By Matthew Klassen, Gainsight Head of Creative
The promise at the heart of the SaaS business model has always been that by sacrificing relatively large one-time payments, you’d maximize revenue over the long-term lifetime of the customer. In four letters, the promise of the SaaS model is CLTV (Customer Lifetime Value).
But baked into that promise is a catch: your revenue needs to actually recur in order to make servicing and supporting your customers worthwhile. That means operationalizing renewals are at absolute minimum equally important as new revenue. And besides blind luck, there’s only one way to meaningfully improve your retention rate: improving your customers’ outcomes and experiences.
The Customer Success Paradox
Customer success—the art and science of operationalizing those outcomes and experiences—has subsequently become one of the fastest growing professions around the world. But it’s not just a job, it’s a strategy. And that’s where too many SaaS leaders have a blind spot. Let’s take a look at some of the most common activities CSM (Customer Success Management) teams are doing day-to-day:
- Mapping customer journeys according to business goals.
- Aligning internal (company-side) milestones to external (customer-side) lifecycle events.
- Onboarding/training customers.
- Conducting Executive Business Reviews (EBRs) with key customer stakeholders.
- Distributing relevant content and communicating with customers and users at scale.
- Running retention/expansion playbooks ahead of renewal dates.
- Tracking customer health using quantitative and/or qualitative signals.
Obviously, there’s a lot more, but let’s start with these seven. What’s missing here? While some of those tasks could be happening at least partially inside the product, chances are they’re happening mostly—if not completely—independently of the product.
That’s a problem, because:
- The vast majority of your customers’ day-to-day interactions with your company and your brand are happening inside the product.
- The vast majority of data about your customers’ usage habits, health, feature adoption, etc. is being generated in and by the product.
- The outcomes and experiences so critical to determining whether your customers will renew and expand with your company are being achieved inside the product.
In short, your customer success strategy is of paramount importance to your business model. Unfortunately, most of your customer success activities are happening outside the arena where they’d have maximum efficacy.
To put it bluntly, your customers’ success is almost entirely occurring in the product, while your customer success efforts are almost entirely occurring outside the product.
The New Sales & Marketing
When it comes to new revenue, businesses solved this sort of problem decades ago. Sales and Marketing team are aligned around common numbers, systems, and strategies. With hindsight bias, it’s easy to say that it’s equally intuitive that Product and Customer Success teams should be just as symbiotic.
But that won’t happen by accident. There are three core facets to any business strategy—the people who execute it, the process by which they do it, and the technology they use to succeed. When it comes to Product and CS alignment, you need to have a plan for each one.
When CSM is siloed off from Product, the dynamic that arises is often a “CSM of the gaps” approach, as outlined by Gainsight COO Allison Pickens in this blog. In a nutshell, every product has gaps or shortcomings, and in too many businesses, it becomes the main job of the CSM team to paper over those gaps. And when customer success is happening largely outside of the product, it’s inefficient and the CSM team sacrifices taking opportunities to drive growth.
Look, if a product has gaps, the team best equipped to fill them is the Product team. Furthermore, when CSM is a cost center—a necessary expense to deliver on the promises you’ve sold to your customers—it’s never going to be an area of investment for growth-minded leaders.
So what’s the solution? Bust down the silos. Align the teams on what their core goals, responsibilities, and objective metrics will be. Coordinate them daily. Sales leaders are talking to Marketing leaders every single day in most companies. Understand the core purpose of each team: Product to build the products your customers love and CSM to deliver the outcomes your customers desire.
It’s so easy to say “break down silos”—if you came here looking for business jargon, you’re feeling it, but everyone else is probably asking what it all even means. In order for you to functionally break down organizational silos, you need to have aligned processes. As it stands, each team is probably developing workflows that work for each individual organization, but they don’t necessarily work for the other.
For example, can you answer these questions?
Do your Product and CSM teams have the same adoption measures? Do they have the same access to usage metrics? Do they have visibility into the same qualitative feedback with customers? Who’s closing the loop on the feedback? How are you tracking and announcing enhancements in synchronization?
All these questions (and others) need to be answered together—as a Product and CSM team. And it should be obvious that your process is going to require your systems to work together as well as your teams.
These days, almost all Sales & Marketing teams have shared visibility into common data and can take coordinated action at scale thanks to CRM software. You’ll be hard pressed to find organizations of any size that don’t collaborate closely inside CRM of some kind. But when it comes to Customer Success and Product, they’re often not using any shared systems at all.
That’s unfortunate because there are some no-brainer applications—like usage data. CSM teams need good access to data generated in-product. Product teams need visibility into users’ desired outcomes and lifecycle events. Both teams need to orchestrate their customer communications.
Just as Sales & Marketing has CRM, we think it’s imperative for CSM and Product to have their own shared technology.
Product Experience and Customer Success
That’s the core of the message Gainsight wanted to communicate at SaaStr this year. We believe the core mission of customer success and product is the same as sales and marketing: to drive growth. And to do that they need the right people, processes, and technology. Click here to learn more about how you can do that at your company.