Why Great Service Doesn’t Drive Account Growth with Brent Adamson

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About this episode

CEOs and sales leaders have long wondered: how can we drive organic growth and increase sales from existing customers?

But for many B2B companies, that growth is elusive.

The traditional answer has usually been: serve customers better, delight them, go the extra mile, and earn the right to ask for more business.

But the data tells a more complicated story.

According to CEB, now Gartner, only 28% of sales leaders report that account management channels regularly meet their cross-selling and account growth targets.

That is why I interviewed Brent Adamson, Principal Executive Advisor at Gartner, and co-author of The Challenger Sale and The Challenger Customer.

In this first part of our conversation, Brent explains why service drives retention but does not necessarily drive growth, why over-serving customers can create a “zone of wasted effort,” and why account growth requires a different motion: customer improvement.

Writer’s note: This is part one of my interview with Brent Adamson. You can view part two here: New research: Empathy and how to solve buying problems.

About Brent Adamson

Brent Adamson is a Principal Executive Advisor at Gartner. He works with sales, service, marketing, and communications leaders to understand what world-class B2B selling and marketing looks like.

Brent is also the co-author of The Challenger Sale and The Challenger Customer.

Chapters

00:00 Introduction to Brent Adamson
01:17 How sellers can drive account growth
03:57 Why existing customer growth is so hard
05:14 Why over-serving customers does not drive growth
09:32 Service drives retention, not growth
11:20 The zone of wasted effort
16:47 What customer improvement means
19:37 Customer success versus customer improvement

How do you drive growth from existing customers?

You drive growth from existing customers by helping them change their business, not simply by serving them better.

Great service helps customers renew. But growth requires something different. It requires helping customers see new ways to improve their business, make money, save money, reduce risk, or change behavior in a way they may not have fully appreciated on their own.

A few things worth taking away

• Most companies struggle to grow revenue from existing accounts.
• Sales leaders often blame account managers when growth stalls, but the problem is often the role design and the strategy.
• Account managers are asked to do two different things at once: protect the existing business and drive growth.
• Retention asks customers to maintain the status quo. Growth asks customers to change.
• Great service increases the likelihood of renewal, but it does not necessarily increase the likelihood of growth.
• Over-serving customers can create a “zone of wasted effort.”
• Customer expectations should be clearly set so teams do not over-deliver in ways that add cost without creating growth.
• Customer improvement is different from customer success.
• Customer success is often backward-looking: helping customers get value from what they already bought.
• Customer improvement is forward-looking: helping customers change their business in ways that create new value.

A few lines that stuck with me

“Service drives retention, but it doesn’t drive growth.” — Brent Adamson

“The single thing worse than failing to grow an account is failing to keep it altogether.” — Brent Adamson

“To get them to grow, you actually need to get them to embrace change.” — Brent Adamson

“You’ve got to make the business case not for buying your solution, but for changing their behavior.” — Brent Adamson

“Customer improvement is not backward-looking, but forward-looking.” — Brent Adamson

Resources mentioned

• Gartner
• The Challenger Sale
• The Challenger Customer
• Why Changing Behavior Is Your Biggest Sales Challenge

You may also like

• New research: Empathy and how to solve buying problems
• Why customer advocacy should be at the heart of your marketing
• How customer-hero stories help you connect better
• How to Attract B2B Buyers with Amazing Content

Listen and subscribe

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Full transcript

Brian: Hello everyone, and welcome to today’s B2B Lead Roundtable Podcast. I am excited to have Brent Adamson. He’s the Principal Executive Advisor at CEB, now Gartner, and he’s also co-author of The Challenger Sale and co-author of The Challenger Customer.

Both these books are bestsellers. I’m sure many of you have heard of them and read them. I was just glancing through both books in preparation for our conversation today.

Brent, welcome to our show. Can you tell our listeners a little bit about you and your background?

Brent: Hey Brian, absolutely. Thank you so much for the invite. It’s great to be with you and everyone today.

I work with an organization formerly known as the Corporate Executive Board, which became CEB and has now been acquired by Gartner. I sit in the sales marketing practice here at the company.

