Churn is a major problem for businesses in the SaaS industry. Although it existed in earlier businesses too, the scale at which it occurred was within an acceptable limit. But now it has gone way beyond up to an extent of affecting the business sustainability. Hence, SaaS customer success has evolved out of a need to handle this common problem.
The major shift of business model in the software industry was brought upon by the subscription based economy. Earlier, the implementation cost of legacy systems was so much that a customer would never think of switching the vendor. That cost was a major factor for a customer to choose the vendor and stay with them for long-term. It sometimes led to the customer feeling “stuck” when their promises were not met.
But with the subscription model, the switching cost has been considerably reduced. A customer has become more empowered to choose from the list of vendors. And due to lower switching cost, they are more free to shift to any other vendor. This has become a common phenomenon in the SaaS industry.
Hence, Customer success has emerged as a much needed solution to deal with this. But this is just a tip of an iceberg. There are many other benefits of SaaS customer success that we will look upon.
SaaS sales are different from traditional sales
SaaS industry is growing at a much larger pace. It has a huge market size of USD 158 Billions in 2020 and is expected to grow to USD 307 Billions by 2026.
This shows that most of the software vendors are shifting to a SaaS delivery model. So what makes it so fascinating?
It allows business owners to sell their products at a lower upfront fee that considerably reduces the customer initial barrier. This means more customers can subscribe. And once they are converted into a regularly paying customer, more opportunities emerge.
Through customer success initiatives, CSMs can sell more products to the same customer. These can be a higher version of the software, or another related software. And since a growing company regularly releases new software, the existing customers are their first resort to sell.
This keeps on repeating for all their customers. Hence, there is no such thing as post sales in customer success organizations. There’s first sale, then next, then next and so on.
Customer success helps in product enhancement
Any product development team needs a robust feedback mechanism from their users. It helps them refine the product performance and design better functionalities. No matter how deeply a product manager or chief product officer scrutinizes a product, they always need an external eye.
If the feedback comes straight from the customer then nothing beats that. But in reality this is not so straightforward because of two reasons. A) Customer is not usually so deeply invested in giving you constructive feedback. B) They don’t possess enough competency to give the right judgement.
Hence, customer success comes here as a useful medium. A skilled CSM would be wise enough to identify the growing needs of the customer through regular interactions with them. They should be on a look out for how the customer needs would evolve in the future. Then a proper articulation of so far unrealized need must be done for the product team.
These are the valuable inputs which only a CSM can produce. And product management must consider these inputs for charting their roadmap.
Align marketing to right direction
Traditional marketing team represents the ideas associated with the brand. But SaaS organizations are more than just an organization. Their territory expands to include customers too in their business strategy. This means that a SaaS organization becomes a collective whole comprising its internal teams along with its customers.
When you extrapolate the likes and dislikes of your existing customers, you can formulate a better marketing strategy. Few companies have taken it to a much further level and formed a customer advisory board.
Through existing customers, you can design a precise marketing strategy that would attract a right fit customer. Since the goal of a SaaS organization is to increase the customer lifetime value, they must filter the right prospects. Secret of success for most SaaS brands is that they avoid giving false promises to their customers.
Hence, when you collaborate with customer success while marketing, you get valuable inputs for creating the right customer personas. This ensures you are not only designing an effective marketing strategy but also targeting the most-fitting audience.
One of the major goals for SaaS customer success is greater customer satisfaction. Through this, companies can build customer loyalty and customer advocates. When customers are highly satisfied with your brand, they would discuss it with others. This is measured through Net Promoter Score (NPS).
Companies with a high NPS score have a greater authority in their niche. When customers share their positive reviews over social media, or any other online portals, it helps brands build their reputation.
It has two major advantages:
- Customers love to read feedback from existing customers before making a purchase decision. Even if they don’t buy immediately, it leaves a subtle positive impact in their subconscious of the brand.
- Few close ones would trust the customer feedback and would decide to purchase the company’s product. This helps in fetching more business for the brand.
Sustainability of the business
Gone are the days when companies could survive only through one-off sales. Although there is no limit to the new customers you can acquire, the business grows more steadily with long-term customers.
They have two benefits.
- Customers evolve with the vendor and grow deeper into the niche. That helps in streamlining the business with a progressive greater comfort.
- Existing customers bring more business to the customers through:
i) increased lifetime value
ii) Upsells and cross-sells
iii) Brand advocacy
To sustain a business for long-term, you need to join the customer in their success journey. Customer success ensures that customers are deriving continuous value from your product. And when they are always satisfied and are able to maximize their ROI, they would stay with you for long.
If you are a growing SaaS organization, you must not look at customer success as a revenue generator. Even though it is one. Traditional companies have departments like HR, customer support, etc., that do not generate revenue for an organization. Yet they are considered an integral part of a firm. Likewise, customer success is the need of a modern SaaS organization.24
You need a proactive approach towards customers to add value into their business. With customer success, you can not only generate more revenue but provide a great experience to your customers. Grooming your customer to an evolving journey is your prime responsibility. Hence, by investing in customer success, you can fulfil all your above goals towards a successful, sustainable business.
Rohan has over 11 years of experience in client services, marketing and hospitality field. Previously, he was head of digital marketing for a hi-tech mobile application. Rohan is driven by new challenges and the possibility of making an impact on individuals and businesses.
Published September 24, 2020, Updated March 01, 2023