THE CUSTOMER EXPANSION PLAYBOOKStrategies for maximizing customer lifetime value through cross-sell and upsell

Introduction

Are your Customer Acquisition Costs (CAC) out of balance with your Customer Lifetime Value?

B2B companies today across every industry—from hardware to

software to life sciences—are shifting towards subscription-based

revenue models. These models require more than just a new approach

to pricing and product delivery. Your success depends on the ability

to deliver customer success.

Everything from organizational structure to product development to

how you engage your customers must be reimagined. Empowered

customers have done their research and they’re demanding a lower

cost of entry as well as guaranteed business outcomes. As markets

become more competitive, acquisition costs rise. If you do not invest

in customer expansion strategies that maximize CLV, then your new

model will not be viable—even if you effectively manage customer

churn. As the is a global leader in providing outsourced, performance-

based revenue growth outcomes, ServiceSource can help you leverage

proven best practices and take a holistic approach to customer success

management that will maximize CLV for greater revenue growth.

This guide will help you better understand customer success and

answer five critical customer expansion questions. How do I...

Î Keep growing revenue from my installed base of customers?

Î Organize my teams to cost-effectively expand customer revenue?

Î Offer the right product to the right customer at the right time?

Î Build best-practice processes?

Î Measure the effectiveness of my customer expansion strategies?

1 Gartner, Tech Go-To-Market: Best

Practices in Enabling Reseller

Channel Partners in the Changing

World of Cloud, Mark Paine 2016

Revenue generation and customer experience are not mutually exclusive. Increased revenue through upsell and cross-sell activity can financially support the extra time and attention required to drive a positive customer experience in the enterprise.1

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Customer expansion basicsIn the B2B market, customer expansion efforts are quite often tackled by silos of teams. The marketing

team initiates cross-sell and upsell campaigns, while account management or channel partners look to close

the deal. Customer success and service teams are given SPIFFs or other incentives to pass along possible

expansion opportunities. Your customer ends up feeling “sold to” during critical interactions. This puts

you at risk of alienating your customers by giving the impression that you don’t care about their business

results, only about their money. Any approach to expanding CLV must be part of an over all framework

to strengthen customer relationships and foster customer loyalty. On the next page, you will learn more

about the importance of taking a holistic approach to customer engagement, but first let’s cover customer

expansion 101.

CUSTOMER EXPANSION: ACTIVITIES AND PROCESSES AIMED AT EXPANDING YOUR CUSTOMER

FOOTPRINT AND WALLET-SHARE. START BY IDENTIFYING CUSTOMER EXPANSION PLAYS AND

OFFERS THAT MAKE THE MOST SENSE FOR YOUR BUSINESS:

PLAY GOAL

Increase Licenses (Upsell)

Sell additional licenses of products or services

Upsell Service Level

Upgrade customers from standard or bottom-tier service levels to the premium or top-tier service levels

Expand Services Sell adjacent services that support your solution, such as professional services or training

Lead GenerationUncover additional sales opportunities using customer profiling and generate qualified leads

for your account management team

Multi-Year Upgrade

Sell multi-year contracts

Sell Consumables Sell consumable resources that are used alongside the product or service that you provide

Bundle Offerings Sell a wider variety of products to individual customers by offering specially priced packages

Warranty Conversion

Convert your customers from limited free offerings to premier warranty offers

Trial Conversion Convert trial accounts into paying customers

Freemium Conversion

Convert free accounts into paying customers

Platform Upgrade Migrate legacy customers onto a new technology platform

Technical Refresh Migrate legacy customers onto newer hardware or machines

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Customer success management basicsIn order to thrive in the age of the empowered customer and effectively maximize customer lifetime value,

you must take a holistic approach to customer engagement and define strategies to drive growth and

customer retention.

Too often, ongoing customer relationships are managed inconsistently, with multiple stakeholders, inefficient

processes and inaccurate data. For example, too many B2B companies don’t have the right mix of skilled

people, best practices and the necessary technology to optimize customer revenue growth and retention.

This results in higher customer cancellations, lower margins and missed revenue expansion opportunities.

