12 commandments of customer success
We’ve had the good fortune of learning from and investing in SaaS businesses with excellent customer retention and upsells. Below are some of the key learnings we’ve gathered over time.
The Customer Success Team is not the only group in charge of customer success. Preventing churn is everybody’s job, so your engineers should talk to the clients’ engineers often, the CEO should greet as many customers as he/she can and have direct communication with the largest customers (every customer should have the CEO’s email address), and the head of onboarding should also touch base to make sure customers don’t need a refresher on the product.
You should make your customers the defacto “Head of Product”. The feedback of customers should drive the direction of the product. Make sure your customers know their feedback is important and make them feel ownership. The result will be customers that feel appreciated and invested in the product.
Contract structure is important. All contracts should have auto-renewal with a small pricing increase at renewal (Vista Equity makes all their portfolio companies use contracts with clauses like this). In addition, as an alternative to paid pilots, give customers a 90 day out when they sign up. This will lower the barrier to customer acquisition.
Give onboarding away if you have to. You should always try and charge an upfront fee for onboarding, but if a customer won’t pay it, then give them free onboarding anyways. Customers are won and lost in onboarding so making sure they’re well versed in how to use the product is critical. One of our portfolio companies discovered 40% of those customers that didn’t receive onboarding churned in 6 months. Also, if you can travel to the client to onboard, do it. It’s way more effective than onboarding virtually and you’ll get much deeper buy-in.
The first 3 months predict the next 9 months. Your team should be especially high touch in the first 3 months. A customer’s experience in these formative stages when they’re paying the most attention to your product must go well, so be especially attentive and proactive.
Touch, touch, touch. Every customer should be touched at least once a month, big customers should be touched once a week, and your most important customers should be touched multiple times a week. A “touch” is not an automated email by the way. It is a message or conversation regarding ways your helping the client get more value and adoption out of the product.
Low usage or unwillingness to adopt features can be warnings. If a customer isn’t using your product, isn’t reaching out to you with questions 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 nothing is wrong.
The Rule of 40. For a SaaS company with enterprise clients, generally you need one customer success rep for every 40 clients. Don’t overwhelm the customer success team with a ratio far outside 40:1.
Educate the customer. Make your customer better at using your product by educating them constantly, and share ways in which other customers are using the tool. Customer feedback drives the product roadmap and customers feel like they have ownership in the product because their suggestions are incorporated.
Your customers are your best new clients. You should always be exploring ways to upsell your current clients, adding seats, features, cross-selling, etc. They’re the cheapest source of new customers so make sure you’re maxing out their interest in your product.
Your CS team should do nothing but CS. Customer success reps are not good at selling the product, trying to collect receivables, are do anything else that 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 to badger them for a payment or try and upsell them, they may be less inclined to reach out when they have an issue and ultimately churn. Use dedicated Account Mangers for upselling (AE’s should focus on new sales).
Make sure you’re selling to the right customers. Not all revenue is created equal. Do not allow your sales team to sign up everyone and anyone. The sales team needs to make sure the customers they’re signing are a strong fit for the product (again, the “ICP” or ideal customer profile). Bringing in revenue just for the sake of growth that then churns out does not create value and just sucks up CS and onboarding resources.
Be generous with users. If you’re pricing based on value and not users, make sure the client can add as many users as they want. The more users at the client, the more evangelists you’ll have. We’re big fans of finding alternative ways to price that isn’t just user based as it does make for a much stickier base.
Those are the 12 commandments of CS.
Visit us at blossomstreetventures.com and email me directly at email@example.com. All founders and funds welcome! We invest in companies with ARR of $1mm to $30mm, with year over year growth of 20% to 100%+ depending on revenue. We lead or follow in growth rounds and special situations like inside rounds, small rounds, rushed rounds, corralling investors with our term sheet, inbetweeners, cap table clean up, and extensions. We can commit in 3 weeks and our check is $1mm to $3mm. Also visit https://blossomstreetventures.com/metrics/ for always up-to-date SaaS metrics.