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The Customer Deciding Journey, part two: Expand. Acquisition vs. Expansion are complete opposite messaging, and we must treat them as it.
Tim Riesterer, author of The Sales Expansion, and Chief Strategy Officer of Corporate Visions is back! We dive into part two of our two-part series, the Expanding portion of the Customer Deciding Journey. The expanding portion’s methodology is: “Keep them happy from the beginning to end.” Tim walks us through his new book and why acquisition is not the only lifeblood of organizations. We learn if you give an existing customer the same messaging you would give to prospective customers; you can have them questioning if they should stay. Reinforce and remind them of the impact you have made by showcasing the value and demonstrating their ROI.
Tim Riesterer is responsible for leading the strategic direction of Corporate Visions in thought leadership, positioning, and product development. He also leads the company’s consulting team globally, including staff and certified contractors. Tim has more than 20 years of experience in Marketing and Sales. Before joining Corporate Visions, Tim co-founded Customer Message Management, LLC (CMM Group), where he was CEO until Corporate Visions acquired it in 2008. Before CMM Group, Tim was CMO and VP of Strategic Services for Ventaso. Additionally, Tim was President and CEO of Brady Marketing Group and has worked in marketing, communication, and sales support for world-class technology manufacturers such as Rockwell Automation and GE Medical Systems.
Tim is co-author of Customer Message Management: Increasing Marketing’s Impact on Selling (Thomson/AMA), Conversations that Win the Complex Sale: Using Power Messaging to Create More Opportunities, Differentiate Your Solution, and Close More Deals (McGraw Hill), and The Three Value Conversations: How to Create, Elevate, and Capture Customer Value at Every Stage of the Long-Lead Sale (McGraw Hill) and has a degree in Mass Communications and Journalism from the University of Wisconsin-Milwaukee.
George: It’s our second part of the two-part series of the Conquer Local Podcast with Mr. Tim Riesterer, and on this episode, we’re going to talk about the expand portion of the customer deciding journey and more about his recently released book, The Expansion Sale. Tim Riesterer coming up next on the Conquer Local Podcast.
George: We are back, it’s episode number two of this two-part series with Tim Riesterer, and Tim has released his new book back in February, The Expansion Sale. How was it releasing a book just before the entire COVID thing happened, do you think that the sales went up or how did it impact that?
Tim: Well, so the good news is, and we had nothing to do with the pandemic is that the book is focused on how to expand existing customers, and in the pandemic, it turned out new customer pipeline, shrunk. People were just like hunkering down, didn’t wanna make decisions. So if a company was gonna survive, they had to go renew and upsell existing customers. So in some ways, it looks like our book was prescient and that it was aimed squarely at the business of expanding existing customers. I always say, when we came out with the book we told people, hey reality is 70 to 80% of your growth and your revenue comes from existing customers, you should spend more time there. Well, after COVID hit it like went to nearly a hundred percent of your revenue, and growth was gonna come from existing customers. So it was a well-timed book, even though we didn’t know it at the time,
George: But when we talk about this expansion and by the way, I one million percent agree, we spend a lot of time landing new business in organizations, and then we don’t pay enough attention to expanding those customers that we have today. Well, why do you think that is? And I’m sure you’ve done a ton of research around this. Is this prevalent in most organizations that you go into and do some work with where you’re like, Oh, you’ve got all this gold over here, why aren’t we mining that?
Tim: Well, yeah, in fact, if you look and ask them, like, let’s talk about the resources you’re applying to new prospects and new business acquisition pipeline development, versus the resources and spend you’re putting against renewals and upsells. And what you find out is it’s disproportionately weighted towards acquisition. Rightfully so in some cases, ’cause it’s harder to acquire new business too. People think it’s a little sexier. There’s just something about it. It just seems like hey, that’s the lifeblood of our company. Well, what happened is, as more companies went from, let’s say, transactional business models with products and on-premise software and things like that. When it all started moving to subscriptions and licenses and long-term contracts, renewals, all of a sudden became the lifeblood, because what happened is you amortized your margin and your money over years, instead of getting it all upfront in the transaction and people started going, Oh my goodness, if we don’t renew this business, we aren’t gonna make money. Because oftentimes when you get new business, you put a lot of money in to get it. You discounted it to try and win it. And then in the first few years, you over serviced it, trying to make them happy. So the reality is like the next contract, or the next thing you sell is where you actually make your money. And so companies that were pivoting to more this economy, sometimes known as the SaaS economy, were starting to realize that renewals and upsells were really where the margin was and that new logos were kind of the loss leader. And the famous phrase was sort of born: land and expand. The landing part was the hard part, you had to do a lot to get there. But then once you were there, you needed to expand because that’s how you were actually gonna make your money. So it’s just one of those things that are one part, here’s what we’ve always done, and another part the market is shifting the way our services are offered are shifting. And this just became a reality that they needed to spend a little more effort on. They couldn’t just hope that people renewed or where they were so deliriously happy they bought the next thing, you actually had to do that deliberately.
