The early days of a startup are hectic (to say the least). Between a bevy of competing priorities like sales and product readiness, it’s easy to get caught up in the nuts and bolts of building the next great company.
Previously businesses were built upon two main revenue drivers – sales and marketing. This traditional approach focused on one thing – acquiring as many customers as quickly as possible. As customer priorities have changed, organizations can no longer focus on acquisition alone. A third driver, customer success, has become increasingly vital to growing predicable revenue. With 70-90% of profits by SaaS companies generated through renewals and upsells, the value of customer service cannot be understated.
Are you looking to leverage your new or lean customer success team as a driver for growth? Read on to learn why CS matters, the importance of metrics, the power of automation and how to engrain customer success in your corporate culture from the beginning.
Why Customer Success
For a new business with limited resources, building an initial customer base is of the utmost importance. When focusing on your business’s early growth, it’s easy to forget that maintaining existing accounts is just as vital to long-term growth. After all, customer churn can act as a drag regardless of your acquisition methods.
To put it simply, customer success is about ensuring that your customers derive value from your product. CS represents a shift from focusing on ‘me’ (your company’s success) to ‘us’ (the success of your company – client partnership.) By viewing (and treating) your customers as valued partners, your team will experience more opportunities to build upon existing relationships.
By focusing on the ‘us,’ companies with effective customer success teams reap big rewards. Besides maintaining reoccurring revenue, organizations that embrace CS experience increased customer goodwill. This goodwill not only provides deep usage insights but encourages customer advocacy and referrals. For founders, revenue expansion opportunities are one of the most powerful aspects of customer success. By ensuring your customers’ success, their likelihood of being upsold increases. After all, a happy and healthy customer is someone who’ll be willing to continue investing in your platform.
Creating (and Understanding) Metrics
No matter the size of your team, creating and understanding customer metrics is essential to your long-term success. Rather than relying on assumptions, the best way to understand your customers is by leveraging the appropriate data points. When maximizing the impact of customer success, remember that there are no one-size-fits-all metrics. For most organizations, these three metrics are a valuable starting point:
- Net Promoter Scores – NPS is the simplest way to start collecting customer data. This survey tool provides a 10,000-foot perspective on your customer’s sentiment, often using a sliding scale or numerical score. By asking whether your customers would recommend your product to others, NPS provides a pulse on your customer health. Just remember that NPS doesn’t answer why your customers responded in the way they did. When leveraging this metric, focus on the whole picture. Consider what variables impact your organization’s Net Promoter Score. Most importantly, remember that the value of NPS comes through increasing this score over time.
- Churn – Churn is one of the most common reasons for organizations to implement customer success. Simply put, churn is the percentage of customers who quit your product during a given time. Since the cost of acquiring new customers is high, churn should be a priority. After all, retention is a much more profitable approach to growing a business rather than solely focusing on acquisition.
- Expansion Revenue – Unlike churn, expansion revenue is an indicator of how your customers are growing with your product. This organic growth rate reveals how effective your team is at expanding existing customer relationships. Remember – since expansion revenue comes at a lower cost than other acquisitions methods, it is one of the best ways to drive growth.
By creating and understanding which metrics best apply to your business, your team can unlock valuable customer insights. Many of these same metrics can form the basis of a customer health score (and drive data-driven customer conversations.). Developing these metrics early on in your customer success journey will allow your team to focus on what matters most: delivering an exceptional customer experience.
The Power of Automation
For a new or lean customer success team, one of the most powerful tools at your disposal is automation. Ideally, every account would receive the same care and high-touch service typically reserved for larger customers. However, in a world of multiple customer types and contract values, it’s impossible for all customers can be treated the same.
Thankfully tools do exist that can close this gap. Customer success software and email automation tools allow for CS teams to increase their account-to-CSM workload and take a proactive approach to account management. When automating some of your common customer success tasks, consider the following tactics:
- Identify Bottlenecks and ‘Triggers’ – When beginning to automate CS functions, be sure to identify the common bottlenecks experienced during your customer’s journey. Consider creating a list of ‘triggers’, that can lead to a change in customer sentiment. Whether login instances are dropping, or certain integrations have been disconnected, subtle changes in customer behavior often reveal larger problems.
- Connect Your Bottlenecks to Automated Activities – After creating a list of common bottlenecks, identify the steps are needed to remedy these challenges; this is where the power of automation can come in. For instance, when a customer gives a poor NPS score, consider the actions your CSM would take. In the case of a poor score, automation could automatically deploy a follow-up email to the survey respondent. This email could solicit a follow-up call or even schedule additional customer training.
- Identify and Encourage Specific User Behaviors – As you guide your customers to success, consider which behaviors provide the most value for them. Work to identify what actions took place immediately prior to a customer being successfully upsold. Perhaps it was the use of certain features or widgets. Or maybe it was a high level of engagement during training sessions. Aim to discover what exactly helped justify their further investment. By identifying these valuable behaviors, your team can work to encourage them.
While automation can take many forms, one thing’s for sure: automation is a powerful tool. By reducing your manual tasks, your team can be best equipped to serve more accounts without sacrificing your service quality.
Building a Customer Success Culture
If you’re looking to maximize the impact of customer success, it’s important to remember that CS is everyone’s job. Customer-centricity should be woven into every aspect of your organizational culture. Whether at the start of the customer lifecycle (sales and marketing) or the end of the customer lifecycle, all employees should know where they fit into customer success.
Since a culture of success doesn’t just rely on CSMs, consider ways to communicate customer data across your entire organization. Because the number of potential customers is finite, it’s important to ensure that every customer experience is amazing. Communicating KPIs like NPS or churn rates are two such ways to provide valuable insights company-wide. Another way to cement a ‘customer first’ attitude among employees is through weekly meetings. By proactively sharing customer successes, feedback and challenges encountered, every member of your organization understands how they can contribute to a customer-centric culture.
While internal resources may be precious, consider the impact that customer success can have on your startup. Despite other competing interests, customer success should be a top priority for any new business. By understanding metrics, the power of automation and the importance of fostering a customer-centric culture, your team can maximize leverage CS as a driver for growth. In doing so you’ll create meaningful customer relationships that will provide dividends well into the future.
Looking for more ideas to turbocharge your Customer Success efforts? Download the Churn Monster Playbook and learn how to combat the 12 “Churn Monsters” that cause customer churn.