Early Stage SaaS? You Might Already Have a Churn Problem
Guest Post by Anthony Kennada, VP Marketing at Gainsight
It’s something we often hear at Gainsight when we’re talking to SaaS founders in early stages of their lifecycle: “We’re a startup, we’re not ready for Customer Success yet.”
If you’re a founder, you’re probably still recruiting your core team, building product, and raising your first round of funding. You’re likely more concerned with the health of your pipeline than the success of your early customers — a customer base that might not even exist yet!
Unfortunately, if you’re not thinking about your customers’ success even at this early stage, the clients you do have are already on a path to churning, and your future customers will follow them out the door. Customer Success needs to be at the forefront of your mind even before you sign your first contract.
Here are three reasons why:
Your core product is EVERYTHING, and Customer Success will keep you on the straight and narrow.
If you were a proud owner of an original Apple II computer, or you were one of Facebook’s first 1,000 users, you had an indelible impact on the evolution of those companies. They watched and learned how you used their products and adjusted to fit your needs. Without an emphasis on your end user’s success, your company doesn’t stand a chance.
The roadside is littered with the wreckage of startups who didn’t care enough about what their customers needed from their products. When your Product team is kept focused on Customer Success, your Product will thrive on the right foundation, and your first users will look back and feel proud to be early adopters. Many of them will become customers for life.
Customer Success will help you avoid the deals that will inevitably churn.
SaaS isn’t like the old days of selling boxes. It didn’t matter who was buying; a sale was a sale. But when you factor in all the costs that go into acquiring a new customer and the revenues you can expect in the first year of the deal, you’re likely looking at a net loss. With subscription software, your endgame is Customer Lifetime Value (CLTV). But depending on the customer, that CLTV could turn out to be a net negative.
Let’s say for example, you have a customer with a use-case that’s not ideal — they’re going to be on the phone with support, they’re going to be demanding custom solutions, and they don’t forecast to expand their licenses. If it’s a low dollar value client, it could easily turn into a black hole of time, money, and resources. Without Customer Success to check them, your Sales team could close dozens of those deals. They’re after the commission, after all. There are so many cases where a deal is just a bad fit over time for you. Customer Success will help you spot them.
Customer Success will help you stay on target for CLTV.
But CLTV doesn’t tell the whole story. The amount of money a client pays you over the course of its life can’t even begin to cover the total value it brings to your company. I’m talking about second-order revenue. I’m talking about the residual effects of loyalty. The “free” marketing you get from successful customers in the form of references, case studies, and positive reviews can’t be manufactured. It should also be a cornerstone of your marketing strategy.
On top of that, let’s say your executive sponsor at a client organization jumps ship for a startup. What SaaS product do you think she will want to buy? If she was successful, she’ll champion yours.
But that just scratches the surface. As a Founder or CEO, you need to know how to operationalize each of those three Customer Success outcomes. That’s why Gainsight has teamed up with SaaStr to produce a dedicated track at Pulse 2016 for SaaS founders to apply each of these strategies at your company.
We’re going to bring to life onstage three of the top Customer Success posts on SaaStr, and a bonus session on aligning CS and Sales. Specifically:
- CLTV Isn’t The Whole Story. Don’t Shortchange Second-Order Revenue (link)
- Customer Success Is A Single Digit Hire (link)
- The $2 Million Dollar Man/Woman: How to Think About Scaling Your Customer Success Team (link)
- Aligning CSM and Sales on Renewals, Upsells, and Handoffs
Join us in Oakland on May 10th for the SaaStr at Pulse 2016 track, or stick around through May 12th for three days of Customer Success goodness. You can use the promo code SAASTR for a $500 discount on registration.
Whether you’re in the middle of your first series of fundraising or you’re well on your way to a major IPO, these are crucially valuable topics to master.
Gainsight, the first and only complete Customer Success solution, helps businesses grow faster by reducing churn, increasing upsell, and driving customer advocacy. The company’s SaaS solution is 100% Salesforce native and uses predictive analytics to drive revenue from sales, usage, support, survey and other sources of external customer data. In this way, Gainsight provides a 360° view of customers and drives retention across Customer Success, sales, marketing, executive and product management. Learn how leading companies like Angie’s List, Castlight Health, Marketo and Informatica use Gainsight to help their customers succeed at www.gainsight.com.