The Need To Know for SaaS Businesses

The need to know

In the traditional software market, it has often seemed that the only thing that a vendor felt they really needed to know about a given customer was how to get their signature on the initial contract.  The bulk of the profit to be realized (and the source of the Sales’ commission!) came up-front from the sale of the perpetual licenses.  After that had been accomplished, the barriers to switching were presumed to be high enough to keep the customer tied to the vendor for some time.


In the SaaS/Cloud sector and business model, there is no burst of up-front profit, and the barriers against churn are much lower.  It can take many months, in some cases as long as a year or even more to recoup the customer acquisition cost.  A customer who elects to end the relationship before that point can instantly turn what appeared to be a highly profitable deal into a dead loss.  As a necessary result, the Customer Success Manager at a minimum must know a great deal about the customers’ business, and especially about the customer’s expectations and usage of the vendor’s application, in order to have any accuracy of insight about the real status of the relationship.

Looking for Answers


The beginning of the quest for knowledge is in determining what you need to know in order to function as an effective CSM (Customer Success Manager).  What drove the customer to engage with your company and application?  How does the customer measure success?  Are they tracking their own progress towards those success goals and objectives?  Are their individual users appropriately moving up the adoption curve of the application’s feature set?  All of these core questions must be reliably answered, and on a continuing basis, but the need for knowledge doesn’t stop there.

Some of the answers will come from conversations with your customers.  Others will be provided by your application feature usage monitoring resources – but here, too, you have to know what to look for.  Which features are core to the application. such that there is something very wrong when a customer is not using them?  If your monitoring tools haven’t delivered enough data to use in this regard (or even if you think they have!), go talk to the Support team reps.  Ask the customers themselves what they consider to be the must-have features.  What does the Sales team report as customer hot-buttons?  How do prospects talk about their expectations?  What does Marketing say about competitive analyses of the opposition’s products?

Are You Sure?

What you don’t know can very definitely hurt you in the game of keeping customers and increasing per-customer profitability levels.  So can what you think you know.  Cross-check the data and responses you get to your inquiries from different directions.  If there is conflict, dig deeper.  Why would some customers or respondents think that a given feature was vital and others not?  Look for patterns, and matches with verifiable customer behavior.  Look, too, for what doesn’t fit – and ask why.

About the Author

Mikael Blaisdell, The Hotline MagaszineMikael Blaisdell, publisher of The HotLine Magazine, brings 30+ years of experience in the strategy, process, people and technology of customer support, retention and profitability to the emerging profession of Customer Success Management. He is also the moderator of the CSM Forum on LinkedIn. Read moer about The Customer Success Management Initiative, sponsored by Totango.

 

 

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