It’s sort of our mission in life, at least in the business-to-business space where I spend most of my time, to understand with data, research, and analytics as best as we possibly can, what does world-class B2B selling and marketing look like?

We get after that with all sorts of analysis and research. It’s funny, we’re actually industry agnostic. We work across industries, go-to-market models, geographies, and try to understand across all of the diversity that we have, across all of the different kinds of companies out there, what do we all have in common?

What’s the recipe for success that’s going to help us all move the dial and do a little bit better in sales, in marketing, and ideally in sales and marketing?

Brian: Well, I’m glad to have you with us, and we’re going to touch on both the sales and marketing research, some of which I got exposed to about two months ago when you had a group of us at your thought leader roundtable.

Why don’t we just start with how can we better enable sellers to drive account growth? I know that was part of the new research you completed. What can marketing do in this process?

Brent: Sure. This is brand new research for us.

In some way or another, we always study growth because that’s what sales and marketing are all about.

There’s a certain urgency, or we like to call it the “why now?” of this growth question, especially in sales, which is especially relevant for us today.

That is simply the journey that we’ve all been on over the last five years, five months, 10 years, 20 years of building out broader capabilities across our organization to offer our customers solutions as opposed to individual products and/or services.

The idea is that if you can offer your customer broader solutions, that’s going to allow you to stand out, differentiate yourself, and command price premiums in the marketplace. All good things to do and good reasons to do it.

The thing that’s interesting though, Brian, is as you add all those capabilities to your portfolio that you can now bring to your customer to add that additional value, the actual value they create for you as a supplier is directly contingent on your ability to sell them, to get your customer to buy those incremental capabilities.

Not surprisingly, companies all around the world, in their efforts to grow, are looking to existing customers to buy more of the cart, as we like to say, to penetrate that account more deeply and get them to buy into more of the value that we can offer.

It turns out this is actually a huge challenge for B2B organizations around the world, which is simply put: to get existing customers to buy more of what we have to sell. To essentially drive growth with existing customers.

That is the challenge, or the terrain as we like to say, that we dove into this year.

Specifically in this world of account management or existing customers, what is it that sales organizations can do to do a better job of driving growth with those existing customers?

When you dig into it, what’s really interesting is the amount of frustration with sales organizations around the world in making that happen.

There’s only about roughly a quarter, somewhere around 25% or 26% of the heads of sales that we surveyed this year, who told us that their account teams were actually meeting, let alone exceeding, cross-sales or up-sales across portfolio goals.

Whether you call it up-sales, cross-sales, land and expand, whatever you might call it, we’re all struggling to get that incremental revenue from our customers.

Let me take a breath there, but that’s sort of the terrain that we dove into to try and understand what’s going on. I would imagine, Brian, that’s something you hear a lot about too across your listenership.

Brian: Yeah. I was just talking with a CEO and his team, and that’s really a struggle.

This brings us to the question I wanted to ask you about. They were looking at how they grow organic growth. They talked about customer success, and they talked about how they could service their account above and beyond, but that just didn’t seem to be enough.

Servicing accounts above and beyond has been something that sellers have focused on, but what’s counterintuitive about your research is something that it doesn’t seem to be helping, does it?

Brent: Well, no. You’re right. It was counterintuitive even to us.

We always have these hypotheses that we test in all of our research, but it’s always interesting to see how the data and the research shakes out.

What we found is a couple of things here in this particular world of account managers, if you will, that this is the farming side of the hunting-farming debate.

That’s about our farmers, and they have to be nurturers and take care of our current customers. Then when they fail to grow, we think, “Oh, they need to be harder. They need to be tougher. They need to be more aggressive. We need to get them in there.”

What’s interesting is when they fail to drive growth with current customers, we often blame the people.

We need more hunter-oriented sales professionals in our account management ranks, or we need someone that is going to ask for the business or be more aggressive as opposed to being so nurturing.

There’s a really interesting tendency to fall back on DNA, or at least individual traits, and assume that the lack of growth is the result of the wrong people.

Then you get the CEO saying, “We need better people. We need different people.”

