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:
When you’re in the Software-as-a-Service (SaaS) business, you should think of how to attract your users to your application in a way they’d be more successful due to it and therefore happier. If you think about selling, chances are it won’t going to happen… especially when your sales model contains a trial period or freemium, where users check up your app before deciding they need it. Also, you should think of your existing customers – you want them to renew their service, right? They’re all seeking the added value to reach success.
Make sure your application is adding tremendous value to your users, making them happy and successful with what you offer. Also, your users should go through an enjoyable experience while in your app and receive great support, resources and help.
It’s not easy, but Customer Engagement can help. By listening to your customers, understanding them and engaging to fulfill their needs you will get customer love. It’s really that simple.
2. A Customer Success Team
Assign an executive on your team to be responsible for customer success. That would help you understand the value your users subscribed for, guide new customers through training steps, and monitor for any signs of unhappiness.
Customer success is key to your growth – successful customers stay longer, increasing your revenue.
3. Create a Customer Health Score
To help customers succeed, you need to find out who’s doing well and who’s struggling to get value from your application. The only way to do that systematically is to define a consistent health benchmark for your paying customers, then track each account to see who needs help. Here are some example benchmarks:
Good Health: Successfully using the application
Average Health: Using the application, but not at the level of a successful customer
Poor Health: Not using the application; unsuccessful
What defines a healthy customer depends on your service, but be sure to define, track, and monitor it on an ongoing basis.
4. Nurture Your Paying Customers
Lifecycle marketing is the discipline of marketing to your existing customers, based on the status of the relationship. There are two important lessons here.
Don’t stop selling once customers sign up for the paid service.
Don’t treat all customers equally. That means you should communicate very differently with a customer in poor health than with a customer in good health.
Membership Length: How long were they customers before cancelling?
Engagement Trends: How engaged were they throughout their subscription?
See if you can identify and mitigate trends. Your goal should be to improve the experience for current and future customers. Customer success should be a pillar of your business. Happy customers help generate new leads and business. Unsatisfied ones create PR nightmares. In our connected world, customer success is your most important marketing asset.
In today video post, Tracey Kaufman, VP of Customer Experience for Cloud9, speaks about how a business should aspire to its customer’s success in order to become successful itself.
I agree with that saying. Furthermore, I think that if a business is constantly supplying an added value to its customers and focusing on the quality of its service rather than on sales (read: How NOT to Sell in SaaS and Increase Paid Conversions), that would lead to a win-win situation as both the users will get added value and the business will gain loyal customers.
Tracey is also talking about how to count active paying customers, referring to Jeanne Bliss book: “Chief Customer Officer“. How do you measure how many customers you have? Do you count your customer accounts? buy do you include cancelled account in this amount? and did you count how many of them have actually succeeded and how many are going to renew?
In this blog I mention the importance of the measurement of the key metrics that any successful SaaS business should have. There are measurements which sometimes look simple but takes several metrics to calculate. Also should also keep in mind, that measuring is just the first step – the second step, which is just as important, is to interpret these numbers into customer behavior and make the right decisions by them.
To read the full transcription of the video, click here
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Video Transcription:
Hi, my name is Tracey Kaufman, I’m the a VP of Customer Experience for Cloud9. In a lot of times, I think people look at, when they look at their customers, they say, “OK, well how do we know we’re done and if you have a product you know are they using that product? Have you deployed that product? Have you gotten them implemented?” But really you have to ask yourself–the question is, “What is the greater vision for that product?” Are you telling this customer that they’re gonna grow their business or they’re gonna gain more revenues or they’re gonna gain more forecast accuracy like we talk about.
And so I really believe at the beginning of an engagement with a customer, you have to dream. You have to figure out, what is it that they really want so it isn’t just the tactical, and then gauge success and come up like with a little success curve so you have key metrics along the way and you can have, you know, individual wins along the way but at the end of the day you’re really reaching high up, and that’s when you’re successful, when they’re increasing revenues, when they’re growing their company because of using your application.
Jeanne Bliss wrote a book called, “Chief Customer Officer”. And it’s really the Bible that I use for if you’re trying to do a customer success. disorganization. You really should read that book. It’s asking yourself the very basic questions of, how do you count your customers.
So many companies You ask them how many customers they have. And they look at their active paying customers and that’s their customer account. But you also have to know other questions like how many customer did you have now many of them actually cancelled? And how many of them are successful? And how many of them are going to renew?
So you have to be a lot more granular and segment your customer base and understand what your patterns are. If you had a hundred customers and now you have fifty customers, well that’s a problem. Because now you have a fifty percent turn rate. So it’s really being much more honest with yourself.
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.
So you have a product! you’ve worked so hard on making it the way you want (iteratively of course) and now you want to sell it – so how do you do that? The answer, as strange as it might sound, is that you don’t!
