• Laurence OToole

    Thanks David for another very insightful article – It’s a shame you’re not presenting at London SuccessCon! (That would have sold me a ticket).

    We focus our SaaS business around five key areas:

    Awareness – Inbound Marketing to generate brand awareness and to drive leads

    Acquisition – Conversion rate optimization to convert as many website leads to trials or paying customers.

    Adoption – Making the initial experience great, as well as the daily ongoing experience great (our internal metric is how fast can we get them to say “Wow!’).
    In fact right now we are planning a complete UI overhaul to get this right. Giving on-boarding support and training to the right high-value prospects and directing lower-value customers to webinars, videos, user manuals and our support forums. We’re also testing charging for packages of initial training and ongoing regular training services to assess the impact on retention and LTV (so far, so good). This team is also responsible for customer support (since a lot of queries are about how to do this, or feature requests) – they can then use this to produce resources that answers these queries for as many customers as possible to try and pre-empt more support cases.

    Conversion – Using skilled sales resource to convert customers that are adopting the platform to paying customers, to up-sell training and to right-size the package so they get the right level of package (without being oversold).

    Retention & Upsell – Again using specialist sales resources to manage this process.

    We are trying to get the stage where we have one owner for each area with a small set of focus KPIs. Of course where this becomes difficult is when you expand internationally and you have less resource available – this is exacerbated when you enter a market where they have a different language. At the moment we have 1 person focusing on all these areas in France…..that’s a lot of ground to cover!

  • http://blog.kwiqly.com/ James Ferguson @kWIQly

    Hi David,

    Another very clearly laid out post.

    I would hope that this would be obvious to heavy touch startups that are engaging with their clients at senior level.

    However, I can imagine how through treating clients as numbers the point can be lost.

    I think the biggest opportunity to capture the consumer happiness index (YUK) is at the point of signing – its good practice to elicit contacts, so a good question might be.

    Of all the things we promise (and we intend to deliver on them all), which would make you turn cartwheels of happiness if we deliver our side of the bargain. And – who would that enable you to recommend us to ?

  • SaaS Guy

    David, great article. My first company (starting in 2001) was SaaS Marketing Automation and I ran sales & Customer Success. I employed the firefighting model for CSM. I now run Biz Dev and CSM, and employ the same model. My goal is to find a way to make that model scale no matter how big we get (I think our deal sizes and the less complex nature of our implementations allow for this). In my opinion, there is something to be said about 1 person owning the relationship with the customer. Proactive service and support throughout their contract term is key to retention, and I believe the person responsible for providing this fanatical ongoing support over the long haul needs to have a financial incentive to do so. The Customer Service function rarely has true financial skin in the game …. this changes that. Therefore, my CSM’s get paid a % when the trial converts, and get paid big bonuses based on retention. To make this scale, I’ll likely need to hire junior CSM’s that end up supporting senior CSM’s with the backend work, yet the senior CSM retains the relationship and all communication.

    I also find that many customers don’t want to have multiple contacts, and the last thing I want is to have a rep come swooping in at the end to for a renewal (like the girl that only hears from the guy every few months when he wants a date). I have yet to prove this can scale to a large organization, but am hopeful.

    And on hiring …. It is harder to hire for this … you are right.

  • http://www.totango.com Guy Nirpaz

    David – great article!

    For the benefit of the readers – here are some visuals that are mentioned in this article.


    Guy Nirpaz – Totango

  • http://www.startupmanagement.org/ William Mougayar

    That’s one heck of an article. Thanks.

  • Steve

    Retainly.com is an up and comer. Stay tuned for their official launch.

  • Nico Roddz

    David, this article is pure gold.


  • Ed Miller

    Excellent article … hard to go wrong if you’re establishing metrics to measure success with the client. Great way to marginalize relationship-based churn.

  • Mark

    Great blog as always David. Another factor that appears to contribute to retention is consistent product innovation / news. At Offerpop, we’re finding that this helps during renewal conversations.

