Show Value to Customers Before Trying to Expand Account Revenue

Today is Earth Day, so I thought I would chime in on a way that we can make better use out of what we already have instead of acquiring something new. To be more specific, I’m talking about customers. (I realize this has nothing to do with Earth Day, but I needed some tie-in, so cut me some slack please).

I’ve talked here about why it’s important for everyone (including marketers) to help demonstrate customer value. Why is this important? Because as my new research note entitled “Tech Go-to-Market Best Practice: Providers Need to Clearly Demonstrate Value to Expand Existing Account Revenue (available to Gartner clients) points out, nearly two-thirds of the tech buyers we surveyed said they would purchase more from existing providers if they saw value from their initial investment being clearly demonstrated. Setting aside the fact that it’s much cheaper and easier to sell to existing customers versus trying to acquire new ones, this finding should remove any doubt about the benefit of trying to grow existing accounts.

As providers continue their steady march away from delivering software and services on-premise and through perpetual licenses to SaaS-based delivery and subscription pricing, we’re seeing clients do a better job of demonstrating value to customers from the get-go. However, as the chart below shows, we have a long, long way to go. Less than half of the buyers in our survey (44%) felt that only a quarter of their existing providers were helping them maximize value consistently.

On the whole, providers are leaving a lot of money on the table by not demonstrating value. But the blame isn’t simply on sales or marketing. In the survey, we asked respondents to talk about how valuable their ongoing interactions were with providers and broke it down by function. On a scale of 1-7, with 7 being extremely valuable, no one (from sales to marketing to professional services to support and product management), scored over a 4.7. Contrast that with a separate survey we did where we asked a larger group of buyers to rate the importance of those interactions on determining their propensity to maintain or expand the relationship. In that survey, all of the functions were rated between 5.84 and 6.09.

In my research note, I talk about ways to better ensure that providers are able to clearly demonstrate the value that buyers expect when they make their initial investment. But for those of you with responsibility for managing and supporting sales teams, the most important takeaway is that you establish value before you try to sell more. This requires a lot of potential changes and also patience as you are staring at forecasts. The urge will always be there to take a customer that is not unhappy and try to sell them more. But lack of unhappiness doesn’t translate to desire to purchase more. You have to clearly and consistently demonstrate value (in the areas they care about) before you undertake that expansion discussion.