Here’s a big question in SaaS right now…
🤔
Who owns what?
This question is everywhere!
Who owns retention?
Who owns upselling & expansion?
Who owns churn?
There doesn’t seem to be one right answer and ownership changes from company to company.
In fact, if we consult Gainsight on who owns upsells and renewals, they’ll say “the short answer is it depends. The longer answer is that it still depends but will also likely change over time.”
Luckily, tons of resources help us peek into what other companies are doing around these metrics and in this post, we’ll be focusing on AppsFlyer.
Hey everyone 👋, this recap is from a Churn.FM episode. Andrew sits down with Ziv Peled, the Chief Customer Officer at AppsFlyer and they dig into how the Customer Success team generated over $100M in expansion revenue.
The Details
Ziv Peled has built the Customer Succes Team from scratch over at AppsFlyer. He now leads a global team of over 150 Customer Success Managers (CSM) in 13 offices . The team focuses on pre-sales, onboarding, adoption, and advocacy.
Ziv sat down with Andrew Michael, the Churn.FM podcast host. Andrew brings on big names in SaaS to help us understand churn, customer retention, and other related topics.
In the past, I’ve touched on other metrics like retention and how it shouldn’t always be the priority, and in this post, I want to focus on something that feeds into that, upsells and renewals.
Ok, so here are the three takeaways from this episode, let’s go ↓
Upsell indicators > retention/churn
The problem with quotas
Customer feedback, where AppsFlyer failed
Upsell indicators > retention/churn
Retention and churn weren’t metrics that Ziv felt told the entire story for Customer Success so he spent some time thinking about what would.
Since Ziv knew that growing customers sat in his ballpark, he doubled down on upsell indications.
He started measuring this as a KPI in 2018 and in 2019, he added a sister KPI called feature adoption indication.
Our product teams are busy building features for our customers, some of these features were actually suggested by the customers and Ziv’s strategy ensures that his Success team uses this as a lever for upselling and renewing.
At AppsFlyer, it looks something like this
The CSM show the customer three new features during QBR, if the customer shows interest in any of the features, this information is then documented in Salesforce. The CSM would create an upsell indication if their request is for a premium feature or a feature adoption indication for non-premium features.
The goal, Ziv says, is to open 4 indications per month.
Since May 2018, by focusing on upsell indications, the success team over at AppsFlyer has closed-won over 1,400 upsells and expansions. This helped generate over $100 Million!
Feature adoption indication for non-premium features has around a 46% conversion rate. This means that the CSM needs to find the right value for the customer, they can’t just open feature adoption for customers that don’t align.
A good CSM is opening 2 feature adoption indications, and most likely one of those features will be adopted. For stickiness and in an effort to reduce churn, this is the best thing you can do for your customers.
But you need Product behind this! Make sure you have enough product features to push for more value. By doing this, you’re reducing churn and grow your company(Take it from a company that has net-negative churn 😉).
The problem with quotas
Ziv speaks to many companies who have given their Success team the goal of growth and have also given them a quota. But if we gave some thought to the book of business of an average CSM, they’re managing nearly 30 accounts.
An example of what ends up happening is that when they go to meet with one of those customers and they try to upsell them on a premium feature––because the CSM wants to generate more revenue–– the customer will say they don’t have the budget for the next 6 months. This customer has now been given a lower priority in the CSMs portfolio since their goal is to generate revenue.
At AppsFlyer, the CSM doesn’t care that the customer doesn’t have the budget!
they will push the customer to use one of the 25 non-premium features which if you think about it, that customer can raise 50M in 6 months or a year. And if they do, they WILL remember the CSM that was pushing them on value all the time. By doing that, the CSM has fortified the relationship and has positioned themselves as a trusted advisor.
Andrew chimes in to say that the problem with Success is that people want to see the ROI…
And sometimes it’s not the 50M raised, it’s the people that leave companies to go to another one and they want to bring AppsFlyer with them. This is where driving value trumps solely focusing on revenue.
Customer feedback, where AppsFlyer failed
By failing to get customer feedback, churn is inevitable.
Some of the churns at AppsFlyer has been by bigger customers. There are a lot of relationships to balance and sometimes the decision maker’s voice isn’t being heard or sought after.
Understanding customer satisfaction is actually a wider issue in B2B SaaS.
There are tools for NPS and CSAT but you only understand the status of customers who answered these surveys, you don’t get to hear from all the customers.
For example, If you work with 20 people at a big company and only 3 answered but they’re not the influencer or decision-makers, this is a problem. And if these 3 people are all promoters, you may be walking away thinking everything is awesome but in reality, you don’t know if there IS a problem.
The solution
For Ziv and his team is something that they’re currently developing. It’s a new object they’er adding in Salesforce that’s going to manage everything related to the relationship. With larger companies, you’ll sometimes have around 200 contacts and some of those are irrelevant or have left the company.
With this solution, they’ll be able to set the most important/signification relationships, of the account. The CSM can identify who owns what and rate their relationship on a scale of 1-5 based on how well they know the person . And then from a wider view, Ziv can see the relationships established and who is who.
This is a game-changer for Ziv since it will give his team a lot of the information that will enable them to strategically think about the next engagement with a customer. If we keep in mind the average accounts managed by CSMs–30–having this information at hand can help them understand
How to prioritize their next engagement
Who should they invest their time on next
Who should they get feedback from that hasn’t given yet
When it comes to collecting feedback, Ziv is even thinking about having a third party survey agency go directly to the customer to gather unbiased feedback (and hopefully from folks that have not given feedback).
Summary
Upsell indications and feature adoption indications help lock in renewals & expansions
If the goal for Success is to generate revenue, we run the risk of de-prioritizing adding value
Incomplete customer feedback = churn. AppsFlyer is developing a solution for this!
Shout outs
And if you want to hear more from Ziv, connect with him on LinkedIn.
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