Customer Success: The Key to Long-Term Growth in B2B SaaS

In B2B SaaS, Customer Success is crucial for sustainable growth and profitability. A robust Customer Success team can elevate customers’ experiences, ensuring they extract maximum value from your product, achieve their objectives, and remain loyal subscribers.

Customer Success has emerged as the guiding star steering companies toward enduring prosperity. From the inception of a company’s journey to its full-scale expansion, a well-crafted Customer Success strategy serves as the secret ingredient.

What is Customer Success?

Customer Success revolves around aiding customers in attaining their objectives using your product or service. In simpler terms, it’s about ensuring that customers reap the full value of what they’ve invested in. It entails a proactive approach to customer management, extending beyond reactive problem-solving.

The term “Success” encapsulates the effective extraction of value from your product. While it might sound straightforward, it necessitates establishing multiple processes and key performance indicators (KPIs) in practice.

Typically, Customer Success reports to the revenue owners (CRO, COO, VP of Sales, or even directly to the CEO)

Customer Success: Cost or Profit Center?

On average, the Customer Success team’s cost should range from 5% to 15% of the total revenue, contingent on the product’s maturity. Nonetheless, it can evolve into a profit center in numerous instances, driving expansions, upsells, and enhancing net retention metrics. This depends on the Average Contract Value (ACV) and the customer segment. With larger customers, Account Managers might oversee the expansion, while for smaller customers (ACV < $12k), Customer Success could be the driving force.

In any scenario, Customer Success is key to business success.

What is Customer Support?

Diverging from Customer Success, Customer Support is predominantly reactive. Customers are directed to Customer Support when they confront technical issues, aiming to swiftly resolve them before ushering them back on their journey. In B2B SaaS, customer support pertains to technical hiccups in the product that involve technical or development teams. Customer Success hinges on customer support to ensure the product functions optimally, delivering the value customers anticipate.

Typically, Customer Support reports to the tech leadership (CTO, VP of Engineering, VP of Product, etc.)

Customer Success and Customer Support are important aspects of providing a good customer experience. However, they have different focuses.

Initiating Customer Success: Where and When?

As the term suggests, a customer must exist to embark on the journey of Customer Success. While there are cases where Customer Success steps in during the latter stages of the sales process to understand a prospect’s purchase intent, it often commences after the deal is sealed and a new customer is onboard.

Over time, it has become evident that many companies grapple with a handover gap from the sales process to Customer Success. This gap leaves the Customer Success team oblivious to the motivations and expectations that led the customer to invest in the product. Consequently, customer onboarding and training might inadvertently lack the tailored focus essential for each customer, often resorting to general product feature education. This misalignment fosters frustration both within the customer base and the Customer Success team, subsequently affecting metrics like product adoption and value creation.

Imagine you purchased Microsoft Word, a product under development for over 40 years with thousands of features. Would you like to be trained on every feature it supports? Probably not. If you purchased the product for specific values, you better understand how to get and use that value. This will lead to better product adoption, renewal, and potential expansion.

In structured and well-organized teams, Sales is responsible for enlightening Customer Success about why a new customer opted for the product and the value they anticipate. Sales should also facilitate an introduction between the Customer Success team and the user and buyer personas of the customer. This information ought to be documented within the CRM rather than confined to emails. The journey of Customer Success commences when this crucial information is at hand and understood. Otherwise, pitfalls are likely.

Primary Objectives of Customer Success

By understanding the value each customer anticipates from the product, Customer Success can initiate the onboarding process, guiding customers toward achieving their goals. Depending on product types and industry verticals, various activities come into play — technical training, best practices, benchmarks, case studies, and more.

The main objectives of Customer Success are:

• Product value adoption: The first goal is to get the customer to adopt the product’s value they purchased. This should be measured and monitored using in-product analytics tracking usage and value creation. It is important to note that a product may have multiple values for different customers. The product marketing teams must identify those values and create the measures to track adoption.
• Enhance customer retention: The goal of any Customer Success program should be to reduce churn and keep customers subscribed for as long as possible. This can be done by either ensuring the customer is getting the product’s value he/she is interested in or by offering an additional value the customer might be interested in.
• Increase customer satisfaction: Happy customers are more likely to renew their subscriptions, refer new customers, and provide positive reviews.
• Stimulate customer advocacy: Customer advocacy is when customers promote your product or service to others. This can be done through word-of-mouth, social media, or online reviews.
• Generate additional revenue: Customer Success can also help you generate revenue by upselling and cross-selling to existing customers.

Key Performance Indicators (KPIs)

There are several key performance indicators (KPIs) that can be used to measure the success of a Customer Success program. Common KPIs comprise:

• Product adoption and value creation: This indicator refers to the engagement with the product across the value creation journey. In technical terms, it is a cluster of features that the customer engages with to create value.
• Customer retention rate: This represents the percentage of customers renewing subscriptions after the initial term. A high-value creation propensity typically leads to elevated retention rates.
• Customer satisfaction score measures how satisfied customers are with your product or service. It is a combination of metrics from value creation and technical support.
• Customer advocacy and net promoted scores: These metrics estimate the likelihood of customers recommending your product or service to others. Influencing this metric is complex, as certain customers might be bound by internal policies restricting endorsements.

How to Implement Customer Success at Different Stages of a B2B SaaS Company

The specific goals and KPIs of a Customer Success Program will vary depending on the stage of the B2B SaaS company. However, some general principles can be applied at all stages.

Founding Stage

At the founding stage, Customer Success’s focus should be building relationships with early customers and getting them to adopt your product. This can be done by providing personalized support, offering training and onboarding, and gathering feedback. At this stage, you probably have design partners that may require even more attention, so expect founders to be involved in the process or have the first hire to own this important domain.

Early Stage

The early stage demands a focus on augmenting value adoption, product usage, and overall satisfaction. Customer Success is a conduit to relay customer feedback to the product team, especially considering potential product-market fit adjustments. At this juncture, insights from customers are invaluable for future business triumph.

Growth Stage

In the growth stage, the focus of Customer Success should be on ensuring that customers are getting the most out of your product. Your leading indicators should be around each customer’s product adoption and value creation metrics. In the growth stage, you should set the foundations to identify happy vs. unhappy customers by leveraging data. You would like to start prioritizing the Customer Success time based on the business value and risk associated with each customer. As more customers are added, the Customer Success capacity is stretching, which can impact the quality of service to valuable customers. Automation initiatives are key.

Scale-Up Stage

In the scale-up stage, the focus of Customer Success should be on maintaining customer satisfaction and reducing churn. In some scenarios, expansion is also part of Customer Success responsibility. However, to succeed at this stage, you must have systems and processes in place. Data takes the spotlight as the company expands. Customer Success evolves into a data-driven entity, leveraging analytics to forecast behavior, identify churn threats, and deliver personalized interventions. Metrics and data, rather than personal relationships, steer decision-making and actions. Visibility into customer health becomes pivotal, dictating work priorities and success indicators. Automation becomes key.

Harmonizing Account Managers and Customer Success

Account Managers and Customer Success emerge as the power duo driving expansion. Account Managers provide insights into customer expectations, an invaluable asset for Customer Success in accelerating value realization. Effective collaboration between the two stands paramount.

Conclusion

Customer Success is an essential ingredient for success in the B2B SaaS world. By implementing a well-designed Customer Success program, you can increase customer retention, satisfaction, and advocacy, ultimately driving revenue growth.

Retaining and expanding existing customers from acquiring new ones is cheaper due to churn.

Written by: Yuval Ben-Itzhak