Customer Growth: Decisions for the SME CEO

A report by The Executive Connection and Salesforce

ContentsExecutive summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 3

Identifying ‘Growth SMEs’ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 4

Strategies that drive customer growth . . . . . . . . . . . . . . . . . . . . . . . Page 5

Backing customer growth strategies with investments . . . . . . . Page 6

Customer engagement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 8• Attract • Capture • Retain and grow

• From digital transition to digital transformation

Three key customer growth decisions for SME CEOs . . . . . . . . .Page 18

The Executive Connection Customer Growth survey was conducted between 5 June 2018 – 22 June 2018 and includes 149 responses from CEOs and business leaders from around Australia . The Executive Connection members are CEOs and business leaders of predominantly small-to-medium enterprises (SMEs) with up to 200 employees and annual revenue of between $2 million and $100+ million per year .

Executive summary 3

Executive summary

Decision making is the most important part of a CEO’s job . While each decision is unique in its nature and impact, those that directly drive growth top the list .

Together with Salesforce, The Executive Connection undertook a study with our members to identify the key strategies driving customer growth in 2018 .

Business growth and customer growth are fundamentally intertwined . The key business functions that contribute to customer growth, including marketing, sales and customer service, have undergone a rapid evolution in their ability to adapt, capture and retain new customers .

Advancing technology such as the Internet of Things, AI and automation; alongside evolving and diversifying customer expectations; has created an ever-growing number of options to focus and optimise investment to drive customer growth .

This study focused on Growth Companies – those achieving consecutive year-on-year growth – to analyse and identify the customer-focused initiatives driving success, and harness insights that have been proven to yield results .

By understanding where to focus their efforts, CEOs and leaders will be better-placed to make the right decisions to elevate their businesses and drive customer growth .

Stephanie Christopher CEO, The Executive Connection

Identifying growth SMEsGrowth levers 4

The first six months of 2018 has seen the Australian economy achieve broad, synchronised growth across employment, trading conditions and business confidence . Within that same period of time, business conditions reached an historic high1, spurring growth, and the expectation of future growth, for small-to-medium enterprises (SMEs) .

The Executive Connection’s recent Customer Growth study of 149 leaders of SMEs in Australia found that the majority reported growth in the period between June 2016 – June 2018 .

In fact, 55 per cent of CEOs and business leaders didn’t just report growth for the previous year, they also projected growth for this year . In this study, we call this group of leaders Growth Companies .

In contrast, just four per cent of leaders reported flat or declining growth for two years straight and the remaining 41 per cent experienced growth either last year or this year, but not over two consecutive years .

Growth Companies (2 year growth)

Flat to declining growth (2 years)

1 year growth

Increased growth (2 years)

55%

41%

4%

Growth levers 5

Strategies that drive customer growth

A leader’s decisions for customer engagement starts with strategy, so what key strategies are CEOs implementing as part of their growth plans?

The data shows that Growth Companies are significantly more likely to focus on existing customers while developing efficiencies to scale growth . These top two strategies employed by Growth Companies proves that tapping into an existing pool offers significant opportunity to upsell and increase the longevity of those already engaged with the business .

Growth Companies also place a greater emphasis on how they can better serve existing customers and scale for growth .

However, it isn’t all about growing from within . Growth Companies complement the growing value of existing customers alongside new customer acquisition; evidenced in their slightly higher percentage of new customers versus existing within their customer base . What differentiates Growth Companies from other organisations is how better prepared they are to serve and to scale when needed .

Top 5 strategies Growth Other Growth Companies’ likelihood to deploy strategy

1 . Expansion/retention of existing customers 87% 73% 19% more likely

2 . Operational efficiencies to better scale for growth 73% 62% 18% more likely

3 . Serving new markets and customers 69% 68% 1% more likely

4 . Introducing new products/capabilities 64% 62% 3% more likely

5 . Growing sales teams 34% 32% 6% more likely

Growth

Other

New

New

Existing

Existing

27%

24%

73%

76%

Investing in growth 6

When strategies are outlined, investments follow . The leaders involved in the study were asked to demonstrate where they plan to make investments in order to accomplish their customer growth plan .

The analysis shows that Growth Companies are up to 36 per cent more likely than other businesses to have dedicated marketing, sales or service leadership in place .

The findings demonstrate that converting investments into customer growth requires specialised leadership for different business functions . Growth Companies are acutely aware of the need to ensure dedicated leadership roles across the business, with the ability to spearhead growth in that function to achieve long-term gains .

