Zendesk, which is one of Totango customers, is using Totango to find out how people who are trying their product or already existing customers are actually using it and how engaged are they with their product.
J.D. from Zendesk, was covering the other 3 steps, to complete the process of building customers loyally, form the customer-service and support angle.
Here are Totango slides from the webinar – please feel free to share or embed them in your website/blog:
Take a step back and you’ll realize user-engagement is the single most important metric in any SaaS business.
In a world where customer evaluate your offering at their own pace, and can cancel their subscription at any time, the best way to maximize your business potential is to make sure users are engaged and see value in your offering.
And the best way to ensure that is to create a metric which can be monitored for change and improvement on an on-going basis.
It has been somewhat surprising for us to see that most SaaS companies (and we’ve spoken to hundreds by now) are somewhat at a loss as to how to actually measure their user’s engagement with their offering and application. In fact, when pressed many admit that, important as it is to their business, they actually *don’t* measure user engagement. Simply because they could not figure out a systematic way to!
Since we’re here to help SaaS companies do better in this area, here’s our 3 step guide to getting started.
Step 1: Segment your users into lifecycle stages
The signals engagement for a trial user that has just signed up vs. an established customer is very different. Trying to come up with an engagment metric that applies throughout all lifecycles is practically impossible. Consider the following (in a fictitious SaaS application):
User1: Signed up last week, has logged in 5 times, created a project with some content and reviewed our knowledge-base 3 times User2: Paying customer for a year. Last week logged in 5 times, created a project with some content and reviewed our knowledge-base 3 times
Clearly User1, as a new trial user, is exhibiting a good level of engagement, where-as the behavior of User2, a year into their subscription, is concerning at best.
We recommend you break down user lifecycle at least into the following stages. We also suggest some ideas of things you’d want to look at as you compute engagement at each stage
You’d want to apply a different engagement metric to users depending on where they are in the process.
Step 2: Create a scale
Engagement is not a binary metric. Users are not either engaged or unengaged, but rather fluctuate on a scale. We recommend creating the following buckets:
The time window to measure varies. we typically suggest 14 days – 30 days, depending on the application’s complexity.
For a top-line view, you eventually want to end up with a dashboard similar to that shown below.
The chart shows, number of total, highly engaged and lightly engaged users overtime. For convenience, we overlay important milestones (product releases, marketing campaigns, etc.) so we can see their affect on our users.
For example, we see a good pickup of total activated users after launch . Growth is mainly in lightly engaged users however. Important milestone 1 made almost no impact (maybe it wasn’t that important after all? Important milestone 2 on the other had, clearly increased the number of highly engaged users (we should do more of that)
Step 3: Constantly refine & improve
Your engagement metrics should not be static but evolve over time. You should constantly “test” them against users eventual decision to purchase or cancel their subscription. If they don’t provide a good enough prediction as to what a user is likely to do with their account, the metric and its underlying formula should be tweeked.
Specific Examples:
“Highly Engaged” Trial users should convert at a very high conversion-rate to paying accounts
“Gone” and “Fading” Paying users would tend to churn if left unchecked
Summary
Measuring engagement can be tricky, but is absolutely essential for success in a SaaS environment.
A corporate-wide engagement metric helps:
The product-teams improve the product’s value to customers
The sales team focus on trial accounts that matter most
The customer-success team identify and proactively manage paying-customers
And helps marketing teams bring more qualified, relevant leads
It should be part of every SaaS organization’s core-competency. Get it implemented in yours today!
Do you know how to measure your Customer Engagement? Our SaaS Dashboard can easily do that for you! Try it now for FREE
I agree with Jeff that reducing churn is not only the concern of your Support group – the entire company should focus on client retention and reducing churn as focusing on existing leads is more profitable than acquiring new ones (see: Treat Customers Based on Their Value)
Below are the most critical elements for client retention strategy:
Losing an executive champion opens the door for competitive bids at renewal time – In order to leave their mark, new executive champions will be open to more competitive bides before agreeing to renew.
Many software companies are surprised when clients renew or leave – technology companies need to adopt a client lifecycle approach that removes the element of surprise.
Understanding the true retention rate – many clients will renew in year two more as a reflex then as a choice (Unless you have failed them miserably) making the 3rd 12 month term less likely for renewal. Therefore, it is important to measure retention rate per subsequent renewal years
Having high client retention, frankly, is hard work – clients will renew only if they find value in your product. Ensuring retention requires hard work and the whole organization should be focus on that.
A disconnect between the purchaser and the user community spells trouble – Companies rarely renew a solution that is not being properly used. Wherever necessary, bridge the void between purchaser and user when a divide exists.
The bad news – SaaS solutions are easy to deploy – If they are easy to deploy, they are also easy to remove and in many cases, the customers’ risk in replacing a SaaS provider is low. Retention is always a risk, when leaving you is painless – relative to the on-premise model.
Client retention is strengthened when your solution is connected into a larger eco-system of solutions – your clients will be more dependent on your solution and less likely to leave if your solution can integrate, communicate or otherwise “hook into” other key tools that your client needs such as financials, CRM, project management tools, etc.
Complimentary service offerings positively impact client retention – That too will create dependency for your service – offer complementary services that will help to ensure that your solution is entrenched in your client’s business process and workflow.
