Thursday, 18 Jul 2019

Startup diary: 'Customer success' may be SaaS jargon, but it's still important

The term ‘customer success’ refers to a relatively new business function that is central to the successful execution of a Software-as-a-Service company. This function used to be called good old ‘customer support’, but that is very passé these days.

The problem with the term customer support is that it conveys very clearly the fact it is a pure cost to the business.

One that must be endured and reduced to a minimum. That’s why most customer support experiences are terrible, for both the customer and those providing support.

Customer success, on the other hand, conveys a much more positive outlook; this function is one that brings in revenue. How can providing support for customer issues with your product generate revenue?

The key insight is that the success of your business is inherently connected to the success of your customer in their business. The more your product helps them succeed (and if you are providing value, then that has to be the case), the more you succeed.

And in using your product to be successful, your customers will use more of your product, for longer, and your revenue goes up. For this simple reason, customer success should be considered a sister function to sales and to marketing, and should have equal status with both of these traditional revenue engines. In many companies, all three functions report to a chief revenue officer.

For Voxgig, customer success will be vital to our growth. We operate a ‘freemium’ model with paid usage tiers.

In order to get our users to climb those tiers and generate more revenue, we have to make them successful with our product.

For us, setting up a customer success function will be one of our major projects for the second half of 2019.

There will be two operational aspects to consider: the reactive side, and the proactive side. The reactive side is the activities that react to customer needs.

This is the more traditional customer support aspect. But in addition to providing the expected support modes, we always seek to understand the real context behind a support request. It’s about taking the right conceptual stance to support. What are the support modes? You need to provide self-service support content.

This includes not only core documentation in text form, but also things like frequently asked questions (FAQs) and video guides. We’ll need to provide short guides within each part of the user interface, directly related to the task at hand.

Going up a level, you need to offer online chat, email support, trouble ticketing and, at the top level, live phone support. Some of these modes will only be available on paid tiers.

The reactive operational aspect is more interesting, and can be more effective. This works by actively monitoring the health of the customer interaction with your system.

To do this, you need to determine the key metrics that indicate how engaged your customer is.

This is easier said than done. For example, you might decide that your customer needs to log in at least once a week. We might decide that our customers need to run, attend or speak during at least one event a month.

Finding the right metrics is hard. It is a process of trial and error, especially at the beginning. And as we build out more features, they can change. The most important thing to do is to take a data-oriented perspective. It is vital to avoid bias generated by personal opinions.

Again, easier said than done. The first step is awareness that this will be a challenge.

Once the customer engagement metrics are giving you useful information, you can do something with them. This is the proactive part.

Instead of allowing a customer to flounder and lose interest, you can reach out to them to find out what the root cause of the problem is.

Once you start a conversion, you are well-placed to understand how best your product can help the customer.

This is a very powerful way to retain the customer, and possibly even grow them as an account.

This activity is similar to another traditional business activity – account management. The difference here is one of scale. Operationally, you cannot support all of your customers with individual account managers. Nor can you take them all out to lunch. There are just too many.

What you can do is use the customer activity data that your Software-as-a-Service product generates naturally to proactively intervene when you see leading indicators of ‘churn’.

Churn, the loss of recurring revenue when a customer leaves, is the true fear of the startup chief executive.

Because you spend more (a lot more) to win new customers, spending a modest amount per customer to reduce churn makes a big difference to your eventual revenues.

It is almost always true in business that keeping an existing customer is more valuable than winning a new one.

Customer success, while it may be SaaS jargon, is just a recognition of that old truth.

Richard Rodger is the founder of Voxgig. He is a former co-founder of Nearform, a technology consultancy firm based in Waterford

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