How to improve your account management and customer retention?

Most of us in the SaaS businesses—wanting to increase our earnings—frequently turn to marketing and sales to generate more demand or identify new levers for growth. Yet, somehow, we often fail to see our existing customers as the most potential channel we can double down on.

This is ironically common oversight, despite the entire SaaS business model being dependent on customer retention. A key part of looking at our existing customers as a growth lever includes identifying upsell and cross-sell opportunities, thus improving our top-line and bottom-line metrics. So, ignoring these opportunities can not only become counterproductive to your growth but end up creating a leaky-bucket phenomenon.

Although data varies across studies, every research on the topic of acquisition versus customer retention eventually agrees that retaining your existing customers is 5–25 times cheaper—and profitable—compared to acquiring new ones.

In this post, we will discuss ways to improve account management and customer retention and identify opportunities for upselling and cross-selling. 

But first, let’s start with a few basics.

What does upselling mean?

Upselling is a component of account management where you encourage your customers to upgrade their product subscriptions. For example, it could be a customer upgrading from a free to paid plan or upgrading to a premium plan compared to their current one.

The key account management aspect here is that you need to stay on top of your customer’s evolving needs and become their trusted advisor who can recommend the right upgrades at the right time. In many ways, being a trusted ally to customers is similar to the challenger sales approach.

What is cross-selling?

Cross-selling refers to suggesting a complementary product or service to your current customers who can benefit from it. It is a technique to increase the bottom line by expanding opportunities with your existing customers.

But here’s an important disclaimer—both upselling and cross-selling are in many ways like walking on a tightrope: it can fall flat on the face if you aren’t customer-centric. For instance, if you push your customers to buy additional products when they don’t need them—you are just giving them an excuse to sever ties with your brand.

Therefore, you need to ensure that the upgrades and products you are trying to upsell or cross-sell to your customers are of value to them and are done in their interest.

The difference between upselling and cross-selling

Often, we use the terms "upselling" and "cross-selling" interchangeably to mean some kind of upgrade in a plan or original purchase order. And while both upselling and cross-selling are related, they are two distinct concepts under the broader realm of account management.

McDonald's—the world's largest fast-food chain by revenue—offers a good explanation to differentiate upselling from cross-selling. When you walk into a McDonald's restaurant anywhere in the world, the staff behind the counter will almost always ask you two questions towards the end of your order:

1. "Would you like to Supersize your order?"

2. "Would you like fries with that?"

In this case, #1 is an upselling technique because—in McDonald's lingo—supersizing an order means to increase the size of your burger, fries, or drinks at a nominal upgrade fee. On the other hand, #2 is a cross-selling tactic because the McDonald's staff is persuading you to buy an additional product (i.e., fries) related to the main product (burger).

The in-flight experience that airlines provide to their passengers also offers a similar distinction between upselling and cross-selling. Upgrading from an economy seat to a first-class seat is an upsell, for example. However, cross-selling is often the meals and in-flight entertainment purchases that they offer on the plane.

In practice, most SaaS businesses typically use a good mix of upselling and cross-selling tactics to maximize customer value while improving customer retention.

Now that we’ve set the context of what we mean by upselling and cross-selling let’s look at things a little more holistically. In the next section, we will explore why we should double down on account management and give it as much importance for new customer acquisition.

Why double down on account management and customer retention?

Account management is the practice of offering service and support to customers in order to improve the stickiness of your products. It usually helps you explore lucrative/profitable opportunities to upsell and cross-sell additional products or services to increase your bottom line. The idea of doubling down on account management is not to say that new customer acquisition isn’t important. 

Customer acquisition is a critical business imperative in your go-to-market (GTM) strategy, especially when rapidly scaling your business. In the longer run, however, most brands are likely to hit a growth plateau in acquiring new customers due to high customer acquisition costs, fierce competition, and stringent regulations around data privacy. 

From a business perspective, it’s more time- and cost-efficient to double down on improving your account management approach than trying to expand your new customer base.

Here are the top five benefits that account management activities like upselling and cross-selling offer to you and your customers.

Strengthen customer relationships

Upselling and cross-selling are far more complicated than recommending the latest features in your product to your consumers. Effective account management necessitates your customer success reps to understand who your customers are, their goals, and what matters to them the most. The customer success managers should customize the upgrade offer to a customer based on their unique requirements—backed by data.

It implies that the customer success managers (CSMs) must spend a significant amount of time truly getting to know their customers. This level of proximity not only improves your chances of a successful upsell but also makes your customers feel appreciated and encourages loyalty.

Increase customer lifetime value (LTV)

Loyalty begets long-term profits. It’s no surprise that 43% of customers spend more time and money on brands they are loyal to. Meaningful upselling and cross-selling strategies often foster deeper bonds between your brand and the customers—ensuring loyalty and converting consumers into repeat buyers.

Build customer equity

Customer equity is the sum-total of all of your customers' LTV. Given that well-managed accounts mean improvement in each customer's LTV, they also improve your brand's customer equity in the long run.

Boost and generate profit

Selling to existing customers requires less effort than attracting new ones and demands less market expenditure. For instance, you can substantially boost profits and exceed your revenue targets quicker by focusing more on solving your existing customers’ problems, building better relationships with them, and maximizing your LTV.

Improve your market position

Given today's competitive business environment, it's not enough to market your products and services as the best in the industry—you must also demonstrate it. When ensuring customer delight becomes your means to maximize profit, you will be forced to strengthen your product's capabilities, offer better services and help your customers achieve their goals. And that, in turn, will help you articulate your brand positioning better and improve your standing in your niche.

