Customer success in SaaS

SaaS products success are totally dependent on customers who are happy and loyal to gain maximum product value. Hence, customer success becomes a crucial factor in sustained business growth.

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Introduction

When operating a SaaS company, customer retention is just as important – if not more important – as customer acquisition. It costs up to seven times more to acquire a new customer than to retain an old one.

What’s more, businesses have a responsibility to look after their customers post-sale. Since SaaS companies are built on the subscription model, there is always the possibility that customers could be lured away by your competitors if they don’t realize the value they expected from your product.

Are your customers happy using your products, and are they likely to renew their subscription? These are big questions for a SaaS business, and they are the domain of your customer success team.

While some churn is inevitable, customer success teams are deeply engaged with retaining your customers and maintaining the recurring revenue that your business gets from your existing customers.


What is customer success?

First, let’s look at the definition of customer success. Customer success is the method of proactively engaging your customers to help them get the most out of your products and enabling them to achieve their desired outcome. Customers go from unsatisfied and confused to happy and satisfied power users as a result of your intervention.

To make your customers successful, you have to know what success means to them. All customers are different, and they all work in different industries. It’s important to get a view of all the varying definitions of success and incorporate them into your customer success strategy.

You created your product in the first place to help customers meet a need. Customer success is all about fulfilling those needs and delivering ongoing value to the customer. Without the help of your customer success team, customers may simply churn and seek their solution elsewhere.


What is the relationship between customer success and SaaS?

Any type of company may implement a customer success program but it is most closely associated with the SaaS world.

This is because SaaS companies need to keep customers on an ongoing basis in order to make a profit. Their products are priced on a monthly subscription rather than a one-time fee of thousands of dollars. Customers need to be realizing consistent value month-over-month and be satisfied with their product in order to keep paying the subscription fee. If they don’t, it’s easy enough for them to cancel and seek an alternative solution.

It’s all about Customer Lifetime Value. The longer you keep a customer in your business, the easier it is to offset the initial acquisition cost and make a profit. When you keep your customers happy, that makes it possible to upsell and cross-sell to your customers and generate even more profit.

customer success challange

Customer success just makes sense for SaaS companies. That’s because SaaS businesses are equipped with the data to execute proactive customer success. They know how customers are using their products with usage statistics and when they are running into problems, so they are able to act on this information and prevent customer churn.

Using customer success software software like Churn360 enables you to keep track of the health of your customers and identify who is at risk of churn, so you can do something about it.


The benefits of customer success

  • Minimizes churn – by unlocking the value of your product for existing customers you reduce the likelihood that they will churn and cancel their subscription. Customer success reminds customers why they bought the product in the first place and ensures that they are using it to meet their goals.
  • Increases customer lifetime value – when customers are successful with your product they are more likely to renew their subscription and be open to upsells and cross-sells. Customer success generates more revenue per customer and offsets the acquisition costs of acquiring that customer in the first place.
  • Generates word-of-mouth referrals – happy customers are more likely to recommend your products to others. When they are impressed with your customer success team, they are likely to tell friends and colleagues about how good your service is.

The challenges of customer success

  • Success means different things – when implementing a customer success strategy, it’s not always easy to know what success means for individual customers. Customers are in all sorts of job roles in all kinds of industries. There is no one-size-fits-all approach to customer success. The answer to this challenge is to develop meaningful relationships with customers that help you understand their needs and goals.
  • Lack of insight into the customer – if you don’t have the right tools, you won’t know how customers are using your products and when is the right time to reach out to them. Customer success software like Churn360 shows you how customers are using your app and you can create alerts for your customer success managers to take action. You’re no longer in the dark when it comes to customer behavior.
  • Managing too many customer relationships – when you have a small customer base, it’s easy to build personal relationships with nearly all of them, but as your customer base grows this becomes more of a challenge. You can hire more CSMs but that might not be realistic. You can take advantage of automation features in your customer success software that allow you to send out automated messages at specific times.

The difference between customer success and customer support

Sometimes the terms customer success and customer support are used interchangeably. After all, they are both concerned with dealing with customers and helping them succeed. What’s the point in having two different terms?

The main difference between the two is that customer success is proactive while customer support is reactive. Customer support reps don’t call up customers to find out how they’re doing, or need to have access to the whole context of the customer’s usage of the product. In customer support, the customer contacts the team with a problem, they solve it, and the customer goes on their way.

customer success support

In customer success, CSMs look at the customer as a meaningful whole and focus on building a long-term relationship with them. CSMs actively look for opportunities to help customers without them having to ask, and anticipate their needs. In customer support, something has already gone wrong and needs to be fixed, and the emphasis is on speed and efficiency.


Customer success best practices

1. Define what success means for your customers

As we’ve already mentioned, success means different things to different customers. The best way to find out how your customers define success is simply to ask them. When you onboard your customers, send them a survey to ask them how they will know when they are successful with your product.

After that, regularly ask for feedback so you can check whether your customer success efforts are hitting the mark. The more people you talk to, the easier it will be to identify trends in what success means for your customers and you can refine your process accordingly.

2. Make customer success one of the foundation stones of your business

Customer success is not something to do as an afterthought. It should be integral to your company from the earliest days of its founding as a sign that you wholeheartedly and thoroughly invest in your customers.

Building customer success right from the start helps you develop a customer-focused culture in your company. Everyone on your team should have a stake in seeing the customer be successful and be willing to contribute to make that happen.

3. Don’t forget about onboarding

Onboarding is the first point of contact that customers are likely to have with your customer success team. Onboarding matters because it is the springboard from which customers will be interacting with your product, and sets the tone for all future experiences. If onboarding doesn’t work well, customers are unlikely to start using your product and understand its value.

