We’ve had the goodfortune of learning from and investing in SaaS businesses with excellentcustomer retention and upsells. Below are some of the key learnings we’vegathered over time.
TheCustomer Success Team is not the only group in charge of customer success. Preventing churn is everybody’s job, so your engineers should talk tothe clients’ engineers often, the CEO should greet as many customers as he/shecan and have direct communication with the largest customers (every customershould have the CEO’s email address), and the head of onboarding should alsotouch base to make sure customers don’t need a refresher on the product.
Youshould make your customers the defacto “Head of Product”. Thefeedback of customers should drive the direction of the product. Make sure your customers know their feedbackis important and make them feel ownership. The result will be customers that feel appreciated and invested in theproduct.
Contractstructure is important. All contracts should haveauto-renewal with a small pricing increase at renewal (Vista Equity makes alltheir portfolio companies use contracts with clauses like this). In addition, as an alternative to paidpilots, give customers a 90 day out when they sign up. This will lower the barrier to customeracquisition.
Giveonboarding away if you have to. You should always try and chargean upfront fee for onboarding, but if a customer won’t pay it, then give themfree onboarding anyways. Customers arewon and lost in onboarding so making sure they’re well versed in how to use theproduct is critical. One of our portfoliocompanies discovered 40% of those customers that didn’t receive onboardingchurned in 6 months. Also, if you cantravel to the client to onboard, do it. It’s way more effective than onboarding virtually and you’ll get muchdeeper buy-in.
Thefirst 3 months predict the next 9 months. Your teamshould be especially high touch in the first 3 months. A customer’s experience in these formativestages when they’re paying the most attention to your product must go well, sobe especially attentive and proactive.
Touch,touch, touch. Everycustomer should be touched at least once a month, big customers should betouched once a week, and your most important customers should be touchedmultiple times a week. A “touch” is notan automated email by the way. It is amessage or conversation regarding ways your helping the client get more valueand adoption out of the product.
Lowusage or unwillingness to adopt features can be warnings. If a customer isn’t using your product, isn’t reaching out to you withquestions or issues (customers reaching out to you for help is a good thing!),or if a customer isn’t adopting new features, reach out and make sure nothingis wrong.
Thereal Rule of 40. For a SaaS company withenterprise clients, generally you need one customer success rep for every 40clients. Don’t overwhelm the customersuccess team with a ratio far outside 40:1.
Educatethe customer. Make your customer better atusing your product by educating them constantly, and share ways in which othercustomers are using the tool. Customerfeedback drives the product roadmap and customers feel like they have ownershipin the product because their suggestions are incorporated.
Yourcustomers are your best new clients. You should always be exploringways to upsell your current clients, adding seats, features, cross-selling, etc. They’re the cheapest source of new customersso make sure you’re maxing out their interest in your product.
Your CS teamshould do nothing but CS. Customer success reps are not goodat selling the product, trying to collect receivables, are do anything elsethat isn’t CS. They don’t want to do it,wont be good at it, and will only serve to alienate the customer. If a customer thinks a CS rep is going tobadger them for a payment or try and upsell them, they may be less inclined toreach out when they have an issue and ultimately churn. Use dedicated Account Mangers for upselling(AE’s should focus on new sales).
Makesure you’re selling to the right customers. Not allrevenue is created equal. Do not allowyour sales team to sign up everyone and anyone. The sales team needs to make sure the customers they’re signing are astrong fit for the product (again, the “ICP” or ideal customer profile). Bringing in revenue just for the sake ofgrowth that then churns out does not create value and just sucks up CS andonboarding resources.
Be generous withusers. If you’re pricing based on valueand not users, make sure the client can add as many users as they want. The more users at the client, the moreevangelists you’ll have. We’re big fansof finding alternative ways to price that isn’t just user based as it does makefor a much stickier base.
Those are the 13commandments of CS.
Thank you for the readership. Visit us at blossomstreetventures.com andemail me directly at sammy@blossomstreetventures.com