The Discipline of Customer Success for SaaS Companies
“Customer Success”, a popular buzzword in the industry, isn’t glorified Support and it isn’t something to put off until your start-up gets big enough; in fact, it is an important growth driver for SaaS businesses.
Customer Success is the discipline of ensuring your customers continually receive value from your product throughout their life as a customer. Happy customers don’t churn — stop using your services and leave. In fact, successful customers get the most value out of your product. Done well, Customer Success (CS) is a proactive, holistic, and organization-level approach, where in addition to people dedicated to Customer Success, each function, from Sales to R&D, has quantifiable CS targets for each quarter.
It is all about Churn
Managing churn correctly is the key to making Customer Success a growth driver. Successful customers, in addition to sticking with you, will not only buy more but also refer new customers to you — new customers which have shorter sales cycles and a faster conversion rate. When you get to the point where upselling and cross-selling revenue exceeds the revenue lost from churn, that’s when you’ve hit the magic inflection point, and achieved negative churn. And if you can convert just one in 10 of your customers into an evangelist, referring one other customer a year, you can make significant gains in monthly recurring revenue (MRR) and drop your customer acquisition cost (CAC) at the same time.
There are a number of tactics to manage churn, but the most important is to instrument key features — ideally the most sticky — in your product, and to log customer usage. You want something that will give you both a view of how recently and how often they are using it, and you can create a customer engagement score using weighted values for different events in the product deployment process. This is a deliberate investment which you may need to weigh against other R&D priorities, but it is one that is well worth making for the insight it will give you.
Once you know which customers have low engagement, you can have your CS team reach out to them proactively with help and advice about how to get going. While an automated email from your CRM system works well for small customers, you may want to use a high touch approach for your largest or most important clients.
And those customers who are churning? Don’t give up on them right away; call or visit them instead. Ideally someone with the authority to impact the product roadmap based on feedback should call. While you may not succeed in changing their mind every time, you will always get input that shows how your product is not solving customer problems or is hard to implement — feedback that will be invaluable to improving the product in the next software iteration.