Aligning SaaS Customer Success

saas marketing - saas customer success alignmentSaaS businesses develop intimate, long term relationships with their SaaS customers. Keeping that relationship positive and aligned over the years is a real challenge. In fact, many public SaaS companies have yet to turn a profit. If they don’t keep their customers around for years, then all that capital invested in customer acquisition will have gone to waste.

This is the third post in a series that explores the importance of SaaS customer alignment across the SaaS customer lifecycle. The last post examined the challenges of aligning SaaS customer acquisition, resulting in a short a list of SaaS Customer Alignment Tips. This post continues the list of tips into the second half of the SaaS customer lifecycle by examining the challenges of aligning SaaS customer success.

Churn Starts on Day One

It is typical in B2B software for customer acquisition to eat up 50% or more of total costs. In traditional licensed software, that cost is immediately recovered when a deal is closed by the revenue of the deal. There is very little uncertainty about the value of any new contract: it is the margin reaped between license revenue and acquisition costs. In SaaS, however, customer acquisition costs are recovered over time as the customer renews each period. There is a great deal of uncertainty about the value of any new contract, because the customer might cancel early or stick around for years.

saas marketing - saas customer alignment stock

The economics of a SaaS contract are like that of buying a stock or a bond, where you make an up front investment based on the promise of future returns. As the future unfolds, the value of that investment has little correlation to the price that you paid. It is determined by how effectively the underlying business manages its future. In SaaS, the work doesn’t end when then deal it is signed. It begins, because churn starts on day one.

SaaS Customer Alignment Tip #7

Don’t Fumble Your Handoffs

saas marketing - saas customer alignment fumbleSeparating hunters and farmers is a common SaaS sales best practice. Deals are closed by an aggressive quota-carrying sales team: the hunters, and then handed over to a more service oriented group of account managers and customer success reps for on-boarding, renewals and up-sell: the farmers. Your SaaS customer has only one SaaS customer life cycle. Every time you hand-off a SaaS customer relationship, you create the opportunity for that SaaS customer to fall through the cracks in your process. Read more »

Aligning SaaS Customer Acquisition

saas marketing - saas customer acquisition alignmentSaaS businesses can be overwhelmingly complex. If the multi-tenant, cloud-based technology isn’t enough, there’s the recurring revenue model which creates all kinds of challenges from accounting to sales compensation to funding. Then, there’s the marketing. Getting noticed on the Internet gets harder every year and almost every SaaS product category has a crowded field of competitors. And of course there is mobile, which should come first right? In my own SaaS experience, be it scaling a sales and marketing team, consulting for SaaS startups or bootstrapping my agile marketing SaaS, Markodojo, I find myself returning to a common theme that always cuts through the complexity: SaaS customer alignment.

This is the second post in a series that explores the importance of aligning the goals and actions of the SaaS customer with the goals and actions of the SaaS business. The first post in a series introduced a simple framework for understanding SaaS customer alignment and its many benefits. This post digs deeper into the challenges of achieving SaaS customer alignment in the early stages of the purchase process. Along the way, we kick-off a list of tips to help SaaS businesses improve SaaS customer alignment at every stage of the SaaS customer lifecycle.

Not Everyone Needs Your Stuff

We love our SaaS companies and we love our SaaS products. They’re our babies! But, your baby always looks cuter to you than it does to everyone else. Selling to everyone is one of the biggest causes of poor SaaS customer alignment. Some people just don’t need your stuff, and they will never appreciate the unique qualities of your baby. Selling to everyone is an ill that inflicts many businesses, not just SaaS businesses, because it is baked into the economics. When growth is the primary determinant of SaaS company value, then there is always pressure to expand your available market. Unfortunately, your available market was probably determined a long time ago when your baby was conceived. Expanding your available market generally requires a new product module, a new SaaS product or even a new business unit.

saas marketing - poor saas customer alignment

SaaS customer acquisition should focus on maximizing available market penetration, not increasing available market size, and to do that you have to have a very clear picture of your target SaaS customers. Who truly needs your stuff? Why do they need it? What do they get out of it? How many are there? And, how can you reach them? This information goes by a lot of different names: market segments, qualification criteria, pain points, buyer personae, customer profiles, use cases, etc. The important realization is that they are all the same thing in the end: tools that reinforce SaaS customer alignment. The primary difference is in the depth of data; because you tend to have more of it the deeper the SaaS customer proceeds into the purchase process.

