are you initiating this communication? Every customer interaction should have an associated goal.
I don’t care if it’s a pop-up inside the app. I don’t care if it’s an email that you send. I don’t care if it’s a meeting that you’re having in person, on site, with the client. It should have a goal. I will say that the more valuable this interaction would be from them investing their time in it, probably the more important it is to have a goal.
But also, we want to have a goal for everything we do because we don’t want to teach our customers to ignore us. When you communicate without having a goal, you’re basically teaching your customers to just delete the message, send the email to spam, and just to ignore you. And that’s the opposite of what you’re going for here.
So every customer interaction should have an associated goal. The question to ask yourself is, “What do I want out of this engagement,” or, “What do I want out of this interaction?” And if you can’t add value with this conversation – if you can’t add value with this piece of communication that you’re doing – then don’t do it. Right?
And so you might, just as a way to start out, audit all of your communication with your customers, and take out the pieces that don’t have a goal. If you can’t state the goal, if you can’t figure out why we’re doing this, then don’t do it.
So, how many of you have a QBR – a Quarterly Business Review – with a customer, and all it is, is a check-in, and you don’t really know why you’re even doing it? Maybe you shouldn’t be doing it.
Communication Model: Receiver
The receiver – the communication receiver – is the person – most likely a human person – who’s going to receive the communication from you. I mean, I suppose we could be talking app to app, but I’m not going to worry about that right now. We’re talking about humans.
So this is the person who’s going to be receiving the communication from you. You have to take into consideration that there are probably different personas within your customer’s company, right? So who is actually the receiver? You have to make sure that the right message goes to the right receiver. That’s really important.
And when you’re thinking about who’s going to be receiving this message or this piece of communication, or who you’re setting up the meeting with, you also have to think about who the message is coming from, because a receiver who is an executive may not – and whether or not this is a good thing isn’t the point – be moved to action by a message coming from somebody at a lower level at your company.
If you want to get an executive’s attention, you might need to have another executive be the sender or the source of the message you are sending.
So you have to think about how you match the sender and the receiver. The main thing is that you really have to take into consideration who is receiving the message: is it the end-user, a brand champion, a power user, an administrator, an account owner, or somebody in accounting? I don’t know. That’s what you have to think about.
So for every message that goes out, you have to really think about who’s going to be receiving it. Who are you going to be setting up the meeting with?
Communication Model: Method
Then there’s the method – the communication method. This is the modality. This is the channel – whatever you want to call it – this is a meeting, this is an email, this is Slack, this is in-app messaging, this is whatever you use to communicate. It’s the method.
If you think about what Customer Success is – and you know that Customer Success is when customers achieve their Desired Outcome through their interactions with your company – the Desired Outcome has two pieces: one is the Required Outcome, and the other is Appropriate Experience.
Appropriate Experience is what is going to dictate the method of communication that you use. It’s going to dictate the modality, the channel, or the method. It’s also going to dictate the ratios of those different modalities that make up that Appropriate Experience.
So sometimes, for one particular customer segment, it may be more high touch. It may be more human touch – phone calls, in-person meetings, that kind of thing – augmented, obviously, with technology. But for some customer segments, it may all be digital, right? It may be very little high-touch, very little synchronous communication.
And when you think about that digital aspect of this, you usually go into some sort of automation, of being able to leverage systems to scale humans. And that’s awesome, but what you need to be thinking about is the fact that automation isn’t something that’s really anything special; it’s just what you would do by hand, manually, if you had an unlimited amount of time and resources. But because you don’t, you have to figure out ways to scale that.
So the reason I say it like that is when you’re talking about automating messaging, it can be hard sometimes to sit down and say, “Okay, how do I write a blast email.” Well, the reality is you don’t. You’re just writing an email.
You’re just creating some content that’s going to pop up in the app as if you were talking specifically to a very specific person about a very specific thing, right? So automation is just what you would do manually if you could, right? So, you need to take that mentality and figure out ways to scale that. And that’s where automation comes in.
The other thing about method is that if you are having human interaction – if you are spending time in meetings or spending time on the phone with your customers, if that is the appropriate method, the appropriate modality, or the appropriate channel – then you want to make sure you’re not scripting that, and you only have an outline or a checklist of things that you need to cover, because if you script out what you’re going to say to a customer, that script goes out the window as soon as the customer gets on the phone with you or comes into a meeting with you, because customers have their own agenda.
You need to have a checklist of the things that you need to get through, and you need to make sure that you always keep your customers on the right track during that meeting or during that phone call, but scripts don’t work. Flexibility is key. Think of it more as improv.
So now, let’s talk about some things around the method. The method is going to be determined by what your customers want or need as part of their Appropriate Experience. And this is obviously a very important thing. What people tend to do – and the reason I say it this way is that it’s based on the customer’s Appropriate Experience – is that very often, people default to what’s comfortable for them. So you, for example, say you want to send an email.