Prospects and Existing Customers: 180 Degrees of Difference
George: You know, my colleague has a quote, Mr. Jeff Folckemer, our EVP who used to be with the Hearst Corporation has a quote from one of these very podcasts about a year or so back, you can outsell churn. So in this expansion portion where you’re dealing with an existing customer base, you know, churn is the number that SaaS watches very, very closely. How many logos am I losing? But then also what are the characteristics of these deals that are growing? And I find it really interesting, we spend all of this time running, you know, demand gen campaigns, we run great email campaigns to a lead list, but yet those emails seem to stop the minute that we signed the deal with the customer, and we’re not supporting the value proposition as to why they came in the first place. And then sometimes reluctant to show them things that can help solve more problems. It’s just, it’s so fascinating. And obviously, you see that there’s a big opportunity, or you wouldn’t have written this book. So give us some things that sales organizations need to look for when we get into this expansion role. Is it a different team? Do you have one team that acquires and then another team that expands? What are you seeing?
Tim: Well, I think everybody wants to think about it from the standpoint of what kind of resources they have and how many they can allocate, etcetera. But here’s one way to think about it. So we always start with the customer side first, ’cause that’s how our psychology bent. And what we found is that existing customers are asking themselves different questions than prospects. Prospects are saying, should I change? Why should I change? And customers are saying, should I stay? Should I do more? And it’s actually 180 degrees different. When you’re trying to dislodge an incumbent, when you’re trying to go after and take out an incumbent, the psychological principle is you want to disrupt status quo bias. Humans live in status quo bias, they don’t really, they’re reluctant to change. So you have to go disrupt status quo bias, but in an existing customer, you’re the status quo bias. And the thing I’ve seen too often is people when they finally decide to market to existing customers, they use the same approach that they took to win them, like something disruptive, something, all changy. You know you tell the why change story again. And what we found out in our research is that when you come in with a disruptive provocative, why change message, to an existing customer, you actually create an opportunity for competitors ’cause the customer is like, wow, geez. If I have to do all this new stuff, if I have to consider changing, I might as well look at all my options. And the reality is you want to actually reinforce status quo bias, not disrupt status quo bias when you are the status quo bias. And it sounds obvious, but it isn’t, you need a deliberate set of tactics to do that differently. So what we say is the acquisition sale versus the expansion sale are 180 degrees different psychologically you’re disrupting status quo bias in one case, and you’re reinforcing and expanding status quo bias, in the other, and it’s a different conversation, which means different messaging and really different skills. So in reference to your specific question, George, on the idea of, do you need separate teams or separate sets of resources? I think the idea here is you need to recognize these are commercial moments. And sometimes when people go hunter versus farmer or business development versus account management, they put people in the farmer account management role that are account service, they love to create satisfied customers and keep them happy all the way to when they exit. So there needs to be a commercial mindset. So the reality is you need to train them up to be situational and have a commercial mindset. And if you have the resources to do separate teams fine, but it is not a necessary ingredient. And sometimes when we see people do that, they don’t inspire and instill enough of that commercial energy in that account management farmer role.
