Issue 75: Welcome to the Real World - You Will Lose Customers
Let’s face it, as you grow, you will lose customers. It’s painful but inevitable. When it comes to the importance of Customer Retention, the numbers don’t lie. The Gartner Group found that 80% of your company’s future revenue will come from just 20% of your existing customers. In this issue of the SaaS Tattler, we discuss what you can do to retain your customers.
Join Kia Puhm, Former VP of Customer Experience at Eloqua, on February 23 at 1pm ET, to learn how you can define and manage your customer lifecycle.
Unlike traditional business models, for a SaaS business, the customer journey beings with the purchase. From there on out, the goal is to continuously earn renewals at the end of the contract. This can be done by maintaining your customer’s expectations of your product and fostering loyalty. But what if your customers aren’t renewing? In this article, Raj Badarinath, provides three strategies a SaaS business can use to increase renewals and reduce churn.
Focus on Customer Success
Software businesses need to understand the difference between customer service and customer success — and focus on the latter. While of course there will always be issues that need to be fixed, which is where customer service comes in, a focus on customer success is proactive rather than reactive and helps customers take full advantage of your solution and gain real value from it, increasing the likelihood of renewal.
Consider creating a customer success team whose goal it is to “look at the entire customer process and lifecycle in order to resolve universal adoption issues and other common bottlenecks that prevent customers from achieving their goals.” This should involve coordination across the enterprise, on both an individual account level and a systemic level.
When mapping out your customer journey, it’s important to identify each touch point. By doing so, you create an opportunity to capitalize on each stage. As your customer grows, each interaction will be different, therefore, you will constantly need to adapt with your growing customer base. Understanding your customer’s pain points will set your apart from your competition. In this article, Ryan Tkowski, illustrates steps to optimizing your customer journey.
Steps to Optimize your Customer Journey:
- Look at all the ways your customers touch your company . . . not just the easy ones.
With the innovation of technology and the speed of which business is done there are a number of touch points associated with your customer experience. This makes for a complex process. It is important to improve on each touch point because an issue encountered at any one of these points can dramatically influence the overall experience.
Never underestimate the value of a strong customer onboarding process. After all, it’s your customer’s first impression of your business. While in hyper-growth, it’s easy for startups to ignore churn, but in order to succeed long term, companies need to combine hyper-growth with customer success tactics. In this article, Aaron Agius, outlines the impact a strong customer onboarding process can have on retention and growth.
3. Increase retention.
Customer onboarding tactics such as conducting needs assessments, offering assistance, following up with customers, and offering them a custom experience can be powerful strategies to increase retention. Research in the Harvard Business Review found that businesses don’t increase customer loyalty by delighting them -- but by finding ways to reduce their effort.
Still, most businesses consider generating leads and converting them to be their top priority instead. For inbound marketers, getting to these new leads is considerably more important than gaining more revenue from existing customers, as shown in Hubspot’s State of Inbound 2015 Report.
The gap in priority is actually pretty strange, considering the value of retention compared to acquisition.
- Higher retention equals more profits: Research from the Harvard Business school found that a 5-percent increase in customer retention leads to more than a 25-percent increase in profits.
- Retention is cheaper than acquisition: An Econsultancy survey found that 82 percent of companies agree that retention is cheaper than acquisition. For some markets, retention is essential for getting any return on investment (ROI) at all.
Having a Customer Success Team is a solid way to create long-lasting relationships with your customers and generate revenue for your business. Not opting to have a Customer Success Team will result in a poor customer retention rate, therefore hindering your company’s long-term growth. In this article, Katrina Holmes, shares her personal experience building a Customer Success team at Ebsta.
Considering Starting a Customer Success Team?
Customer success is key to making your business sustainable. Eve explains “Sales are your starting point; it’s where you get your revenue and build your client-base. However, Customer Success is going to make you money on that client-base. It costs more for companies to get a new customer on-board than to keep a current customer renewing. Plus, you should be wanting your customers to be coming back for more because it means they trust in you over your competitors.”
It may be easy to decide on starting a Customer Success team but how do you go about building a successful team that can implement a successful strategy? “You need someone that has extensive experience with the customer journey and can map it out for you. There’s a lot of resources out there but you fundamentally need someone that can deal with pressurised situations and can build long-lasting relationships effectively. When it comes to how many people should be in your team, it’s dependent on your company size. At Ebsta, we have a small Customer Success team that is aiming to expand over the coming year but we’ve managed to look after our 40,000 user community to a very high standard. I’m looking forward to having more people on board to liaise and continue building a valuable rapport with our customers.”
The Best of Customer Success Today
If you are a customer success professional considering taking a role at a SaaS vendor, this test can give you a quick sense of how customer success operates there. The Amity Test: 16 Steps to Better Customer Success.
During the onboarding period, customers are highly motivated to get started and are awaiting clear instructions from you, the vendor, as to what to do next. Improve Your Onboarding Practices for Customer Success.
The people you hire are your biggest investment. Here’s a blueprint for how to build an extraordinary Customer Success team. Hiring for (Customer) Success: Where to Begin.
With so many customer success resources to choose from, we’ve selected the top customer success resources and events that we think will educate and inspire you for the rest of the year. The Best Customer Success Resources of 2016.
Every week I issue this roundup of relevant articles from the customer success industry so we can learn from each other and share best practices. If you like what you read here, please consider forwarding to others. New reader? Subscribe.
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