Investing in customer success management solutions and processes—a holistic framework for growing

and retaining revenue from existing customers—will put you on the winning track.

Customer Success Management

THE FRAMEWORK FOR GROWING AND RETAINING REVENUE FROM EXISTING CUSTOMERS

INITIAL SALE

ONBOARDING & ADOPTION

UPSELL & CROSS-SELL

RETENTION & RENEWALS

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SolutionsThis playbook recommends solutions and best practices to help you effectively manage the customer

expansion—upsell and cross-sell motions cross—while allowing for alternative routes tailored to your specific

business. These best practices will improve communication, build better relationships and transform your

business into a customer revenue-driving machine. You will also have the opportunity to assess your own

upsell and cross-sell programs capabilities to guide future performance improvements.

Planning for Success

Customer expansion requires the right team, meticulous planning, insights to action and consistent

follow-through. We will explore proven best practices across three key areas in this eBook:

Î Skilled people

Î Proven processes driven by clean customer success management data

Î Purpose-built technology and analytics

PeopleFoundation for Success

Rethink your organizational structure to focus the right attention on customer experience after the initial

sale. Your teams need to understand the value and business outcomes for each and every one of your

products and services.

ProcessesInsights to Action

Use proven processes to minimize friction not only within your teams, but with your partners and

customers as well. Fed by accurate and timely customer insights, effective processes lead to the right

customer engagement play and optimized sales performance.

AnalyticsYour Performance Gauge

Deliver powerful insight into how well your customer expansion strategies are performing. With real-time

reporting and data-driven insights, you gain transparency into performance and the ability to take

corrective action when necessary.

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People

Skilled people are the essential ingredient to execute with precision and success.

When it comes to customer expansion, timing is everything. If done right, it can strengthen your relationship

with your customers. Done wrong, it can contribute directly to customer churn. No one likes being sold to,

which means customers are not always keen to be “transferred to an account representative” when they

have a specific problem that they are trying to solve. In the age of empowered customer, the answer to the

question “Who’s in charge of customer expansion opportunities?” is everyone. In a best-practice scenario,

every last employee should understand the value proposition of your products and services. Winning at

customer expansion requires synchronized team-work across departments—and that often means shifting

focus from departmental objectives to clearly defined customer objectives. A customer-obsessed team

should bring a diverse set of skills that allow them to drive the right actions from clean customer success

management data.

THE DATA SCIENTIST

Department: IT Data Management

Knows: Data required and historical trends

Expansion Role: Ensures that data is customer success

management ready

THE STRATEGIST

Department: Product/Solutions

Knows: Customer journey, value and business outcomes

Expansion Role: Outcome-based customer journey maps and

value propositions

THE CLOSER

Department: Account Management

Knows: The right offer or solution to solve customer pain points

Expansion Role: Run plays that maximize customer lifetime value, while improving customer loyalty

THE PROMOTER

Department: Marketing

Knows: How to create targeted, personalized offers that

get attention

Expansion Role: Drive customer expansion, engagement

and loyalty

THE ENABLER

Department: Training

Knows: How to put knowledge transfer to work

Expansion Role: Develop assets to help customers understand

how add-on or premium products can help drive more value

THE TRUSTED ADVISOR

Department: Customer Success

Knows: Customer health, key moments of truth and

change management

Expansion Role: Recommends solutions to business challenges while managing customer health

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Benchmark your people capabilities

OPPORTUNISTIC OPTIMIZED STRATEGIC

BENCHMARKING QUESTIONS

• Do you have an executive sponsor accountable for customer revenue?

• Do your teams understand their role in customer expansion?

• Do you offer product value and outcome training for employees?

• Is your customer journey well defined?

• Does your training team build assets that include an overview of all of your products and services?

• Do you have team members that can sell and solve customer problems?

• Do you have a data scientist that provides insight into customer expansion triggers and predictive analytic technology?

• Do you organize your teams around the customer journey?

• Are all team members prepared to strategically focus on customer outcomes?