SaaS Customer Alignment Tip #1

Create a Common Customer Understanding

saas marketing - saas customer alignment knowledgeChances are your SaaS Marketing VP has some version of market segments, buyer personae, and lead scores, while your SaaS Sales VP has some version of qualifying criteria and pain points, and your SaaS Product VP has some version of users and use cases. Do they match? Are they shared? Do they use the same language? Read more »

Avoiding Poor SaaS Customer Alignment

saas customer alignmentWhen I’m not completely absorbed with my agile marketing software startup, I do a bit of SaaS consulting on the side. SaaS colleagues come to me with a wide variety of problems from positioning to sales compensation to churn analysis, but lately I’ve noticed a common theme: poor SaaS customer alignment. SaaS businesses develop intimate, long term relationships with their customers that are enabled by the always-on connection between the SaaS customer and the SaaS business through the SaaS product. Like many long term relationships, it is founded on a recurring cycle of needs fulfilled and expectations met, or not. And I don’t just mean customer needs and expectations. There are two sides to every relationship. SaaS businesses need to make money as much as SaaS customers need to spend it. SaaS customer alignment means aligning the goals and actions of the SaaS customer with the goals and actions of the SaaS business at every stage of the SaaS customer lifecycle.

This is the first post in a series that explores the importance of SaaS customer alignment. This first post introduces a simple framework for understanding SaaS customer alignment and its many benefits. Future posts will examine the challenges of achieving SaaS customer alignment in customer acquisition, customer success and early product market fit.

saas customer quality

In SaaS, customers are the fundamental unit of measure. Each new customer brings a new thread of subscription revenue that is woven into a larger tapestry to form the total recurring revenue of a SaaS business. The quality of that tapestry hinges on the quality of your SaaS customers. But,what makes for a high quality customer? Read more »

SaaS Inside Sales Benchmarks Survey | Take It!

As many of you may know, Trish Bertuzzi and the folks over at the Bridge Group publish a lot of great stuff on Inside Sales strategy and operations, including inside sales compensation benchmarks, lead development rep best practices, outbound selling strategies, and on an on.

Their upcoming 2015 Inside Sales Metrics and Compensation report will feature expanded coverage and focus of SaaS inside sales benchmarks in an extra effort to service the SaaS community. But the numbers are only as good as the data, so I’m reaching out to all my SaaS sales colleagues to TAKE THE SURVEY!! It only takes 6 to 8 minutes to complete. As motivation, SURVEY PARTICIPANTS WILL RECEIVE A PRE-RELEASED COPY. If you don’t do it, your competitors will ;).

saas inside sales benchmarks

For reference as to how great the fruits of your labor will be, here is a link to the 2012 Inside Sales Compensation and Metrics report. And, if you haven’t come across the other inside sales resources the Bridge Group has published, I highly recommend you check in out.

The Metrics-Driven SaaS Business | New Ebook!

The SaaS community has gained a solid understanding of SaaS financial metrics, as well as many of the operational principles required to achieve them. However, there has always been an obvious gap between what happens on the top line and what happens on the ground. This is about to change! The SaaS industry is maturing beyond simple, historical SaaS financial measures toward sophisticated operational measures in the form of new SaaS customer success metrics and predictive analytics. We are witnessing the emergence of The Metrics-driven SaaS Business.

saas customer success metrics ebook

This new Ebook is a compilation of recent posts inspired by my ongoing collaboration with Bluenose Analytics that explores the new Metrics-driven SaaS Business and its foundation of emerging best practices in customer success metrics.

Please enjoy, comment and share!

JY

The SaaS Metrics Maturity Model

saas metrics maturity modelBecoming a Metrics-driven SaaS Business is no easy task. It takes time, commitment and plenty of customers. However, the financial rewards of moving beyond standard SaaS financial metrics to SaaS customer success metrics and ultimately to sophisticated predictive analytics are significant. Each step toward SaaS metrics greatness builds upon the last. The stages of development can be classified into a natural progression of increasing SaaS business understanding from financial stability to operational measurability to revenue predictability outlined at the very beginning of this series. These stages define a SaaS Metrics Maturity Model that provides a SaaS metrics roadmap along with benchmarks at each stage of development for SaaS companies that aspire to become a Metrics-driven SaaS Business.

saas metrics maturity model

The SaaS Metrics Maturity model provides a SaaS metrics roadmap
along with benchmarks at each stage of development
for SaaS companies that aspire to become a Metrics-driven SaaS Business.

