This article originates from a presentation at our virtual Customer Success Festival in October 2022. At the time of the event, all job titles were correct and up to date. Catch up on this presentation, and others, using our OnDemand service. For more exclusive content, visit your membership dashboard.

It’s an all-too-common complaint among customer success leaders that while they’re trying desperately to drive retention, their sales counterparts have a single-minded focus on short-term wins. If that sounds familiar, fear not! Minna Vaisanen and Nieves Canada are here to unpack how you can build alignment between sales and post-sales customer success teams to drive customer lifetime value (LTV).

Nieves has been working in tech companies for over 16 years, and she’s currently the Global VP of Customer Success at iText PDF, a global leader in PDF software, where she’s building and scaling the customer success team.

Minna is Head of Customer Success at Growth Engineering Ltd, a learning tech company that delivers value through learning outcomes for its customers. Like Nieves, she’s a tech company veteran, having spent 10-plus years in customer success and change management.

Between them, they’ve got a wealth of hard-won insights to share. Let’s dive in, shall we?

The three keys to alignment between sales and post-sales teams

Nieves Canada:

Today, we’re going to be talking about driving customer lifetime value – in other words, the entire value generated from the moment a customer signs up for your solution to the moment they leave. That includes their first purchase, renewals, upsells, cross-sells, and, of course, the value of their referrals.

But before we jump in, let's start with a general overview of how customer success teams can drive lifetime value through alignment with their sales counterparts. Minna, what’s your view on this?

Minna Vaisanen:

This is a topic that comes up a lot because it’s very common to have differences of opinion on what drives lifetime value. So how do you achieve alignment on this between sales and customer success? I’d concentrate on these three areas:

  1. Goals and OKRs: Both teams need to have the same aim in their sights.
  2. Customer strategy: Who is your customer? You want both teams to have the same profile in mind.
  3. Tools and processes: These are essential for building a seamless customer experience.

What about you Nieves? How would you start thinking about this topic?

Nieves Canada:

I think we’re pretty aligned on these three main areas. I think we also need to keep in mind that driving LTV through alignment is not only the teams’ responsibility; it starts with the leadership.

When it comes to goals and OKRs, if sales is only measured on bringing in short-term revenue, we're not facilitating an interest in a long-term vision for the customer.

When it comes to the customer strategy you were referring to, customer segments can be gathered in the field, but it's also up to leadership to set the direction and guide the customer-facing teams.

And of course, to your third point on tools and processes, we need to have integrated tools that allow both teams to communicate. That will not only facilitate collaboration but also make the teams more agile. Streamlining the processes between the buyer journey and the customer journey has a direct and positive impact on the customer experience, setting up the customer for success and moving them faster towards expansion.

How to drive customer lifetime value in your CS organization

Minna Vaisanen:

How do you go about driving lifetime value in your CS organization?

Nieves Canada:

Something we’ve done that has had a very direct impact is having sales and customer success reporting to the same leader. This person owns the total revenue – not only new sales and upsells, but also churn. Plus, they see customer success as a growth center, not a cost center. In our case, reporting to the CRO has helped to facilitate a strong relationship between the sales leader and the customer success leader.

It’s also important to note that when we think about LTV, we tend to focus on post-sales journeys – everything that happens after the sale. However, in reality, the success of the customer starts with the first sale. It starts with how the customer feels and the expectations that are set during that sales process.

With that in mind, we're driving LTV by incentivizing customer-centric behaviors in the sales team through their compensation. That can be achieved in several ways. In the past, I've worked in a model where sales were responsible for the first-year renewal, and if this didn't happen, their commission was taken back.

You might also want to incentivize your sales team not only on the total revenue they bring (which generally results in them focusing only on the biggest opportunities) but on developing long-term deals and having quotas for upsell and cross-sell revenue.

Another important point is your data. When you can track churn, you can address its causes early on. Perhaps customers in a certain segment, using a certain product, or in a certain region are churning, so you need to figure out what you should do differently to impact LTV.

For instance, thanks to our data, we saw that for one product, customers were churning because they needed more hand-holding during onboarding; in fact, that hand-holding needed to start during the closing conversations.