  • Ed Powers

    Great article, David. However, I believe there’s a lot more to loyalty than satisfaction with features or providing business benefits. The Kano Model shares helpful insights about product and service attributes and the effect on satisfaction and loyalty–basics (“musts”), performance (“more is better”), and excitement (“delighters”). Assuming basics and performance attributes are there, the BIG WIN for loyalty (96%-98%) is in the “delighters;” offering the completely unexpected, thereby making customers raving, loyal fans. Some “Easter egg” features may fit in this category, but superb service is typically the stickiest loyalty factor. Why? Studies have shown that people repurchase from people they know, like, and trust EVEN IF THEIR PRODUCT IS INFERIOR. I think the challenge for the CSM role is to create three great customer moments systematically and in scale: “moments of connection,” “moments of truth,” and “moments of WOW!” Connection is really knowing someone–their business, their application, their personal preferences. Moments of truth are service recovery incidents, rising from adverse situations to regain satisfaction and build trust. Moments of WOW are doing something totally unexpected and over-the-top, demonstrating how important the customer is to the company. Do these things well (as I have in my previous subscription businesses) and SaaS companies can take loyalty to world-class levels.

  • http://www.forentrepreneurs.com David Skok

    Good point Mark. Thanks for adding.

  • http://www.forentrepreneurs.com David Skok

    Ed, great point. I love the notion of Delighters. I’ve personally experienced this, and it’s had exactly the effect you describe. Interesting to think about how to do that systematically. Thanks for adding this to the conversation.

  • http://www.potterfamily.ca/ Mike Potter

    Another great article. At Halogen Software our customer success team is part of sales, but we also have a marketing manager who is dedicated to marketing to existing customers. That’s not a structure that you’ve mentioned, but one that we’ve found works very well for us.

  • setxebarria

    great article! thank you

  • http://www.forentrepreneurs.com David Skok

    Mike – that is a very good point that I should have mentioned: the role of marketing. It was also one of the important changes that HubSpot made: getting marketing to focus on customer success/health in addition to winning new customers. I may add this to the post. Thanks!

  • http://communitas.tumblr.com/ tobymurdock

    Great article David.

    I specifically like the points about Marketing assisting post-sale towards the customer’s success.

    Many companies are using content marketing–and specifically content that informs their customer as opposed to content about their own product–to acquire new customers.

    We’ve seen a great best practice in customers using this content post-sale, to continue to educate them and help them be successful, again, around their business objective, not the product.

    This is a great way for Marketing to assist with Customer Success.

  • http://www.forentrepreneurs.com David Skok

    Thanks for the validation Tony.

  • http://www.forentrepreneurs.com David Skok

    Laurence, thank you for sharing your experiences. I know other readers will appreciate this.

  • Rachel English

    Love the article, especially the discussion around quantifying and measuring the value customers gain from utilizing an application. I agree that it’s a shift in thinking for many companies, and believe that is in part because customer ROI is complicated to measure well. It requires layering together multiple data inputs that are all too often siloed in most businesses.

    Ultimately, you can’t get to the ROI without including both the I and the R in the analysis. You need to know what your customers are investing, in terms of both money and time, as well as a quantitative measure of what they are achieving that they were not able to achieve without utilizing your product. This means that you need to have subscription data (MRR, plan level, etc.), product usage data (frequency, duration, features, etc.), resource usage data (support, training, knowledge base, community, etc.) and product metrics (record counts, event counts, etc.), all with historic information for trending purposes. And you need to be able to analyze all of these data inputs, along with the outcomes of interest to your business (ex. churn, upsell, etc.), in a single place for the analysis to be both meaningful and scalable. It’s a complex and exciting challenge to tackle! And if done well, this type of deep ROI analysis can serve as the critical core of a true Churn Prediction Score, along with the other factors you mention: billing events, lifecycle timeline, user role/job changes, community engagement, and referenceability.

