Create meaningful Customer Success with SaaS metrics
By: Birgit Thümecke
It didn’t take long for the tech industry to realise that SaaS (software as a service) is synonymous with customer success. That’s because a subscription service is, by its nature, judged for its usefulness by the week, month, or year that a customer makes their payment. As one author puts it, if a customer buys a t-shirt there’s no need for customer success: they bought it, will wear it, and they like it, that’s it. But SaaS runs a much greater risk, in that customers will give up on subscription services they don’t understand, know how to implement, or without apparent usefulness.
But even once we acknowledge the importance of customer success to SaaS, the questions of how to judge metrics on or how to successfully implement these protocols are much murkier issues. So how do businesses implement these programs, and know that they are doing so successfully?
Let’s start with understanding what customer success means in terms of SaaS. The term customer success (not to be confused with customer service) was coined by SalesForce, which moved away from a sales-driven approach and towards a long term consumer-oriented one. The company differentiates customer service as the front-line employees who solve customer problems quickly and efficiently, while customer success is a movement or long-term goal taken on by upper-level management. So customer success might include converting trial users to paid users, using customer feedback in strategic planning, and making sure customers are happy and finding value added.
Most experts agree that onboarding is one of the most critical tenets of good customer success protocols. Most customers who do leave exit within the first few days of using a service, so it’s imperative to inform customers about all the different ways they can use the service and its direct potential benefit on their lives.
Another vital part of developing customer success is integrating data that provides feedback on features customers struggle with the most or on features they may not be using in their full capacity. By collecting personalised information on least-used features, companies can provide customised user reports or emails, that circumvent the one-fits-all approach in favor of targeted, and much more effective, customer success strategies.
Preventing Churn, or the percent of customers that exit your software each payment period, is central to most customer success protocols. One of the best ways to reduce churn is to engage customers with constant support, be it via PDF instruction manuals or customer service centers, that allow them to get the most out of the software. By providing customers with information as quickly as possible, you give them little time to decide that the software is something unnecessary.
Good customer success protocol is all about increasing customer lifetime value (CLV), essentially a prediction of the net profit that will result from the entire relationship with a customer. There are several metrics that can be used to check in on its effectiveness in this regard. Arash Asli, founder and CEO of Yocale.com, recommends using customer onboarding costs, customer effort score (inefficiencies causing a customer to leave), customer retention cost (i.e. technical support), and customer health score (login frequency, use of service). He also notes the importance of churn rates, which though sometimes deceptive are often good indicators of how good your company’s customer success is, and Net Promoter Score (NPS), which determines customer loyalty and how likely they are to recommend your service.
Customer success encompasses many of the customer service tenets we already understand to be true, such as prioritising retaining customers over just acquiring new ones, and paying careful attention to the customisation each client needs to stick around, reducing churn rates. Loyal customers will bring in new customers, increasing growth rates and maximising company profitability. The more loyal customers you bring in based on simple customer success principles, the lower your customer retention costs will be.
As most customer profitability comes after the initial selling point, it’s vital that companies practice customer success and engage with their clients. But simply hiring a “customer success” representative is not enough to bring about real change. Integrating these principles requires constant vigilance on the part of the company to ensure that metrics, such as those noted above, are being analysed and measured on a recurring basis. By utilising SaaS metrics surrounding customer success, companies can tailor their personal approach to engaging with consumers. After all personalisation is central to the entire concept of meeting customer expectations, and in an SaaS economy, the customer is King, and they expect to be treated as such.
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