You Mon Tsang is the CEO and founder of ChurnZero†
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Acquiring new customers is good. But the customers you’ve kept is better. With the rise of the SaaS model, retention has dethroned acquisition as the primary means of achieving long-term growth and high valuation. Incremental improvements lead to big profits. According to one source, increasing your customer retention by just 5% can actually increase your sales by: up to 95%†
However, it also calls for a new approach. A customer’s decision to stay with you does not come from a single interaction; instead, it reflects their entire experience in your organization. To tap retention as a growth channel, you need a customer success strategy that takes your customer success teams to the next level and puts customers at the center of everything you do.
The benefits of the customer success approach are unparalleled. I’ve seen how it can help SaaS leaders unlock greater customer value, higher net revenue retention (NRR), and accelerate product-driven growth.
Customer success increases customer value
Increasing the value customers get from your product starts with understanding their goals. Your customer success teams need to work with their customers to gain a deep understanding of their business goals. From there, they can group customers based on their needs and develop a customer journey designed to meet those needs. Then they have to track customers as they progress; if a customer gets stuck or lagging, the team can intervene to mitigate any churn risks.
Conversely, if mastery of a customer’s solution points to upselling potential, your teams can present extensibility offers based on customer’s realized value. Using consultative touchpoints, the customer success team monitors and increases customer adoption and engagement throughout the customer lifecycle. Traditionally, these touchpoints coincide with milestones such as onboarding and renewal. But effective teams also create touchpoints based on behavior and product usage (e.g. time spent, activities completed, total events, etc.). By knowing exactly where a customer is in their journey and what they need at any given moment, your team can provide guidance that maximizes customer value, reduces churn and expands your commercial relationship.
Data and technology matter
The customer success strategies that deliver the most value to customers are data-driven. Better customer data leads to a better customer experience that you can partially automate as your business scales. Progressive SaaS companies are:
• Segmenting their customer base to provide prescriptive and appropriate guidance.
• Design customer-centric onboarding and in-app product walkthroughs to accelerate time-to-value.
• Activate customer outreach to increase engagement based on product usage data.
• Create health scores to monitor early signs of dissatisfaction, expansion or advocacy and then automate action plans based on those scores.
With a digital and data-driven customer experience you meet the customer where he is. And with intelligent automation powered by insights, you can do more with less.
Customer Success Improves Net Revenue Retention (NRR)
SaaS companies work with subscription terms. That’s why — both in the form of higher NRR growth and business valuation — it pays to have a team focused on account tracking and growing. While it took some time for this insight to become mainstream, it has been and continues to be the driving force behind high-performing SaaS companies.
Previously, this responsibility lay solely with account management or sales teams. Then companies realized that a person who just comes by to ask a customer to buy more creates a one-sided, transactional dynamic and a less fruitful relationship. When you take partial or full ownership of your customer success team—the ones who ultimately drive value creation—you turn money conversations into a more authentic experience.
To further increase NRR, customer success teams can operationalize aspects of their revenue streams. Automating refresh tasks and communications delivers a high-touch experience, while also freeing up customer success managers (CSMs) to focus on high-risk accounts and other strategic initiatives. CSMs can use health scores to predict the course or likelihood of growth, which improves their range prioritization. Creating playbooks for all company books keeps communication unified, making it easier to spot engagement trends. As with the previous point of delivering value through data, automation helps you deliver consistent and intuitive service that makes customers your biggest supporters and source of growth.
Customer success efficiently drives product-driven growth
Product-driven growth strategies usually offer a free product or trial as the primary means of attracting, retaining, and expanding customers. The benefit is that more people use your product and enter your universe of potential buyers. The downside is that anyone can sign up regardless of product fit or purchase intent – although I tend to believe that good product positioning helps users self-select.
While you can try to remove people-led sales and onboarding, product-led growth still creates a need for people-led sophistication and activation. Customer success can fulfill this role by identifying valuable prospects from the large pool of trial users, converting them to a paid subscription, and encouraging their adoption and expansion.
Because product-driven growth uses a tech-touch approach, it relies more on customer segmentation, travel, and behavioral data to drive the user experience. However, for high-value customers, you still want human touchpoints at critical lifecycle intersections. Customer success teams can engage valuable customers in determining their pain points and goals beyond what a signup form captures. By mapping and monitoring customer journeys, they can ensure consistent product adoption. This is especially important for models that work with monthly subscriptions, as they are prone to impulsive cancellations. You can also analyze product usage data to determine a valuable customer’s expansion readiness and the most ideal time to connect.
Integrate customer success everywhere
SaaS companies need to retain and expand customers to grow. To do that, achieving customer value must become your company’s priority. From that point of view, customer success is everyone’s responsibility, but that should not be done in the abstract; it must be accessible and visible. From the CEO, start putting customer success at the heart of your business, and I think you’ll be pleased with the return on your investment.
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