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Business is ultimately about relationships, and deeper relationships result in a higher lifetime value of the customer (LTV). Over the years I’ve often used the term “Relationship ROI” to describe the value that can come from developing and continually fostering relationships with customers and, more specifically, individuals within customer accounts. Relationship ROI can manifest itself in very tangible ways, such as new revenue coming from a newly developed relationship. Or, it can manifest in more intangible ways. For example, I’ve witnessed situations when the only reason a customer did not churn was because a deep relationship of trust had been established over a long period of time between individuals. That relationship enabled us to overcome the difficulties of the moment and preserve the partnership. In fact, not only did we overcome those difficult situations, we came out the other end with an even deeper relationship that resulted in tangible ROI later.
So the question becomes: How do you develop Relationship ROI as a CSM? Here are three keys that will help you in the process:
Too often, relationships with customers are too shallow and narrow. Contracts are signed, users are trained, software is used, but few relationships are developed outside of the day-to-day contacts. Sometimes that works, but most of the time it’s a risky proposition. What happens if your only contact leaves the company? You’re likely left with no advocate and no additional relationships within the account. Plain and simple: you are at risk of losing them as a customer.
My mentor and former boss, Steve Wellen, ingrained in us a concept called “High & Wide” that’s typically referenced as a sales strategy, but equally applies to customer success. As it suggests, the concept references the goal to develop as many relationships as possible high and wide within your customer’s organization. Rather than having the entire relationship hinge on one or two lower-level contacts that have little to no influence or buying power, broaden your scope to develop as many relationships as possible throughout the organization. Not only will you strengthen the overall relationship, but you’ll also uncover other opportunities to add value in their business that may result in expansion revenue.
As we were scaling our CSM team at Omniture, we noticed that many of our relationships were narrow and shallow. After Steve introduced us to the High & Wide concept, we not only adopted the concept, but also measured our CSMs on their ability to successfully go High & Wide within their assigned accounts. We came up with a simple acronym to measure our High & Wide activities called “DELT” – Director & Executive Level Touches. With this, we measured how many new relationships at the Director level and above our CSMs were able to develop, as well as how often they nurtured those relationships. While it may sound like a hokey KPI, it worked and drove the behavior and results we were hoping to achieve. Over the course of a year, it completely transformed the mentality of our team and significantly strengthened the relationships with our customers. Our customer relationships no longer teetered on a few individuals, but rather had broad, solid footings throughout our customer base that ultimately led to substantial expansion revenue.
Famous author Stephen R. Covey is noted for coining the phrase “seek first to understand, then to be understood.” Although that statement applies much broader than this context, I believe it’s something often forgotten in the B2B SaaS world. As a CSM, do you know who the Executive Sponsor is for each of your assigned accounts? If you don’t, you better figure it out quickly because usually the Executive Sponsor is the one who is writing the checks – or at least approving them. Even more important, do you personally have a relationship with the Executive Sponsor? Have you ever met her face-to-face? Do you know her background, how long she’s been with the company, what she values in a partnership, and her expectations of you as a partner? Do you know her key business objectives (KBOs) so you can ensure your company is aligned to those KBOs? Do you know how she is personally measured (KPIs, goals, etc.)? Do you know if you are delivering value to her and her team? If not, start establishing that relationship now. This doesn’t just apply to the Executive Sponsor, but to each of the key individuals within your assigned accounts. Get to know them.
One of my most valuable client relationships started out very rough. I was pulled out of a sales kickoff meeting to join a client escalation call. Things were not going well with the client relationship and I had never met the Executive Sponsor until this call. And boy did he let us have it – harsh language and all! He was angry about many things, but one that he called out specifically was that we had never even met him in person. And he was right, we should have. From that point, I was determined to get to know him personally and do all I could to develop a positive relationship with him – and fortunately, he seemed to have the same desire. Over the next several years I made an effort to build a more personal relationship with this Executive Sponsor, and to ensure our team knew his needs and did everything we could to fulfill them. Eventually, he and I became quite close – but it wasn’t overnight and it wasn’t always positive. There were times when the relationship between our companies was hanging by a thread and on the edge of separation.
Thankfully, the thing that pulled us through was the relationship. We had fostered a relationship (individually and across our respective teams) to weather that difficult storm and pull through to a stronger client-partner relationship on the other side. Oh, and by the way, it also resulted in significant new revenue over many more years of partnership (higher LTV).
Now, I’m not saying you have to be best friends with each of your clients, but I am encouraging you to know them better, understand their needs, and foster relationships that will result in Relationship ROI.
This may sound counter-intuitive at first, but beware of focusing too much on your biggest advocates. You’ve seen it before. Your team has latched on to one individual within the customer account that is a huge fan of your company. He loves all the positive attention and creates more by being a huge advocate – both inside his company and outside with your customers and prospects. He speaks for you at conferences, does reference calls, and even occasionally hangs out with your team after hours. You ride the gravy train for as long as possible because it’s a mutually beneficial relationship. Until … something changes. Something goes wrong in the relationship and he’s getting pressure because his boss is questioning whether his loyalties are with his company or yours. To avoid that pressure, he quickly tries to distance himself so he doesn’t look like a “homer”. Now you’re left in a very difficult situation.
I call this a “false-positive” relationship. It’s a customer relationship that is too heavily focused on one extremely positive advocate – a mega-fan – that eventually comes back to bite you when that individual either leaves the company or is forced to distance himself to avoid appearing to have a conflict of interest. When that happens, this single relationship turns into a liability (or single point of failure) because you’re left without a broader group of advocates to stand behind you. Absolutely embrace your best advocates, but beware of these “false-positive” relationships and counter them by going “high & wide” to expand your advocacy base as large as possible.
There are many other principals around driving Relationship ROI that we’ll discuss in future posts. But, for now, take a few minutes today to evaluate your current customer relationships. In which accounts do you have shallow and narrow relationships? Do you have any potential false-positive relationships? Make a plan today to go higher & wider within your accounts and develop deeper, more personal relationships. If managed correctly, Relationship ROI absolutely pays off in the long run.