Principles of Customer Success
Over the past year, my company has spent a lot of time refining our Customer Success and Support models. We are a B2B SaaS company serving the service industry (retail, hospitality, restaurant, and the like).
Customer Success is an emerging discipline and department within SaaS companies whose role it is to help customers take full advantage of the products and services they provide. Customer Success Managers, as they are often called, are responsible for coaching and training customers on industry best practices and how to utilize the product or service to maximize business outcomes.
As an example, suppose the SaaS company provides a product that helps HR departments find and hire talent for their companies. As a best practice, we know that the most successful employers tailor online job descriptions for search engine optimization as well as toward the specific types of individuals they are trying to attract. It’s a simple concept but in practice may not be top of mind for recruiters who subscribe to the SaaS. They may not be skilled in this area and need coaching and examples of well-written job descriptions to mimic as they are getting started.
The Customer Success Manager serves as the coach who can lead the user through that journey and teach the best practices they need to thrive. For this reason, often Customer Success Managers come from the industry the SaaS company serves.
From this point forward, the Customer Success Manager helps analyze the data to see what is working, what’s not and what can be done better or differently to achieve a greater result.
This is the crux of Customer Success, combining best practice strategies with the tools — i.e. the products we sell — that enable them.
So, with all of this in mind, here are a few principles of Customer Success…
Principle #1: Customers who adopt are more likely to renew
According to Scout Analytics, customers who churn have about half the adoption rate as those who renew their contracts. It’s completely intuitive that if users are not utilizing your service, they are not deriving the value it provides. The benefit of the subscription economy is that we only pay for what we need when we need it. If we don’t use it, that probably means we don’t need it, and therefore we’ll stop paying for it the first opportunity we get.
Principle #2: Customer Success is not Customer Support
Customer Support solves problems for SaaS customers. Customer Success handles adoption. If a Customer Success Manager is handling broke/fix issues, they won’t have time to provide the consultation and coaching described above. Customer Success is proactive while Customer Support is reactive to problems that arise during use of the product.
I guarantee you can never resolve enough of your customers’ issues to retain them on the merits of Support alone. But if you can teach customers how to execute better and continually increase their performance, it is possible to create customers for life.
Principle #3: Customers who buy more are more loyal
Customers who subscribe to two or more products or modules are many times more likely to remain customers come renewal time. Len Markidan from Groove, a provider of SaaS-based support software, sums it up best:
Upselling isn’t just a sales tactic; it’s a customer happiness tactic that can help you build deeper relationships with customers by delivering more value.
Not to mention the financial benefits. Upsell and cross-sell add significantly to both revenue and profit margin by increasing customer lifetime value, further magnifying the benefits of financial retention on the income statement.
To sum it up: Adoption breeds customer engagement and achievement of the value proposition a customer buys into when they subscribe to software services. Customer Success is the discipline of driving that adoption to mutual benefit of the customer and the SaaS company itself.
