Finding Revenue During Disruption
In this Coffee Chats episode, we sit down with Steve Silver, VP Research Director at Forrester where he provides tips on how sales leaders can create a winning strategy by prioritizing existing customers. Watch this webinar with Steve to get more insights and tidbits on how you can use AI to find revenue even during disruption.
Highlights
[1:07]: Customer retention vs customer acquisition. Where should leaders focus their time?
[2:05]: The three categories of customers due to the pandemic
[3:39]: Should sales leaders treat customers differently in each category?
[5:15]: What can sales leaders empower sales teams to find opportunities
[7:25]: How should sales leaders think about eCommerce as a channel when aligning sales teams to focus on existing customers?
[10:14]: Are there sales technologies or tools which can help teams during the sales process?
Full Transcript
Loretta Faluade: Welcome to Coffee Chats with the PROS. My name is Loretta Faluade and I am a Solution Strategy Director at PROS. And with me today, I want to welcome Steve Silver, who is the VP Research Director of Sales operations at Forrester. Welcome Steve....
Steve Silver: Thanks Loretta. It's a pleasure to speak with you today.
Loretta Faluade: Awesome. So, Steve I'm excited about this topic because I want to pick your brain about some of the challenges that a lot of sales leaders are facing during this time. There's been a lot of disruption to revenue for a lot of businesses. And as businesses are trying to basically figure out how to ramp up their growth to really meet their numbers, or even get close to where their revenue expectation should be. I wanted to talk to you a little bit about how they should think about their strategy and what customers they need to be going after. So, for a sales leader there's always the question as to sales or customer acquisition versus customer retention. What are your thoughts around where sales leaders really need to be focused during this time?
Steve Silver: Yeah, it's a great question Loretta and it's one we talk about all the time. At any time, regardless of the broader economic situation, focusing on retaining your current customers is absolutely critical to profitable revenue growth. And by some estimates, it costs as much as five times more to acquire a new customer than to keep an existing customer. Now that metrics is highly variable depending on the nature of your business. But I think we can all agree that if you can't keep and renew and retain and grow your existing customer base, you're really starting out in a hole where revenue growth is concerned. Now when we talk about this with our customers, I think the first step is understanding how the pandemic has affected their customers. So, we put those into three modes or buckets, if you will.
Steve Silver: One is those who are basically in survival mode, they've been severely impacted by the pandemic, they've had to do potentially lay offs. They'd had revenue declines, the obvious candidates here are hotels and airlines and restaurants and brick and mortar retailers. Number two are those that are in what we call adaptive mode. So, they've been impacted obviously, everyone has, and they probably seeing some decline in revenue, but they're starting to adjust to this new reality. So, they've probably done a few things like frozen hiring and put travel on hold. Maybe put some of their internal projects on hold.
Steve Silver: The third type are those who are in growth mode. So, there is a subset of companies that are seeing rising demand as a result of the pandemic, Amazon is one of the most obvious examples, but those who're in communications, those who are in social, those who're in streaming media are potentially in this growth mode. So, coming back to your question, sales and marketing organizations first have to understand their current customer base, figure out what mode they're in, how the pandemic has affected them and then focus their retention efforts on those, that are in that adaptive or growth mode. That's where those opportunities are for that renewal motion.
Loretta Faluade: I really like how you guys, you've really broken it down into the three different phases, those that are in survival mode. If sales leaders actually look at where their customers are at, should they treat each customer differently? And if the answer is yes, what are some things that they need to be thinking about?
Steve Silver: Yeah, a great question. So once you've classified them as survival, adaptive or growth. Those that are in survival, probably not good candidates for an upsell, cross-sell, or even a renewal discussion right now. And it's not that you want to ignore them, but you're probably not actively pursuing them unless your product or solution is inherently value to their ongoing survival. The ones who are in adaptive mode, you've got to position your value to them.
Steve Silver: How can your product, your solution, your offering, help them as they adapt, and then hopefully begin to emerge from the pandemic and start to thrive. And then obviously those that are in growth mode are the ones that you really want to focus your efforts on. They're the ones who will still have active buying opportunities right now. So sales leaders, sales reps, first line sales managers, and they have to go through their entire current pipeline and their prospect list and say, "Well, of those three modes, where are they? And which ones are still willing and able to have a buying or even a renewal conversation?" And focus your efforts on those.
Loretta Faluade: So, that makes sense. And as sales leader start to classify, you talked about those that are in survivor mode are probably not really great candidates at this time, but those that are in a adaptive mode, those that are in growth mode. As sales leaders are looking at some of those costs or some of these types of customers, how can they empower their sales teams to really reach into those customers and maybe find business expansion opportunities?
Steve Silver: Yeah, what we're finding is a couple of things. First of all, sales reps have to get much better at remote communication, right? Many of us, especially when we're calling on enterprise level customers, we're used to walking around the floor, we visit their facilities. We shake hands. We sit down, we learn a lot just through those, perhaps unscheduled or less formal interactions than we might have otherwise.