This is the fourth and final post in a series inspired by my ongoing collaboration with Bluenose Analytics that explores the new Metrics-driven SaaS Business based on emerging best practices in SaaS customer success metrics. The last two posts discussed the potential uses of SaaS customer success metrics for reducing churn and accelerating customer acquisition. This final post defines The SaaS Metrics Maturity Model, a path for SaaS companies to follow on their way to becoming a Metrics-driven SaaS business.

SaaS Metrics Maturity Model Stage 1:
SaaS Financial Metrics Mastery

The first step along the path to becoming a Metrics-driven SaaS Business occurs when Read more »

Driving SaaS Customer Acquisition w/Success Metrics

saas customer acquisition metricsAs a SaaS business matures, the importance and value of SaaS metrics increase. Most SaaS businesses begin their journey down the SaaS metrics path by tracking recurring revenue in relation to customer acquisition costs. After building a solid customer base, churn becomes a priority. These fundamental SaaS metrics are all apparent in the standard SaaS profit equation below.

SaaS profit =
current customers x ( avg recurring revenue – avg recurring cost )
– new customers x avg acquisition cost

However, it quickly becomes apparent that fighting churn requires a SaaS metrics toolkit that digs significantly deeper than simple financial metrics. Operational metrics are needed that connect day-to-day business reality to financial performance. It is this realization that gives birth to the new Metrics-driven SaaS Business as it discovers the goldmine of SaaS customer success metrics and predictive analytics that enable it to eliminate churn before it begins.

But what about the other half of the profit equation? Is it possible to apply SaaS customer success metrics to customer acquisition? The answer is most emphatically yes! Prospects are merely future customers, and their success lies in the purchase of your SaaS product. It’s a SaaS best practice to provide a seamless customer experience from visiting your website to trial to purchase to use, therefore the metrics used to describe this process should be seamless as well. In all cases, the goal is to help customers become happy users of your SaaS product, i.e., successful customers. SaaS customer acquisition is merely SaaS prospect success.

saas customer success metrics kpi dashboard

Customer success metrics are equally applicable to SaaS customer acquisition,
because prospects are merely future customers whose success lies in purchase.

This is the third post in a series inspired by my ongoing collaboration with Bluenose Analytics that explores the new Metrics-driven SaaS Business based on emerging best practices in SaaS customer success metrics. The last post discussed the promise of SaaS customer success metrics for churn reduction and upselling. This third post examines their use in SaaS customer acquisition.

Improving Trial Conversions

Marketing automation vendors built an entirely new software category based on the idea of facilitating purchase by helping B2B companies engage more effectively online with the New Breed of B2B Buyer. Unfortunately, marketing automation products focus all their attention on trying to get prospects to read your content, not use your product. Read more »

The Promise of SaaS Customer Success Metrics

saas customer success metricsOver the past few years, the SaaS community has gained a solid understanding of SaaS financial metrics, as well as many of the operational principles required to achieve them. However, there has always been an obvious gap between what happens on the top line and what happens on the ground. It’s one thing to claim that a 50% reduction in churn will result in a 2X increase in recurring revenue, but it’s quite another thing to make it happen. Achieving that 50% reduction in churn is usually a tedious and unreliable process of trial and error. This is about to change. As the SaaS industry matures, we are witnessing the evolution of SaaS metrics beyond simple, historical financial measures toward sophisticated operational measures in the form of new SaaS customer success metrics and predictive analytics.

saas customer success metrics kpi dashboard

We are witnessing the evolution of SaaS metrics beyond simple, historical financial measures
toward sophisticated SaaS customer success metrics and predictive analytics.

