Customer Success for Early-Stage Startups: How To Increase your Customer's Life Time Value
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Today, I want to talk to you about the other side of the moon.
The world of Customer Success.
I have been introduced to customer success and existing business very late in my career.
I always thought that acquiring new business was the most important part of selling.
For many companies I have worked for, the primary focus has been acquiring new logos and customers.
However, my tenure at LinkedIn has been pivotal in my career.
If you have been following me, you will know that from 2014 until late 2017, I worked at LinkedIn EMEA HQ in Dublin, Ireland.
And I was a Relationship manager, basically an account manager with mainly two goals:
Renew my existing customer base
Grow my clients by at least 20% every year.
Those goals meant I had to work closely with our CS team (customer success).
Long story short, it wasn't always a great experience.
At the time, a company like LinkedIn focused on acquisition, leaving CS teams behind. It was not explicit, but we all knew that AEs' teams were 'more important' than relationship managers or customer success.
So, I grew up with that in mind.
Still, quickly, after I left LinkedIn and got into a leadership role, I learnt the contrary: you cannot build a company without a system to onboard, renew, and ultimately upsell your clients.
The Bowtie Model By Winning By Design considers Customer Success a vital part of the sales cycle.
What is Customer Success
Customer Success is the function that ensures clients achieve their desired impact while using your product or service.
It's not just about supporting or renewing them; it's a proactive, holistic approach that begins right from the customer's initial onboarding with your company and extends throughout the LTV (lifetime value).
Why It Matters More for Startups
As of today, growing successfully your existing clients is more important than acquiring new ones. Yes, you heard right.
With the cost of acquisitions (CAC) skyrocketing, outbound fatigue, and budget constraints, landing a new logo will require far more effort today.
That's why you should focus on growing your clients; that is usually cheaper and more effective.
Building a CS Framework
Start with the Right Metrics: Focus on metrics that directly reflect customer satisfaction and engagement.
Metrics like Net Promoter Score (NPS), Customer Satisfaction Score (CSAT), and churn rate can help you set the bar for some data and reporting.
New Business - Existing Business Transition: Work well with your new business team (AEs) to learn how to introduce and hand over your clients to the customer success team (CS).
Make sure to add relevant info like:
Why did they buy
Who are the primary decision-makers
What are the expectations of the project?
Structure the Customer Interactions: Monthly and Quarterly Business Reviews have been used for many years and still work great. Build a place for async comms, like Slack channels and PODs, to manage your key customers effectively.
Investing in customer success has been shown to influence recurring revenue streams significantly.
Not only the ARR but, more importantly, the critical metric of startups: LTV (Lifetime Value).
If we expand, you will have a more substantial LTV/CAC ratio when a team of CS is in place and doing its job.
Summary
Customer success is a support function and a growth engine for early-stage startups. Indeed, during these difficult days of acquisition, you need a strong, powerful CS function.
Remember, when you care for your clients, they don't just stick around - they become the pivotal drivers of your growth.
It's essential, even if you are in the early stage, to build
Thanks for reading this far. I will see you all next week.