Growth Other Growth Companies’ likelihood to have functional leaders

Sales leader 64% 50% 28% more likely

Customer Service leader 57% 42% 36% more likely

Marketing leader 53% 52% 2% more likely

Backing customer growth strategies with investments

Drivers of growthInvesting in growth 7

While almost everyone is investing in training, marketing and technology, Growth Companies are investing more in talent and strategy at a significantly higher rate than their peers .

While there is consistency in the categories of investment for both Growth Companies and other organisations, the main point of difference is diversity .

Growth Companies are more likely to invest in all categories than their peers and three out of five Growth Companies invest in their strategy, making sure they have a clear plan for growth .

The top four drivers of growth: 1. Training: Competencies to improve

effectiveness of existing personnel

2. Marketing: Branding, digital marketing and traditional media

3. Talent: Hiring new customer-facing staff in sales and service

4. Strategy: Strategic planning or third-party consultants

Top 5 investments Growth Other Growth Companies’ likelihood to invest

1 . Training 76% 65% 17% more likely

2 . Marketing 67% 62% 9% more likely

3 . Talent 65% 48% 34% more likely

4 . Strategy 60% 45% 33% more likely

5 . Technology 55% 48% 14% more likely

The study also reveals that Growth Companies are more likely to enable customer engagement through technology . These fast-growing companies implement technology at a greater rate, especially customer service technology (64 per cent more likely to have technology deployed) .

In addition, Growth Companies are more likely to report their use of technology as extremely effective versus other organisations . Inconsistency in effectiveness can be attributed to the presence or absence of leadership in disciplines where technology has been deployed .

Growth Companies have the leadership in place to drive the initiatives and align the technology; a clear sign that the synergy between people and technology is a key lever for customer growth .

Technology in place Growth Other Growth Companies’ likelihood to have technology

Customer Service 65% 39% 64% more likely

Sales 60% 41% 27% more likely

Marketing 52% 42% 26% more likely

All Technologies 18% 14% 29% more likely

Customer engagement 8

To increase understanding of the success of Growth Companies, the study also analysed the decisions SMEs have made in the specific functions of customer engagement, including marketing, sales and customer service .

This report identified the top five strategies for Growth Companies in each of these areas and enlisted experts in each specialist area to provide a view into the future of these disciplines for businesses looking to increase or maintain their growth .

“Good customer engagement starts at the top. In fact, an integral part of a CEO’s role should be as Chief Customer Officer; which goes beyond just knowing the challenges, opportunities and pain points.

When businesses and their leaders have the ability to think and operate on a customer value strategy, leveraging new technology such as AI and automation, it can completely change the way they engage with customers.”

Geoff Stalley Principal, justG Business Consulting

“A relentless focus on the customer is crucial to any small business growing and succeeding.

By building their business around a single view of the customer and integrating each sales,

service and marketing touch point into a coherent customer journey, small businesses are more

likely to exceed the demands of today’s customer.

This single view of the customer should be housed by a platform that can scale as the

business grows. This way, small businesses can work smarter and faster than ever while future-proofing their business’ investment.”

Adrian Towsey Area Vice President, Small & Medium Business

Salesforce, Asia Pacific

Customer engagement: Marketing, sales and service strategies

Attracting new customersMarketing 9

Top 5 marketing strategies that work for Growth Companies

50%

40%

30%

20%

10%

0%Digital

marketingReferral Networking/

face-to-faceEvents and

conferencesDirect

marketing

35%

25% 21% 19%14%

“Marketing has evolved to a point where we have such great tools available to drive change within

the function, but behind that has to sit a strong strategy to fuel growth.

Marketing is about education, not just promoting or selling and

it has to be aligned to what the business is trying to achieve - it

has the power to supercharge growth, quicker, faster and more

impactful than ever before.”Tanya Titman

Managing Director, Consolid8

Analysis of the top five marketing initiatives for Growth Companies reveals a blend of old and new approaches to attract customers . The prevalence of new digital marketing initiatives to connect with prospective customers demonstrates the ongoing evolution and transformation of the marketing function .

Search engine optimisation, social media and new web experiences are all essential elements

of a digital initiative . The emergence of content marketing, specifically the use of thought leadership to educate and build credibility, is proving a significant activity to capture the eye of prospective customers .

When combined with direct marketing techniques, these elements are enabling Growth Companies to expand their reach and connect with prospects where and when they want .

While digital methods grab attention, traditional human-to-human connections remain essential to new customer growth . Growth Companies aggressively pursue methods to connect with customers digitally and in-person . Relationship-based marketing methods such as referrals, word of mouth and networking also continue to prove fruitful for Growth Companies, leveraging personal credibility and professional connections to engage new customers .

