Sales Management Pain Point #7
What is account management? Well, a question which any business person is going to ask after closing that first sale is: How can I keep that customer now that I have them?
Retaining and selling to an existing customer costs far less than pursuing and selling to a new customer.
The answers to that question add up to account management. It is the set of activities needed to keep your customers once you have sold them. You want to retain them with your brand, keep them coming back to your store, have them buy different products from your product line, and the like. Account management is critical because, as we all know, retaining and selling to an existing customer costs far less than pursuing and selling to a new customer.
Since the beginning of business itself, there have existed principles for account management that have always held true. You need to establish a strong relationship. You have to build trust. You have to provide great service. We're not going to explore of all these here, as much has been written about them already by us and by many others. But just know that such principles still hold very true and must never be violated. The data we're going to cover here is simply in addition to these principles.
Software as a Service
In the same way as the last article, I want to stick with the industry which I am in, along with many of my prospects and customers: Software as a Service (SaaS). In SaaS, account management means keeping your customers subscribed.
In SaaS, customer retention begins with a full set of metrics designed to allow you to track your customers, predict any changes and, most importantly, predict your revenue. To start with, you need to know the number of your current customers, how many licenses each of them have, your churn rate—the percentage of your customers that you lose—and the Monthly Recurring Revenue (MRR), which is the regular revenue coming in from your subscriptions. Other metrics might be average sales price and average total sale.
You need as many indicators as it will take to show you the whole picture, and allow you to know as soon as possible when any changes, positive or negative, take place in your customer base so action can be taken. We employ close to 50 metrics for this purpose.
Customer Success Manager
Today at my company as well as with a growing number of others, account management is handed by the Customer Success Manager. The total job of the Customer Success Manager is, as the name implies, to keep customers happy and succeeding with our product. (Traditionally, an account manager has been in charge of a set of accounts, whether they have purchased or not. The job description of a Customer Success Manager would certainly apply to an account manager as regards existing accounts that have already purchased.)
The main guide for the Customer Success Manager is this set of account management metrics. The Customer Success Manager uses these to be alert to any customer that is a risk factor. The risk factor is, of course, the customer not renewing.
For ourselves, we have our indicators arranged so that we can spot such risk factors right away. For example, has the customer purchased more licenses than they are using? Those unassigned licenses will most likely not be renewed. Or, is the customer actually using Pipeliner, creating contacts, accounts, leads and opportunities? If they're not using it, they're also not likely to renew. We have an alert system set up that shows when someone has stopped using our software. At that moment we call that customer and inquire into the issue.
It is a fact of life that you will lose some customers, if for no other reason than some companies fail. For example we had a customer that was a fracking company, but the cost of the oil obtained through fracking was substantially lower than the cost of fracking itself, and the company went out of business. So you will have a churn rate—the idea is to keep it as low as possible. Our Customer Service Manager is charged with that duty and has a dashboard that provides him alerts. He handles them as they come up.
CRM and Account Management
Your choice of CRM plays a big part in account management. Many companies, for example, have a whole different process for existing customers than they do for regular sales. This process would include stages and tasks designed to consistently keep the customer happy, and where applicable to move that customer up to the point of being ready another of your products or services.
Many companies have a whole different process for existing customers than they do for regular sales.
Not only is Pipeliner CRM extremely customizable to your account management process, but allows for multiple processes so you can have as many separate processes as you need for handling different types of prospects or customers. All of these processes rely on a single database, so that you can move accounts intact from one process to another, when required.
There is a ratio used by investors to evaluate SaaS companies, that a company can use themselves to get a fast look at how they are doing. It is called, appropriately enough, the Quick Ratio. Here it is:
|Quick Ration =|
The way this figure is analyzed by investors is that they utilize a benchmark of 4. If a company averages 4x as much added MRR as lost MRR, that company is strongly considered for investment. The higher the number, the better.
However you do it, remember that effective account management is more important than ever in today's networked society. A happy customer spreads the word far and wide, and can be viewed the world over through the internet. The same is true for an unhappy customer. So make sure you make great account management a top priority.
Pipeliner is the perfect CRM for tracking account management.