Gartner Research: Boost Your Growth From Existing Customers with Brent Adamson, VP of Gartner

CEOs and sales leaders have long wondered: how can we drive
organic growth and increase sales from existing customers?


But it’s elusive. In fact, the traditional approach is no longer
working.


According to CEB, now Gartner, “Only 28% of sales leaders report
that account management channels regularly meet their
cross-selling and account growth targets.”


That’s why I interviewed Brent Adamson (@brentadamson), Principal
Executive Advisor at Gartner, and the co-author of The Challenger
Sale and The Challenger Customer.


Writers note: You can view part two of our interview
here: New research: Empathy and how to solve buying problems
 Can you tell our listeners a little bit about you
and your background?

Brent Adamson:  I work with an organization formerly known
as CEB and has now been acquired by Gartner.


I work with the Sales & Service and Marketing &
Communications practices here at the company. And it’s sort of
our mission in life, at least in the business to business space
where I spend most of my time, trying to understand with data,
with research, with analytics, what does world-class B2B selling
and marketing look like?


We get after that, again, with all sorts of analysis and
research. It’s funny, we’re actually industry agnostic. We work
across industries, go to market models, geographies, and try to
understand (across all of the different kinds of companies out
there) what do we all have in common?


What’s the recipe for success that’s going to help us all move
the dial, do a little bit better, in sales, in marketing and
ideally in sales and marketing?
How can sellers drive account growth?  

Well, sure. This is brand new research for us. In some way or
another, we always study growth, right? Because that’s what sales
and marketing are all about.


There’s a certain almost urgency, or we like to call the “Why
Now?”, of this growth question, especially in sales, which is
especially relevant for us today.


And that is simply the journey that we’ve all been on over the
last five years, five months, 10 years, 20 years of building out
broader capabilities across our organization to offer our
customers, if you will, solutions as opposed to individual
products and/or services.


The idea that if you can offer your customer broader solutions,
that’s going to allow you to stand out, to differentiate
yourself, to command price premiums in the marketplace. All good
things to do and good reasons to do it.


The thing that’s interesting though, Brian, as you add all those
capabilities to your portfolio that you can now bring to your
customer to add that additional value. The actual value they
create for you as a supplier is of course directly contingent on
your ability to actually sell them, to get your customer actually
to buy those incremental capabilities.


Not surprisingly, companies all around the world, in their
efforts to grow, are looking to existing customers to buy into
more of the cart, as we all like to say, to penetrate that
account more deeply and get them to buy into more of the value
that we can offer.


It turns out this is a huge challenge for B2B organizations
around the world, which is, simply put, to get existing customers
to buy more of what we have to sell; to essentially drive growth
with existing customers. That is the challenge or the terrain, as
we like to say, that we dove into this year.
What can sales do better?

What can we, as sales organizations, do to do a better job of
driving growth with those existing customers? When you dig into
it what’s interesting is the amount of frustration with sales
organizations around the world in making that happen. There’s
only about roughly a quarter of the heads of sales that we
surveyed this year who told us that their account teams were
meeting, let alone exceeding, cross-sales or up-sales across
portfolio goals.


Whether you call it up-sales, cross-sales, land-and-expand,
whatever you might call it, we’re all struggling to get that
incremental revenue from our customers.


Let me take a breath there, but that’s sort of the terrain that
we dived into to try and understand what’s going on. I would
imagine, Brian, that’s something you hear a lot about too across
your listenership.


Brian: Yeah. I was just talking with a CEO and his team, and
that’s really a struggle. They were wondering how do they grow
organically?


They talked about customer success, and they talked about how
they could service their account above and beyond, but that just
didn’t seem to be enough.
Driving organic growth (it’s counterintuitive)

Brent: Well, no. You’re right. It was counterintuitive even to
us. We always have these hypotheses that we test in all our
research, but it’s interesting to see how the data and the
research shake out.


 


What we found is a couple of things here in this world of account
managers, if you will, that this is the farming side of the
hunting/farming debate. Right?


That’s about our farmers, and they must be nurturers and take
care of our current customers, and then when they fail to grow,
we think, “Oh, they need to be harder, and they need to be
tougher, and they need to be more aggressive. We need to get them
in there.”


What’s interesting is when we fail to drive growth with current
customers, we often blame the people. We need more
hunter-oriented sales professionals in our account management
ranks, or we need someone that is going to ask for the business
or be more aggressive as opposed to being so nurturing.