  • justinmares

    Love this comment. Ed, do you mind sharing a bit about how you did this well in your previous companies? Was there anything you did to systematically deliver “WOW” moments to your customers?

  • justinmares

    Great post David. 2 notes:

    1. We’ve found intercom.io very useful as an easy tool to get users to engage with different aspects of the product from within the app. For example, if someone hasn’t logged in for a few days, we give them a popup notification next time they log in (whether trigged by a lifecycle email or on their own) that gives them a suggestion of a next step to take. It also creates a really useful feedback loop between our CSM employees and the customer.

    2. Another complication that may be interesting to cover is onboarding new users in existing accounts (e.g. the 10th user at an account we’ve had for several months). We’ve struggled a bit to find a balance between doing standard New Account onboarding vs letting them email us with questions. The standard proactive approach can get annoying (so we’ve heard), as the new user doesn’t necessarily need to engage with every aspect of the product – they may only need to get value from one aspect of it. Have you seen this issue in any of your portfolio companies?

  • Tom Krackeler

    Terrific summary of the rationale and concepts behind SaaS Customer Success initiatives. One specific thought– to the question of what are the key elements of customer happiness, I’d add one more: feeling listened to by the vendor. Even for high volume/low price products, customers not only want an avenue to provide feedback, but want evidence that its been heard and considered (even if its not acted on every time).

    You don’t have to address every product feature request or respond 1:1 to every survey response, but I’ve found that creating an overall customer experience where there is a recurring theme of “we are listening; here is what you are telling us; here is what we are doing (or not doing) about it” is an effective way to increase customer happiness.

  • Steve Cardillo

    David – great post as always!

    I was wondering if you or anyone on here had thoughts or suggested resources related to the best way to think about compensation structures for customer success-focused resources. As a SaaS-based remote monitoring and management platform serving managed service providers, our customers grow significantly over time as they add end clients but require an active ongoing account management / customer success function (and losing a mature MSP could equal 10-50 new MSPs). We’re probably closest to the Partnership CSM described above. A simple way could be to tie part of their variable comp directly to revenue churn (either gross loss or net loss) but I’d love to understand what other companies are doing in this regard at whatever level of specificity that can be provided. Thanks!

  • http://www.forentrepreneurs.com David Skok

    Steve that is a great question, and one that we did discuss in our portfolio review of how people were doing this. Sadly I didn’t take notes but I do remember that most had a variable part of the compensation that was tied to renewals. I do agree with you that Revenue Churn would be a good metric to use if they are also able to drive upsells, cross-sells and expansion. Perhaps other readers will chime in with more specific numeric data.

  • http://www.forentrepreneurs.com David Skok

    Great observation. My own experience in this area strongly confirms what you are saying. When we had severe problem customers, I used to personally take the time as CEO to email them daily on how we were handling their issues. That turned them into strong advocates once we had solve the problems. Thanks Tom.

  • http://www.forentrepreneurs.com David Skok

    Hi Justin, thanks for the input. I have added Intercom.io to the list, and agree with you that it is a very interesting platform.
    Re 2., One of my portfolio companies, TribeHR would likely have run into that problem as they had three modules, and users would likely only want to learn to use one at specific moments in time. So what you say makes sense.

  • http://www.forentrepreneurs.com David Skok

    What you are describing is the data that needs to get fed into the “Crown Jewels” data repository. Thanks for the added insight here.

  • http://www.enkata.com/ Enkata

    “Because most startups are created by passionate product people, they
    tend to fall in love with their product and its features. Often this
    means that they lose touch with the simple messaging around business

    Great point. Startups are run by passionate, brilliant, and deeply committed people. But sometimes they are deeply committed to something that just isn’t working. This doesn’t mean the whole company is wrong, but certain aspects have to change if you want to move forward and really grow. If you’re product/service doesn’t deliver as promised you’re going to lose plenty of customers and then word will get out, hindering your chances of getting new clients.

