These days, it’s not enough to undercut your competitors and sell your service for the cheapest price. Research shows that consumers are willing to pay a premium for high-quality customer service.
But what exactly does customer service mean to the consumer?
Customer service can be defined as the support that you offer your customers before, during, and after they purchase. Many SaaS companies treat customer service as a reactive service. It’s something you do after a customer encounters a problem with your service.
However, true customer service is both reactive and proactive. You should definitely have a plan in place to help the customer when they hit a road bump during their lifecycle with you. But you should also offer proactive service to ensure that your customer never hits those road bumps along their path. In addition to customer service and customer support (which are definitely needed departments for every business), you also need a customer success department that helps your customers meet their goal(s) with your SaaS product.
In this guide, we’ll discuss what customer success is, how it differs from customer support, and how to create your own customer success program from scratch. These efforts will have a direct impact on your ability to retain your customers, increase your profits, and grow your business. Not only will customers succeed, so will your business.
What is Customer Success?
There are three ways to deal with your customers: Wait for them to reach out to you first (reactive), you reach out to them first (proactive), or you ignore them altogether.
It may sound funny or strange, but the majority of SaaS businesses take the third option when dealing with their customers. Businesses in our industry invest so much effort into attracting prospects and then converting those prospects into new customers that they barely have any energy left over to give to their paying customers.
Shortly after they’ve signed up, customers are quickly forgotten about. The company may share a poorly constructed “getting started” guide as a way to onboard their new customer and that’s the extent of their welcome.
The result?
The new customer feels confused and overwhelmed. They’re not sure how to use the service correctly. They may fiddle around with a feature or two before giving up in exasperation. This will prompt them to develop a negative opinion about your service. They may say to themselves, This service isn’t what I’m looking for. I don’t understand how to use it. It’s obviously designed for someone else.
But the sad truth is that the service was indeed designed for them. They simply don’t know how to use it effectively to solve their problem.
This is the story that happens far too frequently amongst SaaS businesses.
Some customers, when they hit this road bump, will take it upon themselves to look for additional resources on how to use your product. They may comb your knowledge base, search on Google, or look up a tutorial from a third party on YouTube.
Other customers will react by disengaging from your service. They’ll cancel the “auto-renew” feature and chalk their sign up to a miss.
And what a shame. New customers sometimes churn because they don’t feel like the right fit for your product, but this is often the fault of poor onboarding.
No one is going to understand your service when they first encounter it. It’s up to you to teach them how to use your product.
And that’s the idea behind customer success.
Customer success is everything you do to ensure that your customers achieve their goals when using your service. This includes new customer onboarding, ongoing education throughout their relationship with your business, proactive check-ins, and customized advice on how the customer can take better advantage of the service.
The goal of customer success is two-fold. The first goal is customer retention. By reaching out to customers before they encounter a problem, you can rescue them from common pitfalls that may have claimed your past customers. This way, you can keep customers around for longer.
The second goal of customer success is advocacy. An added benefit to investing in your customer’s success is that you create engaged advocates for your business. When a customer has received a great experience from a business, they can’t help but share their experience with others (the same is true for customers with extraordinarily bad experiences). Retention is sweet, but referrals are even sweeter.
And referrals are also stronger than your own marketing. Referred customers already trust you because they trust the recommendation of the person who referred them.
How is Customer Success Different From Customer Support?
Customer success and customer support are both focused on the customer, however, they serve the customer in two different ways.
Customer support is often called customer service. These two terms can be used exchangeably to describe a company’s inbound interactions with a customer. The customer initiates contact with a business and is met by either the customer service department (to handle complaints) or the customer support department (to solve problems). The goal of both departments (customer support and customer service) is to swiftly handle a customer’s problem so that they can go back to using the service again, unbothered.
Customer success is also focused on customer problems. However, customer success comes at the problem from a different angle.
Customer success is not only proactive, but it’s also anticipatory.
Customer success anticipates problems that a customer may have before they have it. The ultimate goal of a customer success department is to avoid problems and ensure that the customer experiences the product in the way that it was intended. No bumps. No bruises.
For this reason, a business can and should have both a customer support and a customer success department. This ensures that you’re able to guide your customers away from common pitfalls and, if one does fall through the cracks, someone on your team will be there to get the customer back on track. It’s never an either/ or scenario.
However, customer success is still a relatively new trend. The vast majority of businesses have only a customer service and/ or support department, but don’t consider the value of a customer success team.
Customer service and support are aimed at resolving conflict, while customer success is aimed at partnering with the customer to meet their goals.
Customer success is also not one event, but ongoing. Your customer success program will reach out to customers continually, not just when they run into a problem. This is the best way to ensure that the customer doesn’t feel abandoned by your company, but instead feels supported.
Another huge advantage of customer success over customer service is its ability to generate more revenue for your business. Customer service and support teams can only retain your revenue, and that’s if they’re able to successfully solve the customer’s problem. However, with customer success, you can recommend new ways for your customers to use your service. For example, you can offer key upgrades that increase the customer’s lifetime value by also perfectly aligning with their goals. Of course, customers who feel supported are also more likely to continue their subscription with you. And no churn means more revenue.
What are the Benefits of Implementing a Customer Success Strategy?
We’ve already explored some of the top benefits of customer success, but let’s look closer into why every SaaS can benefit from building a relationship-focused strategy.
