How Our Customer Success Team Achieved Negative Churn For Four Consecutive Months

Part 2 in a series on our customer success process at Proposify

Kyle Racki
Jun 6 · 8 min read

In last week’s post, I covered the basics of customer success (CS), who you want to hire for your CS team and how to compensate them, and some key metrics to keep an eye on as you roll out a strategy.

This week, I’ll explain CS from a more tactical, day-to-day standpoint. I’ll pull back the curtain on Proposify’s onboarding and renewal processes, and highlight some signs to watch for that indicate your customers aren’t doing so well.

First, let’s dive into the specifics of the onboarding process and how getting these early interactions right can set up customers for a long and successful relationship with your company.

Onboarding and activation

Onboarding is one of the most important functions of CS because there is such a strong correlation between a successfully onboarded customer and retention and increased lifetime value. Going back to the farming analogy from part one, it’s nurturing the young sapling when it’s new and fragile and ensuring it grows into a healthy, fruitful tree.

In more concrete terms, proper onboarding means the difference between a customer with a lifetime value of $10K paid over one 12-month cycle or $100K over ten years. On a company level, that means lower churn, higher retention, and increased lifetime value. And that’s before factoring in expansion revenue.

As your CSM rolls out the software and helps them get set up, it gives the customer ample opportunity to tackle any initial obstacles and get immediate value out of your product.

Measuring that initial value doesn’t have to be a shot in the dark based on purely anecdotal claims of satisfaction. You need to put activation metrics in place to ensure your customers are achieving their goals right away.

At Proposify, we know our customers are getting value if they’re sending and winning proposals. We monitor that activation metric very closely. If a customer’s signed on and they haven’t sent a proposal, or they’ve sent some but haven’t won any, we know it’s time to step in and see if we can help them.

Do you charge separately for onboarding?

Here’s the issue: The bulk of the cost of customer success happens when a new customer signs up. Onboarding is expensive.

But, once an account is active and using the software, the time required to keep the account is minimal. Save for some proactive outreach when problems arise, it doesn’t take much time to keep a customer happy.

To offset the front-loaded cost of onboarding, some SaaS companies charge customers a one-time set-up fee. There are a few problems with this:

  • Some customers may wonder why you’re charging them for set-up and not understand what the cost includes, which can make selling it difficult.
  • When sales reps are trying to close a deal, the one-time set-up fee often gets sacrificed for a time constraint. (“If you sign today, we’ll waive the set-up fee”) This can be a useful carrot to dangle, but using the set-up fee as a pawn for sales defeats the purpose of having it in the first place.
  • You don’t want a lot of your revenue made up of one-time fees anyways. This is SaaS! Recurring revenue is how your company is valued.

On the other hand, charging for onboarding can be positively perceived by customers. This insight came from a recent chat with Brad Coffey, HubSpot’s chief strategy officer, a company who does charge a one-time set-up fee. He found, generally:

  • The customer appreciated the peace-of-mind that came from knowing they’d paid for training to ensure the smooth rollout of a complex product.
  • That training session acted as a buffer against all the time and money spent investigating HubSpot as a solution just in case bringing it on didn’t work out.
  • They felt better about buying the onboarding service because it meant someone was there with them helping every step of the way.

Deciding whether to charge for onboarding depends entirely on the nature of your product. If it’s extremely technical and requires a lot of service work to roll out, then charging extra for onboarding training might be something to explore.

For enterprise SaaS, each install of the software is completely customized and highly labour intensive. So in this instance, fees associated with onboarding (which may include training and implementation) are almost always a necessary part of the deal.

If your product is less complex, it may only require a call or two and maybe a training session to get new customers up and running.

Our approach at Proposify

After some trial and error, we’ve found the following to be the best way for us:

  • In general, we don’t charge more than 10% of the ACV as a one-time set-up fee. We want 90% or more of what a customer pays us to be recurring subscription revenue.
  • We mostly don’t charge for onboarding itself (kick-off calls, training) but we do charge for professional services.

Here’s what that looks like on the ground at Proposify: The majority of accounts that sales closes will have a document (or several) created in Word or InDesign that the customer wants recreated as a proposal within Proposify. We have a designer on our CS team, Luke, who does this.

Setting up the customer’s first proposal for them provides a smoother transition to using Proposify, allowing them to get up-and-running shortly after they sign on. It’s a time-consuming task, and easy for customers to appreciate the value, so we charge a fixed one-time fee for the service depending on the complexity of the project.

If the opportunity is big enough, we’ll also sometimes sell paid trial periods. These aren’t “trials” in the sense that the customer is just kicking the tires to see if they like it, but rather it’s a fixed implementation period. They’ll sign a contract and pay a one-time fee while we set them up, implement their template, and train the first cohort before they bring on the rest of their users. At the end of that fixed period, they’ll automatically roll into the annual plan. Using this approach has allowed us to close our biggest deals yet (200+ seats).

