In Part-1 of our Sales Enablement Series – Do More With Less – we cover the importance of unifying your playbook across sales and customer success. In Part-2, we discuss implementing microlearning.
You’ve heard it before – do more with less. Companies across the board are laser focused on efficiency metrics. From our own analysis, we find most companies have about 1:200 sales enablement to sales rep ratio. Compound this with the broader macro climate and enablement teams need to find ways to create impact at scale.
This is part 1-of-4 in our Enablement Series to help provide strategies to maximize productivity across your sales and customer success teams.
The first part we will discuss is unifying your sales playbook across your sales team and your customer success (CS) team to exceed your sales goals while improving the buyer’s journey.
Let’s first look at an important metric that will be the measurement of more effectively unifying your sales & customer success playbook.
Net dollar retention (NDR) is a SaaS financial metric that is used to measure the percentage of revenue growth from your existing customer base over a given period of time. It typically includes churn, expansion, and cross-sell.
For example: the annual change in a customer cohort’s monthly recurring revenue after accounting for churn, upsell, and cross-sell.
If you’re curious on the many ways company’s define NDR, check out this list Alex Clayton has built.
Why is it important?
NDR is important because it helps companies understand how well they are at retaining and growing revenue with their existing customers.
And investors reward companies for a high (>100%) NDR.
In 2021, the average company filing for IPO had an NDR of 119%. This is an increase from 115% the previous year.
Take a best-in-class company like Snowflake on the list, at 158% NDR in 2021. Assuming all else equal, if they brought on 0 new customers in 2022 they would end the year at 158% of their current revenue.
NDR is also important because customer acquisition cost can be 5x the cost vs. retaining customers.
Now that we’ve set the stage of why NDR is important to investors, and the role expansion plays, you’d assume expansion is a key area of the business, but there is still some to be desired.
Investor interest in NDR implies that customer success should focus on growth and expansion. However, much work needs to be done to drive a growth mindset and expand accounts.
According to Gartner, studies have shown that:
These statistics show that sales and customer success leaders are leaving expansion as an afterthought vs. a critical driver of ARR.
In addition, sales teams are negotiating Enterprise License Agreements (ELA), prioritizing upfront revenue at the expense of future upside.
Sales, customer success, and enablement leadership should work in partnership to maximize ARR for the long-term. This all starts with building compensation plans to motivate the right behaviors.
Compensation for customer success reps have a typical base-to-variable split anywhere from 70/30 to 80/20 against total On-Target Earnings. We would recommend a comp plan for customer success at the higher end of this variable split or even a 55/45 split to motivate CSMs to look for expansion.
Additionally, add sales spiffs in the compensation plan for things like multi-year renewal/expansions and for any customer success manager with >100% NDR attainment.
In addition to compensation, the lack of growth and expansion can be attributed to the compartmentalization of CS and sales.
In the average sales organization, there’s no standard Customer Success methodology, while sales has MEDDICC, MEDDPICC, BANT, SPICED, SPIN, and more. Customer success is not classically trained as sellers, but they are now being asked to take on sales responsibilities.
Macro conditions have sparked an interest in aligning sales and customer success more closely, and sales consulting companies like Winning by Design are helping by creating unified sales playbooks as found in their Customer Success Operating Model. They are taking their industry leading SPICED framework, and applying it to customer success to drive recurring growth and boost sales performance.
Historically, Customer Success teams concentrated on delivering value on what was previously sold. They didn’t have a growth mindset, causing suboptimal expansion efforts. As Winning by Design likes to say:
“To increase recurring revenue, your business needs to drive recurring impact.”
By training Customer Success on a similar methodology as sales, you’re able to create that growth mindset, while providing more consistency for the customer.
To help with training and enablement of your customer success playbook, Aircover has partnered with Winning by Design to virtualize their CS Operating Model and integrate it directly into the meetings of customer success reps, proving to be an effective way to drive engagement and ROI of a sales/CS playbook.
Playbook alignment can take customer success from retroactive and delivering on the value previously sold, to forward looking, finding new areas of the business to expand and drive impact. They can solve problems proactively and drive recurring value for customers.
Do more with less, and boost your sales, by evaluating the compensation plans of Customer Success to ensure they have enough of a variable component, as well as looking into levers such as sales spiffs to drive the expansion behaviors you’re looking for. Additionally, unify your sales playbook across sales and Customer Success.
In Part 2 of Do More With Less, we’ll be talking about implementing Microlearning to drive more engagement in your enablement efforts.