BEST PRACTICES

DEFINE ROLES AND

RESPONSIBILITIESCUSTOMER-INFORMED TEAMS CUSTOMER-CENTRIC TEAMS

In the opportunistic phase, your primary focus is to establish clear

roles and responsibilities to eliminate friction points. With a defined

executive sponsor that is accountable for customer revenue, you will be able

to eliminate current organizational silos and begin to take a more holistic

approach to customer success management.

In the optimized phase, your teams are prepared to demonstrate the value of the upsell, cross-

sell or other customer expansion opportunity. With a clear picture

of the entire customer journey and critical touchpoints, teams

have a better understanding of the customer. Customer success or account managers are trained in

solution selling, as well as experts in increasing customer retention.

In the strategic phase, a data scientist reviews trends and provides insights to inform strategy. Teams are organized

around the customer journey and are cross-trained to provide an

extraordinary experience. Every team member has the ability to explain

how products and services will help the customer achieve

goals, solve problems or provide business outcomes.

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Real-World Example

Incremental bookings with a holistic approach to customer success management.

COMPANY

A leading online meeting provider.

CHALLENGE

A rapid growth period led to an array of

challenges that needed to be addressed for them

to retain market share. One of the key struggles

faced was helping customers understand and

realize the full value of their product, rather than

just the value of what they were sold at the time

of purchase.

Retention rates were in the low 60s.

SOLUTION

Proactive adoption and retention approach

focused on driving knowledge of product value

and associated business outcomes.

BENEFIT

Increased retention rates by over 20 points and

drove over $60M in incremental bookings.

Processes

Empower your people with accurate and timely insights that drive consistent and effective customer engagements.

Driving the right customer engagement

requires data-driven best-practice processes

that proactively address customer health risks,

while triggering prescriptive sales plays

at the right time. Effective customer

expansion processes will set the tone for

a healthy relationship between your internal

teams, channel partners and—ultimately—

your customers.

One of the biggest challenges to customer

expansion is identifying which customers

have an actual business need for an upgrade,

add-on or warranty extension. Customer

success and account managers need to be

informed of patterns in usage data that indicate

when a customer has the highest propensity to

buy. To solve this challenge, you need to be able

to successfully separate the signal from the noise

in your data. This is done with product usage and

behavior analytics, an integral part of your clean

customer success management data. By regularly

monitoring key customer criteria and behavior,

you can identify optimal times to offer a new

product or service.

Insights to action

Pricing and Packaging

Evaluate your pricing and packaging to ensure it is based on business outcomes and offers the right incentive triggers for customers to invest further in your company. Pricing should include guidelines around discounts and campaign bundles.

Customer Insight Analytics

Become data-driven to successfully separate the signal from the noise in your data.

Perfect Timing

Trigger automated and personalized marketing campaigns directly from customer usage and lifecycle analytics to target the right customers, with the right offer, at the right time.

Training and Tools

Provide customer success, account and service managers with the training and tools required to perform consultative selling based on customer engagements.

Messaging and Sales Empowerment

Empower sales reps with insight into customer propensity to buy, as well as talking points to engage and close the deal more effectively.

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Benchmark your customer expansion processes

OPPORTUNISTIC OPTIMIZED STRATEGIC

BENCHMARKING QUESTIONS

• Do you have an executive sponsor accountable for customer revenue?

• Do your teams understand their role in customer expansion?

• Do you offer product value and outcome training for employees?

• Is your customer journey well defined?

• Does your training team build assets that include an overview of all of your products and services?

• Do you have team members that can sell and solve customer problems?

• Do you have a data scientist that provides insight into customer expansion triggers and predictive analytic technology?

• Do you organize your teams around the customer journey?

• Are all team members prepared to strategically focus on customer outcomes?

BEST PRACTICES

DEFINE ROLES AND

RESPONSIBILITIESCUSTOMER-INFORMED TEAMS CUSTOMER-CENTRIC TEAMS

In the opportunistic phase, your primary focus is to establish clear

roles and responsibilities to eliminate friction points. With a defined

executive sponsor that is accountable for customer revenue, you will be able

to eliminate current organizational silos and begin to take a more holistic

approach to customer success management.