What we’ve come to really understand is not only is it a structure of the role. In an account management role, yes, you’re on the hook for driving growth in existing accounts, but let’s not forget you’re also on the hook for not losing the business that you’ve already won.

At the same time, you’re partly involved in the servicing of those accounts as well. You’ve got service. You’ve got success, or making sure they get value from that which they’ve already bought, and then driving incremental growth.

What happens in the account management role, unlike a pure hunting role, is that when you’re sitting over or at least involved in all three of those categories simultaneously, not only your time but your attention and focus gets split in some really interesting ways that create all sorts of tension.

If I’m a pure hunter, all I’m tasked to do is go out and bring in new logos or new customers altogether.

But if I’m a farmer, if I’m someone in an account management role, yes, I’ve got to bring in incremental business, but never at the cost of losing the business that we won already.

That’s the thing we say: the single thing worse than failing to grow an account is failing to keep it altogether.

What you have now is this really interesting tension of an account manager trying to pat your head and rub your tummy at the same time. They’re trying to do two very different things simultaneously, which is grow the account but not lose the account.

The reason why that matters is because what you’re asking the customer to do in this environment is actually two very different things.

To keep the customer, you essentially have to get the customer to agree to the status quo. Keep doing what you’re doing. Sign up for it again. Renew that contract. Buy the same amount. Renew that business if it was a renewal-based business. That’s a status quo decision.

But a growth decision is actually to do something different: to buy more, to expand to more seats, to go to a new geography, to incorporate this new service or new technology.

From an account management perspective, I’ve got two tensions simultaneously.

One tension is to try to get them to grow without losing what I’ve got already. The one thing worse than failing to grow an account is failing to keep it altogether.

Simultaneously, I’m trying to get my customer to change and not change their behavior at the same time, and this turns out to be really hard.

This stuff is really fascinating from a social science perspective. You think about, how do I play that card? What’s the strategy for winning and driving growth in that environment?

So full circle back to your question, Brian. We find that the predominant mental model of account managers in this world is, first things first, before I get the growth, I’ve got to get the maintain. I’ve got to get the retain.

Let’s make sure that they’re happy. Let’s make sure they’re taken care of. Let’s make sure they’re satisfied. In fact, let’s make sure they’re delighted with whatever we sold in the past.

Let’s over-serve them. Let’s provide world-class service, and if we do that we’re going to at some point achieve a threshold, a permission. If we can get over that permission threshold, then we’ll have won the right to ask them for growth.

Somehow, just by being so happy with the service we provided in the past, that will drive growth.

That brings us full circle to the punchline of a lot of our data, which is what we found is while providing a world-class level, in fact even just an above-average level of service and success to your customer, that is making sure they’re happy with that which they’ve bought already, makes your customers significantly more likely to renew that business, to retain that business.

They’re twice as likely to renew.

But we can find no statistically significant impact between that level of service and the likelihood of that customer to actually grow.

So put it all together and what you get is service drives retention, but it doesn’t drive growth.

That’s a really interesting thing to find in a world where the mental model, essentially the working hypothesis of not only account managers but all the way up to the CEO, is let’s serve our customers. Let’s create these world-class moments of delight, and that will earn us the permission for growth.

We just don’t find that to be the case at all in our research.

Brian: When I first saw that, I was blown away because the rationale and logic has always been go the extra mile, delight.

Everyone’s measuring based on Net Promoter and some of these other things to look at, are we doing well?

What your data is showing us is that there is a point of over-serving our customers. What’s the phrase that you use? It’s not diminishing returns, but there’s this term you used in your research.

Brent: We gave it a provocative name.

If you draw this out in a set of curves, and we’ve got graphics to go along with this, the idea is if you think more service equals higher likelihood to grow, it almost looks like a 45-degree angle going up and to the right.

Service is on the horizontal axis. Likelihood to grow is on the vertical. The more service I provide, the farther I go to the right, the higher I get on the vertical, because service leads to growth.

What we find is, in fact, that the line doesn’t go up and to the right endlessly. It shanks to the right. It levels off and ends to your point in terms of diminishing returns.

