Professional Services and Customer Success in SaaS startups

Brooke Goodbary
Jun 28 · 5 min read

The past 15 years have seen a massive shift in the tech industry where million dollar, multi-year, on-premise deals have given way to try-before-you-buy SaaS contracts, delivered through the cloud. As part of this shift tech companies have had to rethink their existing Professional Services offering, and startups entering the space for the first time have to decide if they want to offer Professional Services at all.

Professional Services can certainly add value to the pre and post sales customer experience through implementation and onboarding, instituting change management, and product customization. 71% of SaaS companies in a a recent survey say they offer Professional Services. This survey also indicates that Professional Services can lead to more Enterprise deals and lower churn. However, Professional Services resources need to be used wisely and differentiated from Customer Success.

How to use Professional Services

Increase sales, especially with larger customers

Companies targeting Enterprise customers see 16% of their first year’s ARR from Professional Services — 2018 Private SAAS Company Survey by David Skok

Lower churn

If a customer spends a greater percentage of their first year ARR in Professional Services, the company can expect to see lower gross dollar churn — 2018 Private SAAS Company Survey by David Skok

How to not use Professional Services

Accepting any SOW

“Packaged services reduce complexity, contains scope creep, helps the customer better understand the nature of the project, and makes the customer feel more confident about the real costs of acquiring the app and their probability of success.” Bryan Stolle

When Professional Services can be easily replaced by product functionality

Life continues to get easier for IT buyers in this day and age and we are in a beautiful time where product led SaaS organizations continue to focus on how to build best in class experiences that require little time to get up and running.” — Michael Brown

Professional Services and Customer Success

Revenue from Professional Services is linear

“Accenture, one of the world’s largest consulting companies, trades at 1.6x revenues. Contrast this multiple to a basket of the fastest growing SaaS companies which trade at 12x. The difference in valuation afforded to companies which grow revenues by leveraging technology rather than growing headcount can be 10x!” — Tomasz Tunguz

Revenue from Customer Success is exponential

Companies with a dedicated Customer Success team see a decrease in aggregate gross churn between 15% and 27% and at least a 10% boost in net dollar retention. — Patrick Cambell

How Professional Services and Customer Success should work together

Brooke Goodbary

Written by

Customer Success consultant, writer, and expert