In the optimized phase, your teams are prepared to demonstrate the value of the upsell, cross-

sell or other customer expansion opportunity. With a clear picture

of the entire customer journey and critical touchpoints, teams

have a better understanding of the customer. Customer success or account managers are trained in

solution selling, as well as experts in increasing customer retention.

In the strategic phase, a data scientist reviews trends and provides insights to inform strategy. Teams are organized

around the customer journey and are cross-trained to provide an

extraordinary experience. Every team member has the ability to explain

how products and services will help the customer achieve

goals, solve problems or provide business outcomes.

REAL-WORLD EXAMPLEA Client Success Story

Customer Retention Improvement and Cross-Sell

Company

A leading travel expense management company.

Problem

The company lacked a standard process for managing customer health or next best action. Their highly reactive engagement process resulted in low retention rate and poor compliance.

Solution

Established and deployed a dedicated sales and enablement team guided by consistent best-practice customer success management processes.

Benefit

Over time, the company anticipates $3M–6M retention improvement and 5% cross-sell uplift through compliance.

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Analytics

Consistently monitor and report performance to executives and facilitate continuous improvement

Performance analytics provide you with a complete understanding of the corresponding processes and

customer success plays that enhance operational and sales productivity.

Today, customer expansion opportunities and quotes are typically captured, measured and tracked through

a CRM system that is designed for new customer acquisition, or worse yet, through manual spreadsheets,

emails and voicemails. Without customer expansion analytics, you can’t accurately assess and compare

performance of current processes and determine what constitutes success. Since customer success and

account managers are unaware of their performance and how they rank among peers, they can’t effectively

manage and continuously improve.

INSIGHT THROUGH KPIs AND ANALYTICS

Accurately measure performance and track real-time, standardized KPIs associated with customer success

management. For example, analytics based upon Key Performance Indicators (KPIs) such as “time to value”

allow you to assess customer success representatives that are proactively managing onboarding, adoption

and engaging customers. These KPIs should be visible across teams to understand customer health before

any selling activities take place.

ANALYTICS DRIVE ACTION

ANALYTIC FEEDBACK IMPLICATIONS NEXT ACTIONS

Renewal rate—up

Revenue per rep—up

Cross-sell and upsell plays are working

Hire more reps to increase sales coverage, and begin to roll

program out to other teams and/or channel partners

Renewal rate—up

Revenue per rep—down

Reps are effective, but plays are not driving adequate revenue

Investigate discounting processes and adjust pricing and packaging models

Renewal rate—down

Revenue per rep—down

Play and reps are both under performing

Provide additional training for reps and research pricing and packaging

Renewal rate—down

Revenue per rep—up

Customer satisfaction is being impacted by expansion processes

Focus on customer success and delivering business outcomes

Insights to action

Without automation, customer expansion sales teams can access 5–7 systems to process a single opportunity.

IDENTIFY THE IMPORTANT METRICS

Tracking and refining the performance of your customer expansion efforts requires relevant metrics. Here is some of the data you may want to analyze for each of your established sales plays:

Î How often was the play run?

Î What was the success rate?

Î When it didn’t work, why didn’t it?

Î What customer segment was most likely to buy?

Î What was the impact on the overall retention rate and customer lifetime value?

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Benchmark your customer expansion processes

OPPORTUNISTIC OPTIMIZED STRATEGIC

BENCHMARKING QUESTIONS

• Do you have KPIs and metrics in place to measure performance?

• Do you compare and rank reps’ performance?

• Do your reps receive emails with lists of opportunities weekly or quarterly?

• Do you measure standard customer success management KPIs such as Retention Rate, Revenue per Rep or Close Rate?

• Are your reps evaluated quarterly based on established metrics?

• Do you have an automated system to access quotes and opportunities?

• Do you measure reps by KPIs such as customer health, conversion rate, close rate and resolution rate?

• Are your reps reviewed monthly with analytics and compared against peers?

• Do you leverage an automated tool for next-best action tracking?

BEST PRACTICES

PERFORMANCE MONITORING COMPARATIVE ANALYTICS NEXT-BEST OFFER

In the opportunistic phase, consistently monitor vital KPIs such as “in-quarter” and “final” retention rates. At the same

time, provide reps with the ability to monitor these trends so they can track their own performance. Finally, create automated performance reports and

make them available.

