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Why Customer Success is a Crucial Metric for Your SaaS Startup

5 min read
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  • Relevance of customer success in the SaaS industry
  • How is customer success different from customer support
  • Why and how you should implement customer success at an operational level

If you think that customer success is just another buzzword thrown around by SaaS entrepreneurs and service industry professionals, think again.

With the evolution of SaaS businesses, getting “customers for life” has become significantly harder. The flexibility of the SaaS model, and the ability to pay monthly or periodically for products and services, allows customers to regularly evaluate the actual value they’re getting from a solution.

Jason Lemkin, managing director at Storm Ventures, believes that as much as 90% of your SaaS revenue, and your future growth, now depends on customer success.

Some of the biggest SaaS companies like Salesforce and Box, have succeeded not just by creating great products and offering unmatchable service standards, but also by closely aligning their success with the success of their customers.

And this is the core concept behind customer success.

The best way to grow your business is by helping your customers grow. If your product is actually helping them succeed in their business, and you’re continually creating win-win scenarios, you’ll hardly ever need to worry about churn rates and retention.

But since the concept of customer success is relatively new, you can easily confuse it with customer service and support.

How is Customer Success Different from Customer Support?

Unlike support, customer success is not just a separate department in your company (it can be, though). The concept goes even beyond the popular belief that effective service and support ensures your customers are successful.

That should always be the case.

But customer success is an even bigger concept. The way I see it, and most experts seem to agree, customer success is a change in your approach from reactive support to proactive hustle.

It is a forward looking approach that works only when it becomes a part of your core business philosophy, and reflects in everything that your organization does – from hiring the right people to resolving customer issues.

It always puts the customers first and focuses on making real contributions to their business, and helping them succeed.

You can think of it as a performance based model where an organization aligns its efforts and resources with the business goals of its customers.

Customer Success at an Operational Level

Implementing customer success as a business philosophy obviously requires a strong buy-in from the CEO and the top management of your company.

But the operational implementation of this concept still needs to be managed by the on-ground resources.

Below I’ve tried to break up and explain how customer success should change your approach towards some of the key stages of customer life cycle.

1. Acquiring the Right Customers

Customer success starts even before you acquire customers. To deliver optimum value with your product, and help customers succeed, you need to make sure that they’re actually the right customers for your product.

The best way to go about this, is to develop personas of your ideal buyers. Buyer personas are sample profiles of your ideal customers that take into account their expectations from your product, their business goals, their current standing in terms of finances and resources, and what they plan to achieve in the long run.

This is a crucial step which, if not done properly, can come back to haunt you in the form of dissatisfied customers, unrealistic expectations and frequent customization requests.

2. Creating a Seamless Onboarding Experience

Onboarding is the phase where your product makes the first impression on your customers. If they’re making a switch to your service from another platform, this step involves technical assistance and support as well.

However, for customer success, you should make sure that the customer explores as many features of your product as possible that can give him immediate value.

You can use different triggers, notifications, and emails to guide new users and make their onboarding experience memorable.

A great example of this is how Groove sends prompts to its users when they first sign up for a free account.

Customer success - onboarding

Groove found that free users that took action as a result of these prompts within the first 24 hours were 80% more likely to upgrade as paid users.

As a company focused on customer success, you need to proactively reach out in this phase and help users understand how exactly your product can give them business value.

3. Making Your Mark With Early Engagement

Every customer defines success differently. But the earlier you understand what success means to your customer, the better.

That is why during the early engagements with your customers you need to understand why they’re actually using your product.

This is important because you and your customers might define success completely differently.

For example, you might believe that a customer logging into your product dashboard twice or thrice a day and using it for a few hours daily shows that he’s getting value.

But in reality, this can be completely wrong. The customer might be spending additional time on the product because they’re finding it hard to use it properly.

You need to make your early customer engagements fruitful since that’s the time when the customer is willing to speak his mind and share his feedback.

4. Providing Proactive Customer Education

Customer support works on a reactive model where complaints are registered and resolved. Customer success, however, focuses on proactively creating awareness about your product through education programs, tutorials, guides and interactive trainings.

A great example of this is Canva, a design tool that lets users create attractive images for social media and blogs.

Customer Success - Proactive Customer Education - Canva

Instead of telling users how to effectively use their tool, Canva shows them some of its core functions in a 23 second video tutorial.

Another great example is how GetResponse, a leading email marketing solution, not just helps users send effective emails, but also trains them on building email lists, creating great landing pages, creating effective subject lines, writing irresistible content and using calls to action for higher conversions.

Customer Success - Proactive Customer Education - GetResponse

The objective is to help users get the maximum business value from their tool. This simple, but extremely effective, approach sets customers up for success from the day they sign up.

5. Developing Customer Success Advocates in Your Company

Organizations with a culture of customer success have dedicated customer success managers who’re responsible for protecting the interests of the customers and ensuring that they’re getting value from the product.

They are customer advocates who’re closely connected with individual clients and understand what they need in order to be successful.

At the same time, they ensure that the customer remains viable for your company as well. Because if you’re not successful, you won’t be able to help your customer succeed.

By hiring customer success managers, you develop an internal accountability system that always keeps you on your toes, and focused on your customer’s business goals.

6. Forecasting Customer Troubles Early

As opposed to traditional support, a company focused on customer success forecasts the potential difficulties and troubles that a particular customer is likely to face while using their product.

You can do this by using past data, existing customer trends and by developing triggers based on customer patterns. You could monitor their activity on your platform, and identify proactively if they need help.

Mitigating risks even before they arise can lead to a much more pleasant customer experience that makes a lasting impact.

However, there will always be times when a customer faces a unique challenge. In such cases, your standard helpdesk and support functions should prove sufficient.

7. Understanding Reasons for Churn and Learning

No matter how closely you’re aligned with your customer’s goals, there will always be churn for one reason or the other.

However, you need to make sure that you learn from this ongoing activity and make adjustments to your model when it makes sense.

A key part of this exercise is to understand why a customer is leaving you. You need to get in touch with them after the initial “cooling off” period and ask for quick feedback.

As a result, you may even learn that the customer was never the right fit for your product and should never have been acquired in the first place. Or you could realize a gap in your service model and make the required adjustments.

The important thing is that you’re willing to learn and evolve.

Wrapping Up

Customer success, as a concept, is still raw and there’s not a single definition that everyone agrees on. That is why it can easily be confused with support excellence as well.

In reality, though, it’s a change of mindset from providing mere support to proactively focusing on eradicating customer issues even before they arise, and ensuring that your tool plays a key role in helping customers meet their business goals.

Once your focus shifts from extracting the maximum revenues from your customers, to providing the maximum value to their business, and helping them succeed, you’re on track to developing a customer success culture and in your organization. The next step is to build a customer friendly support process.

This is a really interesting topic so I’d love to hear thoughts on it in the comments.

Author
Jawad Khan
Jawad Khan is an experienced project manager, a content marketing consultant and a freelance blogger for hire. He's an active consultant to several tech startups and SaaS companies in the US, Middle East and Australia. Follow him on his blog Writing My Destiny, Twitter and Google+