Your customer wants you to pick up the phone and call them. Which is the appropriate method? The appropriate method is whatever your customer wants, and if you don’t want to do that, too bad. You shouldn’t do business with that customer because you can’t give them the Appropriate Experience if you can’t pick up the phone and call them.
And if you can’t do that at scale in an economically feasible way, then that means that this customer would be a not profitable customer, and you shouldn’t go with a different modality just because it would be economically feasible.
You just shouldn’t be doing business with that customer. But that’s outside the scope of what we’re talking about here. However, that’s where Appropriate Experience comes in.
Communication Model: Sender
Now, let’s talk about the communication sender. I also refer to that as the source. But the sender is important to understand because when you send messages to our customers, when you request meetings with them, when you message them in app – when you do all of these things – you are hitting your customer with lots of different messages coming from different people.
So maybe it’s the Customer Success Managers; maybe you have multiple CSMs on a particular account. Or maybe it’s the support system, maybe it’s the support team, maybe it’s the system itself, maybe your executives are sending them messages, maybe finance is sending them messages, sales is also coming in, maybe it’s your channel partners.
You have all these different senders that are hitting your customers – that are hitting the receivers. You have to make sure that the sender matches the receiver and that the receiver matches the sender so that the communication is working… so that it truly resonates.
But you also have to take into consideration that you have all of these different senders communicating with you customers and that, at some point, this can get confusing, if not just outright frustrating. So you have to take into consideration all of these things and figure out a way to make it work.
You also have to take into consideration – like I said earlier when we were talking about the receiver – that an appropriate sender needs to be the one who’s hitting the receiver. So if you want an executive to show up at a meeting – and again, whether this is fair or not doesn’t matter as this is just the reality – if a CSM emails the CEO or calls the CEO at a customer company, that might not go very far. However, if you want that CEO to show up at a meeting, two things.
You might call the meeting, instead of a Quarterly Business Review, an Executive Business Review, so now the executive feels like it’s actually meant for them, and you might have somebody from your executive team reach out to them to invite them, right? So the sender matches the receiver.
You have to think about that. It’s pretty critical, but it’s, again, something you don’t put a lot of thought into, but you should, when it comes to customer engagement and really when it comes to communication in general.
Communication Model: Action
Then there’s the action. We all know call to action. We all hear that from marketing, from sales, and a lot more, lately, in Customer Success. But when it comes to customer engagement, we want our customers to take a particular action.
And if you don’t have an action in mind, especially if you don’t have a goal in mind – goal was the first thing we talked about – it’s going to be very difficult for you to come up with an action that you want your customer to take.
But if you don’t have an action in mind, why are you communicating with your customer? Why are you setting up that meeting, why are you having that call, and why are you sending that email? If it’s not to move them in the right direction, should you be messaging them? Should you be sending that message? Should you be communicating with them?
You want to have a call to action, and then you definitely want to be specific in that call to action. Believe it or not, people actually do want to be told what to do. The call to action should also match the source or the sender.
In other words, if you are sending a message, if you’re a CSM, should you be asking an executive on the customer side to take a particular action? That might not work, right? You might have to have somebody else on your side – the source or the sender – that matches the receiver, and therefore, you can make the particular action request of them.
So some calls to action must come from a different source; it must come from a different sender. And it should be very specific. So one of the things we’ll talk about is what the message should be like.
You want to make sure that you have basically one call to action in your message or your meeting. There should be one very specific thing that you’re building towards. Otherwise, you’re just going to confuse people. How many of you have received – or probably actually even sent – an email with 17 different calls to action? How many of those 17 actions get done? What if you could boil it down to just one?
And then send more frequently, right? Send more of those messages. Have more of those meetings – shorter meetings, smaller meetings, smaller messages, shorter messages – that all have one particular call to action. So, whatever it is, have a goal for that meeting, and then have an action that’s going to come from that meeting.
Communication Model: Message
Now, I want to at least plant the seed when it comes to the message. The message is the thing that people tend to focus on when it comes to communication, whether you’re setting up a meeting or preparing the agenda. When you’re sending an email, you spend time writing the email.
But are you actually spending time thinking about the message, or are you just spending time making the message happen? You know what I mean? Are you actually thinking about it, or are you just doing it? Most of the time, frankly, you’re just doing it. And I’m guilty of this, too. I’m not preaching here. I’m saying these are things that we – including me – need to always keep top of mind.
But when it comes to the message, I have this framework that I call BEAST. It’s B-E-A-S-T: Brief, Efficient, Actionable, Simple, and Thoughtful. I cover the BEAST Message Framework in detail in another post, but the main thing is, if you don’t have a goal and you don’t know what the action is going to be, how can you actually even craft a message that’s going to help do what you need it to do?
And that goes back to understanding why are you even communicating, why are you even creating the message, and why are you setting up a meeting. So when it comes to the message, BEAST – BEAST mode: Brief, Efficient, Actionable, Simple, and Thoughtful.
So, that’s it – the Communication Model in a quick nutshell. Think about it. Apply logic to the way that you communicate with your customers – the way that you communicate with everybody essentially – but especially customers if you want to engage them.