Changing the Customer Relationship: Driving More Value for our Customers

One of the great things about being an early founding team member in a startup is that you can not only help input into the product and engage with early design customers and partners but also help define the company's culture and shape the go-to-market strategy.

One of my biggest frustrations with the sales GTM in recent years working at various vendors is the way that they build their model for looking after customers post-sale, and in particular, how they compensate and structure the teams that look after customer renewal and value realisation.

Challenges with the Traditional Vendors

If we look at how most traditional large technology vendors deal with this key point, the common  structure is to set up a dedicated renewals team who acts as the primary contact for all aspects of the renewal including the quoting and ordering process.

However, the major drawbacks of this model are that these teams are not experienced account managers, they often lack technical credibility and knowledge and have little to no experience in navigating customer challenges, politics and value realisation.

While there can be exceptions, the reality is that these renewal teams often only engage with clients 90 days before the renewal date. Their primary focus is on issuing quotes and navigating the commercial process. This approach leaves customers feeling unsupported throughout the contract lifecycle, with no dedicated point of contact to assist with value realisation and ongoing support beyond the renewal window.

How Do Startups Tackle the Issue?

At most startups, the model is slightly different because they are too early to have a dedicated renewals team, they will compensate the account manager on the renewal, but only a small percentage of the deal value, which still doesn’t address the core issues for the customer.

As a customer, you don’t want to have a different experience from the sales phase to the implementation/onboarding phase to the ongoing value realisation phase to the renewal phase. This experience should be consistent and should ultimately revolve entirely around ensuring we are meeting the customers’ requirements and providing value.

One of the proudest moments in my career was when a customer told the account team that we had turned up more post the deal than during the sales process to ensure success. This was despite the fact we didn’t get compensated for the renewal, but we wanted to ensure that we met the customers’ requirements and we were passionate about their success.

However, I can’t put my hand on my heart and say this happened with every customer I have looked after, why is this? Why can’t the account manager still be the main person who ensures the customer realises values?

Why Can’t Sales Do the Right Thing to Support?

The simple reason is that salespeople like any other person doing a job will focus on the goals they are set and how they are compensated. If you are not paying your salespeople on a renewal and are instead heavily focusing them on winning new business then this is what they will do, especially with the pressures that come from quarterly and annual sales plans.

Whilst every salesperson wants to do their bit to support their customers, especially as they recognise the importance for a happy customer from a reference and relationship standpoint, it can be very difficult to put this at the forefront of your mind whilst you are balancing a large complex new business sale that will have a material impact to you and the company.

Customer Success Only Goes So Far

One of the new roles that has really come to prominence in recent years to go some way to addressing these core issues is the customer success manager.

I have seen this role in various guises over the last few years, it’s fairly common that they are part of the technical support organisation and often have a support background.

The key difference between companies is whether the individual has a technical focus or more of a commercial/relationship management focus. However again the major drawback here is the inability to flex between the two and critically they tend to be more focused on the support part of the relationship rather than the overall value realisation of which support is a key strand.

I have always found that the other common drawback is that these individuals don’t have a background in account management and so struggle to understand the complexities of navigating both the customer and also the vendor to connect the dots between product management, support, sales and other teams.

They are also often not paid any specific incentives for ensuring the customer is seeing value and renewing with the vendor, so it’s questionable whether they are truly motivated to ensure success.

Only Looking Through a Financial Lens

So why do companies operate this way, well the simple answer is it's often down to profit margins. It isn’t very financially prudent to pay your highest-paid employees an additional bonus to retain business rather than go and get new clients and create growth.

Instead, a lot of companies feel it is much more financially efficient to run an offshore low-wage renewals team with a much smaller OTE and commission model.

However, this is in my opinion a very flawed approach, client retention should be treated just as importantly as growth, as I stated earlier the customer wants to be treated the same from the start of the engagement to the end of the engagement.

It's no good for any company if you're winning as many clients as you are losing, and sadly, I have experienced this with one of the vendors I worked for where almost every client was on fire and they weren’t being managed correctly by the renewal and support teams.

What is the ESPROFILER Model?

So how do we plan to be different, well the approach is not all that novel, in fact, it’s a similar approach to how some large successful startups run their customer success teams with more of a sales focus, and indeed it’s the same way some of the companies I first worked for used to operate.

In our GTM model, the account manager remains the main point of contact for the customer throughout the lifetime of the contract, and we ensure that our account managers are paid and incentivised the same way whether they sell a new contract or retain an existing contract.

To help focus on growth we will add additional incentives for winning new business, but the key metric that matters for our customers is that our account managers will be paid for ensuring customers are happy and realising value.

Conclusion

We do still plan to continue with building out a customer success team but their focus will be more on the initial onboarding and implementation as well as managing the customer support experience, particularly regarding escalations. The key difference is that they will have a dotted reporting line into the account manager who will act as the main coordinator to bring together all the teams together in ESPROFILER across support, pre-sales, product and engineering.

I don’t suggest that this is the perfect solution or indeed that it doesn’t have its drawbacks, however I am very excited and motivated by how this model will help our customers and partners over the next few years as we embark upon a rapid rate of growth.

‍