Marketing 10

Today’s B2C marketing climate has forever changed the way consumers buy goods and services . The more online businesses observe tastes and behaviours, the more accurately they present customers with goods and services that meet needs and desires .

In the B2B world, ecommerce has yet to hit the same stride . But by 2020, consumers will begin to feel the impact, with B2B online sales predicted to top $1 .1 trillion, accelerating to more than 12 per cent of total business buying online .

Marketing becomes part of operationsBusinesses that apply technology to their operations for competitive advantage will drive this movement . They will be fuelled by cloud-based systems that dramatically streamline and automate how they market, sell and deliver their products and services .

The scope of marketing expandsWhere the era of sales automation made customer relationship management more efficient, this more comprehensive era of marketing automation will be able to precisely target, nurture and close sales as a result of accelerating deployment of machine learning and artificial intelligence .

Strategic shift from sales to marketingFor mid-sized companies that have relied on sales teams to drive growth, this will be a jarring shift . For businesses that have already discovered the power of modern marketing, this will simply be the next step . Marketing-focused companies will lead and be ready to deploy the technology that will accelerate their growth .

Expert perspective: The era of automation and intelligence

Pete Hayes Principal, Chief Outsiders

Capturing new customersSales 11

Source: June 2018 TEC Australia CEO Customer Engagement Survey, n=149

Top 5 sales strategies that work for Growth Companies

50%

40%

30%

20%

10%

0%Face-to-face/ networking

Referral Prospecting/ cold calling

Talent and training

Marketing segmentation/

account management

42%

22%15% 15% 11%

The sheer range and volume of sales initiatives used speaks to the worldwide importance of connecting with customers .

The fundamentals of speed and attention to customer needs are universal requirements for all organisations . Beyond these fundamentals, initiatives to increase the amount of time that sales

functions spend with prospects is the top area of focus for Growth Companies, reflecting the continued importance of human interactions .

Having clear sales management strategies that leverage the right talent, combined with strong training, ranks high among survey respondents . This also ties closely to the importance of

aligning sales teams with key market segmentations, to ensure accurate and effective management .

Growth Companies are more likely to have specialised roles in inside sales, field sales, vertical market specialists, technical sales or new distribution channels all of which offer unique skills, knowledge or expertise to enhance customer growth .

Customer service 12

Retaining and growing customers

Source: June 2018 TEC Australia CEO Customer Engagement Survey, n=149

“Everything starts and finishes with leadership. From brand and marketing to sales, leaders need

to be the ones setting the tone for success in customer service.

Ultimately it comes down to knowing the target audience; while

some want a ‘bells and whistles’ experience, some simply want an easy transaction. Knowing

that is the key to success.”Gary Bertwistle

Keynote speaker and author

Top 5 customer service strategies that work for Growth Companies

50%

40%

30%

20%

10%

0%Referrals/ references

Consistent process

Quality and speed of response

Communications/ education

Customer satisfaction

45%

31%

20% 18% 16%

Customer service is at the front line in terms of understanding satisfaction, and often leads to securing referrals and recommendations from happy customers . While this can happen in many forms, such as a review, case study or reference, the concept is the same; leverage satisfied customers to find new opportunities from their network .

The data shows that customer communication is a winning initiative for retaining and growing existing customers . Connecting through regular emails,

newsletters or direct engagement keeps Growth Companies close to their customers, providing a platform to share information that could lead to additional business .

A formal process for delivery and engagement ensures there is a consistent approach to all customers, which may include a proactive approach to engaging and supporting customers .

At the same time, regular communications allow organisations to collect satisfaction or

loyalty data, which provides valuable metrics for mapping a customer’s journey, ensuring retention and providing target customers for referrals .

A commitment to quality and responsiveness builds trust and credibility which is an essential requirement to retain customers . This is shown through the processes and strategies put in place to resolve customer issues quickly; resulting in increased satisfaction, retention and loyalty .

Expert perspective: From customer service to customer experience

Customer service 13

Smart CEOs carefully consider how their companies design and choreograph their customers’ experience… the entire customer journey and every touchpoint along the way . What does the customer expect? What does he feel? What does she need from us? How can we make sure that every point of contact “feels like us?”

Design and delivery of a great customer experience is a CEO responsibility . It requires coordination across every function, not just customer service . From marketing and operations to IT and finance, a great customer experience demands that what happens at every touchpoint reflects and enhances the value proposition; every effort must be on-brand and on-strategy .

