Today I want to discuss how forecasting monthly recurring revenue, renewals and upsells, should be part of your customer success strategy.
Running an online service business is challenging. Skepticism is at its highest, promises for every offer out there are outrageous, and defaulting on payments or even starting a chargeback is easier than ever…
And who should be held accountable for this? Partially the sales team, but also your customer success team. This is why Quality Control should be the bread and butter of your business.
How to hold online customer success teams accountable for customer success?
I keep trying to learn from the best in business so that we can serve our customers better. And one of the most interesting numbers out there is that for renewals and upsells that more than 50% of retention of clients comes from Customer Success teams (this has been surveyed across a multitude of different businesses).
You might say that your business runs differently, and the sales teams own renewals and upsells, but don’t you think that those renewals and upsells are a reflection of the Customer Success involvement in client delivery?
If we go back in history, Wright’s law proves the point here.
“Wright’s Law aims to provide a reliable framework for forecasting cost declines as a function of cumulative production. Specifically, it states that for every cumulative doubling of units produced, costs will fall by a constant percentage.”
In layman’s terms, our main goal is to create a Deflationary Customer Success department that gets cheaper and cheaper over time, so for every unit of effort, we can get a better ROI without compromising on quality.
Strategies for improving customer retention through accountability
First of all, have a strong grip on customer health scores and how every single client is doing, with a form of internal tracking.
This will give you plenty of data on how to forecast retention, churn, and even workload to know when to hire and when to wait.
If you want to know more about the customer health score approach comment or send me a DM.
But in a nutshell:
- Understand flagged accounts (under risk of churning)
- Keep an eye on any accounts that cannot be left unmonitored to make sure we prevent churn and increase the likelihood of renewal/upsell
- Create predictions based on the confidence score
- Early in the month forecast any renewals, possible upsells, or clients at risk of churning
- You should have a clear contract duration and make sure you can forecast any clients that are going to renew in the next 30 days
- You can assign a confidence score to each client and what offer you believe they’ll purchase to estimate and forecast possible revenue
- Identify accounts at risk that are still in the up to 50% of their contract duration and establish an action plan to protect those accounts from churning which can impact estimated collected revenue
- Based on the confidence scores and forecasting, review your team’s workload and align with the marketing and sales team’s goals to ensure the capacity to serve clients within the identified period
Let me know if it makes sense,
Jay