There’s an interesting tendency to fall back on DNA or at least
on individual traits and assume that the lack of growth is the
result of the wrong people.


Then you get the CEO saying, “We need better people. We need
different people.” What we’ve come to understand really is not
only is it the structure of the role.
Growing and keeping customers what you need to do
differently

Yes, you’re on the hook for driving growth in existing accounts,
but let’s not forget you’re also on the hook for not losing the
business that you’ve already won.


At the same time, you’re partly on the hook, or at least
partially you’re involved in the servicing of those accounts as
well. You’ve got success or managing, making sure they get value
from that which they’ve already bought, and then driving
incremental growth.


What happens in the account management role, unlike a pure
hunting role, is that when you’re sitting over, or at least
involved in, all three of those categories simultaneously, not
only your time, but your attention and focus gets split in some
interesting ways that create all sorts of tension.


So, if I’m a pure hunter, all I’m tasked to do is to go out and
bring out new logos or new customers altogether. But if I’m a
farmer, if I’m someone in an account management role, yes, I’ve
got to bring in incremental business, but never at the cost of
losing the business that we’ve won already.


That’s the thing we say: the single thing worse than failing to
grow an account is failing to keep it all together.


What you have now is this interesting tension of an account
manager trying to pat your head and rub your tummy at the same
time. They’re trying to do very different things simultaneously,
which is grow the account but not lose the account.
Balancing account growth with retention

And the reason why that matters is that what you’re asking the
customer to do in this environment is two very different things.


To keep the customer you essentially must get the customer to
agree to the status quo. So, keep doing what you’re doing, sign
up for it again, renew that contract, buy the same amount, renew
that business if it was a renewal-based business, so that’s a
status quo decision.


But a growth decision is to do something different, to buy more,
to expand to more seats, to go to a new geography, to incorporate
this new service or new technology.


From an account management perspective, I’ve got two tensions
simultaneously. One tension is to try to get them to grow without
losing what I’ve got already. And simultaneously I’m trying to
get my customer to change and not change their behavior at the
same time, and this turns out to be hard, right?


So, this stuff’s really fascinating from a social science
perspective.


You think about, how do I play that card, what’s the strategy for
winning and driving growth in that environment. So full circle
back to your question, Brian.
Does over servicing customers drive
growth?  

We find that the predominant mental model of account managers in
this world is, well, first things first, before I get the growth
I’ve got to get the “maintain,” I’ve got to get the “retain.”


Let’s make sure that they’re happy, let’s make sure they’re taken
care of, let’s make sure they’re satisfied. In fact, let’s make
sure they’re delighted with whatever we sold in the past.


So, let’s over-serve them, let’s provide world-class service, and
if we do that we’re going to, at some point, achieve a threshold,
permission, and if we can get over that permission threshold,
then we’ll have won the right to ask them for growth.


And somehow, the fact of just by being so happy with the service
we provided in the past, will drive growth.


And so that brings us full circle to the punchline of a lot of
our data.


What we found is when you provide a world-class level, even just
an above average level of service and success to your customers,
they are twice as likely to renew.


So, we can find no statistically significant impact on that level
of service, and the likelihood of that customer to grow.


So, put it all together and what you get is service
drives retention, but it doesn’t drive growth.


And that’s a really interesting thing to find in a world where
the mental model, essentially the working hypothesis of not only
account managers but all the way up to the CEO is, let’s serve
our customers. Let’s create these world-class moments of delight,
and that will earn us the permission for growth.


And we just don’t find that to be the case at all in our
research.
The zone of wasted effort

Brian: The rationale and logic has always been, go the extra
mile, delight. What your data’s showing us is that there is a
point of overserving our customers?


Brent: We gave it a sort of provocative name, so if you draw this
out in a set of curves, and we’ve got graphics to go along with
this.


But the idea is if you think more service equals higher
likelihood to grow, so you think of almost sort of like a… If you
grasp this regarding growth likelihood, it almost looks like a
45-degree angle going up and to the right.


So service is on the horizontal axis, likelihood to grow is on
the vertical and the more service I provide, the farther I go to
the right, the higher I get on the vertical. Because service
leads to growth.


What we find is in fact that the line doesn’t go up and to the
right endlessly, but it shanks to the right. It levels off and
ends to your point regarding diminishing returns, and at some
point, no matter how much more service you provide, you pour into
that account, the chances of driving growth do not go up, because
service doesn’t equal growth.


