Customer Success and this, the year of Net Revenue Retention
Revenue Growth Guide - Jan '24
It’s January!
I’d say Happy New Year, but over the past couple weeks I think we’ve collectively decided as a society that the time for that has passed. Instead, I’ll just say I hope you’re settling in comfortably to what we are right now declaring the year of Net Revenue Retention.
Why are we making this call? There are the oft-discussed reasons, of course: the current macro-economic hellscape, changes in buyer expectations and behavior, etc. But on a slightly brighter (and more original) note, Customer Success is finally getting the attention it deserves as a reliable driver of sustainable revenue.
Full disclosure, there are two reasons this letter is finding its way to your inbox a little (a lot) later in the month than usual:
Our team here has been working tirelessly on something very cool that’s is finally going live this week. While I couldn’t be more excited to share it with you, it has also meant that much of my RevOps-writing energy has been channeled into that.
With this exciting thing going live this week, I wanted to be able to tie what’s going into this newsletter directly into the content we’ll be sharing with the launch. Is this a whole second reason? We’ll call it reason 1b.
Anyway, let’s get into it.
What does success look like this year?
I’ve seen plenty of thought leaders point out that when it comes to the B2B SaaS market, 2023 was, shall we say, rough as hell. Sales teams missed quotas, layoffs continued, and customers either reduced spend or outright churned.
While plenty of these things were due to factors out of companies’ control, we’ve learned we can mitigate these risks. To do so, we’ll need to pull some strategies straight out of the B2C playbook. If companies want to fare better this year, they should be using both hands to pull their CS teams into strategic planning.
Quantitatively, success looks like NRR over 100%. If you’re seeing a lower number, it might mean that while you’re succeeding in retaining most of your customers, you’re not driving the kind of expansions needed for meaningful growth.
How should you be leveraging data?
Our CEO, Jen, recently chatted with Stephen McBride, a CS leader at Hubspot, and if I had to boil the conversation down to one word, that word would be data.
If you’re not leveraging usage data to not only deliver a better experience, but also to prime your reps for more successful expansion conversations, what are you even doing? (I really tried to make that sound less obnoxious in writing.)
Usage Signals
How much are they using your product? If someone is consistently hitting the usage thresholds of the tier they’re in, it’s a good indication they’re ready for a conversation about upgrading to a higher tier.
Behavior Signals
How are they using your product? If someone is using a particular integration or feature, think about recommending complementary products or features that might help them maximize the value they’re getting from your product.
Firmographic Signals
Things like company size or revenue can be a good foundation for expansion conversations. Look at how companies of similar sizes and structures are using your product successfully and use that information to make personalized recommendations.
What role is AI playing in all this?
Asking for a friend–or, rather, for everyone. Because nothing is allowed to happen anymore without there first being an in-depth and/or polarizing chat about whether AI is going to make that thing easier, harder, or just go ahead and take your job.
In this particular case, AI is our friend. CS teams can use it to streamline tedious-yet-necessary tasks, like breaking down long email or chat conversations and drafting communications, but a human touch still very much puts the ‘success’ in Customer Success.
When it comes to not only keeping your customers happy, but also getting them to spend more money with you, personalization is hugely important. Yes, you should leverage AI and the tools at your disposal to get the insights you need and boost your efficiency, but your approach should always be human and tailored to the individual you’re interacting with.
Want to hear the whole conversation with Stephen?
Of course you do, and now you can, because our brand new content hub covering all things Net Revenue Retention is officially LIVE!
Our goal in creating these hubs is to share our knowledge and experience with revenue operators so they can build world-class go-to-market engines. We’ll be launching a new hub every 2 months for the rest of our lives (this is hyperbole but also kind of not?), so please go check them out.
As always, you can email me directly with any feedback, questions, thoughts, dreams, etc.
There is also now a dedicated suggestion box where you can submit requests for hub topics and content at the bottom of THIS PAGE.
Until next month!
-Kristi