Another change we’ve brought in to drive LTV is sitting down with the customer early in our partnership and mapping out exactly where they’re heading with our solution. We’re also closing three-year deals and defining how the customer goals will change down the road.

We can use the customer milestones we set out in our plan as sales interactions, saying to the customer, “Hey, you're not ready for this yet, but once you reach this milestone, we can set you up with sales to check through how this functionality will support your next milestone.” This sets expectations for customers and internal teams around long-term growth.

Another super-important thing that we've seen helping LTV is customer feedback – in our case through NPS. That has not only helped us to identify areas where we can do better, but it has also helped us to identify customer advocates and gather referrals that we can bring back to our sales team. What are your thoughts?

Your go-to guide on how to obtain customer feedback
Feedback can help you identify and understand gaps across your business, and influence the change necessary to improve these products, services, or operations.

Minna Vaisanen:

We're really aligned again! I was going to highlight a lot of the same things you mentioned, particularly the alignment between the goals, and sales not just being targeted on short-term goals but on retention.

If we really think about where long-term value comes from, it’s net revenue retention (NRR). It’s the ability to satisfy the customer so that they find the value, they want to renew, and they want to grow with us. That can’t happen if you only have short-term sales in mind.

Like you, we’ve got three-year deals because our product is quite complex and implementation takes a lot of effort. That means our sales discussions need to be based on value rather than features. We can't just look at all the things the product does; we need to talk about the value it’s going to deliver for the customer because it’s going to take some effort to get it going.

This comes back to one of the three pillars I mentioned earlier: aligning on goals and OKRs.

Whether CS and sales are under the same leadership or not, they need to align their goals and there should be a retention goal across the organization.

The most successful companies are the ones with the highest net retention rates. Companies that do 120% or more in net retention are the ones that are growing the most. That means the whole organization needs to be aligned around retention – starting with sales and post-sales.

Turning to our customer strategy pillar, both departments need to align on the right customers to look at. They can do that by understanding who's a successful customer in your organization and, therefore, who you should continue to sell to. You should almost qualify out, then qualify in.

Thirdly, both teams need to find alignment around the delivery of value, making it frictionless to deliver what you sold. That comes back to what you mentioned, Nieves, about using your internal tools and data to see who the customer is and making sure you communicate that across the organization.

Why you should align customer success, marketing and sales
Customer success is preoccupied with nurturing its current customers, rather than seeking out new customers. While being distinct with different objectives, there is an intersection between customer success, marketing and sales: they’re all customer-centric fields.

Best practices for building and defining processes

Nieves Canada:

Earlier on, you mentioned aligning processes to drive LTV. Can you share some best practices around that?

Minna Vaisanen:

Funnily enough, my sales leader and I have just finished building a new process for handovers between sales and post-sales. Our sales processes generally take between six and 12 months, and we’d spend all that time talking to the customer only for the conversation to go dead as soon as the account was handed over to the next team. That's how we knew we needed to create a solid process that would build more continuity for customers.

We’ve started this new process with a document that aligns both teams by asking the following questions:

  • What kind of problems is the customer trying to solve? To understand where value is generated for the customer, we need to understand their use case, how they’re going to implement it in their organization, and which teams will be involved.
  • Why our company and why now? We want to know what it is that makes us unique in their eyes because that will impact how they measure success. Also, we want to know if and why this is a critical time for them; that’s going to help us agree on a project plan, outcomes, and milestones, and again, that crucial value aspect.
  • How will the customers measure success? This is my favorite question. Not how will we measure success for them, but how will they determine the value they’ve received?

And then obviously you can't leave out the nitty gritty:

  • Who's involved?
  • What are they paying for?
  • What has been agreed to?

All of this goes into a living document in the account plan so that you can always refer back to it with the customer. That was a lot of detail, but this topic is quite close to my heart!

Nieves, do you have any examples of process-building from your organization?

