How to become a data-driven CSM - Part IV

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Hi, Markus here. Welcome to a new episode of the Customer-Value-Led-Growth Newsletter.

I share strategies and guides to help you become a proactive CSM delivering more value for your customers and revenue for your company every week.

Need additional help? Check out these resources 👇️ 

• Free Templates

• Notion Guides

• CSM Operating System

• Learning Platform

• Coaching Services

Customer expectations are at an all-time high. Their willingness to pay is at an all-time low. CFOs everywhere are reevaluating expenses. They cut everything that does not deliver a substantial ROI.

At its core, the equation is simple: new customers buy based on the value they expect while existing customers stay and spend more based on the value they've already received.

The ultimate measure of CSM performance is how much revenue you’ve created through renewals, expansions, up- and cross-sells, and customer referrals. It’s also the best way to demonstrate the value you bring to the company to your leadership.

In our final episode of 2024, we’ll dive into how to use data to monetize customer value.

1. Customer Renewals

The “secret” to successful customer retention is not a well-crafted 30-day reminder E-mail. It’s not building top-notch negotiation skills. It’s not any of those so-called retention strategies (that are actually generic random tactics).

Customer renewals happen if you (at least) meet your customers’ goals. Churn happens when you fail to do so. There is a twilight zone where customers have slightly missed their goals but are still open to continuing but that’s it.

The first step to customer retention is to understand and verify your customers’ goals. If their expectations are somewhat unrealistic, you need to set them straight, even if it means your customers are leaving immediately.

It’s better to do it early instead of wasting time for nothing on both sides. This is also what it means to be data-driven.

Here’s how to make your renewals run smoothly:

• Start your meetings with a recap of value to ensure customers are aware of how much they benefit from working with you.

• Sending a value report in advance is even better and if you are handling renewals remotely you need to do it anyway.

• Dispel remaining doubts by highlighting unused resources and features that if seized, add more value without any further costs

• If you are working with a new customer, there are also learning effects and trends. Put simply, customers didn’t perform as well in the first 3 months as they did in the last 3 ones.

But what if customers have not accomplished their goals? Your mission stays the same but the conversation is an entirely different one. Your mission changes from demonstrating value to saving the account.

This is not about compensating customers for their lack of value with discounts. It’s about creating a rescue plan that’s convincing your customers to give it another shot.

This plan must be built on a relentless reappraisal of what went wrong and how to correct the shortcomings of the past approach.

2. Account Growth

The prerequisite of expansions, up-, and cross-sells are customer renewals. No matter if it’s in the short or the long term. If customers don’t get enough to stay, they are not going to invest more.

The hottest candidates for additional purchases are the customers who did not only meet but exceed their goals. They got the biggest proof of value. They are the ones looking for ways to further grow their value.

The second requirement for growing accounts is to identify customer growth opportunities. How? By leveraging data, of course 😀 

• public information (more teams, branches, subsidiaries)

• based on the customer use case (next goals to pursue)

• knowing your customers’ business (additional problems to solve)

This is something most companies are doing wrong. It’s not about talking customers into buying because you want to grow your revenue. It’s to create demand for additional purchases.

Turn these opportunities into business cases that outline how customers can grow the value they are already receiving. Quantify the impact based on prior results and what you know about your customers’ business to give the numbers credibility.

Meet with and start the conversation with a value recap (similar to renewals) to set the right tone. You want to keep the conversation about value. Walk your customers through their opportunities (2-3) and answer their questions.

In the last step, you make the transition to the additional resources, features, or products customers require to pursue them. If your customers are signaling clear intent, explicitly whether they are willing to move forward.

3. Customer Referrals

What every CSM needs to understand is that a high NPS and getting referrals are worlds apart. Everyone can click on a 9 or 10 button “showing intent” and not taking any action. There’s not even a correlation between NPS and renewals.

If you want to get actual referrals you have to ask for it. Who are the most likely customers to give them to you? Once again, it’s all about customer value.

Asking a customer who is frustrated and leaving at the next opportunity does not work. And it leaves a bad taste that does not help your reputation.

The difference between referrals and renewals/account growth is that they are one-sided. That’s why I don’t recommend setting up a meeting asking customers for a referral. A better opportunity is to do it at the end of a QBR/EBR.

It gives you the perfect angle. After walking customers through all the value they have received you can ask who they know that would benefit as much as they do. Reciprocity can be a powerful motivator.

If your customers want to think about it, hold them accountable. Schedule a touchpoint e.g. one week later. When they are giving you names ask whether they are willing to make an introduction.

The success of both, getting referrals and introductions does not only depend on the outcomes customers get. The quality of your customer relationships matters as well.

If it feels awkward to even ask your customers it’s a strong sign that your relationships need improvement.

Happy Holidays and all the best for 2025 🥳