  • http://www.linkedin.com/in/rickroberge/ Rick Roberge

    As I read your article, I began to hear my voice in my head. Please don’t misunderstand, but I’ve always felt that customers that churn, did so because they felt unloved and/or became ‘un-sold’ (i.e. forgot the business solution that they bought and that both could be avoided if their salesperson or their representative ‘touched them’ often enough. The push back that I’ve gotten is that it takes a lot of time to ‘touch’ customers and keeps them from chasing new customers, but what I’ve found, like you, is that if you turn your existing customers into evangelists, they’ll help you chase. Thank you. By the way, I shared a few anecdotal ideas about this on my blog last April.

  • http://www.forentrepreneurs.com David Skok

    Rick – I think that’s a good insight. If they are high value customers, the article recommends doing the personal touch. Having a system that helps identify a smaller subset that need the call makes this cheaper.
    For low value customers, the question is be can you make them feel loved if they are getting nice personalized emails that are system generated?

  • http://www.linkedin.com/in/rickroberge/ Rick Roberge

    Cool! Thanks for the reply. System-generated? No. But, I’d be willing to bet that a good rep could leave 10 “Thought of you, today” voice mails and send 10 “missed you, but…” emails in 10 minutes, off hours. That may be all the love and/or reminder that a small customer needs to call back to upgrade, refer, renew, etc.

  • http://www.mikevolpe.com/ Mike Volpe

    As usual, excellent article! The one thing I would add or even disagree with you about is the idea that customer happiness is the primary driver of churn. Certainly all else being equal, happier customers make for lower churn. But I think there are a lot of other factors that determine churn, including the customer profile (the size of the company and the industry they are in), the competitive dynamics (is there a lot of competition and is there differentiation among them) and the degree of lock-in (how hard is it to move to another provider).

    For instance, in the CRM market today, Salesforce has very low churn. But I think that is because there is not much differentiation among different solutions (so why bother moving to another CRM) and there is a high degree of lock-in (it is very difficult to move to a new CRM). In my informal surveys of my peers, none of them love Salesforce, but most of them use it and almost none of them plan on churning. (Interestingly, I am starting to see that when people start a new company, they are looking at or even implementing CRM systems besides Salesforce, since there is no lock-in.)

  • http://www.forentrepreneurs.com David Skok

    Thanks Mike. You are right – the article didn’t do a good job pointing out these, and they’re important considerations. The thrust of the first part of the article was to see if there was a way to create a predictive indicator for churn. If not happiness, it would be great to find other elements to use in the score. That score helps target limited resources on the highest risk customers. Lock-in is one of the factors you mention, and usage of certain product features can achieve that, even if the customer isn’t happy.
    Thanks for pointing this out.

    And I agree, There are several legacy vendors, such as Salesforce and Omniture, where customers aren’t in love with the product, but haven’t yet seen anything compelling enough to get them to switch.

  • Leonardo Maia

    Hi David,

    I’ve been working for a SaaS business for over three years now and been following and reading your blogs. What struck me about your article was how companies structure their CSMs groups. Interesting concepts presented – In particular, I identified our company with the Service Oriented CSMs model.

    With regards to elements that relate to customer happiness, I’d add onsite consultation and training, which reduce customer churn and contribute highly to customer happiness.

    Btw, we use Hubspot and Evergage.

    Keep the good work!

  • http://www.forentrepreneurs.com David Skok

    Thanks Leonardo. Good feedback!

  • Earle Gregory

    Fully agree here. For enterprise SaaS products (and most others) I very much subscribe to Christensen’s focus on “jobs to be done” and you nailed it- the customer’s job is to deliver business results and the product used is just a tool to help achieve those results.

    Also very much agree with the comment “Happy customers refer other customers, which are your best leads.” This applies to both new organizations that become customers and expansion within an existing customer (land and expand). In fact, the larger the CAC (high dollar value and/or high product complexity, etc), the more important this positive feedback loop becomes.