At some point, no matter how much more service you provide or pour into that account, the chances of driving growth do not go up because service doesn’t equal growth.

What happens is that in reality, you keep providing more and more service with absolutely no incremental impact on growth likelihood.

It creates this huge gap between the amount of service actually provided and the amount of service that you needed to provide simply to get retention.

We call that gap the Zone of Wasted Effort, which is somewhat provocative.

But the Zone of Wasted Effort is in fact that. It is effort that you’ve expended in serving the customer and delighting the customer in hopes of getting growth that will never actually get you growth because it doesn’t lead to growth.

At the very least, in that Zone of Wasted Effort, there are all sorts of questions. One of them is simply, what are the opportunity costs of our time?

How much time, money, effort, and people are we pouring into a customer to provide world-class service when, in fact, your customer’s going to renew or retain anyway?

By talking to heads of sales about this, I’ve learned a lot in the last couple of months.

Just in Atlanta two weeks ago, one head of sales said, “We do this all the time.”

The real price is not just the opportunity cost of time that you pay, but the fact that you are now raising expectations for your customer way above anything that you ever originally promised, and you’re recalibrating or resetting their expectations for the next deal.

So yes, it gets you retention, which you were going to get anyway. It doesn’t get you growth because it can’t get you growth.

What it does do though is make the next deal you do with the customer even that much more expensive because you’ve recalibrated their expectations way higher than you ever needed to do originally just to keep the account.

Brian: This is a problem that’s affecting nearly every B2B company: how do we drive organic growth?

How can companies use the findings of your research to move from this retention model to actually driving growth? What are some of the strategies, the things you found, that sellers can do differently?

Brent: A couple thoughts on this.

One is, to get back to the previous point, it becomes really important in this world to set very clear expectations.

The thing that heads of sales ask us all the time is, “Okay, I get it, or I kind of get it. I’m on board. I see the data makes sense. I understand that at some point there’s diminishing returns to providing greater and greater service, but how do I know how much service is enough? How do I know when I’ve reached that threshold? I’ve maximized the benefit for retention, knowing that there is no benefit for growth. How do I figure out what that moment is?”

The answer is simply: it’s in meeting the expectations that you’ve established with your customer in advance.

Whether it’s formally through something like service level agreements, or more informally through quarterly reviews, business reviews, or account planning processes. One way or another, set those expectations very clearly, probably in writing with not only your customers but your own team, so that you don’t perform way above them because all that does is add cost with no real return.

That’s point one. Setting expectations is super important.

That is more of a cost mitigation strategy. It’s not really a growth strategy, as you asked for.

So, Brian, the flip side is now how do I actually drive the growth?

What our data has led us to understand is there is a completely different strategy altogether, which is something that we’ve come to call customer improvement.

For any of the listeners on the podcast who are familiar with our work that we’ve done in The Challenger Sale and The Challenger Customer, this idea will sound very familiar.

Effectively, it’s a subset of behaviors or attributes that are all completely consistent with the Challenger body of work.

We tested a whole bunch of different attributes in our data across about 750 B2B customers, individual stakeholders involved in a big B2B purchase.

What we found is that for those suppliers who were perceived by those customers as providing a set of interactions that we’ve labeled customer improvement, they were significantly more likely to buy incremental services, additional geographies, additional features, and additional products from that supplier.

Customer improvement very specifically is the ability of a supplier to help critically assess the customer’s business in a way the customer hasn’t fully appreciated on their own, and help them identify new ways to grow, make money, save money, or lay out the ROI of taking a step in that direction.

It goes back to that tension I was mentioning before.

Brian: Yes.

Brent: If your goal is retention or renewal, what you’re trying to do there is just get your customers to embrace the status quo, to keep doing what they’ve already decided to do in the past.

But to get them to grow, you actually need to get them to embrace change. To do something different. To buy something different.

If you want your customers to do something different, that’s change. Change is perceived as risky.

If I’m going to do anything risky, if I’m going to do anything involving change, you’ve got to make the business case not for buying your solution. You’ve got to make the business case for changing their behavior.

That’s what customer improvement is all about.

