Balancing Growth with Long-Term Customer Retention: A Marketo Case Study

Balancing Growth with Long-Term Customer Retention: A Marketo Case Study

“Empathy” and “relationship” kept coming up as key topics in recent Altus interviews with 25 Heads of Sales.

Everyone we talked to was doubling down on customer retention as a strategy to thrive in these uncertain market conditions. We all know it’s less expensive to keep a current customer than to close a new one.

However, during the heady growth over the past fifteen years, sales leaders—at least in the Silicon Valley—tended to concentrate aggressively on net new revenue and hyper growth.

Now, Altus is seeing sales leaders creating cultures and processes to balance growth and long-term customer retention.

So how do we operationalize such a shift?

In our practice at Altus Alliance, we analyse 21 High Performance Revenue Elements (co-developed with the Stanford Center for Entrepreneurial Studies) to help our clients grow top line revenue and lifetime customer value.

Below are some examples from my work early on at Marketo and some best practices taken from the Altus Customer archives.

Right out of beta, Marketo created some unusual sales practices to quickly build a stable of happy customers.

Marketo’s founders and their key investor, Bruce Cleveland (exceptional marketeers) knew that customer success stories and references were key to building a pipeline and maintaining a reliable revenue stream.

Their innovations resulted in low attrition rates plus valuable customer feedback needed to continuously improve both product and services.

From inception, Marketo’s Sales and Customer Success functions were one team. As the first VP Sales, I owned the customer from lead through to implementation. Some of the unconventional policies we implemented to maximize customer success included the following.

  1. A statement of work (SOW) for each new client implementation for every forecasted deal. The SOW forced an in-depth qualification of the client team. The SOW included timelines and tasks committed to by both Marketo and the client. This work plan became part of the initial contract; the client had to sign off on it.
  2. A 30-day opt-out clause. Of course, we knew the additional SOW work during the sales process would slow down the deal. So, we did something most sales managers would traditionally only do as a last result. The opt-out incentivized the sales reps to stay close to the implementation work plan and to support the customer success team.
  3. Sales and customer success teams jointly owned the SOW. Customer success reps were in forecast meetings to plan for closed deals. Sales reps were in the implementation status meetings and helped with customer expectations and communication as needed.
  4. Qualitative measurement of customer satisfaction. Going beyond surveys, as VP, I would personally call customers every week. Sales reps had action items to call their customer contacts regularly. We believed there is no substitute for a personal phone call where we asked customers open-ended questions and really listened to the answer.
  5. Highly visible KPI tracking. We posted a leader board that included customer attribution rate by rep and company in  addition to traditional KPIs such as closed deals, revenue to date and net new discovery calls. All sales action items associated with customer success were tracking in the CRM systems just as we tracked progress on an open deal.

    In our first year selling, our close rate improved month over month.

    Since the SOW process helped us fully understand the needs and concerns of each person on the client team, there weren’t any surprises when we asked for the order. We had an 80% close rate on forecasted deals (compared to the usual 50%) and deals closed on time. Our forecast was 95% accurate.

    As sales leaders, our instincts are often to find those magic new sales people who will solve our revenue problem. But often, if we look closely enough, there are additional action items that will have a significant, immediate impact.

    Start by picking up the phone yourself and asking open-ended questions to your customers; encourage all levels of the company to start doing the same on a regular basis.


    Categories:

    Strategy, Insights, Business Development

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