Studies of both B2C and B2B customers show that their satisfaction is influenced more by experience than by product or price .

Gone are the days (or they should be gone) when customer service was the responsibility of a single department, managed as a low-cost operation . That’s because service is only one part of a customer’s experience — one that usually comes into play when something is going wrong . A great customer experience involves every link in the value chain to woo customers, wow them and win their loyalty .

Thomas A. Stewart Co-author, “Woo, Wow, and Win: Service Design, Strategy, and the Art of Customer Delight”

Technology 14

From digital transition to digital transformation

Technology effectively drives productivity and performance for all facets of customer engagement, marketing, sales and service . For SMEs, it’s a question of what and when, not if, they should implement technology .

There is surprisingly little difference between Growth Companies and other organisations when it comes to the effectiveness of their customer service technology; suggesting goals and objectives are identified and suppliers are thoroughly researched before any investments are made .

“Technology in sales today is relatively standard, but Salesforce

is a critical tool that enables us to track and manage our sales

opportunities. Exploring new sales initiatives, particularly those looking at technology to make it easy for our people to manage the sales pipeline,

will be essential to our growth.”James Kemp

CEO and Managing Director, Amicus

Effectiveness of customer service technology

100%

80%

60%

40%

20%

0%

Not effective

Extremely effective

Moderately effective

Growth Other

70%

28%

2% 3%

69%

28%

Digital transformation powering productivityTechnology 15

Eventually, any business that seeks growth will look to their technology as a competitive advantage, not an administrative expense .

Organisations will move beyond digital transition and completely reimagine the application of their business processes, based on the capabilities of the technology .

This study asked SME business leaders what technology applications they used, and the results show that while there is a wide and varying pool of suppliers and solutions used; there are a few clear leaders .

The solutions represent a range of functionality; from niche/free applets to full-service, integrated customer relationship management (CRM) suites .

Key decisions 16

Customer growth decisions for SME CEOs

1. Growth Companies execute strategies more effectively with leadership and technology in place

CEO growth decision: How is my leadership team leveraging customer management technologies to support critical strategies?

Growth Companies are more likely to have dedicated leaders for all functions, and specifically higher in sales and customer service . In addition to focused leaders driving strategies, Growth Companies deploy technology at a higher level and with increased effectiveness compared to other organisations . The connection is that dedicated leadership can align strategies to the use of technology to make it more effective and therefore a key differentiator in driving customer growth .

2. Growth Companies focus on customer service that results in increased referrals CEO growth decision: How do we increase sales and revenue from new customers?

Growth Companies employ multiple strategies; they are focused on customer retention at all levels from leadership and strategy to technology, while simultaneously leveraging this strong and scalable position to reach new customers . Focused customer service strategies underpin Growth Companies high retention and satisfaction levels, and proactive engagement leads to referrals that expand their customer base .

3. Growth SMEs invest more in talent to support face-to-face interactions CEO growth decision: How much should we invest in people and training?

With face-to-face interactions reported as the most effective strategy for winning new customers, Growth Companies fuel progression by investing in people . The people, process and technology mantra remain true to drive growth . Hiring high potential talent enables SMEs to engage with more customers, training and development improves the quality of customer interactions, and technology optimises engagement .

Contributors 17

Contributors

Stephanie Christopher CEO, The Executive Connection

Joe Galvin Chief Research Officer, Vistage Worldwide

Anne Petrik Director of Research, Vistage Worldwide

Tanya Titman Managing Director, Consolid8

Pete Hayes Principal, Chief Outsiders

Gary Bertwistle Keynote speaker and author

Adrian Towsey Area Vice President, Small & Medium Business Salesforce, Asia Pacific

Thomas A. Stewart Executive Director, National Center for the Middle Market

James Kemp CEO and Managing Director, Amicus

Geoff Stalley Principal, justG Business Consulting

About The Executive ConnectionThe Executive Connection is the world’s leading CEO network, connecting over 1,200 Australian and New Zealand senior executives with over 22,000 members in 20 countries .

The Executive Connection supports CEOs, business owners and senior executives as they look to become better leaders . Through peer connection, mentorship and access to world-class business resources, leaders can deliver stronger business results, improve judgment, expand perspectives and optimise decision making .

Visit www.tec.com.au, LinkedIn

About Salesforce Salesforce is the global leader in customer relationship management (CRM) . Founded in 1999, Salesforce enables companies of every size and industry to take advantage of powerful technologies—cloud, mobile, social, internet of things, and artificial intelligence—to connect to their customers in a whole new way .

For information, please visit www.salesforce.com/au

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