Sales rarely take an active involvement in client retention – Sales people skill set is very different from Customer Success skill set (read: Hunters and Farmers post) and even though Sales is often responsible for all revenue they cannot and should not spend the amount of time and effort on client retention. This is another reason why you need a client lifecycle approach that complements the Sales team and gives them the confidence to pursue new business because they know the company is pursuing client retention and revenue protection.
Clients will not renew if they think they have chosen a market loser – have your Marketing and PR teams communicating you market wins to counter any perceived “market loser” symptoms. i.e. RIM, a great company, that has great products, but will lose clients not because their products or solutions, but because they are perceived (wrongly so) as a “market loser” – and no one wants to be associated with a perceived loser.
So take a hard look at your organization through the lens of each of our Top 10 items, and adjust accordingly.
1. Must be a corporate wide initiative – not just a client services initiative.
Without Board and CEO level visibility, buy-in and sponsorship this type of corporate-wide initiative can be challenging to have all key stakeholders involved and invested. Although it is often lead by the client services team, a multi-departmental approach is necessary for it to be highly effective.
2. Each Department Leader has a key role to play
In a successful Client Lifecycle program, the leaders in departments such of Sales, Marketing, Product Management and Client Services all have a role to play at some point. Their contributions provide the pieces to the puzzle for a client when they are decided whether or not to renew.
3. Market and Promote your client lifecycle program
When you develop and execute on a truly unique approach to client engagement that will absolutely be a differentiator from your competitors, brand it. Market it. Don’t be afraid to let people know that your whole company has an approach that will make your clients successful with your product & service over the long haul. This added visibility also provides the appropriate amount of pressure to make sure your organization sticks with it.
4. Have a designated owner who acts as a “quarterback” of Client Lifecycle program.
Coordinating multiple stakeholders does require ownership for a client lifecycle program. The Executive owner is often the most senior client-facing (post-sale) executive. Depending on the size of firm, this would be the CEO, COO or VP of Client Services. This executive owner should be responsible for client retention. From a client to client perspective the owner should be a post-sales account manager, often referred to as a Client Advocate, Client Account Manager or Client Success Manager who is measured on retention, and not new sales revenue.
5. The Client Lifecycle activities should support the three main criteria that a client will use when deciding to renew:
Although this is a potential point of debate, from our experience there are 3 key factors that your client assesses when deciding to renew business with you:
Is your organization meeting or exceeding their current business needs / business drivers;
Does your client have confidence that you will continue to meet their current, future and evolving business needs business drivers, and;
The client is confident that they picked a market “winner” not a market “loser”. For example, even though RIM continues to be quite strong on meeting the business needs of the corporate user community, they will still lose many clients because they are now perceived , wrongly so, as a market “loser”. No one will want to be the one that made the decision to go with a market “loser”.
Each of these three areas must be proven, measure, re-evaluated over and over again throughout the client lifecycle to ensure that the elements your can control or influence are in your favor when they are making a renewal decision. There are other factors outside of your control, but they are just that, outside of your control.
6. Should leverage, and take advantage of, your ability to use client driven referrals to generate new business.
This should be an obvious, but many companies stop at having a logo on a website, or perhaps a case study, as a method to use an existing client as a reference. The reality is, that if you are doing a great job for your client, many of them would take a call from a prospect, or even better, refer you to a peer from another organization who would also benefit from your solution. As a former colleague of mine used to say, “Don’t ask, don’t get”. Understand, per client, what type of reference they are willing to be, and leverage it – but don’t take it for granted either. You need to continue to earn their reference.
7. Should concentrate on user adoption and overall usage rates
The user community within your client’s organization can change frequently due to layoffs, new hires, mergers, and other business events. You client lifecycle approach must have a deep understanding of the user community and adapt to a changing and evolving user base within the client’s organization. A strong client lifecycle approach is highly proactive in tracking usage & adoption and stays on top of the shifts in user community and reacts accordingly. A fantastic product that could help you get great detail on usage iswww.totango.com . It gives a level of usage intelligence that is invaluable.
8. Should provide client intelligence on the renewal health of each client
Having a client lifecycle program that measures, among other possible things, business driver attainment, Vendor-Client interactions, client’s willingness to be a market reference and usage rates provides an ongoing scoring ability to gain a solid understanding of the likelihood of renewal. Doing this in regular intervals gives you plenty of time to change the course for any client who is on the path of not renewing.
9. Measurable with centralized access for all stakeholders
A successful client lifecycle program is like a hub on a wheel with information “spokes” going to and from all key stakeholders in the your organization. Each group will benefit significantly from the knowledge/intelligence gained about client activities, successes, failures etc. In our experience, it can have a profound effect on who you market to, how your market to them, what the actual development priorities should be, etc. With one of my clients, it provided great clarity into a market segment that just wasn’t right for their solution. They pulled all Leads, Opportunities with prospects from this segment, and they exited gracefully from existing contracts that we knew were doomed to fail.
10. Proactive in nature,
If your sole interaction with your clients is reactive by definition it’s a failure. Getting ahead of a train, is far better than being run over by it.
This blog was first posted at ServiceVantage by Jeff Bennett, Founder and CEO. His company, ServiceVantage, which has helped technology clients to maximize recurring revenue, strengthen client retention and increase client-driven referrals via a unique client lifecycle approach since 2002.
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