Scaling companies should operate like flywheels: Each aspect of your company fuels into the next, forming a full circle. In this ideal model, marketing flows into sales, which flows into customer success, which flows back into marketing.
Just as your acquisition efforts inform what occurs post-sale, what happens post-sale should inform your acquisition strategy.
The goal of most acquisition strategies is to generate revenue via closing good-fit customers. Successful customers are often defined in terms of having high NPS scores, continuing their business with you for a long time, referring other customers and being good to work with. But what’s one of the most essential aspects of a great customer? They pay you for your services. It’s a trait that’s often overlooked when assessing a prospect’s fit — and your historic data has much to offer you and your flywheel approach.
Not all of your interested prospects will actually become good-fit customers. It can be a gamble investing resources in prospective customers; you use resources to acquire and to serve them once they close.
This investment means you want your relationship to be long-lasting. If a client churns prematurely, it’s a waste of resources that might have been spent on a better-fit prospect.
The same is also true of clients who fail to pay you.
But how can you see into the future of a seemingly good-fit relationship to know if collections troubles are in the cards? The answer: your past data.
On the sales side, indicators like longer sales cycles and lower close rates can indicate a prospect might not be the best fit. But, if they show sufficient interest, those indicators alone might not be enough to deter sales from pursuing those leads.
How said prospects behave post-sales, particularly in the collections process, can validate that they’re not a segment your marketing and sales team should be targeting.
If they produce more support tickets than other segments, have lower NPS scores, higher churn rates, lower lifetime values and lower collection rates then they’re not a segment you should be pursuing on the acquisition side. But if your marketing and sales team isn’t equipped with that data, they won’t know they’re targeting a poor-fit segment and can’t rectify the situation.
If you discover retroactively that you’ve been closing a lot of customers from a poor-fit segment, you can train sales not to target those types of prospects, disincentivize closing those deals and pivot your marketing strategy away from targeting them.
You can also take proactive measures by involving finance and other customer-facing teams in the creation and validation of buyer personas and ICPs.
Normally when companies are working on their buyer personas and ICPs, they involve representatives from marketing, representatives from sales and a couple members of the c-suite, like the CEO or CRO. Involving people from customer success and finance will help you make your buyer personas and ICPs more reflective of long-term good-fit customers.
Customer success team members will be able to help you identify if there are behavioral issues and misalignment between expectations and the scope of the engagement. Finance will help you identify if there are collection issues within the segments you’re looking at.
If you’re unable to bring a representative from finance into the buyer persona and ICP development process, you should at least try to consult them before finalizing your acquisition targets.
With insights from those teams, if you end up creating a target segment that seems appealing to acquisition on paper, but customer success and finance know aren’t profitable long-term, you’re able to make them a negative persona/ICP and avoid wasting resources pursuing them.
Data is the momentum that keeps your business flywheel spinning. The better data you have regularly flowing from marketing to sales to service and vice versa, the faster your company will grow.
However, equipping all teams with data is only the first step. They also have to act upon it. Knowing a segment has a history of collections failure won’t do your company any good if your sales reps continue to close those types of accounts.