GTM Navigator: Customer Retention and Account Expansion

GTM Navigator is our ongoing series where we break down the essential components of nailing the right go-to-market strategy.  

In this episode, Stephanie Perez, Managing Director of Business Development at Fin Capital, speaks with Chris Chen, GTM Advisor and Managing Partner at CoPilot CRO. Chris brings 20 years of experience leading enterprise revenue teams across the entire revenue funnel in the B2B SaaS market to his work as a GTM advisor and coach for B2B enterprise SaaS companies focused on fintech, insurtech, and healthcare.  

In this discussion, you’ll gain a better understanding of strategic approaches to customer retention and account expansion, the importance of deepening customer relationships and how to drive revenue growth within existing accounts. We’re grateful to Chris for sharing his insights and hope that this episode of GTM Navigator unlocks new customer retention strategies.  

Key Highlights Discussed: 

1. When to focus on account expansion 
2. Playbooks for expansion vs. cross-sell/upsell  
3. Annual operating plans to fuel account expansion  
4. Optimal structures for customer success and sales teams 
5. Compensation models for customer success teams 
6. Current trends and challenges in the market  
7. Role of sales engineering in customer success  

Transcript (edited for brevity and clarity): 

Stephanie Perez (00:06): Chris, can you share more about your background and sales experience? 

Chris Chen (00:10): I’ve managed revenue teams for nearly 20 years, primarily as CRO in B2B enterprise SaaS within regulated industries like fintech, insurtech, and healthcare, which often have long sales cycles. My role has typically involved helping buyers make decisions to shorten these cycles. The products I’ve sold are technical, including data APIs and AI/ML solutions, encompassing functions from account management and customer success to onboarding, engineering, rev ops, and parts of customer service and marketing. I’ve been involved from early stages like Series A through C, up to IPO. 

Stephanie Perez (01:17): As companies reach product market fit and mature, when should they start thinking about account expansion? 

Chris Chen (01:26): Account expansion typically becomes relevant around late Series A or early Series B. Factors like long sales cycles in industries such as healthcare or banking might accelerate this due to the need to meet revenue targets and alleviate pressure on sales teams. Frequent product introductions also necessitate considering expansion as part of a cross-sell and upsell strategy. Underpricing services initially may require adjustments over time, making expansion necessary. There’s a tipping point when the number of customers makes account expansion a more significant revenue source than new bookings. 

Stephanie Perez (02:50): As we’re digging into account expansion, let’s delve into upselling and cross-selling.  

Chris Chen (02:58): I think it’s important to start with the difference between expansion versus what cross-sell and upsell means to me. Expansion, as I define it, occurs within the existing contract framework, typically involving transactional usage or per-seat components that drive revenue beyond a base amount. This contrasts with cross-selling and upselling, which occur outside the existing contract’s scope and often require contract amendments for pricing changes, professional services, or new product sales to different departments or regions. Mature companies may employ specialized sales roles for cross-selling and upselling, distinguishing these efforts from standard expansion activities driven by customer success personnel. 

Stephanie Perez (04:38): How should account executives be trained to introduce conversations about account expansion effectively? 

Chris Chen (04:48): Discussing expansion, especially for new products, is complex. Before customer success became a buzzword around 2011, the focus was not just on ensuring customer satisfaction but also on the entire customer journey or experience. Asking a customer for more money prematurely can jeopardize the relationship. It’s crucial to establish a successful customer journey where account managers, the quarterbacks in this process, ensure all departments contribute to the customer experience. This foundation allows for a smooth transition to discussing financial aspects when appropriate. Establishing clear annual operating plans with customers at the outset defines mutual goals and measurements, facilitating easier upsell conversations when targets are met. 

Stephanie Perez (08:30): What are optimal team structures in terms of customer success versus account executives, and what skills are necessary for success? How should success be measured and compensated within these teams? 

Chris Chen (09:37): The evolution of the customer success role from what was traditionally called account management reflects a balance between focusing on renewals and revenue and enhancing the customer experience. In early stages, such as seed to Series A, the emphasis is on activating customers and integrating them successfully, with metrics focused on user engagement and retention. As the company matures, the metrics evolve to include more detailed product usage and value delivery, aligning closely with customer-defined success metrics. Compensation for customer success should align with these goals, starting with a higher base salary due to the lower risk compared to sales roles, with variable components tied to specific outcomes like upselling or cross-selling. 

Stephanie Perez (17:22): Given your advisory role and the changes in the market, what trends and challenges are you observing currently? 

Chris Chen (17:49): It’s hard not to notice that everyone has the word AI in their company mission or their name. Also, there are now two to three X the number of competition or competitors in each category, and they’re all kind of doing something roughly the same but yet different. And I think it is somewhat confusing. So I think, and I’m not a VC, but I’ve been told by some of my smarter VC friends, there will be consolidation coming, but in the meantime, you still have to hit your milestone and your metrics. Particularly for those in the B2B enterprise saas space where there are long sales cycles, it is really learning how to differentiate in that market and how your buyer wants to buy. 

