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.
If handled appropriately, charging for Customer Success can be an effective strategy that leads to positive outcomes for a SaaS company and its customers.
Investing in Customer Success is a great strategy for ensuring long-term growth and customer retention. It's such a valuable tactic that it's a common practice for SaaS companies to provide a wide range of customer support services for free. However, as a company grows, following a "freemium" model, especially one that includes high-touch support, may become unsustainable over time. So what's the solution?
One option is to begin charging for these services. Be forewarned; treading down this path may result in some pushback. Higher-ups within an organization might fear that switching to a paid model may result in an uptick in customer churn. However, if handled appropriately, charging for Customer Success can be an effective strategy that leads to positive outcomes for a SaaS company and its customers.
Whenever a company decides to charge for something, the obvious upside is creating a new stream of revenue. With Customer Success, this may mean that current services can be enhanced or targeted to high-value customers to ensure they reach desired outcomes. Paid variations of Customer Success can also be presented as an upsell feature to encourage customers who actually want and need deeper product support to access such services.
One of the potential negatives of switching to a paid Customer Success model is your company may come across as focused more on generating cash versus helping customers succeed. Such a sentiment can quickly spread among current and potential customers causing some to seek out a competitor who perhaps still offers Customer Success services for free.
The critical thing to remember here is that if you relied on a freemium model before monetizing Customer Success, any changes should be integrated gradually. Customers should have a choice between accessing free and premium options, and perhaps most importantly, whatever service you charge for must offer a noticeable upgrade in value.
Monetizing Customer Success is not an activity that should be handled casually. A SaaS company needs to clearly justify why charging for something that is commonly provided for free would be a sound strategy.
As previously mentioned, Customer Success is a highly effective tool for enhancing the customer journey and increasing retention. Happy customers are less likely to abandon your company, and therefore they contribute a predictable, continuous revenue stream on which future growth is built. Startup SaaS companies, in most cases, should not charge for CS since they need to build up a viable customer base to sustain themselves.
Another instance where a company should think twice before charging for Customer Success is if they have a complex product or service that a customer cannot use without guidance. In such cases, CS is a necessary feature of operation, and placing support behind a paywall would likely lead to a pretty poor customer experience.
Conversely, an excellent time to examine premium Customer Success is when your company is well established with a healthy customer base. If your SaaS company uses a one-to-many model, you may find offering a "white-glove" upgrade to basic support is a successful revenue generator.
Another opportunity to charge for CS is if you find your company's ratio of customers to a single CS manager has become too high. Charging for some or all aspects of Customer Success may be an effective way to ease the burden off of these valuable team members so that they can perform their work better.
A SaaS company that decides to charge for Customer Success should explore a few suggested best practices to improve their chances for a successful outcome:
There are a variety of ways that an organization can approach monetizing CS. We recently surveyed technology executives in B2B SaaS companies to gain insight into how they're currently monetizing CS services. Below are the results:
Charging for Customer Success can be a great opportunity to generate a new stream of revenue, but more importantly, it can be a strategy for effectively directing CS resources where they will have optimal impact. If your SaaS company is considering monetizing Customer Success, the best first step is to make sure your customer data is organized and your CS processes are streamlined—Vitally's Customer Success platform will help you do just that. Request a free demo of our Customer Success platform today!
Director of Growth, Segment
Schedule a personalized demo today.
We have received your request and will process it as soon as possible.