Customer-led growth is more than a feel-good philosophy — it’s the right move for your company’s bottom line.
For existing customers, a 5% increase in customer retention can produce a 25% increase in profit. Additionally, existing customers are easier to convert: The probability of selling to an existing customer is 60%-70%, while the probability of selling to a new prospect is only 5%-20%. Also, customer-obsessed firms grow 2.5 times faster than non-obsessed ones.
But implementing customer-led growth isn't something teams can do overnight. It requires a deep focus on delivering what prospects and customers need, and it requires alignment across the entire company.
This article is published by the team behind TestBox. Our customers use TestBox to give their prospects a choice in how they want to buy software — and the tools they need to be successful.
What is customer-led growth?
Customer-led growth is a SaaS strategy that aligns an entire company around a collective focus on the customer. Teams combine to collect feedback and use that information to optimize the user experience.
The company’s goals for existing customers are to increase retention, expand their use of the product (increasing revenue), and turn them into evangelists.
On the buying side, a CLG approach helps companies identify “perfect fit” prospects and enables them to try and buy the way they want. This results in increased conversion rates while requiring less time/effort from vendors. At TestBox, we call this customer-led buying.
Customer-led growth vs. product-led growth and sales-led growth
Is CLG a replacement for other strategies, like product-led growth? Actually, it often works by stacking together a variety of growth strategies. For clarity’s sake, let’s define a couple of terms:
- Product-led growth puts the product front and center. The software’s features and performance lead marketing efforts.
- Sales-led growth uses salespeople to drive customer acquisition. As the sales team’s performance grows, so goes the company.
However, a company doesn’t just pick one of these approaches and ignore everything else. It's more of a “strategy buffet” where you can pick and choose the aspects of each that work best for your product. CLG can include bits and pieces from other growth strategies, but the goal of putting the customer first remains the top priority.
9 strategies for implementing customer-led growth
Now let’s get into the nuts and bolts of how to implement a CLG strategy.
1. Keep marketing and sales involved after the sale
In CLG, marketing and sales don’t end at acquisition.
There should be an ongoing process of interacting with customers and learning from them post-sale. That means you need to keep collecting data and feedback even after the deal closes.
It’s vital to constantly learn from your existing customers, especially the most successful ones. After all, you know they're a great fit for the product — and that means they’ll point the way to other prospects with similar needs.
Then, use that information to shape your sales approach and discover effective case studies. Collect stories, quotes, and reviews to use in your marketing materials.
The best solutions come from your customer base. Their challenges are opportunities to improve, their feedback reveals your priorities, and their goals are what you need to address in your sales process.
2. Involve sales in onboarding new customers
Sales should remain involved after a customer is acquired so you don’t lose information or make customers feel like they’re starting over.
A good test: If a customer has to educate your team on something they already shared during the sales process, that’s a sign there’s a gap in the handoff experience.
Instead, have the sales rep(s) who closed the deal be part of the kickoff process, too. Let them sit in on customer calls, hear concerns, and see how the process unfolds. That way, there is continuity for customers. You’ll also build a valuable feedback loop that documents everything customers go through when getting up and running.
3. Incentivize sales to close the right customers
Sales compensation should align with onboarding, retention, and renewals — not just acquisition. That way, sales team members are encouraged to think about long-term goals instead of closing “one and done” deals that won’t get renewed.
“Pre-validate” prospects and make sure they’re aligned so you’re not wasting anyone’s time (added bonus: retention rates will increase). This approach incentivizes your sales team (and the rest of the company) to get customers to re-up after their initial term ends.
4. Make your new customer onboarding process exceptional
Do whatever it takes to avoid churn and make sure new customers view your tool as an effective solution. Offer training sessions, send coaching emails, and monitor customer usage out of the gate.
Post-acquisition is an essential period and should matter to everyone on your team. This is when customers solidify their usage, which can lead to retention and expansion down the road.
Then, measure customer satisfaction post-sale, make decisions based on that data, and invest heavily in your customer success team. The goals are more renewals, better retention, positive word of mouth from customers, lower acquisition costs, and more growth.
The sale is merely the start of the journey, just like the wedding is merely the beginning of the marriage.
5. Invest in customer success
“Success” means more than mere retention. You want customers to be your biggest champions, which means you’ve got to do right by them. Plus, from a bottom-line perspective, you want to drive revenue growth from existing customers. So build content and programs targeting increased adoption, sales, and loyalty.
Be proactive and initiate contact with customers to get feedback. Create events and programs that bring customers and your team together. Reward customer referrals, encourage them to leave online reviews, and incentivize them to mention your product on social media. Build a dialogue instead of just serving as a 911 lifeline for customers on the brink.
Schedule regular meetings (every month or two can be a good timeframe) with customers to suss out their goals and the challenges they’re facing. Also, interview customers and provide surveys after milestones like onboarding and renewal.
