Hidden Gems | Episode 1: How do past customers impact your revenue?

Key takeaways:

• Prioritizing your "Gems" is going to be a top sales play this year
• Past champions impact win rate, deal size, and sales cycle length
• Warm conversations are more important in an uncertain economy

[00:00:00] Krysten: User Gems is starting a new limited series called Hidden Gems, and we're gonna dig into the numbers behind why your past customers and users and prospects, AKA, your gems, why they have huge potential. And they're gonna positively impact your revenue. So today talking with Christian, who's the CEO and co-founder of UserGems, and we're gonna ask him to help us dig into the value of the past customers , for revenue and that impact.

So, Christian, one minute overview, why this research matters. Why do we care?

[00:00:32] Christian: I think it's pretty simple. So we know how many people change their job each year, and I always talk about the champion lifetime value. So when you track people, see how often they change and they purchase your product again.

But we actually didn't know what it means for the revenue. Like what does this actually mean if I create a lot of people that really love the brand and then they keep buying again, and so we. We couldn't find an answer to this, and that's why we did the research ourself.

We analyzed over 5,000 deals and the big question we wanted to answer was, how much are gems really worth to your revenue and pipeline?

[00:01:06] Krysten: Yeah, that absolutely makes sense. And from talking with our customers and prospects, it is shocking to me. people always want to know that number, but they have no idea what it is. They're not tracking it either. So super valuable. Every seller knows that reaching out to your past customers is the oldest playbook in sales.

And especially now, like given how the tech industry is right now with all the uncertainty. That uncertainty in deals leads to hesitation. And hesitation means deals lost to status quo. So every seller, every organization needs those warmer conversations now more than they ever did, and they always wanted them, but now it's critical.

So I know we ended up surfacing some really interesting data about how past customers are gonna impact pipeline and revenue.

So first thing is, I think we're talking about is. Finding our hidden gems, our past customers and champions, their effect, their positive effect on our win rates.

[00:02:03] Christian:  Correct. And so we found that there is more than twice the win rate if there is a gem. So a past user involved in the deal, and I mean, it totally makes sense right now if you ask buyers what is the hesitation in buying anything new? It's like this whole concept of nobody ever gets fired for buying IBM that we had in the 1980s.

It's now very similar where people, I've read that actually, if they're spending money right now, if they're wasting money on tools that don't perform, that's really bad for how they're perceived at work. And so coming back and it's, it's very safe to buy a tool that you have already used before.

And that's why what we are seeing is actually, it's now much more valuable than it was even a year ago.

[00:02:44] Krysten: Absolutely. And every tech organization has all these fancy ROI tools, right? That will say, oh, we're gonna three x your revenue, or we're gonna give you 14x ROI but people don't trust that when sellers say that, right?

With, because people have over promised. But if it's something they've bought before and they've seen the ROI before, it just takes the risk way down. So it, it makes sense that that would impact win rates. Right.

[00:03:11] Christian: That makes complete sense. I think right now, specifically, everyone's really hesitating in. Uh, buying anything new, like spending money right now, uh, really, really difficult.

And he, because you have the risk. What if this doesn't work out? And even in the past it was already the question. I'm gonna buy a tool. What if nobody uses it? That falls back negatively on me. But if I buy a tool that I'm already familiar with, then that risk goes away.

[00:03:36] Krysten: Okay, so we have impacted pipeline. We have impact to revenue, but I really wanna know what we found about how these gems are impacting sales cycles.

[00:03:46] Christian: Once, once again, really interesting. So it's not only that I'm winning more often, but actually that I'm, if I'm winning, then there's a 54% bigger deal size.

This makes a ton of sense. Like typically when I buy a new product, what I actually wanna do is I wanna crawl, walk around. I wanna try it out first and then use it more and more. But in this case, the person, they've already bought it, they've already done the crawling and the walking, so they can immediately do the running.

[00:04:10] Krysten: Yeah, , they've proven it to themselves. They don't need to hear from 12 reference customers. They don't need to read three white papers. Like they already, they've already experienced, it's already been their lived experience.

[00:04:20] Christian: And right now, the other trend that we're seeing is actually, across the board, uh, smaller ACV. So even more this crawl, walk, run behavior than otherwise. And once again, with a champ, that's not really necessary. So you can actually like counter that trend a little bit by having these past champions

[00:04:39] Krysten: involved in a deal.

Yeah, absolutely. It's so much better than them even talking to a reference customer or someone in their industry. Like they've already seen it, they've already proven the value so there's less hesitation on their part, and they can go back and talk to their internal buying committee, and here's this person that they trust that's in this role.

Saying, I've seen it. So it makes sense that deals are gonna happen more often, they're gonna be bigger. And then also that leads to shorter sales cycles. Especially now that should be music to everyone's ears. So how much can we shorten sales cycles cycle?

[00:05:12] Christian: Yeah. I didn't wanna say like, especially now, but this is once again another, especially now. Yes. Yeah. Um, You get also 12% shorter sales cycle. So it really helps, um, every dimension that's important for a deal. It helps you and it actually makes sense. Like selling to past customers. It's kind of like going on a second date, right?

You, you, you already have like, you can bypass the small talk because you already have the connection there. And so basically what you skip is, is the education phase of the, uh, sales cycle.

[00:05:43] Krysten: Yeah, absolutely. And like we talked about now, now more than ever, super important. So this is so interesting to on earth, kind of the things that intuitively make sense, but we could never really put numbers or percentages around.

So this is exciting and I think if people take a second and do just kind of back of the napkin math and think about what would it mean for our organization if we had 12% shorter sales cycles. If we add, you know, 54% larger deals. Um, I don't think anybody would hate that ever, but probably especially, super welcome now.

So next time we're gonna talk about, not just, impact to revenue and win rates, but something even more that we hear coming up really frequently, which is customers say, Hey, we think our past customers, they love us so much, they just come back on their own.

[00:06:35] Christian: So we know obviously that these people have a huge impact on the deal. Now we actually have the numbers, but then the question is always, maybe they're coming back on their own.

Like if they were so happy, then is there actually something I need to do or even can do?

this was one prospect that brought it up to us and I thought it's a really valid point.

So we actually looked into this, and we looked at companies really high NPSs score, like these are the top companies in, in their industry. And we looked at, did they actually come back?

And that's what we are answering in the next episode. And I don't wanna

[00:07:06] Krysten: spoil it. I don't wanna spoil it either, but I will say it's a really big number that don't come back even, bigger than I thought it was gonna be.

I've, I guess I was being fairly conservative, but people will, wanna hear that.

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