The sales team at AutoRocket spent 11 months working with MegaFacture as a prospect for the company’s data automation software. AutoRocket’s sales effort required hundreds of hours of resources spent scoping and delivering on endless information requests.
It’s Friday and the signed contract hits the lead sales pro’s inbox. The celebration gong reverberates virtually through the office as customer relationship management (CRM) dashboards are updated. Team members shoot endless congratulatory messages across Slack.
The scene is different at MegaFacture. The team of 22 people just spent 17 months identifying and scoping their needs for a significant business model overhaul across their data systems. After more than 143 meetings, including 94 days of relentless back-and-forth negotiations, the buying committee comprised of data science, finance, operations, procurement, and IT selected a new data automation provider, AutoRocket. The team is exhausted. Now the real work — delivering on their goal of data modernization — begins.
To understand the shifting sands of how mid-market and enterprise CXOs are making purchase decisions to modernize technology, consider Acceleration Economy’s “Selling to the New Executive Buying Committee,” a Course designed to assist vendors, partners, and buyers in this process.
Understanding the Vendor-Buyer Disconnect
The above is a real scenario (the names of the organizations were changed to protect the innocent). While MegaFacture was focused on using automation software to deliver transformation, the team at AutoRocket was focused on winning the deal. So earlier this year, MegaFacture churned: AutoRocket lost the customer and all its potential lifetime value. This is a common scenario as the market transitions to subscription-based relationships where customers can more easily switch providers.
Upon analysis, AutoRocket discovered it was dropped not due to a product quality or satisfaction issue. Rather, the company had systemic problems. Here is what it identified:
- The culture and reward systems were focused on delivering new customers (“net new logos”), not expanding existing customer opportunities.
- The systems were built around internal sales management processes, not integrated systems that provide customer insights from customer identification to advocacy.
- The data and dashboards tracked the lead-to-revenue process — also known as “interest-to-invoice” — not all stages of the customer lifecycle and definitely not including the post-sale customer experience.
The full B2B customer lifecycle includes the different stages a customer goes through when considering, buying, adopting, using, and remaining loyal to a particular product or service. The typical customer lifecycle stages are identification, engagement, contracting, acquisition, expansion, and advocacy.
Adopting a Full Customer Lifecycle Strategy
Technology buying complexity, subscription-based services agreements, and the pace of business change are all radically influencing customer needs and requirements. As a result, successful vendor organizations are redefining how they view and build customer relationships. Winning a new customer — “the deal” in our AutoRocket example above — is just the start of the relationship. At Acceleration Economy, we regularly chronicle the vendor organizations that lock arms with their customers to co-create new products and services. This is the ultimate way to build customer relationships.
Here’s what AutoRocket learned from the MegaFactur experience and is changing to increase its customer revenue and retention.
- Customer systems override sales systems: Revenue and sales systems were the primary system of record. CRM — its primary sales system — was what executives tracked most closely. Today, CRM is an important source of data. However, customer relationship data and processes are managed in the cloud through a real-time customer intelligence dashboard pulling data from sales, marketing, customer, product, and financial systems. Customers are tracked and analyzed based on lifetime value through monthly customer business review sessions attended by all stakeholders.
- Customer buying process over the sales process: The company was a sales-first culture. On the surface, this is not wrong — but it often drowned out the focus on customers’ needs. To address this gap, AutoRocket is making changes to its process and language. Leaders and data teams meticulously study how their customers evaluate, buy, implement, and adopt their technology over time. And, for example, the words used in the systems switched from “lead, prospect, opportunity, and closed won,” to “awareness, evaluating, contracting, customer, advocate” to underscore the importance of focusing on the customer.
- Partners to help customers drive lifetime value, not just close deals: The company quickly realized it was excellent at creating and selling software, and not best-in-class at adoption and change management, which are often required with its software. Now, assembling the right services and specialty application providers as part of their automation ecosystem is a huge priority.
- Customer metrics include sales metrics, not the other way around: Tracking sales productivity and a proper sales forecast is essential to business. To broaden the view, objectives and key results (OKRs) and company success metrics have been updated to include full customer lifecycle goals. Net dollar and logo retention (NDR/NLR), lifetime value (LTV), and customer satisfaction scores (Net Promoter, G2) are now prioritized.
The Bottom Line on Mastering the Full Customer Lifecycle
So much effort is put into a company’s sales process and winning customers that it’s possible to lose sight of the real prize: creating a lifetime customer. Winning back a lost B2B customer costs an organization as much as 25x more than winning them the first time, according to Bain & Company.
Organizations that can meet the needs of their customers throughout all stages of the relationship are more likely to achieve important financial objectives — from lowering customer acquisition costs to increasing average value contract sizes to boosting profitability. As AutoRocket has been discovering, embracing a full customer lifecycle approach is good for business. In fact, over the past 12 months, revenue has increased by double digits, and customer retention is nearing industry norms. It’s progress, but there’s still lots to do.