I think more so than ever, throwing spaghetti at a wall is dangerous when you have this much competition out there. It is really making sure you do the best deals that you possibly can and put yourself in a position of success. So maybe put another way is because there’s so much competition out there right now, I think the cream can rise to the top. If you really kind of focus your sales and your account management efforts, really build a good customer experience, really build a good journey, you’re going to be able to separate yourself from the competition. Because ultimately in these regulated industries like fintech, healthcare and insurance, the best technology doesn’t always win. In fact, it almost never does. And that means the partner experience you’re creating or the client experience you’re creating does matter. It’s kind of like a Michelin restaurant. Yes, people come for the food, but the experience matters. So, I think there is an opportunity to separate yourselves there while the industry consolidates a little bit. 

Stephanie Perez (25:07): 100%.  

Chris Chen: Also. I think the word “customer experience” is this pie in the sky thing, but you learn a lot actually trying to give reality to it. The reason why the customer experience is different is they’re like the conductor of the orchestra, but everyone has to play an instrument in order to make the thing sound good. So, the customer experience, unlike the sales playbook, sales playbook is usually encapsulated. It is usually contained with the sales team. The sales engineer does this, onboarding, does this, the sales person does this, the SDR does that. Maybe you have to reach out to marketing. It’s not the most cross-functional feel for the most part. That’s just not true in the customer experience, right? Engineering owns a piece, product owns a piece, ops probably owns a piece. Every part of the company, even legal compliance probably owns a piece because of procurement. 

How do you take what was a four piece quartet, whatever, string quartet, and now it’s a full orchestra. How does everyone know what they’re doing at the same exact time depending on where the customer experience is? And so if you’re still in the onboarding phase, that customer needs very different things than someone who’s validated the product. “I have ROI, I’m ready to expand,” involves a very different set of players. For CEOs, founders, CROs, this is critical to understand, and build a playbook around, so that you have outlined the connective tissue for your entire company of how to be customer centric and each point in the journey.  

Stephanie Perez: Is there software that helps organize and streamline the complex customer experience management process you’ve described? 

Chris Chen (25:15): While some new AI tools are starting to address aspects of customer experience management, no single software fully encapsulates the dynamic lifecycle of a client relationship, which involves continuous engagement from onboarding to expansion. The challenge remains to effectively document and manage the customer journey across all stages, ensuring every part of the organization understands their role in delivering value to the customer. 

Do you get calls from your companies around the sales engineering team or the solutions engineering team? 

Stephanie Perez (27:56): It’s definitely a problem area, and it’s usually one that no one wants to admit to. Any particular reason why you ask? 

Chris Chen (28:28): I find, especially in technical products and enterprise sales, they’re really important because probably the least product oriented people are the salespeople and the account managers are somewhere in between. The sales engineers in theory, they’re really the architects and they’re the ones that know the customers, but know the product the best. They should be in the best position to speak. So I don’t think salespeople always know what to do with them.  

There’s a lot of attention paid to the sales collateral, but I’m not sure that people always nail the sales engineering part. It’s very Q&A…I just do a product demonstration… I answer questions. But what are you trying to accomplish with the counterparty on the other side, right? Is the playbook going deep enough and are you really accomplishing what you need? Are you solving problems? There’s different personas, right? There’s clearly a decision maker and a business buyer, but are you really doing a great job with a technical buyer on the other side?  

Stephanie Perez (30:49): From your experience, how have you involved your sales engineers in that part of the process? 

Chris Chen (30:56): If you’re too young, I usually assign them by accounts and do a round-robin. But as you get more mature, I feel that upfront, especially if it’s an API or something that requires integration, it’s really much more about architecture and integration. On the backend post deployment, you might have a different type of experience that’s needed, which is now that we’re live, we are going through potential bugs or features that are missing. How do I work with the product team? How do I help evangelize for this customer to get on the roadmap what they need? Or maybe we miss something in the architecture and we have to kind of redo it. 

So there’s a stabilization. I actually have sales engineers reading customer service tickets to monitor what are the most frequent things that are popping up so they can have conversations with the product team and also educate the sales team on misses. And ultimately, when they’re ready to buy more, when the client’s ready for upsell cross sell, because it’s a new product, it might require more work on the customer side. So definitely bring them back in. If you’re doing quarterly meetings, checking your OKRs with them, I will have solutions engineers sit in on those calls too. It’s important that they understand what’s going and so you don’t put your account managers on an island. 

Stephanie Perez (32:39): Yes, a hundred percent. Thank you so much, Chris. Really appreciate the time. This is a super insightful discussion and looking forward to sharing this with the rest of our network.