What special software do you use?

Customer success requires software above and beyond just the help desk your support team uses. If the goal of CS is proactive outreach, how does a customer success manager (CSM) know which of their hundreds of accounts should be reached out to?

That’s why there’s a whole category of software to help customer success teams monitor their account, track metrics, and implement playbooks.

We went down the road with a couple of products before settling on Gainsight. It’s expensive, but it’s built off of Salesforce (which our sales team uses) and hooks into all of our data sources, allowing our CS team to know the health score of each of their customers and who they should prioritize.

The Gainsight interface

As a side note, I learned another valuable lesson; If you’re looking for a tech platform and hiring a department head, get the person in place first and let them buy what they want. Don’t jump the gun, especially when you don’t really know what you’re doing.

I was running the CS team in December of 2018 and having trouble recruiting a VP. We badly needed CS software so I went ahead and purchased something after a brief evaluation process. When I finally did find and hire an amazing VP Customer Success, Conor Cox, he tried to work with what I had purchased, but it ultimately didn’t do what he needed so we had to cancel the account and buy Gainsight. This was a costly mistake that set us back months and it was my fault.

Red flag metrics post onboarding

Sometimes, even the healthiest crops aren’t resilient to all storms. CS needs to look out for any signs a customer may not be doing so well, even after a successful onboarding.

Just like there are factors that indicate success, there are certain metrics that indicate a lack of it. This is where Gainsight’s health scoring is extremely beneficial. We can see any red flags indicating when those success metrics (sending and winning proposals) aren’t there. It makes it incredibly easy to identify which accounts are at risk of churning and need some TLC.

It’s critical to identify these red flag metrics in your app as it’s one of the easiest ways to see which customers are likely to churn so you can send someone in to stop it before it happens.

Why CS should handle renewals and account expansion

Sometimes CSMs get intimidated by the idea of upselling, but they needn’t be.

Upselling is a different beast than the kind of ‘pure’ sales that the sales department is pursuing. CSMs don’t need to be killer closers the way your account executives (AEs) do. Instead, they should be always on the lookout for opportunities to expand an account when the opening presents itself.

A CSM notices when their customers add a new sales office or close a big funding round; they keep a finger on the pulse on the goings-on (which, frankly, is easier than ever these days with platforms like LinkedIn Sales Navigator and CrunchBase). When these things happen, a good CSM has a plan to roll out your product into that new department.

Another way to upsell is to let customers know about a new feature that can help solve their biggest problems. It may require them to move to a new plan that has a higher per-seat price than what they’re on.

Often, the most opportune upselling moments arise at renewal time.

Renewals are part and parcel of the SasS business model, but a lot of companies handle the renewal process differently. HubSpot, for instance, has renewal managers whose job it is to reach out to customers two or three months before their renewal is up to make sure they’re on board for another year.

One of the downsides to this approach is the sheer number of hands touching that account. A renewal manager is one more person alongside the CSM, a support rep, someone on training, the AE who closed them … it can get crowded.

We have the CSMs now handle expansions at Proposify. Some may object to this strategy for the reason that a CSM who upsells their customer seemingly runs contrary to the trusted-advisor position they should occupy. They can’t be seen as someone constantly trying to extract revenue.

The reason we have it set up this way is because we don’t approach upselling as a method of swindling money out of a company. I think of it like suggesting a good bottle of wine to pair with a meal. It’s about adding more value to the customer’s experience and it’s often a natural sale. Especially if your product played a role in that customer’s growth.

Final thoughts on succeeding at customer success

If you’re putting together a customer success team, I hope you found these tactics and strategies useful.

Knowing who to hire, when to bring them on, which CS software is right for your business and your product, and deciding whether to charge for onboarding are tough decisions not to be made hastily.

But when you get them right, an effective CS strategy can make resounding impacts on your recurring revenue. Putting some effort into ensuring your customers are successful as they use your product means a greater likelihood of retention, reduced churn, and increased lifetime value as that relationship develops.

What does your CS strategy look like? Be sure to let me know in the comments!


Enjoyed this article? I’d appreciate you giving it some claps. Also if you’re an entrepreneur, check out my book, Free Trials (& Tribulations): How To Build A Business While Getting Punched In The Mouth available on Amazon

Kyle Racki

Written by

CEO of Proposify, Author, Speaker, Investor

Welcome to a place where words matter. On Medium, smart voices and original ideas take center stage - with no ads in sight. Watch
Follow all the topics you care about, and we’ll deliver the best stories for you to your homepage and inbox. Explore
Get unlimited access to the best stories on Medium — and support writers while you’re at it. Just $5/month. Upgrade