As I wrote in my previous post, two very common sales models which have recently evolved are the zero-touch and the low-touch models where there are no sales teams or a very small sales team respectively. Why have these models evolved? because they were needed! in the SaaS reality, where the Internet is flooded with information, customers prefer being the active searchers and find solutions for their specific problems. They tend to rely less on non-objective sales people to convince them why their product is good for them – they prefer to simply read or hear about a solution from someone else and if they feel a solution might help them, they can simply sign-up to it’s free trial period or free account (freemium) and try it themselves!
Come to think of it, it’s kind of a revolutionary state of mind where your customers want to be able to choose their products based on its true value! After choosing it, they’ll evaluate it and only then, if they find it really helpful for their needs, they’ll convert to paid users.
The key is not to sell the product but to give away value – if you honestly & utterly try to gain customer success and help other people with their existing needs, they will feel your pure intentions and stay for more. Once trying to sell, the whole focus will go in that direction and you risk loosing the audience loyalty.
This very much like Google organic search: if your website truly provides relevant and valuable content, it will be ranked high in Google and attract prospects. Similarly, if your product is truly relevant and provides value to customers, prospects will try it and convert into paying customers. Your solution should of course solve a very common problem and preferably have a unique answer (and that is a subject to a whole different post).
Customer Engagement is key for software-as-a-Service business. A recent post by David Skok explains how and why to measure customer engagement. If you are a SaaS executive and haven’t read it yet, read this first.
In this post I’d like to elaborate in what areas customer engagement is critical for SaaS business success.
Balancing Customer Acquisition Costs and Lifetime Value
The baseline metrics that govern SaaS business success are Customer Acquisition Costs (CAC) and Customer Lifetime Value (CLTV). The larger the margin between CAC and CLTV, the more poised the business is for sustainable growth and profitability.
So lowering CAC while increasing CLTV is key and customer engagement has a dramatic impact on both.
The most effective way to lower CAC is to increase conversion rates from free to paying customers. We’ve learned that when customer engagement is high during evaluation period it has direct link on conversion rates.
Same in CLTV. The key metric here is churn. Higher CLTV means lower churn.
Customer engagement (or lack of) is very good indication for churn.
The dynamics of “Land & Expand”
The SaaS model lends itself to gradual adoption by customers. It could be inherit in the business model (e.g. freemium), or just by nature of subscription model itself: Most customers start off as short term pilots by one team in an organization. Success results in renewed subscriptions and further adoption within the organization.
This means that SaaS companies have users/clients who actively evaluate the service (paid or free evaluation), and at the end reaches a decision to continue or not as a customer.
As David describes in his post, times have changed with a much higher percentage of business transactions transpiring online with much less interaction.
This new reality places customer engagement at the center. So what does it take to strengthen customer engagement in your service?
Cultivating Customer Engagement
Cultivating customer engagement requires an organizational culture that focuses on customers and their needs.
1. Know your customers
It’s easy to fall into the trap of treating your customers as unknown, faceless people. After all, chances are no-one in your organization ever met them. They probably live far away and may even speak a different language. But you can’t afford to do that.
A company must develop or achieve tools that will help them measure customer behaviour on their service. These tools must be capable of presenting the users behaviour once in your application and answer relevant questions such as:
Have they been exposed to your core features and do they fully understand the value-propositon of your offerings?
Is momentum growing or declining within the organization?
Are they potential buyers?
Etc.
Knowing what your users choose to do in your application is crucial for you to be able to interpret their actions correctly and use it as a basis for running a successful SaaS business.
2. Learn how to be proactive
Being attentive to your customers also means knowing when to intervene.
You need tools to wisely call-out users who need help and are at risk of churn or, conversely, those that are reaching the limits of their current plan and are prime for “upsell”.
Being able to identify these users and conditions is critical because:
Your sales and success teams have finite resources and need to be laser focused on accounts that matter
Users nowadays prefer self-serve and self-paced work. You need to know it’s a good time to contact them, or run the risk of doing more damage than good.
Contacting users at the right time increases their satisfaction and loyalty. It shows you understand their needs and respect their time. And it will increase conversion, reduce churn and maximize upsell opportunities for your business.
3. Evolve your service
The same tools that help you measure and understanding customer behaviour, should help you draw conclusions of how your service and product needs to improve.
Do the new features add value or complexity?
Is the new design helping convert more trials but causing added friction to existing customers?
Are the new tutorials and guides helping new users or are they still getting lost?
Are users from the basic plan not engaged enough to “push through” to the premium packages?
Customer engagement can shed a light to some of these tough product and marketing questions. Not only by directly showing you what parts of your product different users engage with, but by surfacing the users you should be talking to directly for primary market research.
Summary
In the long run, Customer Engagement is all about value – customers have needs and they’re seeking for an efficient, ready and easy solution that fulfills those needs. Now.
If you are able to understand your customer’s behavior, interpret their needs and act accordingly, customers will choose to use and reuse your service!
Do you know how to measure your Customer Engagement? Our SaaS Dashboard can easily do that for you! Try it now for FREE
About TOTANGO: TOTANGO analyzes in real time customer engagement and intention within SaaS applications to help you grow your business
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