Nieves Canada:

That process sounds great and it's a must-have for every organization. To add to that, we’ve also put in place knowledge-sharing sessions. Sharing information between sales and CS is helping both teams a lot. We’ve created these sessions based on the size of the customer, industry, and even region. Because we work in the US, EMEA, and APAC, we see a lot of local specifics.

During the sales cycle, the customer shares information that is useful not only to ensure that the customer is successful but also to map out the account for expansion opportunities later on. The sales team shares the customer intel they gather during the sales cycle, and that’s used by the CS team to grow the customer over time.

On the side of the coin, the customer knowledge that's gathered through customer success interactions can help our sales teams to target customers that are a better fit.

We also have both teams working on upsell, so to boost collaboration between the teams, we've created an upsell methodology to give guidance on how that internal process happens. That aligns the teams and also provides a very smooth customer experience, which is, in the end, what we’re all looking for.

How to identify and align around your best-fit customers

Minna Vaisanen:

How do you determine who's the best-fit customer for your organization, and how do you align that between your sales and leadership teams?

Nieves Canada:

The first step is to look at your data to identify some trends. Which personas, industries, and segments have the most successful customers? We then need to complement this with a strong partnership between sales and customer success. The customer success team will track the customers that are achieving high success and provide that information to the sales team so that they can better target new prospects that fit that ideal customer profile (ICP).

It's also very valuable for both teams in the long run when customer success identifies the bad-fit indicators of existing customers. They might include companies that are too small or too large for the business we're doing today, or customers whose interests lie in one specific functionality and feel underserved. With this information, sales can better direct their outreach and bring on new customers that have a higher potential for success and loyalty.

As you can see, this is not a fixed exercise. As the company grows and our products evolve, certain customers and industries will become better fits than they were initially. What do you think?

Minna Vaisanen:

I agree that it’s about understanding who's a successful customer at this current time. As you said, as your product, team, or company evolves, your ICP might change completely. Are you selling to enterprises more than medium-sized businesses? Who’s the buyer that you typically need to target? Understanding all that is crucial.

It’s also important to understand your positioning against your competitors and why you would be a better fit for certain customers than others. That goes back to the question of why they bought your product and for what use case.

You need data too on who's signing the deals and why. That feeds into your ideal customer profile because if you can tease that out early in the sales process, you're not spending time talking to people who ultimately aren't going to convert. It’s also going to help you with more successful implementation because you won’t be struggling to make your product work for a customer who’s not a good fit for your product.

Coming back to what you said about upsells earlier, I think it's good to establish alignment between the sales and the CS leadership teams on which model you're going for, and again, this can change over time.

If you're a new product, you might want to go for the land-and-expand model to get your foot in the door with different companies, then get more market share once you've proven your success. Or maybe your product is something like procurement software, which doesn't work so well with land-and-expand, and you need to implement it fully from the get-go.

Whatever your sales model is, you need to agree on that within the company. That also means aligning on how you’re going to do upsells and cross-sells if that is your model. You need to review this regularly along with your ICP and look at how it’s going to change as your product roadmap develops. It all comes back to organizational alignment on who you're going after and how you can best serve those customers.

Top takeaways

Nieves Canada:

We've touched on a lot of hot topics today, topics that we could develop for hours, but unfortunately, we have to draw this article to a close. Before we do though, it would be great to have your top takeaways from everything we've touched on today.

Minna Vaisanen:

It's hard to boil everything down, but I think I’ll refer back to my first answer about the three pillars. If you can align the sales and post-sales teams around goals, customer profiles, and processes, and consciously work to continuously improve those, it will be easier to deliver the right outcomes for your customers, drive the right value, and subsequently drive their lifetime value.

What about you, Nieves? What would you leave our readers with?

Nieves Canada:

A couple of days back, I read a study from McKinsey that found that optimizing the customer experience typically results in revenue growth of five to ten percent in just two to three years. In other words, there is a direct correlation between a better customer experience and an increase in customer lifetime value. As we discussed, aligning teams along the customer journey is critical to provide that customer experience.

In line with that, my takeaway – especially for people in leadership roles – is to make sure that you enable your teams and align everyone's interests along the journey. When you’re aligning both teams around the customer, you’re supporting long-term growth.