New customer logos may be the lifeblood of top-line revenue growth and the focus of sales and marketing teams. But renewals have emerged in the last few years as a key growth driver for SaaS companies.
A recent McKinsey study indicated that existing customers can drive between a third and a half of new revenue growth, even at startups. And we’ve all seen the data that says new customer acquisition costs 5X as much as customer retention.
Many companies today focus on a 100% NRR (net retention rate) as a way of protecting and enhancing their bottom line earnings. Existing customers are also much more likely to buy again from you and try new products than new customers are to sign their first sales contract. For these reasons, customer success has found its way to the spotlight in modern SaaS.
But turning your customers into satisfied champions who will not only renew their contracts but use more of your platform and upgrade to new services doesn’t happen by itself. It takes a coordinated effort to make sure they are not just satisfied but successful. Then they will find more problems to solve with your platform, ultimately becoming your customer advocates.
Here are some key steps to follow to guide your customers along the journey to success:
1. Engage Early
Making customers successful starts at deal closure or even earlier. Your sales team closes the deal, the customer signs the contracts and then sales hands off the new customer to the customer success team.
The next step is to create an implementation roadmap, establishing trust with the customer in the process. This can include onboarding and training, user acceptance testing (UAT), the setting of a project plan and a solution description that shows what a successful customer implementation will look like.
2. Build Momentum
Getting the customer up and running on your platform is the easy part. Ensuring that the customer realizes value from your platform is a bit more challenging. As with any other business initiative, you need to have the right data and the ability to analyze that data to understand whether your customers are realizing value and successfully using your product.
For starters, you need to understand how they are using your product, what features or functions do they use the most, what business processes are they managing with your product. This data is key to understanding your customers’ current state. You can’t set goals for their future state and ultimate success unless you have this information.
Do your customers have incidents where they struggled to get your product to do what they wanted it to do? In the early stages of customer implementations, such incidents are common. But they’re also relatively easy to prevent in the future. It’s how you recover and learn from them that counts. Again, having data on customer usage helps you to see this and to constantly measure and review how successful they are on your platform.
Especially in the early stages, you need to provide your customers with a high-touch experience. Assign a dedicated customer success manager to them. Your CS managers should be following a consistent, seamless approach from customer to customer, but one that is personalized for each individual customer.
3. Communicate Constantly
Quarterly business reviews are a must at this stage. You need to understand how customers are using your software and whether it meets their expectations, then help them set an individual product roadmap for future adoption. Customers should also understand what’s coming in your own product roadmap, when they’ll have that game-changing feature they really need.
Not all of the evidence for customer success will be in your customers’ usage data. Questions you can ask the customer to understand how your platform is working for them include:
- How much time are you saving on our platform vs. what you were using before?
- Are you able to use fewer staff than before?
- Have you been able to retire any other software tools since adopting ours?
- Are you able to solve problems and get to the root cause of issues faster than before?
Understand that customers won’t always have data on how their past systems worked so some of this may be anecdotal. Still, asking these questions can help customers to realize the value they’re receiving from your platform and help them see what goals they’d like to accomplish next and how your platform can get them there.
Churning from one SaaS offering to another is relatively easy to do from the customer’s perspective. Customers that fail to take advantage of a SaaS platform’s capabilities won’t achieve success and will take their problems elsewhere.
Most importantly, hearing their concerns and listening to what they need is the most important way to show you care and are invested in their success.
4. Be Dependable
Gaining the customer’s trust from the start, holding their hand through the implementation process, giving them high-touch personalized service, monitoring their usage of your platform, understanding the challenges they are facing and helping them to realize the progress they’re making and the value they’re realizing will help you to not only retain that customer, but grow their usage of your platform and turn them into an advocate for your company.
Following these steps will prove to your customers that you are a dependable partner that understands their challenges and will help them to solve their business problems. Your customers’ success on your platform will in turn help your company grow new revenue streams and boost your bottom line, turning your customer success department into a profit center.
About the author:
Kaveri Kalavath is Head of Worldwide Customer Success at OpsRamp