In the optimized phase, use real-time KPIs to facilitate peer-to-peer

performance comparisons and encourage healthy competition

among reps. These KPIs can include days-in-advance, contacted and

quoted opportunities. Finally, compare reps to one another based on specific performance metrics and enforce policies relative to how they

rank against each other.

In the strategic phase, implement a next-best offer or action automation tool. This predictive tool will serve as a primary vehicle to trigger next-best

action to orchestrate engagement based on KPIs and customer health

and behavioral data.

REAL-WORLD EXAMPLEA Client Success Story

Measuring Performance and Improving Retention Rates

Company

A leading global software provider.

Problem

With limited visibility into performance, the software provider was missing key renewal opportunities while inaccurately forecasting revenue goals.

Solution

The company deployed a cloud-based portal to manage opportunities and measure performance based upon established KPIs.

Benefit

Increased visibility into key customer success management metrics improved forecasting accuracy within three percentage points of actual bookings.

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Course summary

PeopleFoundation

Your people are set up for success and empowered with essential data and insight.

ProcessesInsights to Action

You have a well-planned and measurable strategy with A/B testing, analysis and iterative improvements

that minimize risk and optimize campaigns.

AnalyticsGauge

You monitor and strategically utilize real-time, in-depth analytics to form targeted customer success

and sales plays and trigger next-best action.

Crossing the finish lineCongratulations!

You’re on your way to greater revenue growth. We hope the tools, best practices and case studies

outlined in this playbook will help you to optimize your own customer expansion motions.

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3

4

PEOPLE

FOUNDATION

Your people are set up for

success and empowered

with essential data

and insight

PROCESSES

INSIGHTS TO ACTION

You have a well-planned

and measurable strategy

with A/B testing, analysis

and iterative improvements

that minimize risk and

optimize campaigns

ANALYTICS

GAUGE

You monitor and

strategically utilize

real-time, in-depth analytics

to form targeted customer

success and sales plays and

trigger next-best actionsCROSSING THE FINISH LINE

Congratulations! You’re on

your way to greater revenue

growth. We hope the tools,

best practices and case

studies outlined in this

playbook will help you to

optimize your own customer

expansion motions.

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Recap

Winner’s stand—the rewards of customer expansion

PeopleClear roles and responsibilities set team members up for success. Better insight into the customer

journey and experience helps teams collaborate and eliminates friction points.

ProcessesAccelerated development and continuous improvement of customer expansion business processes

define a clear growth path with a focus on process improvement and lowering the cost to serve.

AnalyticsBetter insight into clear metrics help executives and managers identify areas of improvement and

help prioritize investment decisions.

ConclusionThere are as many different definitions for success as there are customers. You can’t expect a standardized

customer health score to capture all of the subtleties and variations. To deliver customer success throughout

the customer lifecycle, you need to move beyond standardized formulas and into customer success planning.

A carefully considered and effectively executed Customer Success Plan will help you deliver on expectations,

manage exceptions, and create customers for life.

To learn more about how customer success planning drives greater revenue growth,

contact ServiceSource today.

Corporate

Headquarters

717 17th Street, Suite 500,

Denver, CO 80202, USA

Corporate

Headquarters

ServiceSource (NASDAQ:SREV) is a global leader in providing outsourced, performance-based revenue growth outcomes. ServiceSource’s inside sales, customer success and revenue retention solutions measurably accelerate customer ROI by helping B2B companies to more efficiently and effectively find, convert, grow and retain their customer relationships. Trusted by more than 65 global market leaders in the cloud/XaaS, software, technology hardware, medical device and diagnostic equipment, and industrial IoT sectors, ServiceSource sells, manages or renews more than $9 billion of revenue annually on behalf of its clients. Leveraging a robust technology suite, predictive data models and more than 3,000 revenue delivery professionals, only ServiceSource brings to market over 15 years of expertise and the ability to drive greater revenue growth in 35 languages to more than 170 countries.

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