Tips to improve your account management and customer retention

Account management directly impacts the customer experience and their perception of your brand, regardless of how great your product is. And that includes every touchpoint from a customer signing up for a free trial to their onboarding, upgrading, and their entire lifetime with your brand.

In other words, account management is not just about marketing ops or revenue operations or customer success ops—it’s about the entire range of CX ops playing out in a well-oiled manner. Therefore, you need to be aware of the customer experience across all touchpoints and fill the gaps as needed.

To that end, here are some proven tips and tricks to improve your account management and customer retention efforts: 

1. Know your audience

It’s a cliche to say that you should know your ideal customer profile (ICP) inside out. To improve your net dollar retention, you have to go way deeper than creating your customer profiles or analyzing psychographic or demographic data about them. At this point, you need to have granular insights about your customers based on their product usage, questions, feedback, and other forms of interaction. 

For instance, imagine the case of an account handoff from sales to customer success. The CSMs need to have a complete context of the customer so that the transition is seamless. And that is where a good conversation intelligence platform helps.

Avoma makes it smooth for you to hand off customers from sales to customer success so that the customer success team is aware of all customer conversations from day one. Further to recording your meetings, Avoma’s AI-assisted notes and transcripts also ensure that you always have proper documentation and eliminates any chances of miscommunication.

Furthermore, the CSMs can listen to specific parts of the conversation based on their interest, such as objections raised by the customer, their pain points, etc.

It’s also a scalable way to keep a tab on all accounts if the CS team handles multiple customer accounts. They can, for example, save time by quickly skimming through the AI-generated summary notes (the text on the left screen in the screenshot below) without having to listen to easy and every conversation.

2. Map out your customer’s journey

Like in sales, it’s useful to map out the user journey to understand how customers use your product. It will help you visualize the gaps in their product experience, what language they use to talk about your product in their network, and identify opportunities to improve objection handling.

Investing in user research to understand the customer journey (post-sign-up) will improve the customer experience and help them achieve their goals. In return, it will pave the way for your account management teams to upsell and cross-sell additional products and services to the customers since they have already had a favorable experience with your product.

3. Leverage owned marketing channels

How do you make the most of your owned marketing channels? Firstly, by not spamming them now and then to keep your email reputation high. Make sure that you make the best of your owned media channels like email the right way. It’s best used for onboarding cadences, notifying new product updates or feature releases, product enhancements relevant to the customer, etc. You can use email marketing software to automate emails and ensure that they are sent at the right time, automating based on customer signals.

The key point being—make sure you live up to the customer’s trust. And if done right, owned marketing channels are significantly more efficient than betting on paid or earned marketing channels—both of which require you to spend a huge amount of money and be dependent on other media platforms.

4. Improve your account management with regular check-ins

The biggest nemesis for most SaaS businesses is churn—the measure of customers’ exodus from a brand. And churn happens for various reasons—bad customer fit, poor sales to customer success hand-off, or just bad customer experience.

You can fight churn by proactively taking time to check in with customers and identifying churn signals before they become irreversible. Regularly checking in with customers also opens new windows of opportunity to understand your customers’ use cases better so that you can upsell and cross-sell suitable plans and services.

Most SaaS businesses know the importance of regularly checking in with their customers, but they don’t have a proper process set up around it. 

You can get started by asking your customer the following three questions as part of your monthly check-in:

1. How are they using the product?
2. What roadblocks are they facing to achieve their goals?
3. Do they need any help?

And then, depending on how it pans out, you can fine-tune and scale it across your team by creating a check-in meeting agenda template.

Additionally, having regular conversations with customers will help you build a direct feedback loop to discover opportunities to improve product adoption.

Don't wait for your customers to approach you with a problem, request, or upgrade. Instead, assume that they have issues you can help with and proactively reach out to them regularly.

5. Coach your CSMs

Most CSMs go through a training program during the initial period of their employee onboarding process. The onboarding time is certainly great to offer comprehensive product training and improve the new CSMs’ knowledge about the product and the customers.

But that one-off training program is hardly enough for CSMs to stay on top of their performance, especially when your product offerings evolve along with the customer needs.

Create a continuous CSM coaching program that offers contextual training to help the CSMs understand the bigger picture, define success metrics, and helps adapt to the changing business environment. Implement asynchronous communication channels for continuous, contextual and specific feedback.

For instance, Avoma lets customer success teams exchange valuable feedback on important customer calls without the need to schedule real-time meetings. In addition to getting feedback from a senior manager, CSMs can also leverage this capability to reflect on customer calls, review the feedback and comments, and narrow down opportunities to improve the overall customer experience.

6. Don’t go overboard with upselling and cross-selling

It’s easy to get carried away when upselling and cross-selling are set as benchmarks of customer success. But it’s more than just number-driven quotas—there’s an art and science behind how you do it.

The ‘rule of 25’ offers a good reminder not to go overboard. Borrowed from the public finance domain, the rule of 25 states that you should not upsell or cross-sell products and upgrades that cost more than 25% of the base price. If you do, it usually provokes a strong feeling of doubt and resentment in the customers.

For instance, let’s say a customer is evaluating a multi-year subscription plan that costs them $49 a month. In such a scenario, don’t try to upsell them anything that costs more than $59 a month because it sounds outlandish against their original purchase value. 

It’s human psychology 101 at best—when you offer someone to buy something at a price range beyond their comfort zone, it alerts their brain and puts them on the back foot.

Final thoughts

Today, the battle for acquiring new customers is as fierce as it can get. Therefore, it is fundamental to retain customers and continuously improve the overall customer experience. We’re sure you might already be practicing some of the account management tips shared above, but we hope there was something new for you as well. 

Upwards and onwards!