Customer success means helping your customer realize their goals, and hopefully being an integral part of a series of triumphs. A company which focuses on customer success factors will strive to empower their customers every step of the way. Both parties enjoy a mutually beneficial relationship.
With advent of new technologies, many companies’ sales models have evolved from longer contracts to a subscription basis. A subscription model is attractive to informed, capable customers who want to enjoy a flexible, scaleable product.
This is especially true for SaaS companies, who almost exclusively operate by subscription. They need to keep up their monthly revenue. The way to do that is to keep customers using their service.
In 2016, taking customer success into account is no longer much of a choice. Without that concern, your customer base will be susceptible to churn. Let’s take a look at the challenges facing SaaS companies’ customer success goals today and how to overcome them.
Why having a customer success vision matters
For a subscription-based SaaS company, revenue is generated over the course of the customer’s entire life cycle. A contractually locked-down client might only see involvement on the part of their provider towards the end of their engagement period. But a client who subscribes to a service on a monthly basis is a garden that needs constant, dedicated tending.
Rather than aiming for the customer’s happiness, working towards their success is a sure-fire way to make your product indispensable. Acquiring new customers is expensive, and retaining existing ones is immensely profitable. If you manage to make your product and support an inherent part of their success, you’ll be able to retain your customers with much more ease.
Let’s see how to work towards that goal.
The customer life cycle
The customer’s life cycle has several stages. Understanding the customer’s journey is integral to enabling their success at every stage. The cycle is really a loop, and your business should strive to be present for the customer’s every transition.
For a subscription-based SaaS company, the cycle loops back from “renew” to “nurture” every billing period. That gives the customer repeated chances to opt-out of your service, should they be dissatisfied or consider it irrelevant to their success.
This means that failing to successfully onboard and nurture your customer (we’ll come back to this later), they can easily churn.
Let’s talk about churn
Churn is the bugbear of every SaaS company. In fact, a staggering 70-90% of revenue for a subscribed service is generated post-signature. Conversely, the cost of acquisition of a new customer is much higher than the cost of retaining an existing one.
However, in order to convince existing customers to agree to upsell opportunities, they must be enthusiastic about working with you. To that end, they must have you to thank, in part, for their success.
Keep in mind:
Revenue churn: what percentage of your monthly or annual revenue is lost.
Client churn: what percentage of your accounts opt-out, and what their demographic (premium, freemium, or enterprise, in increasing degrees of severity) is.
Taking into account one but not the other will give you a skewed perspective on which areas you much improve on and what your main challenges are. You would also fail to identify which clients should be a priority, both in terms of churn threat but also upsell potential.
Mitigating churn as much as possible is crucial. As your company grows, if its churn rate remains constant, and if the customers you are losing are the ones who generate the biggest share of your revenue, it will represent heavier and heavier losses.
Customer success factors that work
Customer success is the newest frontier for SaaS companies. Though faced with the unshakeable challenge of churn reduction, the industry is seeing ever-increasing interest and funding.
These customer success factors are necessary to succeed in your own right.
Be proactive, not reactive
Customer success is quite different from customer support. In a nutshell, guiding a customer on the path to success is a proactive endeavor.
“Customer success is not about support. It’s not about being reactive — it’s about being proactive.” – Guy Nirpaz, CEO and founder of Totango
However, making sure the customer experience is a happy one demonstrates that negativity travels faster than approval. The way that this information translates to the field customer success is this: to help your client reach their goals, you need to be one step ahead of them. Because if you wait for your customers to tell you how you can help them succeed, chances are they will have left before you get an inkling.
Being proactive means enabling your customers to find the tools to success. This is crucial right from the beginning of the training period.
Emphasize a solid adoption framework
It is of paramount importance that your clients get the most out of your service right from the get-go. This is especially true if customers benefit from a trial period before signing. If the value of your product doesn’t seem tantamount to their success, customers won’t sign, or won’t renew. To prevent this, you must help your customers completely adopt your product.
