Customer success and retention are the most critical parts of building a B2B SaaS business. All the economics are based on customers staying with you and consuming more over time. This means that one of the most important metrics you need to monitor on a regular basis is your churn rate. I put together a list of five main keys you can use to reduce your churn rate and set your customer success team for.. well.. success :) First, let’s discuss a misconception that some SaaS founders have when talking about customer success.
Customer success is a commercial function. It's all about driving the value of your total customer base up by ensuring they stay with you, enjoy using the product, and get value out of using it. In that sense, it's a revenue driver where customer support or customer service is typically a cost center.
Customer success is also something you do proactively. You do health checks with your accounts. You see where they are maybe not using certain parts of the product, and you find ways to help them get more value out of the product. This makes customer success much more success-oriented vs. customer support which is very much efficiency-oriented. The customer service team might be goaled on getting as few tickets as possible or as few calls as possible. On the other hand, customer success may want to have as many calls as possible. The more interaction you have with customers the better (until of course that becomes detrimental to your cost to serve those customers).
The thought of customer success as a revenue driver has also recently caused many SaaS businesses to evolve the role of a chief revenue officer to one that owns marketing, sales, and customer success. Customer service, on the other hand, is more aligned with the engineering team, especially when it's in the first level before it goes up to engineering.
Now let’s dive into the five main keys to customer success in B2B SaaS.
One of the biggest mistakes SaaS startups make is taking on anyone who comes through the door. Customer success starts with setting the right expectations. If you're selling to the wrong customer, who's not going to be aligned with what your service will offer, that will immediately have an impact on customer success rates. Ultimately, you want to optimize the amount of lifetime customer value that you get.
One other reason why this is really important is that the cost of service can be really high if you're not servicing the right customers. They require a lot of extra help because they're just not a great fit. That could be starting with your own onboarding not being low touch, but very complex.
If you're not proactively helping your customers be successful, there will be over time the tendency to move towards a point where they will churn. There are a couple of indicators for this that you can keep an eye on:
It makes sense that your customer success team is going to have a huge effect on your clients, and will build tight personal relationships with them. It is however crucial to make sure that not all business runs through only a few people. What happens when that person leaves? What happens if they stay but are too busy to keep track of every client you have?
You need to architect customer success in a way that could be high touch, but not dependent on an individual. That way if your customer success manager gets an offer somewhere else and leaves or if they get a promotion and move to different departments or different types of work, your clients are not affected. An example of this is what HubSpot does. If you’re a HubSpot partner agency, you have a point of contact to help manage your account. That point of contact changes every year to make sure that the relationship is never dependent on one person and that you don’t skip a beat once they change.
Client health is the biggest indicator of whether a client is going to churn or not. You need to be laser-focused on everything you can monitor. A few examples of things you need to monitor are:
product adoption, customer support usage, and NPS survey scores. You also need to look at if they are paying their bills on time for example. All good indicators for customer health. You can also get a lot of really good data from your marketing team: are your customers opening your newsletters, and are they interacting with your new feature update announcements?
The most important thing here is for your customer success team to have access to all of this data and monitor it on a daily basis. You need to have customer success dashboards that you review on at least a weekly basis to address any concerns and get to the bottom of problems before your service inbox is full of tickets.
You’re selling a SaaS product. That needs to be the way you create value, through your actual product. Marketing will take you only so far; personal relationships as well. If you have a mediocre product, you can have the strongest customer success team and try to use that to reduce churn, but nothing beats making your product better though. Coming from a marketer, it’s so much easier for us to market good products. We see way higher ROI on our campaigns when we’re selling a good product.
Those personal relationships also become really costly. In order to scale, you need to optimize your cost-to-service. If the answer is always to grow the success team, you won’t be able to scale properly. In order to optimize your cost-to-service, you need to inspect what you expect. Monitor your NPS scores or your customer satisfaction scores. Monitor your customer effort level score, and of course, make sure to monitor your online reviews. I make it a habit of checking Capterra, Software Advice, and other review listing sites on a weekly basis. Sometimes I get to celebrate new positive reviews, but it also helps me address negative reviews right away with both the client and the product team.
Essentially what I’m trying to say here is: don't fall in the trap of building a large customer success organization that sort of makes up for some of the gaps in your product. Invest more in your product team, fix the root causes of dissatisfaction, communicate your product roadmaps with your clients, and let the technology speak for itself.
Do you have built-in product analytics trackers? Maybe you use something like Pendo. However you keep track of your product analytics, just make sure you’re not cutting any corners with that.
You need to know how your users interact with your quick start guide, your drop-off points, etc. You also need to be able to calculate how long it takes someone to start a trial to the point where they're really experiencing the value of the product that they're using. How do you make that timeframe as short as possible? Think of your training and onboarding. Think of how long your implementation process is. Do you have someone from CS available at all times to support new users? How long does it take to get those users up to speed? All things you need to track to reduce your time-to-value.
PS: don’t set the wrong expectations with your clients if you know your implementations take a long time or are very high-touch. Nothing drives people away from a new product more than wrong expectations set during marketing or sales conversations.
The most important way to have a successful B2B SaaS business is to master customer success and reduce your churn. Start with selling to the right customers, make your work independent of personal relationships, relentlessly monitor your customer health indicators, obsess over your time-to-value, and last but not least, make product your only scalable differentiators. Remember, your product is a solution to someone’s pain point. Focus on that someone and on making their lives easier and they’ll become that advocate that continues to renew with you and tell others about you.
A data-driven marketer that questions “what everybody knows” and thinks outside the box. He has a background in customer service, sales, and marketing consulting.
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