If you are following the Entrepreneur Roadmap as laid out, you’ve developed a launched a product, and are reaping the fruits of your hard work. New customers are rolling in, and you are getting great feedback on your product. You are keeping a close eye on all your KPIs, and you’ve had some great conversations with a potential investor.
Everything is cruising along, until you have to think about how to grow your revenue and you realize the age-old tenets:
- It costs more to win a new customer than to keep an existing
- 90% of your revenue comes from existing customers (which was discussed here)
A great corollary is the cell phone war in the early twenty-first century. The service providers created a top-heavy funnel, focusing on getting as many customers in the door as possible, locking them in with contracts and forgetting to take care of them once service was established. They used the influx of new customers to offset the rapid defection of existing customers, effectively flatlining growth, depressing lifetime value, and minimizing the overall value of the company because they forgot about how expensive it is to acquire (CAC) and the long tail of revenue (LTV) that comes with an established relationship.
Never take a customer for granted
One of the most important things to keep top of mind as you grow your company is that the customer can walk away at any time. For you to stay relevant you must reinforce the points of value in your product. This starts in the selling process and continues throughout your relationship with the customer. It’s a huge part of why the customer success role is so important—not only do they troubleshoot and advise the customer on use, new functionality, etc, they are focused on the beats that drive value to a customer. If those beats are missed, the experience falters and the customer becomes a flight risk.
If you have reached this stage of growth, and have yet to establish customer success accountability, please revisit how to develop a customer support strategy under the launch phase of the Roadmap. This is one of the most important functions you will build as you scale and getting this in place is critical to your continued success.
Treat a customer relationship like…a relationship!
From the minute you have a customer onboarded you will need to have your eye towards critical points of value that can make or break their lifetime value. By constantly reaffirming the impact of your product you will create a connection to the customer so that when it comes time to renew, it’s not a question of if they will, but how quickly they can execute the contract or purchase. The same holds true for upselling additional assets or functionality. If there is perceived value in what you have provided, and you’ve built a clear connection to how the new functionality will extend that value, the questions of cost or need will be few and far between. It’s when there is no communication or dialogue that the problem arises and people have an easier time opting out.
You’ll notice in this whole approach that there is minimal to no conversation about sales, even though the focus is on revenue generation. That’s because the approach of retention and upsell is less about the hard conversion (or hunting); instead focusing on the curation of use, engagement and need (also known as farming). These are very different approaches that will require different talent, incentive structures, and tools to make maximum impact, but absolutely worth the time spent.
Let the customers lead the way
Ultimately, if you are listening and engaging throughout the entire lifecycle, you’ll build out a very logical, structured approach that will lead your engagement and retention strategy. This dialogue will also feed additional requirements or product adjacencies that will spur innovation. By taking direct requirements and expanding the functionality, you create an additional opportunity to upsell and create product stickiness to drive retention. It’s this healthy cycle that will create a robust funnel and pave your way to growth.
As always, if you are unsure or feel as though you need some guidance, please reach out to the service team at JumpStart. We are happy to chat about your journey and how we can help you functionality evolve your business. Additionally, please tap into the always-on and educational resources available. We have a wealth of information and experience and are always happy to help.