And so, what happens is that you keep providing more and more
service with absolutely no incremental impact on growth
likelihood.  It creates this huge gap between the amount of
service provided and the amount of service that you needed to
provide simply to get retention.


We call that gap the Zone of Wasted Effort,
which is somewhat provocative.


But the Zone of Wasted Effort is in fact that.


It is effort that you’ve expended in serving the customer, in
delighting the customer in hopes of getting growth that will
never actually get you growth.


Because it doesn’t lead to growth, and so at the very least, in
that Zone of Wasted Effort, there’s all sorts of questions there,
but one of them is simply: what are the opportunity costs of our
time?


How much time, money, effort, people are we pouring into a
customer to provide world-class service when, in fact, the
customer’s going to renew or retain anyway?
Strategies to drive organic growth

Just in Atlanta two weeks ago, one head of sales said, “We do
this all the time.” The real price is not just the opportunity
cost/time that you pay, but the fact that you are now raising
expectations for your customer way above anything that you ever
originally promised, and your recalibrating, or resetting their
expectations for the next deal.


So yes, it gets you attention, which you were going to get
anyway, doesn’t get you growth because it can’t get you growth.
What it does do though is it makes the next deal you do with the
customer even that much more expensive because you’ve
recalibrated their expectations way higher than you ever needed
to do originally just to keep the account.


Brian: This is a problem that’s affecting nearly every B2B
company: “How do we drive organic growth?” What are some of the
strategies, the things you’ve found, that sellers can do
differently?
Set clear expectations

Brent: A couple thoughts on this. One is, to get back to the
previous point, it becomes really important in this world to set
very clear expectations.


The thing that heads of sales ask us all the time is, “Okay, I
get it, or I kind of get it. I’m on board. I see the data makes
sense, so I understand that at some point there’s diminishing
returns to providing greater and greater service but how do I
know how much service is enough? How do I know when I’ve reached
that threshold; I’ve maximized the benefit for retention knowing
that there is no benefit for growth? How do I figure out what
that moment is?”


And the answer simply is, “It’s in simply meeting the
expectations that you’ve established with your customer in
advance. Whether it’s formally, through something like service
level agreements or more informally through quarterly reviews or
business reviews, or account planning processes.


But one way or another, setting those expectations very clearly,
probably in writing with not only your customers but your own
team, so that you don’t perform way above them, because all that
does is add cost with no real return.” So that’s point one:
setting expectations is super important.


That is more of a cost mitigation strategy, it’s not really a
growth strategy as you asked for. So, Brian, the flip side is now
how do I drive the growth?
Focus on customer improvement

Well, what our data has led us to understand is there is a
completely different strategy altogether, which is something that
we’ve come to call “Customer Improvement.”


For any of the listeners on the podcast who are familiar with our
work that we’ve done in The Challenger Sale, in The Challenger
Customer, this idea will sound very familiar. Effectively, it’s a
subset of behaviors, or attributes that are all completely
consistent with the Challenger body of work.


We tested a whole bunch of different attributes in our data
across about 750 B2B customers, individual stakeholders involved
in a big B2B purchase.


And what we found is for those suppliers who were perceived by
those customers as providing a set of interactions that we’ve
labeled “Customer Improvement”, they were significantly more
likely to buy incremental services, additional geographies,
additional features, additional products from that supplier.


Customer Improvement is the ability of a supplier to help
critically assess the customer’s business in a way the customer
hasn’t fully appreciated on their own, and help them identify new
ways to grow, to make money, to save money, to lay out the ROI of
taking a step in that direction.
Get customers to embrace change

If your goal is retention or renewal, what you’re trying to do
there is just get your customers to embrace the status quo, to
just keep doing what they’ve already decided to do in the past.


But to get them to grow, you need to get them to embrace change –
to do something different, to buy something different, and if you
want your customers to do something different, well that’s
change.  Change is perceived as risky, and if I’m going to
do anything risky, if I’m going to do anything that’s involving
change you’ve got to make the business case not for buying your
solution, but for changing their behavior.


And that’s what Customer Improvement is all about. It’s building
a business case and articulating a business case to your
customers for why they need not to buy your solution, but why
they need to change their behavior in a way that’s going to
improve their business.


