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Why Customer Success is a Crucial Function of Your SaaS Startup

Why Customer Success is a Crucial Function of Your SaaS Startup

Sep 27, 2022
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10 min read
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Jawad Khan
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Table of contents

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, customer retention has become a challenging thing. 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 as much as 90% of your SaaS revenue, and your future growth, 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 achieve growth (and perhaps one day sell your online 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.

While focusing on customer success is vital to a company’s growth, yet only 23% of B2B companies have a customer-centric approach. Let’s dig deeper to understand why customer success is important in SaaS companies and how you can implement customer success in your organization.

Table of Contents

How is customer success different from customer support?

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

Now that you know the difference between customer support and customer success, let’s understand why it’s so crucial for SaaS businesses to focus on their customer success function.

Why do SaaS businesses need customer success?

75% of UiPath’s revenue comes from existing customers. Zoom’s existing customers buy 30% more every year. What does this data tell us? 

The health and profitability of a SaaS business directly depend on how strong your customer relationships are. 

Earlier it was fairly easy for software companies, or non-tech companies to sell products. There wasn’t much to do after the sales team did their job. But today, especially for SaaS companies, making a sale is hardly the last step. In fact, a study shows that only 5-30% of revenue comes from the initial sale for most SaaS companies.

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Real customer journey starts after making the initial sale

The real customer journey starts after you make the sale. Most SaaS businesses employ a subscription-based business model. This requires that you continually ensure your customers are satisfied and are having a positive experience with you. 

That’s where customer success comes in. But the benefits of focusing on customer success are not just limited to identifying cross-selling or upselling opportunities to increase revenue.

A good customer success strategy will help your customers derive the best value from your product, thus driving your product adoption rates high. This will in turn promote positive word-of-mouth and customer advocacy that will fill your funnel with high-quality leads making customer acquisition easier.

Now, let’s dig deeper into how SaaS businesses can employ customer success strategies to improve customer loyalty and drive growth.

Recommended Reading

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How to implement customer success at an operational level

Implementing customer success as a business philosophy obviously requires 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 your on-ground customer success team.

Below I’ve tried to break up and explain how SaaS customer success should look like at every stage of your customer lifecycle:

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 the 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 that, if not done properly, can come back to haunt you in the form of dissatisfied customers with unrealistic expectations and high customer churn.

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 customers explore as many features of your product as possible that can give them immediate value.

You can use different triggers, notifications, and emails to guide new users and make the onboarding process memorable. A great example of this is how Duolingo onboards customers by offering an animated step-by-step walk-through of their tool.

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Duolingo customer onboarding process | Medium

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 customers are willing to speak their minds and share their 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 training.

A great example of this is Canva, a design tool that lets users create attractive images for social media and blogs as well as videos with its online video editor.

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Canva’s 23-second guide showing its core functions | Medium

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.

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GetResponse has a free landing page builder among other features | 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 (CSMs) 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 customer data, existing 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. Levelling up by putting customer success tools to use

Customer success involves staying ahead of your customers’ needs. It involves improving user experience, tracking and analyzing customer feedback, their behavior patterns, and metrics such as net promoter score (NPS), and customer satisfaction score (CSAT).

If you want to succeed in doing all of this efficiently, you must automate your workflows by using good customer success software such as onboarding tools, customer service tools, and CRMs.

Bonus Read: If you’re an enterprise, here’s a list of enterprise software and tools to check out. And if you’re a startup, you can check out this post on startup tools for 2022.

User Onboarding tools such as Userguiding, help you create a frictionless start for your customers. They can be further categorized into email onboarding, video onboarding, or in-product user guiding.

Optimizing your customer support processes is also a crucial part of customer success. Tools like Hiver can help you track and analyze customer service metrics and automate workflows to help you deliver superior customer experiences.

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Automate your customer service with Hiver

And lastly, your tech stack will be incomplete without customer relationship management tools like HubSpot. CRMs help you engage with your customers seamlessly and build meaningful relationships with them.

Recommended reading

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8. 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.

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A few causes of customer churn that can be avoided

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 product 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 in your organization.

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.

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