Monday, February 15, 2016

Customer success for dummies - What every SaaS startup founder should know

Like most good advice, customer success sounds really simple, but gets complicated once you want to implement it in your own business. So instead of waxing poetical on its many virtues (and there are many), let’s take the For Dummies approach and drill down into what really counts:

How customer success will help you take over the world!

Kidding! Kind of. Not really.

The definition of customer success is:

“A proactive, holistic, and organization-level approach that leverages technology and real-enough-time visibility into customer health (not just usage data, but any contextual inputs) to ensure your customers – including those who directly use (users, administrators, etc.) and those who benefit from the use of your product – continually and increasingly receive value from your product over the course of their lifetime as a customer.” - Lincoln Murphy, Sixteen Ventures

How customer success works, with real, actionable tips

Customer success begins even before the acquisition stage of the Buy Cycle, because in order to deliver those desired outcomes, you have to find out what they are first. Nobody minds answering a few questions if in answering them, they’ll be closer to getting something they want, so try implementing customer surveys to ascertain problem/solution fit, and later, product/market fit.
  • First: Identify your ideal customer
  • Second: Identify the solution they most want to solve, and let them tell you what their desired outcome is (using qualitative data gathering methods like interviews and surveys).
Steps one and two ideally happen pre-launch, but if you’re late to the game, there’s no time like the present. If you’re entering into a new market segment, bringing a new product to market, or have a product/service/sales funnel that isn’t behaving the way you’d like, it’s time to go back to basics and find out who your customers are and what they want to do.
  • Third: Prove your value, fast
Let’s pretend that customer acquisition is a game of “Who can prove their worth the fastest?” And the players are you and your competitors. As you’re drawing prospects down the sales funnel, it should be through a series of content, offers, freebie how-tos and webinars, funny pictures on Facebook – value-driven stuff that positions you as an authority in whatever they want to achieve.

Proving value doesn’t stop when they finally hit the “Buy” button either. The first two weeks of a new customer’s experience are critical – this is when they decide whether you’re worth their time and money (yes, the seeds of churn are sewn here!). You can prove your worth and WOW them with it if you build it into your onboarding process. For example, a new user signs up, triggering this series of events:
  • New user receives welcome email from a customer success agent who asks them what they would most like to achieve with your product. 
  • New user is impressed that somebody cares (they care! They really care!) and replies: “I’d like to sell more balloon poodles at the next county fair.” 
  • Customer success agent replies “I love balloon poodles! So cool! Would 50 more balloon poodles be a good starting point for the next 3 months?”
See what happened there? The customer success agent keys in on the new customer’s desired outcome, then creates a specific, measurable, attainable goal that they can keep track of. Maybe there’s even a page built into the website that helps the customer track their own progress towards their goal.

Now, we’re not done yet with awesome-onboarding. Depending on the tool/product/service, you might need to use a simple how-to program like Whatfix to guide newbies through the first several actions, or you might use your customer’s feedback on their desired outcome to produce an ebook or a series of blog posts on how to use your product to achieve it. Essentially, you prove your worth by making your customer’s success a priority – and making sure they know it!

For existing customers, it’s also important to continue proving your value by constantly adding value in ways that engage and delight. Try hosting member-only exclusive webinars with industry experts, or publishing a private newsletter available only to current customers with even better deals on new products or expansions, or unique high-value content. Have fun with it, and they will too.

Gee, this sounds like a lot of trouble doesn’t it? Is it worth it?

How customer success pays for itself, and makes you gobs of money

  • Cost to acquire a new customer (CAC) is a metric that encompasses product cost, research & development, and marketing – everything it takes to attract and convert a new customer. According to Kissmetrics, it can cost as much as 7 times more to acquire a new customer than to retain a current client, and current customers become more cost-efficient with each subscription cycle. That high cost doesn’t have to be a given – your Customer Success efforts should target lowering CAC as a primary goal, because with happy, successful customers come referrals. And referrals are free.
  • Reducing churn is where Customer Success shines, because instead of being reactive, like customer service or customer support, success teams can identify at-risk customers before those customers call in with a problem. If you’ve followed the advice in the previous section, your customer success agent already knows whether the customer is (or is not) achieving their desired outcomes, and if they aren’t – and are displaying churn-related behaviors like having long gaps between logins – you’ve got some strong clues of trouble.

    Here’s the thing: by the time an unhappy client contacts you, it’s already too late. But if your Customer Success team has been helping them along and answering questions every step of the way, customers won’t have any reason to leave unless your product really can’t do what they want. In that case, you’re either attracting the wrong clients, or failing to manage expectations appropriately.

    As Lincoln Murphy says, “Customer success is about more than delivering service or support. It’s about having real-time visibility into the issues customers are facing and finding smarter ways to manage those issues.”

    Customer Success can save your lost contracts and increase up-sells, cross-sells, upgrades and referrals in one fell swoop.
  • Increasing lifetime value is key to boosting profitability because your old customers are the ones who bring in the most revenue for the least amount of money. But, increasing lifetime value isn’t just about keeping old clients around – it’s about turning your oldest and best clients into loud, enthusiastic brand advocates who will sing your praises, agree to upsells, help with cross-sells, and deliver referrals. When people get the results they want, along with a great experience, they can’t stop talking about it.
  • Negative churn happens when revenue from existing customers expands and offsets revenue lost from churn (think of it as lifetime value on steroids). Negative churn comes from three types of sales: 
    1. The cross-sell: Customers purchase add-ons for the central product or service.
    2. Resource expansion: Customers use more of the product, like buying more space in DropBox.
    3. Seat expansion: More customers within the same company buy the product.
When your customer success team helps clients achieve their goals and find genuine value in your product and engagement with your company, revenue isn’t the only result. You’ll grow like crazy.

Should you adopt customer success?

If churn is an issue, retention is a problem, and lifetime value is that of a mayfly (did you know mayflies only live 24-hours? Fun fact), you should adopt customer success. And, if you rock at acquisition and retention, you should still adopt customer success (though you probably have already). Customer success is what every great company does, with or without the name, because at the end of the day, we only succeed when our customers succeed right along with us.

SignupLab - #1 sales CRM and customer success software for B2B SaaS companies

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