6. Identify customers who need your help
Top users are already locked in, but working with “on the fence” customers is when you can really save the day. Capture data automatically from users and identify friction points. Find out the people who are “low usage” and try to incentivize them to use the tool more. Ask, “Can we help? Would more training be helpful?”
Run competitions, give out gift cards, or find other ways to get them to increase usage and (hopefully) fall in love with your product. Also, speak to various stakeholders on the customer side and find out the issues behind any lack of use.
Also, help high-usage customers brag about their achievements with your product to their colleagues. Make it simple for them to share success stories. Identify them as innovators, and give them a space to talk about things they can now do they weren’t able to do before.
This will create FOMO with lower-usage people on their team. You'll help your top users look good while they do the same for your product.
7. Get marketing involved in customer engagement
The marketing team needs to drive existing-customer growth, too. For example, create an email onboarding sequence that regularly messages existing customers, encouraging them to use newer (or underutilized) features.
Often, marketing is too focused on the acquisition funnel — to the detriment of post-sales engagement. Think more in terms of full-cycle customer engagement, and keep asking yourself these questions:
- How can we cross-sell customers?
- How can we make sure existing customers know about/use new features?
- How can we help customers spread the word?
Collecting customer insights like these is a great way to spur growth.
8. Give existing customers easier ways to try your other plans and products
Get new business (of course), but also focus on renewals and growth via existing customers. Give them a way to test out new features and upgraded plans while still allowing them to keep their current setup. Don’t force a blind upgrade; let them use the new features first in a low-risk environment.
Let's say a customer’s on the Pro version and they’re considering moving to an Enterprise version that includes additional modules. They don’t want to create any new issues or friction points in their current setup, though.
The solution is to give them their own walled-off version they can play with so they can feel confident those additional modules will work for them before purchasing the new plan. You’re giving them a “branch” for a little while to experiment and play around, which is a great way to expand accounts.
9. Make customer success part of everything you do
Make sure all teams are continually learning from customer stories and listening to/reading about customer interactions. Go beyond customer surveys; have a dedicated Slack channel for sharing insights and wins across teams. Bring members of your engineering team onto customer calls, and let everyone see support emails occasionally.
Most importantly, keep asking prospects what they want:
- If you could wave your magic wand, what would an ideal solution look like?
- What’s your current workflow and what do you like/dislike about it?
- What’s wrong with your existing tech stack?
Use these insights to build something the market desires. Innovation comes via co-creation. Think about your product as a work in progress that’s constantly being iterated and improved with help from your customers and prospects.
The customer rules. Focus on their plans, goals, and experience. Any time you make a change, measure the value to the customer, not the value to the business. Learn from and listen to your best customers, use the language they use, and take a long-term view of your customer relationships. It will pay off in the long run.
Collaboration is key
The essence of CLG is having everyone in your company aligned around the same mission.
The old way often has departments that are siloed and don’t overlap. CLG means having marketing, sales, product, customer success, and the rest of your team working together in collaboration. That way, sales, adoption, and renewal strategies become part of the same ecosystem.
Whatever's happening with existing customers should also be communicated to sales and marketing. Customer success should:
- Train sales on best practices for onboarding.
- Inform product about new features customers are craving and the moments when at-risk customers tend to churn.
- Work with marketing to offer events/training sessions that address adoption challenges.
You want all teams to be aligned and rewarded for delivering value along each step of the customer journey. They should be working together to define/find your ideal customer.
Plus, there needs to be shared vocabulary, metrics, and goals in order to ensure all departments are on the same page. Metrics should be discussed in meetings with leaders of each department so there is accountability and visibility to company-wide goals.
For example, a company might have the following goals that are shared across teams:
- Decrease onboarding time for new customers. (Teams involved: product, customer success, and marketing.)
- Get a certain number of accounts to upgrade to a new feature. (Teams involved: product, customer success, and sales.)
- Meet revenue targets and/or get a certain number of accounts to upgrade to a new feature. (Teams involved: sales and customer success.)
- Keep at-risk accounts on the right track. (Teams involved: product and customer success.)
Getting started with customer-led growth
Customer-centric thinking is no longer just the domain of megacompanies like Apple and Amazon. Now, small software companies can take this approach, too. It’s about letting the customer run the show — and reaping the rewards when the fit is right.
On a deeper level, CLG is about having a deep respect for your customers and treating them like partners. After all, they are helping you shape your tools, tell your story, and promote. All that leads to more growth and happier customers.
CLG can work at the top of the funnel (where it’s a great way to identify “perfect fit” prospects, let them experiment with your product, and convert them) and at the bottom of the funnel (using customer data/feedback to improve your product and retain customers). In fact, with CLG there isn’t really a funnel that begins and ends; think of it more as an ongoing loop.
However, don’t expect to be able to pivot instantly to CLG. Instead, think of it as a point on the horizon that you’re steering your company’s ship toward. Getting all the teams at your company on the same page is an ongoing process that can take some doing. But the result creates positive experiences for customers and prospects and increased revenues. Good luck!
.jpeg)