Farmers and Hunters: Keeping Clients at the Forefront
George: Well, and one thing I found the other day, I was working with a sales organization. They use the dreaded handoff word and no prospect customer wants to be handed off. You’re at Costco, you’re talking to somebody about some product like I’m gonna hand you off over here to this group, no customer likes that experience. I’ve found that it, but it’s hard to get that additive view. So, Tim, my name is George, and it’s been great working with you. And now I’m going to bring Colleen in, Colleen is an expert working with organizations just like yours, In fact, we’ve worked together on a few you know, that type of an approach rather than, yeah, I’m leaving now and I’ve handed you off to Colleen and now you can deal with her
Tim: Cause I’m a hunter, I’m going to go back and hunt. No, I think it’s right. In fact, we often talk about this idea of you need to have some sort of regular business review cadence, and that’s the opportunity for, let’s say, Colleen, who’s in customer success or account management to bring George back in it at these moments where you’re reminding them of why they bought and you’re showing them what they’ve done so far and you’re keeping that momentum. And so I think a good cadence of business reviews that make sure that both sides continue to show up is also another way to make that not feel like such a stark handoff.
George: I think it has to be a little more personalized because, in the early stages of your outreach for acquisition, you’re talking to a broad audience, but then now that you have the customer, it really needs to be that personalized approach ’cause you understand them better. You had to understand them to get them signed. But I find organizations spend a lot of time over on the retention and saying, hey, those five deals we lost last month, what happened there? What went wrong? Rather than maybe looking a little more proactively before, they’re out the door already, if they’re in retention, they’ve raised their hand that they’re canceling. So are you finding organizations when they’re in this expand stage, or are doing a lot of research as to, you know, what are the value propositions that the customers are liking? And what are those adjacent sales? And what does that look like on a day-to-day as they analyze that expansion pipeline, it’s a whole other pipeline?
Tim: It is second, a second pipeline, sometimes I call it the second funnel. And the idea here is what we discovered is that existing customers to renew them and upsell them, the first thing you need to do is remind them of the impact that you’ve had and the investment that everybody’s made. There’s something, the thing about reinforcing status quo bias is you want them to think, wow, I’ve made a lot of progress. A lot of good things have happened. They and I, we’ve both made mutual investments and put effort in, do I really wanna put that impact at risk and make a change? Do I really wanna redo that investment and effort and make a change? And the only way they remember that, to be honest, is you think they would just remember it, but you actually have to be very deliberate. So before you go into renew them or sell them the next, the first thing you must do, is talk about the impact that you’ve had and the investment in effort everybody’s made. And the two science principles there, are anchoring them on the positive results and outcomes that you’ve had. And then the idea of sunk costs that they don’t have to redo this again, you’ve onboarded them, you’ve trained them. You’re part of their, you know, the process change is complete. The nomenclature is now embedded in their systems and you’re just sort of operating as part of their business. So the first thing is to establish impact and investment and document it and show them that. Then the second thing is before you tell them about the new thing, you tell them, here’s what you’ve been able to see, now that you’ve worked together. You have this unique perspective that your competitors don’t; you have an inside view. And so what you do is say, hey, these are the things going on in the outside, and the other companies we work with. And we see these things inside because we work with you and here are the thoughts we have moving forward. So we talk about identifying these emerging trends, evolving trends, and then sharing what we call the hard truths. ‘Cause you have this privileged position of the incumbency. So after you’ve told them the great things you’ve done and the mutual investment and effort, it gives you the liberty to say, now here’s what could be next because we’re working with other companies like you and we’re working with you and we see things, your competitors don’t have that vantage point. So for you to just come in and start dropping new products on them, like they’re something from outer space and they’re new, you sound just like your competitors, take advantage of your incumbency and tell the story a different way.
George: Well, some great lessons there, and, and you know the account management role, which is in that expansion stage is a different role from the pure hunter role. Some people call it a farmer role, but you know, it’s like an aggressive farmer because you can’t just sit there and wait for the plant to grow. You actually have to sometimes come in and put some fertilizer on the bloody thing to get it to grow, I was working with this one customer. We took them through a new platform, which was going to automate a bunch of their work, and it was going to reduce costs, make things more efficient, probably be easier for them to onboard their reps at the end, they didn’t end up buying because of the cost of switching. So we didn’t do a good enough job of getting to that point. And then we go into another client with the exact same process, but they were an existing customer. And we already had built that trust and pretty much the same presentation where we went in and said, here are the things that you need to do, here are the efficiencies. And because we had that relationship and already had that insider track. So I liked the way that you put that, you have the inside track, you have to approach it a little bit differently, but then you have that opportunity to get the retention and the upsell
George: Tim, you know, it’s been great having you on the show for the last two episodes. And I would encourage all sales leaders and sales reps to get this book, The Expansion Sale, and to learn more from you on the Customer Deciding Journey, where are we gonna find that book? It’s just everywhere out there or.