Successful Customers
You’re in business to serve your customers, not the other way around. It’s easy to switch perspectives and forget that your goal is to make your customers happy. But, to find success in your business, you must be entirely focused on guaranteeing the success of your customers. By creating a department for this purpose, you will prioritize customer success as one of your business’s most important outcomes.
Fewer Complaints
When you’re constantly engaging with your customers and working with them as a proactive partner, you won’t receive as many complaints. That’s because you’re reaching customers before they get a chance to encounter a problem. And if they do have a problem, you’re there with them, working through it. There’s no need for them to call you to complain because you’re already interacting with them.
Less Churn
Complaints, whether checked or unchecked, are often left to churn. Customers churn when they lose confidence in your service or feel you don’t care about them. A dissatisfied customer may never open a ticket or email a complaint, but they will silently leave and take their money with them. Some churn is to be expected, but if you’re dealing with a lot of churn, the problem may be the customer’s inability to use your product correctly.
Having a customer success team will remedy that problem and result in fewer customers leaving because they don’t know how to use your service correctly.
How to Create an Effective Customer Success Program in Your SaaS
Now that we’ve discussed the benefits of implementing a customer success program in your SaaS, let’s discuss how to set one.
Prioritize Customer Onboarding
Make new customer onboarding your top priority. When they first sign up for your service, your customer is the most excited that they’ll ever be with your service. You can take advantage of this positive sentiment by ensuring that their onboarding is top-tier. Decide how to welcome customers to your business, whether that’s through an interactive tour or video-based tutorials.
Segment Your Customers
Your customers aren’t the same, so your approach to customer success shouldn’t be, either. However, if you’re starting with a small team, you probably don’t have the resources to reach out to every customer individually—at least not all the time. This is why segmentation is so key.
Through segmentation, you can group customers with similar needs, pain points, or goals together. This allows you to then send personalized messages to a group of individuals, instead of attempting to reach out to your customers one by one. This way, you can still invest in the success of your customers without overtaxing your customer success team.
Identify Key Milestones Along the Customer’s Journey
After onboarding, exactly which steps will your customer take to complete their journey from purchase to retention and, ultimately, advocacy? You need to be a present guide, helping your customer every step of the way, especially during the moments where they’re most vulnerable to getting lost.
You can facilitate customer success in various ways, including sending exploratory emails to find out how they’re doing and highlighting features that may help them meet their goals.
Stay Top of Mind
There are many ways to stay in contact with your customers throughout their relationship with your business. For example, you can provide educational resources to your customers on an ongoing basis. This may include tutorials, training webinars, Q&As, and personalized check-ins where your team recommends a special service that meets the customer’s unique needs.
As a customer success department, you must stay in constant communication with your customers. You should always champion both the customer and your brand. Ask them how you can support them along their journey, and then implement their feedback as part of your action plan.
How to Effectively Measure Customer Success?
So after you’ve created a customer success strategy for your SaaS, how do you measure and monitor your efforts for effectiveness?
Hint: It all starts with the customer. Their success directly correlates to the success of your business. Let’s take a look at the top customer success metrics that matter most.
Customer Lifetime Value
Customer lifetime value, or CLV for short, is the total amount of money you can expect to receive from a customer during their time with your business. Your customer isn’t only worth how much they spent in their last transaction, but rather, your customer is worth how much they have already and will eventually spend during their relationship with your business, whether that’s six months or six years, or longer.
The goal of any business is to extend the customer’s relationship so that it’s lengthy and profitable. Through a carefully planned customer success program, you should be able to keep your customer around for longer.
To identify if you’re successful at extending your customer lifetime value, first, calculate your current numbers, and then keep an eye on your CLV in the future.
Learn how to calculate your customer lifetime value here.
Renewal Rate
Your renewal rate is a straightforward metric that indicates customer satisfaction.
Are your customers renewing or are they leaving your product after one cycle? A low renewal rate is a deadly blow to your SaaS because it usually indicates that your customer can’t see the value that your service offers.
Net Promoter Score
A Net Promoter Score, also known as NPS®, is a market research tool used to measure your customer’s experience, loyalty, and satisfaction. The NPS is a single-question survey. It asks your customer to numerically rate their likelihood of recommending your service to others. With the NPS, customers can also explain why they chose the score.
The Net Promoter Score is obviously a simple tool, but it’s also a powerful one. You can use the NPS to measure loyalty. But you can also use it to identify your detractors (i.e. unhappy customers who are most likely to churn), passives (i.e. customers who are still on the fence about your service and may or may not leave in the future), and promotes (i.e. loyal and happy customers who are likely to tell others about you).
Customer Feedback
What do your customers actually say about your product? There are three ways to find the answer to this question.
First, you can simply reach out to your customers and ask them if they’re receiving value from your product.
Second, you can listen to what your customers are saying on other platforms, such as forums and social media. You can use listening tools to find out what customers really think about your product.
Third, you can use your powers of observation to determine customer sentiment. Are your customers actively using your service? Has their behavior changed in the past few weeks/ months? Have they referred your service to others?
The above methods can give you major insight into what your customers truly think about your service.
Final Thoughts
By investing in customer success, you’ll reap a lot of great benefits, including decreased churn, increased loyalty, and better insight into how your customers engage with your service. Successful customers are powerful advocates for your SaaS, and will result in higher revenue for your business.
