Can Customer Churn Be Good for a B2B SaaS Business? Sometimes...
Customer churn tends to be viewed negatively by SaaS companies, and for good reason. However, in specific scenarios, it can actually be, dare we say, a positive.
These seven levels should act as a framework, outlining the key areas wherein your Customer Success department can expand and mature as you scale Customer Success at your organisation.
As more B2B SaaS companies continue to build out their customer success departments, Customer Success is quickly expanding to become large and complex like other departments, such as marketing and sales.
The responsibilities of Customer Success are growing to include increasing customers’ LTV, reducing churn, customer testimonials, capturing product feedback, facilitating renewals, and more.
Depending on the maturity of a Customer Success department—which we will help you evaluate in this article—in general, we can say that the ultimate responsibility of a CS department is the delivery of the outcome desired by the customer. This outcome should be the customers expected ROI. The outcome should then facilitate a frictionless renewal and identify up-sell and cross sell opportunities.
Some companies see Customer Success as an onboarding, education, and renewal department, where activities are mostly digital and one-to-many. Other companies include their support department under the CS umbrella.
But what is maturity in terms of Customer Success? When speaking to Customer Success leaders, I tend to divide maturity into seven levels. These levels give companies an insight into their current maturity and steps on how to expand and mature within each of these levels.
There are many ways of approaching customer success. The challenge often lies in answering the question, ‘what do we want to achieve?’ However, when a company defines customer success as customer support, they are missing out on a large opportunity. So what is the difference?
Generally, customer support is a reactive activity where customers contact you as they run into challenges. These challenges are often a result of a lack of knowledge or faulty implementation. The consequences are often an unsatisfied customer that will likely turn into a churn-risk. Many of these challenges could have been uncovered and anticipated by implementing proactive outreach during the implementation.
This brings us to Customer Success. One definition of customer success, at a high-level, is proactive outreach to enable success for your customer. This is one of the reasons why customer success is not interchangeable with customer support. The endeavour called Customer Success is to guide the customer toward the successful outcome they want to achieve, not to let them fail and call your support department.
In general, successful implementation of your Customer Success strategy should minimise the support calls from any existing customers.
Onboarding (a.k.a. implementation) is one of the most crucial steps in the customer journey, and sets the tone for the entire customer experience. An effective onboarding process is the key to widespread adoption and product usage within an account. However, onboarding is limited to the product and does not necessarily address the strategic outcomes a customer wants to achieve.
All products have functionalities and features that a customer should use, but achieving an outcome is a combination between product and process changes within an account, which cannot be delivered in its entirety during an onboarding.
Onboarding in itself is a specialised process and has its own separate metrics, which is why you’ll also see onboarding (or implementation) broken out into its own department within Customer Success at some organizations. As Customer Success departments evolve and mature, so will their approach to distinguishing between onboarding and Customer Success, and the goals and metrics associated with each.
The current MRR, customer maturity and/or cross-sell and up-sell opportunities are not the same for all customers. Therefore, not all customers can be given individual attention, but treating all accounts in the exact same way is not the right solution either. The solution? Segmentation. As your Customer Success team evolves in its maturity, customers should be segmented into different buckets based on some similar features.
Product plug: With Vitally’s Customer Success platform, you automatically organize your accounts into any number of segments. You can assign accounts to segments based on their product usage, subscription details like MRR or renewal data, market details (using our Clearbit integration), or any other data you send us.
When segmenting your customers base you can look at the current MRR (or ARR depending on your business model), plus possible future opportunities. Some factors that can help you predict these opportunities are the ratio of total number of users vs total employees, relevant business use cases, total revenue, etc.
Knowing and tracking against your KPIs are essential for any department to succeed. To measure the effectiveness of customer success practice, it is critical to identify KPIs and align your team to those KPIs. Earlier, we covered the desired outcomes of customers. To ensure these outcomes are achieved, we should break these down into achievable metrics. These metrics can then form the foundation of your KPIs.
In order to successfully implement Customer Success KPIs, they need to be measurable. Examples of these are the amount of user increase, achieved cost reduction per customer, increased productivity, etc. Besides the KPIs, we can also think about activities done. Examples of these are Quarterly Business Reviews, workshops, education (delivered by CSM or a dedicated team), case studies produced, identified upsell and cross-sell opportunities, and many more. Decide on the KPIs based on the outcomes that need to be achieved, but don’t choose too many KPIs, as that would lead to chaos in the organisation.
To deliver exceptional customer experiences and get consistent results, processes have to be put in place—and regularly reviewed and iterated upon. Processes not only save the customer success manager’s time, but also enable customers to help themselves.
Processes should be defined in playbooks which cover all of the touch points that a customer can reasonably expect from their CSM. These playbooks should always be shared with the wider organisation as this brings consistency and prevents over promising from other departments.
Keep in mind that playbooks are fluid documents that always need to be revisited and improved when the customer success department gets more mature.
There was once a time when we only sold software licenses. This was then followed by an implementation period, often done by (external) consultants. These projects often got delayed and turned into lengthy challenges that spiraled out of control. Was that always the fault of the provider? No.
Since the birth of SaaS and the subscription economy, the above process has had to evolve significantly, along with all other aspects of the SaaS industry.
The silver lining? Now that we (B2B SaaS companies) have more control over the customer lifecycle, there is an opportunity to increase top line revenue growth by offering packaged subscription services—many of which include line items around implementation and CSM services. In terms of maturity, monetising these CS services is not something that needs to be done right off the bat, but rather, should be built into your pricing model when the value add from these services has been proved out.
The final level of maturity is around visibility within the leadership team. An actionable dashboard is a good first step when it comes to making it easier for your C-Suite to be aware of the benefits of Customer Success. It’s also a great way to showcase Customer Success wins.
Moreover, it also allows the CEO to be more involved without putting forth any additional effort. An up-to-date dashboard that gives a high-level view of how the CS org is performing against their KPIs allows CS leadership to share executive and board-level insights at the drop of a hat, make decisions that involve executive stakeholders faster, and ultimately advocate for more resources and room at the table.
Ultimately, these seven levels should act as a framework, outlining the key areas wherein your Customer Success department can expand and mature as you scale Customer Success at your organisation.
Whether you’re building out a Customer Success team for the first time or need to 10x your CSMs’ output without adding headcount, Vitally empowers Customer Success teams at small and medium-sized businesses to create world-class customer experiences at scale. Schedule a personalized demo today.
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