I’m Sabina Pons, a Partner and Principal consultant at Growth Molecules. The objective at Growth Molecules is to help emerging companies jumpstart their customer success teams and nurture established companies to refine, expand, and grow their revenue streams. I have the honor of building a practice that combines my 20 years’ worth of customer experience roles.
Most notably, I was at Mavenlink for almost five years. While there, I built a team from four people to nearly a hundred, and grew and improved our gross dollar renewal rate by over 20%. We were also responsible for 70% of the company’s revenue by way of subscription license expansions and contract renewals.
This is something we first did when I worked at Guthy-Renker. I’ve woven it throughout my career since.
The idea is that when a customer has churned, there is a concerted effort to get them back as a customer in the future.That applies to both a consumer-based based business and a B2B/B2B2C SaaS model. With the ever-growing subscription economy, protecting and regaining recurring revenue is of the utmost importance (avoid the leaky bucket conundrum!).
New customer acquisition costs and post-sale work can be high on cost and effort. However, customers do churn, and leveraging a win-back campaign is significantly less expensive than new customer acquisition. The client is already familiar with you. They already understand your offerings.
Customers that make the best targets for win-back campaigns are those that left you due to financial duress. Take the case of COVID this past year: companies were uncertain about the future and recognized they had to trim costs wherever they could, even if it meant pausing on something that was giving them huge ROI. Some processes just had to pause so they could keep the lights on.
At Mavenlink, we worked with customers as their true partner, rather than just as a vendor. During 2020, we honored one-time payment delays and found other creative solutions to help. For the customers that did end up churning, they left on good terms. Now that the world is starting to shape up again, they were able to “weather the storm” and have since re-signed contracts as the result of our win-back campaign.
Those that left due to product and feature fit. There may have been a perception that the application could do XYZ, maybe due to a misunderstanding or a positioning difference. It may have also been positioned differently to the economic buyer versus the day-to-day end users.
Note that it is important to ensure that the churn reasons are linked back into your CRM in such a way that your product team can digest that information. Such telemetry data, albeit a lagging indicator, is crucial to understanding product market fit to drive future business strategies.
Keep in mind, however, that even if a customer’s product needs are unmet now, they may be in the future. Calling on the churn reasons and reported feature needs allows a company to identify customers that might be ripe for winning back.
Just as customer success is a company-wide effort, win-back campaigns need to be treated similarly. That means marketing, sales and product management - and obviously customer success - have to be marching to the beat of the same drum.
Ultimately, the CSM is responsible for intimately knowing and understanding customer’s feelings toward the company. In the event that the customer does churn, the best case scenario is when the customer says, “I feel like I’m breaking up with you. I think you’re great. It’s just that we can’t afford you anymore.”
That’s an opportunity for us to capture and capitalize on that relationship. If a CSM did their job properly, they’re multi-threaded. That means he or she has established relationships with both the economic buyer, the champion (who may be the same person), some of the end users, and even the CFO or procurement leads. With multiple layers of built relationships, there is a greater opportunity for the CSM to re-engage and introduce a potential new pricing model or maybe a new feature set. If there is interest, the CSM can collaborate with a sales resource as is appropriate.
Another good strategy is to be very cognizant of what’s happening in the customer’s industry. In a business-to-business (B2B) model, your customers have their own customers: how are they faring with their customer relationship management? Talk to them and find out. Or, look at the customer’s blog. Subscribe to Google news alerts. It’s important to understand how they’re impacted.
The win-back ownership and revenue attribution will vary from company to company. This is not legal advice by any means, so consult your tax professional for revenue recognition best practices.
However, from my experience, ownership depends if it’s a B2B or B2C model. In the case of Guthy-Renker, win-back campaigns were wholly driven by marketing. We had customer acquisition marketing, and customer retention marketing. There was a little bit of a Venn diagram where acquisition marketing and retention marketing would work together on these campaigns. Revenue was tagged under marketing.
Then on the B2B side, looking at an application like Mavenlink, campaign ownership depends on how long ago the customer churned. At Mavenlink, I deployed a program where any customer that churned within a rolling 18-month period was the responsibility of the customer success team to engage the customer. If there was a viable win-back opportunity, the “warm lead” was sent to sales to re-demo and close the contract. On the other hand, if the customer was beyond the 18-month time frame, then it was fair game for sales to contact directly. In any case, we booked revenue against Sales but compensated the CSM and the AE for the job well done.
Yes, of course. At Mavenlink, we did a large push for win-back customer sales at the end of the year to bolster our recurring revenue. We segmented a list of our churned customers from the previous 18 months. We prioritized those that had the greatest likelihood of coming back to Mavenlink with the shortest sales cycle - those whose reasons were mostly COVID-related, or due to change in leadership. With that criteria, we were able to obtain a list of at least 30 customers. Of those 30, three re-signed with us, which amounted to over $100,000 of recurring revenue that would have otherwise been money left on the table.
Customer Success teams might object to helping with win-back campaigns on the grounds of being overloaded with work. They already have so much to do. How would they possibly have time to help with a win-back campaign and what would incentivize them?
I think that there are many ways the CSM can help make it work. It could be part of the CSM’s playbook or standard operating procedures to log the churn reason code any time a customer churns. There should be an automated reminder to call the churned customer again six months into the future, and that should be logged in the CRM as well. In terms of how to drive those behaviors, I suggest a reward program for CSMs. Perhaps it’s a $150 spot bonus (or more depending on the size of the revenue won-back) per client who re-signs in a given period.
Growth Molecules jumpstarts growth by simplifying Customer Success with consulting services, which makes companies more profitable. We provide organizational assessments, customer success onboarding, revenue growth playbooks creation, and provide customer success education. Our team also offers fractional VPs of Customer Success services, due diligence assessments for private equity firms, and executive coaching.