How Customer Success Can Transform Your SaaS Business
Acquiring new customers is good. But keeping the customers you have is better. With the rise of the SaaS model, retention has dethroned acquisition as the primary means to achieve long-term growth and high valuation. Incremental improvements lead to big gains. In fact, according to one source, increasing your customer retention by just 5% can increase your revenue by up to 95%.
However, it also requires a new approach. A customer’s decision to stay with you doesn’t come from a single interaction; instead, it reflects their entire experience across your organization. To tap retention as a growth channel, you need a customer success strategy that elevates your customer success teams and puts customers at the heart of everything you do.
The upsides of the customer success approach are unparalleled. I’ve seen how it can help SaaS leaders unlock increased customer value attainment, higher net revenue retention (NRR), and accelerated product-led growth.
Customer Success Increases Customer Value
Increasing the value customers get from your product starts with understanding their goals. Your customer success teams must work with their customers to gain a deep understanding of their business objectives. From there, they will be able to group customers based on their needs and develop a customer journey designed to meet those needs. Then, they need to monitor customers as they progress; if a customer gets stuck or falls behind, the team can intervene to mitigate any churn risks.
Conversely, if a customer’s mastery of a solution indicates a potential for upselling, your teams can present expansion offers that are grounded in the customer’s realized value. Using consultative touchpoints, the customer success team monitors and increases customers’ adoption and engagement throughout the customer lifecycle. Traditionally, these touchpoints coincide with milestones such as onboarding and renewal. But effective teams also create touchpoints based on behavior and product usage (e.g., time spent, completed activities, total events, etc.). By knowing exactly where a customer is in their journey and what they need at any time, your team can deliver guidance that maximizes customer value, reduces churn, and expands your commercial relationship.
Data And Technology Matter
The customer success strategies that deliver the most value to customers are built on data. Better customer data leads to a better customer experience that you can partially automate as your business scales. Forward-thinking SaaS companies are:
Segmenting their customer base to deliver prescriptive and apt guidance.
• Designing customer-centric onboarding and in-app product walkthroughs to speed up time to value.
• Triggering customer outreach to increase engagement based on product usage data.
• Creating health scores to monitor early signs of discontent, expansion, or advocacy and then automating action plans based on those scores.
With a digital and data-driven customer experience, you can meet the customer where they are. And thanks to intelligent automation triggered by insights, you can handle more with less.
Customer Success Improves Net Revenue Retention (NRR)
SaaS companies operate on subscription terms. Therefore, it pays —both in the form of higher NRR growth and business valuation—to have a team focused on keeping and expanding accounts. While it took time for this insight to gain mainstream traction, it was and continues to be the driving force behind high-performing SaaS companies.
This responsibility previously fell exclusively to account management or sales teams. Then, companies realized that an individual who only comes around to ask a customer to buy more creates a one-sided, transactional dynamic and a less fruitful relationship. When you give partial or full ownership to your customer success team — the ones who ultimately drive value attainment — you turn money conversations into a more authentic experience.
To further increase NRR, customer success teams can operationalize aspects of their revenue streams. Automating renewal tasks and communications creates a high-touch experience while also freeing up customer success managers (CSMs) to focus on high-risk accounts and other strategic initiatives. CSMs can use health scores to forecast churn or growth likelihood, which improves their outreach prioritization. Creating playbooks across all books of business keeps communications uniform, making it easier to spot engagement trends. Similar to the previous point of delivering value through data, automation helps you deliver consistent and intuitive service that turns customers into your biggest supporters and source of growth.
Customer Success Delivers Product-Led Growth Efficiently
Product-led growth strategies commonly offer a free product or trial as the primary means to attract, retain and expand customers. The upside is that they get more people using your product and into your universe of prospective buyers. The downside is that anyone can sign up, regardless of their product fit or purchase intent — although I tend to believe that good product positioning helps users self-select.
While you can try to remove human-led sales and onboarding, product-led growth still creates a need for human-led refinement and enablement. Customer success can fulfill this role by identifying high-value prospects from the large pool of trial users, nurturing them to a paid subscription, and encouraging their adoption and expansion.
Since product-led growth uses a tech-touch approach, it relies more heavily on customer segmentation, journeys, and behavioral data to guide the user experience. For high-value customers, however, you’ll still want human touchpoints at critical lifecycle junctures. Customer success teams can engage high-value customers to determine their pain points and goals beyond what a signup form captures. By mapping and monitoring customer journeys, they can ensure consistent product adoption. This is especially important for models which operate on monthly subscriptions, as they’re prone to impulsive cancelations. You can also analyze product usage data to determine a high-value customer’s expansion readiness and the most ideal time to connect.
Embed Customer Success Everywhere
SaaS businesses need to retain and expand customers to grow. To do that, customer value attainment must become your company’s priority. In that view, customer success is everyone’s responsibility, but this cannot be in the abstract; it needs to be accessible and visible. From the CEO down, start putting customer success at the heart of your business, and I think you will be pleased by the return on your investment.
You Mon Tsang, CEO and Founder of ChurnZero
Original post here.