Steve Silver: Now we're all working remotely, we all have to be much more conscious that every single interaction with a customer has to be, not scripted, but planned. So, you need to be thinking in advance. Why am I reaching out to this person? What's the messaging I want to deliver? Is it related to a current opportunity? If it is, how do I move that forward? So, we are spending a lot of time talking with our clients about the importance of sales call planning and really treating every customer or prospect interaction as a golden opportunity, but making sure that, that interaction is tailored to the needs of that customer.
Loretta Faluade: Yeah.
Steve Silver: So empathy, sympathy, understanding, those are all buzz words now that we really do need to be thinking about in the time of the pandemic.
Loretta Faluade: Yeah. And one of the things that the pandemic has really done is shifted, like what you talked about is really shift how we are interacting, right now we're not in the same room, we're talking via Zoom and you talked about how a company like Amazon has really thrived through their e-commerce type of marketplace. When you think about e-commerce, because it's one of the things that I believe is really going to be shifted in how we interact and how buyers and vendors engage. Is there going to be a way that sales leaders need to be thinking about shaping their e-commerce strategy so that it's aligned to reach some of these potential, existing customers and even get expansions just through their e-commerce portals.
Steve Silver: Yeah, absolutely. And that's a great point to bring up. And I think perhaps the mantra there is, understand how your customers want to buy and then make that buying mechanism available to them. And I would also further differentiate into first time buyers versus repeat customers, because oftentimes if it's a highly complex solution, or service offering or software package that's being purchased for the first time, it's a complex sale. And the sales rep is very involved. Sales engineer might be involved, a subject matter expert, a solution designer.
Steve Silver: There could potentially be lots of people involved on both the buying side and on the selling side. But if they're coming back to you and saying, "Well, we just want to add a couple of licenses, or we just need some replacement parts, or we just want to upsell this a little bit." Most of that can be handled via an e-commerce play. And the second point I would make is this is obviously a trend. It's been a business to consumer trend for a long time. People actually say, "We prefer to buy online." I know in many cases we'll do almost anything to avoid picking up the phone and calling some of our service providers because we know we're going to be on hold for 30 minutes ...
Loretta Faluade: Yeah.
Steve Silver: ... And it's just going to be a painful experience. Why not do that online? So, that consumer behavior has been moving into the business to business world for quite some time and the pandemic much like it has with many other things has just accelerated that transition. So you almost have to step back as a sales and a marketing leader and think about how do our customers want to buy, what's the most cost effective way for them to make a purchase and then further differentiate between, is it a first purchase or is it a second purchase and anything that we can move into an e-commerce platform, absolutely should go that direction.
Loretta Faluade: Yeah. So we're kind of running out of time, Steve. So the last question that I'll pitch to you is, as leaders are looking at developing their strategies, and I really love what you said about understanding how their customers want to buy, right. That's the key. Are there sales tools or are there technologies which you believe that sales leaders need to, whether it's invest in, or keep their eye on that can help them whether it's make the determination on how their customers want to buy, or that can help to enable their sales teams on how to better sell into existing customers?
Steve Silver: Yeah. Great question. I would roughly put those tools into two broad categories. The first category are tools that automate or offload highly manual activities for sellers. So, we do a sales activity study with our clients where we categorize and examine how sales reps are spending their time. And they spend a lot of time doing things like chasing down a pricing approval, configuring or reconfiguring a quote for a customer, attending internal meetings, searching for sales content, putting together a presentation, doing a forecast. So, look for tools that automate those routine manual activities that sales reps have to do again and again and again, in order to be successful. Free up that time to focus on your customers. And then the second big category are those tools that provide insights or analytics or intelligence about your buyers and your customers.
Steve Silver: What are they buying? Why are they buying from you? How do they make a purchase decision, who's involved in the purchase decision? Where is a particular opportunity and how you get it to the next step? Those are all tools that collect and provide insights and intelligence for sellers. So you really have to look at where you can automate, reduce manual activity and then leverage those insights, so that that time you get back, is focused on delivering value to customers with a high propensity to buy. And I think about some of the tools that are out there and I'm going to pick on CPQ, for example. That's one of those that falls in both categories and you'll find that many of them do, right? Sales reps spend a lot of time configuring a quote, reconfiguring a quote, trying to get a price approved, all those types of things.
Steve Silver: But automating that means you start to collect a lot of information about what your customers are asking for. Where they're constantly asking for discounts? What components of the contract are always being asked to change? And it becomes this virtuous circle of the more you know about your customers, the better you can meet their needs the first time, rather than having to do a bunch of rework. So, thinking about it in those two categories, really broad and there are literally thousands of sales tools out there, but starting with that, I think as an operating premise can be an entree into a well adapted and well utilized sales technology stack.
Loretta Faluade: All right, thanks so much, Steve. I really love what you said, "The more you know about your customer, the better you can actually match what they're looking for the first time."
Steve Silver: Yeah.
Loretta Faluade: So, thank you so much, Steve, for being here with me. I really, really appreciate it. It was a really great discussion. I know we're going to be continuing this conversation on June the 16th. We're actually going to have a live event, a live webinar where we're going to be talking about how sales leaders can really find revenue within their existing accounts. So if you're interested and you would love to join us, you can go to www.pros.com/findrevenue and register for the event. Thanks so much, Steve again. And until next time, I'll talk to you soon. Have a good one.
Steve Silver: Thanks Loretta.