It’s building and articulating a business case to your customers for why they need not to buy your solution, but why they need to change their behavior in a way that’s going to improve their business.

It’s a really powerful lesson completely consistent with what we found in the past.

But what’s so stark about it in this context is that for existing accounts, while service and success do not drive growth, customer improvement does, dramatically so in fact.

Brian: What you’re sharing reminds me of this conversation I brought up earlier.

It sounds like what you’re saying is we need to move from being more reactive and looking at how do we deliver and retain, to proactive and forward-looking.

I was thinking of this conversation I had with this CEO and his team. They have this customer success strategy, and it was really helping their customers become like gold medalist athletes, performing what they do, which is productivity task management.

The problem is the customers weren’t wanting to be gold medalists. What they wanted was to simply get their job done more effectively.

There wasn’t that vision.

So what I’m hearing is, you need to help someone, if they want to embrace that level, to know where they want to go and how you can help take them there. Is that what you’re saying?

Brent: A little bit, yeah, it is.

I would use slightly different language, only in the sense that the term customer success, at least in the world of software service, for example, the big cloud providers and that sort of world, has taken on a very specific definition or framework.

A success team there is generally designed to make sure the customer gets as much value from that which they’ve bought from you in the past as possible.

This is a proactive team that would reach out to the customer and say, “Hey, you’ve got this subscription from us,” for example, or, “You’ve bought this product or service from us. Did you know it has this capability you can take advantage of? Or did you know there are these ways we can help you based on the contract we already have in place?”

It’s a proactive call.

It’s not reactive in the sense that a customer calls you when they’re upset because something doesn’t work. You’re proactively calling them and helping them get value from that which they’ve already bought.

So it’s proactive but backward-looking.

It’s focused on what you bought from us as a supplier in the past and making sure you get as much success from that as possible.

Now the customer improvement concept, or the approach, is not backward-looking, but forward-looking.

And it’s not about your capabilities, but the customer.

In fact, it’s completely supplier agnostic in a way that will just drive you crazy.

It’s weird to try to get your customer to buy something without talking about your capabilities, which you will eventually, but not at the beginning of the conversation. At the end.

I think, Brian, you’d agree that everything in life can be boiled down to a four-square, right?

You can do that here.

If you think about a four-square where the vertical dimension is supplier across the bottom, customer across the top, and then left-right is backward-looking on the left and forward-looking on the right.

When you think about the top right box in that four-square, what you have is customer-oriented and forward-looking.

Success teams tend to be in the bottom left box. They tend to be backward-looking around the supplier’s capability. So let’s make sure you get as much value from that which you bought already.

It’s a proactive push, but around that which you’ve bought already.

The customer improvement story up in the top right is not about you at all. It’s about the customer and how they can change the way they think about their business in a way that’s going to help them reap greater returns in the future going forward.

So back to your point about the customer doesn’t want to be a gold medalist.

In this world, what you need to do is figure out what your customer is ultimately trying to achieve. Who are they trying to be?

If not a gold medalist, then is it a silver medalist? Is it not a medalist at all?

What are their ultimate goals as a commercial organization?

You can ask yourself: if that’s looking forward to the future, their strategy, what they’re trying to achieve, what is it about that strategy that is incomplete or perhaps even misplaced?

How are they going to get there and what have they missed?

If that’s what’s important to them, how can I help them get there better than they ultimately are planning on getting there on their own?

If you wanted to raise it up a notch in altitude, you could go in and argue with, “That’s not even a good place for you to be starting within the first place.”

That is a higher-level argument, which is sometimes harder to have with your customer. I would never use the word argument per se, but debate, if you will.

One way or another, you will find that your customers are always going to be oriented toward the status quo because change is expensive, disruptive, scary, and risky.

If you’re going to get your customers to change their behavior, the first thing you’ve got to do is convince them that the change is even worth it in the first place.

Maybe it is worth it to become a gold medalist. Or if they only want to be a silver medalist, that’s fine, but let me show you how the path you’re on toward silver medal isn’t going to get you there nearly as fast or as effectively as you thought it would.

The zone of wasted effort