Most SaaS companies can’t afford to personally onboard every customer that starts using their product. Instead, they go for a low-touch model by making use of automation like product walkthroughs and emails that take customers through the basics of using the product.

4. Make your support team readily available

Make it effortlessly easy for customers to be able to contact your customer success team. While a lot of your communication with customers is likely to be outreach, there will still be times when customers want to get in touch with an issue.

Put in place a variety of mediums that your customers can use to contact you such as a telephone number for their customer success manager or an email address for the team. It goes without saying that you should be prompt and efficient when replying to customers so they know that your company cares about them.


Top customer success metrics

Customer Lifetime Value

Customer Lifetime Value (CLV) is an important metric to track because it measures the total revenue that you can anticipate earning from a single customer over the course of their entire relationship with your company. CLV tells you if a customer is being successful with your product, which occurs when CLV increases over time.

You measure CLV by:

CLV = (average purchase value x average purchase frequency rate) x average customer lifespan.

It goes without saying that you want CLV to be as high as possible. Not only does it tell you whether your customers are successful, but is also an indication of how well you are doing as a business. An example is if your average customer spends $50 a month every month for one year, your CLV would be ($50 x 1 monthly purchase) x 12 months = $600.

customer success metrics

Churn rate

Churn rate tells you how many customers are canceling their subscription every month. Naturally, every business hopes that their churn rate will be as low as possible. If you have a high churn rate, this indicates that customers aren’t being successful with your products and don’t see the value in them.

You measure churn by:

Churn = (lost customers / total customers at the start of the time period) x 100.

Churn is important to measure because it tells you whether you are recouping the money you spent on Customer Acquisition Cost, and if customers are sticking around long enough to make the expenditure worth it. An example is if your company had 100 customers at the beginning of the month and lost 20, the formula is (20 / 100) x 100 = 20% churn rate.

Time to First Value

Time to First Value (TTFV) shows you how successful your onboarding process is by tracking the amount of time that elapses between the completion of the sale and when the customer finishes onboarding. Pinpointing the moment when a customer finishes onboarding will vary from company to company but is typically when the customer stops exploring your product and is starting to see a return on investment.

Naturally, you want your TTFV to be as short as possible to ensure the customer doesn’t get bored and churn. The length of your TTFV is likely to be longer if your company offers a complex product that takes a significant amount of time to learn. As long as TTFV is equal to the amount of value that the customer expects to gain from your product then you are on the right track.


Customer success tools

Churn360

We are proud to include our very own Churn360 as part of this list. Look no further than Churn360 if you want a platform that can meet your needs as a growing company.

Churn360 helps Customer Success Managers to manage and retain their customers by integrating with all of the third-party tools that your customer uses in a single unified dashboard that gives you a 360 degree view. It brings your customer communication together including phone, email, chat and online meetings.

With Churn360, you can segment your customers into groups that share common traits, making it easier to perform bulk actions. Once you’ve created a segment, it can be used in all parts of the product from customer list to plays, and customer journey to health score.

When you invest in Churn360, you don’t need any more products to manage your customers. Churn360 provides everything you need to ensure that your customers are successful and that you retain more customers for the long-haul.

ChurnZero

ChurnZero is another customer success platform that helps companies fight customer churn. ChurnZero pulls together data across the entire customer lifecycle giving your customer success team the insight to spot opportunities and address threats.

It offers a number of useful features that allow you to manage your customer relationships. The Command Center is where every customer success manager can start their day by organizing accounts, calendar, to-dos, and notes. ChurnZero’s ChurnScore gives you an idea of your customer’s health and likelihood of renewal. Its segmentation tool allows you to make your outreach more purposeful by targeting customers based on traits like lifecycle or product usage.

Totango

Totango is another customer success platform that offers a number of features to help you manage and retain your customers. Its Customer Health Score is a key metric that Totango uses to show your customer’s health as good, bad or neutral. You can keep track of customers and use it to find opportunities to administer intervention. The Account View lets your organization easily keep track of customer information at a glance. Interactive charts give you insight into customer states, and empower you to take action based on those insights.

Totango offers SuccessPlays, which are a powerful automation feature that helps you deliver consistent and proactive customer success. SuccessPlays allow you to redefine processes and workflows so that your team always knows exactly what is expected of them and no customer is overlooked.


Getting started with customer success

If all this seems overwhelming, it needn’t be. All you need to get started is a commitment to the customer that spans the whole of your organization. If your team is unswervingly focused on the customer, this will lead to a natural emphasis on customer success.

Every team should appreciate the importance of customer success and its role in ensuring the overall success of the business at large. When customers are successful, this reflects well on every team, from Sales and Marketing who acquired the customers in the first place, to Engineering who built the product, to customer support who help customers with the product every day.

Eventually, you’ll want to invest in a dedicated customer success team and the appropriate tools that enable you to manage customers effectively. But before you do that, it’s important to ingrain customer success into the culture of the company. Successful customers lead to long-term profitability, and are indispensable to a SaaS business.

Wrapping up

Customer success in SaaS is critical in ensuring your company’s growth and that your existing customers decide to renew their subscription. Every month, the customer will be evaluating whether the product is living up to expectations or if they might be better served by another tool. SaaS customers are fickle, but you can earn their loyalty by proactively leading them to success and ensuring the company is living up to its promise.

Your customer success team should identify and anticipate problems with the product before the customer has the chance to realize anything is wrong. Customer success has the power to create instances of customer delight and ensure that your product becomes indispensable to the customer’s routine.

Take the first step today!

See how Churn360 can help retain your customers