Tim: It’s a real book, it’s on Amazon and all other places that sell the book. And the reviews have been really solid on Amazon, McGraw Hill has published all our books. We’re very proud of the fact that we are not self-published. We are actually published authors. And so you can find it anywhere you would normally order a book.
George: The other thing that I found in watching you on stage a couple of years back and seeing you here because we’re, you know, it’s audio, but I can see you because we’re on a Google meet. You’re a great speaker and a great motivator. How would I consume some Tim Riesterer through audio or video to get some of that motivation? ‘Cause I’m pumped up right now. I wanna go retain a customer and expand them or go bring them into my customer deciding journey.
Tim: Yeah, so our website, our company is called Corporate Visions. It’s not an exciting name, it’s corporate and visions, but corporatevisions.com and we have a resource page and I’ve got lots of free webcasts there. And you can just search them by whether it’s acquisition and defeating status quo bias, or it’s expansion and reinforcing your relationship. So lots of free resources, eBooks, and webcasts that you can download there. And for the thing that has maybe struck your fancy here, and we believe in the abundance mentality. If anybody remembers Stephen Covey, he said, “Believe in abundance, not scarcity.” We give this stuff to you and hopefully, you can make something of it. If you ever need any help, you might call us. But we really try to give you the frameworks. We give you examples, and we tell you more in-depth about the studies behind it, so that you can try this stuff. It’s literally why we write books. We’re literally here it is. And we just trust that if anybody ever actually needs additional help as they can’t get passive, they’re past their own cursive knowledge, you’ll give us a call, but check it out. Lots of good stuff.
George: Well, Tim, Riesterer joining us here today, and actually the last two weeks producer Colleen has done a great job of getting all the links in the notes here on the podcast, so you can get yourself some more goodness. And I really encourage you to look at this book. If you’re looking to add a book, it’s a great read and it brings home some new points that will definitely help you as you work on your own Customer Deciding Journey. Tim, thanks very much for joining us.
Tim: Thanks for having me, George.
George: Always fascinating to listen to Tim Riesterer and his insights. And we talked a lot about science and he talks about psychology. And we dug into that second pipeline. It’s a second funnel when you are looking to expand that customer and you know, so you’ve acquired the customer and now you’ve come back with, remember those things I told you, here’s where it’s working here are the areas that we need to continue to do some work on. And it’s that whole hunter farmer analogy that’s way overused, but on the farmer side, you know, you need to be that aggressive farmer and help them with the other problem. The messaging is a little bit different as he goes into great detail to talk about the fact that, you know, you have to prove the value that you’ve brought based upon the first brand promise that you made when you acquired the customer. But then you need to keep in mind that your competitors are in there messaging that client, and you wanna make sure that your messaging of, oh, we’ve got a sunk cost here and we’ve been working with you for these months. And here are the things that have come true and having that regular review of the business and how things are improving and then where the new opportunities are, that you can see as an insider. You almost need to make that move when you’re doing account management and the upsell portion to become the insider, I’m on your team. And it’s more than just customer success. You’re not just making sure everything’s working properly and the lights are green. You need to be going in there and saying, Oh, by the way, if we build this new road over here and put some green lights on there, you have this new opportunity. Tim Riesterer, one of the sharpest people that I have come across in my career when it comes to positioning the acquisition and the expansion model. And he works with sales organizations all over the world has got some great resources as mentioned, producer Colleen’s gonna put all of the links in our speaking notes. If you wanna acquire the books or find out more about how you could see some of Tim’s presentations, he’s a riveting public speaker, and really is a motivating factor. I go to him on a regular basis to get fired up. He’s always got some great new learnings and we appreciate getting some of his valuable time. In fact, so much of it we had to put it into two episodes over the last two weeks here of the Conquer Local Podcast. If you’d like to talk to Tim, you can do that on the community and that’s new and it’s exciting conquerlocal.com\community where you can speak to our guests. And we’re gonna continue to bring guests into that community forum, where you can ask questions and find out more from the speakers and the people that we have sitting in the chair here when we sit down and record the latest editions to the Conquer Local Podcast. Thanks for joining us this week on behalf of our sound engineer, Mr. Brent, and producer Colleen, my name is George Leith. I’ll see you when I see you.