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.
Defining the roles of CRMs versus Customer Success tools and illustrate why having a dedicated Customer Success platform in your Customer Success tech stack is essential.
Customer Lifetime Value (Customer LTV) is a metric that indicates how much revenue a customer can create for a business over the length of the customer life cycle. With the right data and a proactive strategy, there are various approaches a company can take to maximize a customer’s LTV. Two tools commonly implemented in order to manage this mission are Customer Relationship Managers (CRM) and Customer Success (CS) platforms; however, only one of these is truly capable of tackling the job at scale.
CS organizations, especially in small to midsize companies, often depend on their CRM to administer all customer life cycle tasks. Various risks come with treating a CRM as a "single source of truth." This article has been written to help clarify the roles of CRMs versus Customer Success tools and illustrate why having a dedicated Customer Success platform in your Customer Success tech stack is essential.
Customer Relationship Management can have variations in its definition depending on a company's goals and its relationship to its customers. However, it's generally understood to mean any activities undertaken or technologies used to administer a business's interactions with its customer base. In most cases, these interactions are transactional in nature and focused on the purchase pipeline.
In comparison, Customer Success refers to any activities or technologies used to help customers succeed with the products or services they purchase from a business. CS tools follow the entire customer journey and deliver the most significant benefit when used to increase customer retention and lifetime value.
There are varying flavors of CRM platforms driven by their primary purpose. For example, an Analytical CRM system is designed to help business managers analyze collected customer data. Through this activity, managers can gain insight into customer satisfaction (Net Promoter Score) or track customer behavior when interacting with a business's products, services, or touchpoints. While similar metrics will be analyzed by Customer Success tools, a CRM will use the data to achieve a different goal, typically, higher sales.
Another variation of CRM systems is the Operational CRM geared toward automating sales and marketing activities. One of the most recognizable examples of this type of CRM is Salesforce. An operational CRM's principal function is to automate as much of the manual work undertaken to drive prospects and current customers toward conversion as possible. Typical tasks automated by an Operational CRM include:
Given the distinct differences between what parts of the customer journey CRM and CS are meant to address, the practical answer is "no." However, this does not stop CRM developers from trying to incorporate CS into their platforms.
Smaller CRM platforms may include a CS component via plug-ins and app integrations that essentially "bolt on" CS functionality to the core product. Other platforms with more resources may develop Customer Success tools as a more integrated feature. The Salesforce Customer Success platform is an example of this approach. At its core, Salesforce is a sales-oriented CRM; by including a host of other customer journey tools around its main product, it purports to be a full-featured Customer Success platform. In actuality, this adds more complexity and greater overhead to an already complicated and expensive platform.
At the top of this article, we mentioned that issues can arise when a business uses a CRM for CS management. This was the case with one of our customers, Foleon; they found the experience of using a CRM for managing the entire customer journey to be unproductive. The attempt created confusion for their Customer Success managers, wasted CSM's time as they chased data and put out fires, and ultimately, their CS team ran into limitations within the CRM.
Once Foleon decoupled their Customer Success activities from their CRM by using a dedicated Customer Success tool built for the task, they achieved the following positive outcomes:
Once a company can see that using Customer Success CRM combo software is less effective than separate, dedicated platforms, they may ask if having both is necessary. If an organization is a small or medium-sized business and budget limits necessitate choosing between a CRM or CS platform, your organization is more likely to have a positive outcome with a Customer Success platform.
Unlike a CRM, a CS platform covers the entire customer life cycle—not just the transaction sales pipeline. Like a CRM, a robust CS platform will feature automation efficiencies and data analytics tools, but unlike a CRM, these features will be geared toward monitoring customer health, nurturing the customer relationship, and ensuring customers can succeed with your products. Statistics have routinely shown that companies that focus on building a deeper relationship with their customers have better outcomes.
If a company will eventually use both a CRM and a Customer Success tool and they have to choose between which to implement first, in most cases, it's best to start with a CS platform. This will allow you to instill a sound customer-focused culture, strategies, and operations in your business from the ground and add a CRM for extra value later.
Lastly, if you already have a CRM that's deeply ingrained into your business, you can find a full-featured, simple-to-use CS platform capable of integrating with your existing CRM. As an example, Vitally integrates with Salesforce and several other popular CRMs.
The Customer Success tool your company chooses will be your single source of truth for customer data and insights. Vitally is the first and last CS platform you'll ever need to get the most customer lifetime value from your buyers while also ensuring they succeed with your products and services. Learn how Vitally makes CRMs and customer data more actionable for Customer Success teams with a personalized free demo.
Schedule a personalized demo today.
We have received your request and will process it as soon as possible.