This is the second post in a series inspired by my ongoing collaboration with Bluenose Analytics that explores the new Metrics-driven SaaS Business and its foundation of emerging best practices in customer success metrics. [Attention SaaS CFO’s and VP’s of Customer Success! Please see the exclusive invitation at the end of this post if you like this series and would like to explore more in person.] The first post discussed the unique qualities of SaaS that enable the Metrics-driven SaaS business to apply a more analytic approach to management than traditional licensed software. This second post drills down on the promise of customer success metrics to bring greater rigor to the processes of churn reduction, upselling and customer success management for increased recurring revenue and decreased recurring costs of service.

saas customer success metrics

Tweet it!

An Ocean of Customer Success Data

The promise of customer success metrics is immense. Unfortunately, so is the challenge of developing them. Read more »

Bluenose Enables the Metrics-driven SaaS Business

bluenose customer success metricsWe are witnessing a dramatic change in the way SaaS businesses are managed. While SaaS financial metrics, such as recurring revenue, acquisition cost, service cost, churn, growth and lifetime value have dramatically increased our understanding of the economics of SaaS businesses, they have proven inadequate for managing them. As useful as they may be, SaaS financial metrics look at the past, not the future. They can tell you that you have a problem with churn, but they cannot tell you what you should do about it. Motivated by the need to better understand churn, many SaaS businesses have been independently exploring a new class of customer success metrics and have begun to embed them in SaaS customer success workflows with the hope of preventing churn before it occurs. We are witnessing the emergence of The Metrics-driven SaaS business.

Two weeks ago, I kicked off a new blog series on The Metrics-driven SaaS Business vision in collaboration with Bluenose Analytics, who I believe is going to help make this vision a reality. Over the course of the last five years, I’ve discussed the potential of SaaS customer success metrics with a variety of startups, but I didn’t feel anyone fully got it until I met the folks at Bluenose. There was always something missing, and that something was predictive analytics.

For those of us that work in SaaS, we feel the customer success metrics pain when we try to bend Web marketing tools like Google Analytics, Marketo or Eloqua to the purpose of SaaS customer success. Unfortunately, they are just not up to the task. They don’t integrate the critical subscription, product usage, and account engagement data required. More importantly, they don’t have the necessary analytical power to enable the Metrics-driven SaaS Business. At best they supply simple historical reporting and heuristic scoring systems that have little basis in reality. There is no short-changing the math. If you want real predictive analytics; you have to use real statistical methods.

Real Stats. Real Easy.

I started my software career at SPSS, a very successful Chicago-based software company acquired by IBM. SPSS made predictive analytics under the tag line: “Real Stats. Real Easy.” The reason I bring this up is that I think a lot of folks believe that real predictive analytics is something that is hard to do and even harder to apply to everyday business. Well it is hard to do, but it can be very easily applied to everyday business. A SaaS customer success manager doesn’t need to know a system is using logistic regression or survival analysis to produce health scores and churn alerts. She just needs to see the red light go on and get the alert in time to keep a customer from churning. Plus, statistical visualization methods can be incredibly intuitive and powerful, providing the ability to zoom out to see high level root causes and drill down to investigate account-specific issues.

Bluenose Analytics Enables the Metrics-driven SaaS Business

The Bluenose platform uses real statistics to create SaaS customer success metrics,
root cause analyses and predictive analytics that enable fact-based churn reduction.

I was lucky enough to get a preview of Bluenose back in November, and they got two things right that I have been waiting to see a long time: powerful statistical visualizations and predictive analytics. Of course the system has the baseline SaaS customer success capabilities, such as work flow management, surveys and broad data integration, but these are just a SaaS customer Success ERP module without the right analytics. Simple heuristic scoring systems just doesn’t cut the mustard. SaaS customer success metrics need real stats, real easy.

I think the Bluenose management team gets the potential of predictive analytics for SaaS customer success, because their roots are in serious big data analytics, specifically anti-virus software. That and I know they interviewed more than 50 potential customers in the development of their requirements. Having announced a significant pre-launch $11 million A round in December, the production release is imminent and the company is actively seeking and working with pilot customers. Anyone who follows my blog knows that I don’t do advertising and I rarely give product recommendations. For me, blogging is a labor of love, not commerce. The reason I am collaborating with the folks at Bluenose is that I think they get it, and I want to see the Metrics-driven SaaS Business become the standard in our industry.

Next Page »