    If there is a high focus on this loop, what is your suggestion for the CSM structure? (To be clear, I’m talking about focusing on the new business referral loop, not just renewals.)

    As always, thanks for the excellent posts!

  • Gil Heiman

    Great piece David! Particularly I can relate to our experience at Clarizen that customers may come initially for particular functionality however eventually stick around for other functionality altogether. We use #Totango and realize the benefits of tracking usage metrics for Customer Success, Sales, Marketing and other departments.

  • Michael Bian

    Thank you for sharing this informative article..

  • Santiago

    David, I ran a SaaS company whose customers are really small retailers, most of them having less than 5 employees, or sometimes no employees at all. Considering this is a very low-ticket, high volume business, which Customer Success organization would you recommend? Most of our sales is done by combined efforts between marketing and customer care agents. We do not have a specialized sales organization, nor renewals. Would you recommend creating a renewal organization? Would you share how CS organizations look when working with micro-entrepreneurs and small companies (and not the mid or large market)?

  • http://www.forentrepreneurs.com David Skok

    Because of the low value of each customer, you will need to avoid spending a lot of human touch to maintain customer happiness and get renewals. I would suggest using an automated system using a combination of customer success software (Totango, Gainsight, Evergage, etc.) together with Marketing Automation software (HubSpot, Marketo) to figure out which customers need what kind of help, and then try to provide that help via email.
    The moment you have to use people on the phone your costs will go up significantly. However in the early days, I would suggest using people, as this is the only way to find out what needs to be fixed in your software, on-boarding processes, instruction manuals, help systems, training, etc. Then as you get these systems fixed, try to automate the steps the people were doing.

  • Santiago

    Thanks a lot for your opinion David, I really appreciate it :)

  • Scott Cardais

    David: This is a terrific article. Thank you for sharing your knowledge and experience.

    Do you have any suggestions regarding how to define the difference between the Customer Success and Customer Support functions?

    Isn’t there a lot of overlap and does that cause internal friction – especially in companies with an established Customer Support team but considering the addition of the Customer Success function?

    Regardless of which of the 5 Org Models mentioned in the article, some set of guidelines are needed to avoid redundancy and internal confusion. Since reading your article, I’ve been unable to find anything about this.

    Is there an article or site you might recommend that discusses this issue? e.g. Roles and Responsibilities of Customer Success vs Customer Support for SaaS companies?

    Thanks again for a great, well-organized article.

  • L.A.

    Customer Success Products: “We are considering doing an updated review of these products in a future blog post. If the idea of this appeals to you, please leave a comment to let me know.” Yes please!

  • http://www.forentrepreneurs.com David Skok

    Thanks for the input. Unfortunately not yet enough Yes’s to suggest that there is enough demand.

  • http://blog.trak.io/ Liam Gooding

    Great post and very thorough write up David!

    Just to weigh in on the vendor front: at Trak.io we’re 100% focussed on Customer Success and are a great option for companies who don’t want to drop the big price tags of other platforms or would prefer a to use software that doesn’t feel like it was made for scientists!

  • sv

    hi, i was wondering what would be the best way to structuure the CSM role in a company, which offers saas products across domains- say crm,hr, financials etc but there is no critical mass of customers yet to have specialist or domain specific csms

  • http://www.forentrepreneurs.com David Skok

    Are there multiple products involved? If so, how many?

  • sv

    yes there are .. it would be 3. each of the 3 would have a different user profile.. eg: sales, finance ,manufacturing, hr folks etc

  • http://www.forentrepreneurs.com David Skok

    It is hard for me to know if this is correct with so little knowledge, but it would seem that initially while you have very low manpower, you might have to have one customer success rep covering multiple apps. That’s not desirable given the need to really learn the customer’s business, and become a business consultant to them, as well as a product support person. So as soon as possible, I would move to either a dedicated group per product, or a dedicated group per customer department. But please use your own common sense here, and override this advice if needed. You are far closer to the situation than I am.

  • sv

    thanks David. Makes a lot of sense.

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