Internal Influence in Business
Within businesses, the teams that bring in the gold make the rules. They have the most influence. And that’s because the primary measure for most businesses is financial performance. Every business must make the numbers. Those who have the biggest impact on the numbers have the biggest influence.
Let’s look at the ability to influence the organisation. Picture a meeting of a vendor’s executives. They’re debating strategies. The VP of Customer Success has noticed a disturbing trend. Sales is selling to companies that have little chance of success. As a result, churn has increased and expansion (upsell and cross-sell) has decreased. She wants to convince Sales to be more selective.
Now imagine two scenarios. In scenario one, Customer Success has no revenue targets. In the meeting, the VP of Customer Success says, “Our CSM’s face increasing difficulty. They believe the new customers coming from Sales are the wrong types of companies. They’re not a good fit for our product and so these customers aren’t achieving success. And that’s increasing our churn. I also believe it has reduced upsell and cross-sell.”
The VP of Sales responds, “You don’t know how tough our market is. We need to close whatever deals we can. The prospects must think we’re a good fit otherwise they wouldn’t sign up. You need to give your CSM’s more training so they do a better job. It’s my team that’s measured on upsell and cross-sell. They’re hurting because your team can’t create success. That’s why we’re not making the numbers.”
The VP of Customer Success finds herself in a tough place. The CEO will listen to those responsible for creating revenue. Their opinions carry the greatest weight. The CEO also has pressure to achieve the quarterly number, and says, “Okay, good discussion. Let’s all give this further thought and pick it up again at our next quarterly meeting. What’s the next agenda item?”
Now consider scenario two. The VP of Customer Success has a renewal and churn target. She also has a target for expansion (upsell and cross-sell). The CSM’s don’t close the deals, but they do build the pipeline of opportunities for expansion. The VP’s financial measures are renewals and the value of the expansion pipeline.
Now let’s go back to that same executive meeting. The VP of Customer Success still believes that Sales are selling to the wrong prospects. She says, “The percentage of customers not renewing on their first anniversary date has increased by 20%. Our pipeline for expansion has dropped by 15%. These are numbers I am accountable for. I’ve analysed the problem. The new customers aren’t adopting our product the way previous customers have. It’s clear we’re selling to the wrong prospects.”
She turns to the CEO, “If we continue selling to the wrong prospects, we might make this quarter’s numbers. But we will fail further down the line. And Customer Success will not be able to deliver the pipeline of revenue expansion we’ve done in the past.”
The VP of Sales says are, “If your people were better trained, we wouldn’t have this problem. And our focus needs to be on making this quarter’s numbers.”
The CEO says, “While this quarter’s numbers are important, there’s no point setting ourselves up for failure down the road. I’d like you both to define our ideal customer. We need to maximise lifetime value from our sales efforts. Let’s pick the prospects that will do that.”
Having a direct and measurable impact on revenue growth gives the VP of Customer Success much greater influence. As a result, she achieves the outcome that was in the best interests of the company. And of the customers.
CS leaders know they must create success for their customers, because that’s what brings in the gold.
To create greater success for their customers, Customer Success needs greater influence in their own organization.
To get greater influence, they need responsibility (and credit) for bringing in the gold. For growing revenue.
And that means they need revenue targets.