During the on-boarding process, make sure that your training is immediately applicable to the customer’s specific needs and goals. Introduce them to relevant features, follow up on the technical implementation, and measure the usefulness they find in your product. With every client, you’ll gain more insight and be able to extrapolate it to the next challenge. The amount of time between signing up and reaching the first successful milestone on the customer’s end must be as short as possible. Successfully training your customers during their on-boarding can reduce the chance of them running into obstacles further down the road.
Once on-boarding is complete, and the customer has fully signed on to your service, you will need to nurture them to fully adopt the product. Since they will repeatedly have the option to leave, you must give them reasons not to do so. Follow up with them, but make sure to never waste their time. Every interaction must be valuable and represent an additional opportunity for success. Accompany them as they grow by presenting solutions to the challenges faced by your customers as they arise. By introducing a chain of success milestones for your customers, you will ensure they have a vested interest in continuing to patron you.
Customer success is everyone’s job
Customers are willing to change providers at the drop of a hat. Therefore businesses with good retention numbers tend to be customer-focused. This means they make customer success part of their business culture.
The principles of customer success factors must pervade your entire business, not stay contained in one department. Customer success awareness helps manage churn, and is therefore crucial to every part of the customer’s life cycle, and in every department. Given how important it can be to commit to customer success, why not involve your whole team?
Using data analytics to benefit customers
Collecting data is a good start to getting a handle on what will work for your business. Nevertheless, the value of any metric, churn included, lies in what it will spur you on to do. You need to know what to infer from what you’ve gleaned, and at which stage of the process it will become relevant.
Before signing on:
One way to miss the mark completely on customer success is to work with customers who you cannot help meet their goals. Some companies use questionnaires and analytics to make sure prospects are a good fit even before signing on. This is very sensible. If your product cannot help a prospect succeed, then the entire business relationship is doomed to failure. Detecting customers who you can for sure help succeed is a pre-emptive solution for churn reduction.
During the nurturing process:
This is the moment in time when keeping track of analytics will best serve your customers, and your company as a result. Using data to segment your customer base is an excellent way to cater to individual needs. The basis of grouping clients together can be their size, activity, revenue, anything.
The process of segmenting your customer base can help your sales team prioritize. Once you figure out which clients are high potential, you can try to replicate that model with new prospects. Likewise, you can identify the clients with high churn potential and plan accordingly. You can also pinpoint opportunities for cross-selling. Using an early warning system for churn uses KPIs to predict possible churn threats.
Segmentation can also be the first step to tailored content and messaging. Content is a great way to foster customer success. Segmented newsletters with targeted subject lines are more likely to be opened and perused than generic ones. If you notice a certain segment interacts positively with a feature of your product, it would behoove you to get in touch to publicise how that feature can benefit everyone from that segment.
Customer driven growth
By accompanying and spurring customers on at every stage of their life cycle, you will have helped them succeed. Customers who are very satisfied with the businesses they patron can become brand ambassadors. Customer advocates can refer new business, talk up your brand, or serve as success stories.
Their genuine, unincentivized support can wield more cloud than any kind of outbound advertising. If anyone was still on the fence about customer success being a boon for any SaaS company, this is a perfect illustration of how successful customers contribute to your own success.
How customer success impacts churn
A well-oiled customer success model can drastically reduce churn dramatically. We’ve looked at differently customer success factors aiming to keep the business-customer relationship mutually beneficial.
The nirvana of SaaS is negative churn. This is the graced existence of a company whose revenue from expansion in existing accounts is greater than their churn losses. Creating negative churn is no easy feat.
Expanding on your revenue is absolutely necessary, and so is making sure than expansion is sensible. For example, in developing its University, marketing specialists at AdEspresso made sure to tailor the educational material to their users’ specific needs.
You’ll need to upsell your customers to a more featured version of your product. Or cross-sell them additional services. One way to do this is to implement a pricing model which set up an increased charge over time. For instance, every time a client adds a user to the service or requires additional data storage, their monthly bill increases. This means that the longer customers use your service, and the more they grow, the more your revenue goes up.
The way to reduce churn to the point of negative churn is to make your service indispensable to your customers’ success, then build on that by expanding the services you provide them.
The main takeaway of this article is this: if your business commits to a savvy use of these customer success factors, churn will, at least in part, take care of itself.
Published on February 22, 2023.