It’s a really powerful lesson completely consistent with what
we’ve found in the past, but what’s so stark about it in this
context is that for existing accounts, while service and success
do not drive growth, Customer Improvement does, dramatically so
in fact.
Go from reactive to forward-looking

Brian: It sounds like what you’re saying is we need to move from
being more reactive and looking at how do we deliver and retain,
to proactive, being forward-looking.


I was thinking of this conversation I had with this CEO and his
team. They have this customer success strategy, and it was really
helping their customers become like gold medal athletes at
performing what they do.


And the problem is the customers weren’t wanting to be gold
medalists. What they wanted to be is to get their job done more
effectively simply and there wasn’t that vision. And so, what I’m
hearing is, you need to help someone.  If they want to
embrace that level, it is to know where they want to go and how
you can help take them there. Is that what you’re saying?
The difference between customer success and
improvement

Brent: A little bit, yeah, it is. I would use slightly different
language, only in the sense that the term Customer Success, at
least in the world of software service for example, the big cloud
providers, and that sort of world, the term success or Success
Team has taken on a very specific definition or framework.


So, a Success Team there is generally designed to make sure the
customer gets as much value from that which they’ve bought from
you in the past as possible.


So, this is a proactive team that would reach out to the customer
and say, “Hey you’ve got this subscription from us,” for example
or, “You’ve bought this product or service from us. Did you know
it has this capability you can take advantage of? Or, did you
know there are these ways we can help you based on the contract
we already have in place?”


So, it’s a proactive call. It’s not reactive in the sense that a
customer calls you when they’re upset because something doesn’t
work but because you’re proactively calling them and helping them
get value from that which they’ve already bought. It’s proactive
but backward-looking.


It’s focused on what you bought from us as a supplier in the past
and making sure you get as much success from that as possible.


Now the Customer Improvement thing is not a thing.


The Customer Improvement concept, or the approach, is not
backward-looking, but forward-looking.


And it’s not about your capabilities but the customers.


In fact, it’s completely supplier agnostic in way that will just
drive you crazy.


It’s weird to try to get your customer to buy something without
talking about your capabilities, which you will eventually, not
at the beginning of the conversation though, but at the end.


So, if you think about a four-square, where the vertical
dimension is supplier across the bottom, customer across the top
and then the left-right is on the left, it’s sort of
backward-looking, and the right is forward-looking.


Success Teams tend to be in the bottom left box. Success Teams
tend to be backward-looking around the supplier’s capability. So,
let’s make sure you get as much value from that which you’ve
bought already. It’s a proactive push but around that which
you’ve bought already.
Customer improvement isn’t about you

The Customer Improvement story up in the top right is not about
you at all, it’s about the customer and how they can change the
way they think about their business, in a way that’s going to
help them reap greater returns in the future, going forward.


So, back to your point that the customer doesn’t want to be a
gold medalist. In this world, what you need to do is figure out
what your customer is ultimately trying to achieve, who are they
trying to be? If not, a gold medalist then is it a silver
medalist? Is it not a medalist at all?


Or, what are their ultimate goals as a commercial organization
and you can ask yourself:


Okay, if that’s looking forward to the future, what they’re
trying to achieve? What is it about that strategy that is
incomplete or perhaps even misplaced?


How are they going to get there and what have they missed? If
that’s what’s important to them, how can I help them get there
better than if they ultimately are planning on getting there on
their own?


And I suppose if you wanted to raise it up a notch in altitude,
if you really wanted to you could go in and argue with, “That’s
not even a good place for you to be starting within the first
place.”


That is a higher-level argument, which is sometimes harder to
have with your customer and I would never use the word argument
per se, but “debate” if you will.


But one way or another you will find that this is the case, that
your customers were always going to be oriented towards the
status quo.


Because change is expensive, it’s disruptive, it’s scary, it’s
risky, and if you’re going to get your customers to
change their behavior, the first thing you’ve got to do is
convince them that that change is even worth it in the first
place.


That maybe it is worth it to become a gold medalist. Or if you
only want to be a silver medalist that’s fine, but let me show
you how the path that you’re on towards the silver medal isn’t
going to get you there nearly as fast or as effectively as you
thought it was going to.
Related resources:

Driving Growth Through Smarter Account Management


Quotable: Why Changing Behavior Is Your Biggest Sales Challenge


Why customer advocacy should be at the heart of your marketing


How customer-hero stories help you connect better


How to Attract B2B Buyers with Amazing Content