Making SaaS sticky: Why customer success is the industry’s new linchpin
Behind every great tech innovation is the need for effective tech implementation. But anyone who has ever been an early adopter of enterprise technology knows that no matter how remarkable the software is, integrating it into a business and its processes is rarely (read: never) an easy feat. Not only must customers understand how to use the new technology, they have to know how to maximise its use for their business.
In the software as a service (SaaS) industry, this gets more challenging still. Time is a luxury most providers don’t have.
When your business model relies exclusively on monthly or annual subscriptions—as most SaaS firms today do—the opportunity window for a customer to achieve maximum use is incredibly short. If the software isn’t achieving ROI after a few months at most, it’s easily dumped for something else. After all, the technology is rooted in the cloud, so there are no installation investments or long-term contracts to fall back on, as is typically the case with on-premise software or hardware.
Losing a customer because your cloud-based software did not meet expectations is very expensive. According to the Harvard Business Review, it is five to 25 times more expensive to acquire a new client than it is to keep an existing one. Moreover, research from Fred Reichheld of consulting firm Bain & Company shows that increasing customer retention rates by 5 percent increases profits by 25% to 95%. And Gartner has found that 80% of a company’s future revenue will come from just 20% of its existing customers.
Delivering on the promise of customer success and optimising technology for clients is the new linchpin of the SaaS industry—especially for B2B SaaS firms, where single customers equate to large-scale accounts, and it’s driving a new trend within the industry.
Bridging support to success
Customer success is not simply another form of customer support. They’re two entirely different facets of business strategy and should be treated as such.
Customer support is rooted in reactivity. If something breaks, the customer support team is there to fix it. If someone can’t get to the right portal, the customer support team is there for guidance. The calls are incoming.
Customer success, by contrast, is proactive. Rather than waiting for calls to come in, the customer success team seeks out customers to discover how they are using the technology to meet their business objectives. A customer success manager gets to know company projects, coordinates personalised training and planning and becomes the company’s internal advocate for successful adoption. Their goals? Customer satisfaction, the best solution to problem fit, and long-term client retention.
SaaS companies need both functions to excel. Still, customer support and customer success don’t typically operate under the same umbrella by design. Support teams have to be ready to put out fires, solve individual project issues and navigate specific technical questions, while customer success teams must be relentless in adding value to customers and helping them to understand and optimise software.
If success and support are merged into a single silo, you’re more likely to compromise important elements of both, or one will simply dominate the other. When they remain separate departments that work alongside each other—keeping a well-oiled dialogue of pain-points and resolutions—you open the door to long-term customer retention that results in coveted revenue predictability.
Building the customer success experience
Because of its bottom-line significance, customer success is just as important to business as sales, marketing, operations or finance. For this reason, we’re beginning to see cloud-based software companies start to build distinct functions for customer success management—and put real resources behind it. Those that haven’t yet are sure to move in this direction to stay relevant.
As SaaS companies build and enhance their customer success strategy, here are a few key tips to consider:
- Weave customer success into company philosophy. Though a customer success department will have dedicated staff to drive customer success initiatives day-to-day, customer success is as much a company philosophy as it is a function. When customers realise that customer success is foundational to every part of your business (that is, you have metrics behind it, and it’s discussed daily by marketers, developers, assistants and leadership), they will come to appreciate that they’re not just investing in software, they have a tech partner.
- Rekindle legacy relationships. Don’t wait for new customers to come in the door before making customer success a priority. Re-energise your relationships with existing clients by performing a success triage—get an in-depth look at how they’re using your technology and why—and then work with them to outline a roadmap for optimization.
- Bring clients to you. Small-group training sessions are among the most effective ways to initiate customer success. There is no better way to ensure customers have the technical skills needed to properly use your software than to have an in-house expert sit down with a customer and work through it together. When groups are small, typically no more than 10 customers in one session, you’re able to have essential face-to-face interaction. The group is also small enough to take out to dinner or to a local sporting event. That social element can go a long way in building trust, and again, reaffirming your company is a business partner, not just a vendor.
- Leverage customer success technology. As more SaaS firms lean in to customer success, we’ll see more resources designed specifically to support it. And there are already some great technologies out there to help build a strong customer success program, such as Gainsight and Totango.
As SaaS companies continue to flood the market and compete for business, it won’t be the technology that defines success. It will be how well companies think like their customers think and guide their customers through the optimal customer journey. Those that ignore customer success do so at their own peril.
After all, without its linchpin, the wheels of an organisation are sure to fall off.