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:
I was on a super exciting panel at the All About The Cloud conference in San Francisco this week: “the Power of the Customer”.
Here are 3 predictions for the future that were discussed on the panel:
1. All SaaS companies will use predictive customer analytics. Measuring and optimizing customer lifetime value was a big topic. You can’t manage what you can’t measure so expect SaaS companies to invest big in customer analytics and predictive analytics. These are technologies coming from the consumer marketing space. However, in software you can go one step further because all customer interactions, including interaction with the product itself are digital. So while Victoria’s Secret may analyze customer transactions to predict whether customers will buy again (and whether it’s worth sending you another expensive catalogue) imagine that you could actually know how often your customer wore that swim suit. That would be a pretty good indicator of how much you liked the swim suit and how likely you are to buy again from the catalogue. With software this is possible! And indeed software usage turns out to be the most reliable buy signal (or churn signal whatever the case may be).
2. There will be many SaaS companies with no sales teams. Think about Atlassian: a $100 million+ revenue B2B software companies with ZERO sales personnel. Their sales model is 100x or more cheaper than that of their competitors with field based sales teams. And their velocity is so much higher. I bet you their customer satisfaction is higher too. At no-sales companies, marketing is responsible for demand generation and initial signups. For more complicated products a customer success function is emerging to coach customers post sign-up and to grow usage, users and use cases over time. There was common agreement on the importance of building out customer success teams regardless of the sales model. Customer success managers have responsibility over renewal revenues as well as upselling and carry a quota rather than being a glorified support team.
3. Products are becoming social. The product itself will be the primary sales tool. Much of customer engagement will happen from within the application itself. Customer actions speak loudest: usage is the most important buy or churn signal. Also customers will communicate with other users and with the vendor using in-application communities and communications. The panel agreed that the new Social Buyer demands self-service. It started some years ago with self-service information (‘inbound marketing‘) and these days the ‘must have’ is a free trial or freemium version of your product. The panel agreed that freebies were essential in creating trust. Also think about this: if your competitor offers free trial of some version of your product and you don’t, then customers will be already half-way down the sales process with your competitor before they ever talk to you.
Thanks to the All About Cloud team for having us, thanks to Shubber Ali from Accenture for moderating and thanks to my fellow panelists Jon Miller (Marketo), Todd Bursey (FinancialForce) and Jeff Yoshimura (Zuora) for fun times! See you next year
If you are interested to analyze and predict your customers’ actions, or if you want to make your product social:
The Totango team is excited to announce its participating in the Engine Yard’s add-ons program.
Engine Yard is the leading Platform-as-a-Service (PaaS) provider. Totango provides Engine Yard’s clients a way to better monetize their applications by driving customer engagement and boosting conversion, retention and customer lifetime value (Read Press Release).
Once Engine Yard’s customers have developed an application, attention rapidly shifts to monetization. Totango can accelerate revenues for new and existing applications by providing real time visibility into customer behavior and automating personalized sales and marketing campaigns based on these behaviors.
The webinar will take place Tomorrow, Thursday, April 26th @ 10am PT.
If you still haven’t registered, please go ahead and do so in this URL
Here are some more details about the event:
6 Sure Fire Tips to Retain and Grow Customers
Customer success starts with understanding how your customers are using your product and what problems they might experience. It ends with more relevant and efficient information delivered at the right time, via the right channel.
During this webinar, you will learn the six things you can do today to retain and grow your customers. Zendesk is joining forces with Totango to share with you the insider secrets to transforming your customer support organization into a revenue center and turn prospects into life-long fans of your brand and services. Register here.
I am looking forward to see you there!
Regarding the integration with Zendesk which we accidentally omitted from our news update yesterday:
Integrate Totango with your Zendesk Help Desk
If you use Zendesk to manage your help desk, you can easily create a feed of ticketing activity into your Totango account, expanding your engagement database. You will then be able to tell which accounts are opening support tickets, how this influences their use of the application and their likelihood to subscribe to premium plans or to cancel their account. Read more…
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.
Promotional discounts, credits or value-add offers can be an important part of a product launch strategy. A properly timed discount, upsell or cross-sell or “bundling” can positively change the perceived product value and dramatically impact adoption of SaaS applications.
But, making on-the-fly changes according to the dynamic needs and circumstances of customers can inherently complicate your billing and pricing models. How does your billing system support the various iterations of a subscription discount, promotion or credit?
For example, how does the discount get applied? What is the duration of the discount? Does the discount apply to all subscription types (recurring, one time charges, activity)? What about conflicting offers? What types of customers are eligible for discounts?
Subscription discounting can get complex very quickly because most billing platforms use a very limited set of “price levers” (time, duration, quantity) capable of shifting the Perceived Product Value.
What you want is to have many price levers around where you dynamically configure and reconfigure services and pricing on the fly: subscriptions + sign-up/activity/event fees + bundles + add-ons + incentives + promotional products.
The ability to add and manage activities, consumption or usage-based price levers to a promotion gives a company a powerful tool for growing its customer base (recurring revenue) and maximizing lifetime value of the customer (reduce churn).
Effect of Changed Product Value
Positive changes in the product – or its perceived value proposition – have the potential to drive improvements in ARPU. Product differentiation can lead to short or long-term market advantages, depending upon how quickly the differentiation can be continued.
As stated earlier, with the simplest subscriptions, a business only has control over the price, the term of the offering, and the product mix of the relationship. Because choice is limited, tweaking price levers in those three categories provides limited results.
For example, if a $10 per month subscription is the MSRP, reducing the price to $7 to attract more users may simply cannibalize the existing customer base.
For this reason, it is important to add additional pricing levers around consumption or usage parameters to evolve the relationship with the customer. For example, the consumption or usage price lever can be implemented as a limit or as a set of charges that are generated by ongoing use. For example, as a person consumes, reward him with a discount or promotion every time he reaches a certain threshold, thus enticing him to continue to consume (along the lines of airline “point” systems.
When charging for different classifications of the good or service, customers paying the set amount for unlimited access will have a different value equation than those paying a lower price for limited access.
Over time, customers can migrate from an unlimited ($10 per month) to other price segments, depending on the customer experience or the changing perception about a subscription’s value – especially to those initially not interested.
Customers that do not see value in paying a set amount for unlimited access to a good or service may become interested if offered a chance to pay a nominal per piece price. For those subscribers, the value comes in the flexibility to consume the good or service at will. In a SaaS application, for those not willing to pay for a $10/month for unlimited access to articles may be willing to pay a $7/month plus a discounted price of $0.25 per activity such as time entry, project, download, computing cycle, contact, or any other measureable activity.
In this scenario, the customer who does not see value in paying $10 for unlimited access may become interested when he can pay $0.25 for only the activities that have value. At $0.25 per activity, the customer has a low barrier to trying out the new content, and the business succeeds in making money on content that previously would not be monetized. But the real value for the business is the opportunity to convert the customer to different subscriptions over time, as the subscriber’s situation and interests evolve.
Billing: A Strategic Asset & Enabler of Innovative, Sustainable Business Models
In a subscription business model, it is the relationship with a person that matters most, and no customer touch point is more important than billing, as it connects businesses with customers on an ongoing, personal basis.
Though not the sexiest topic, “billing” is the medium by which companies can truly drive and capitalize on customer usage patterns and preferences.
Billing is, therefore, central to improving adoption. Product management and sales strategies that focus on long-term relationships and maximizing customer lifetime value must address billing models.
Utilizing any one of those practices requires sophisticated billing that goes beyond a cookie-cutter approach for maximizing volume and per-unit profits. Now, billing has to boast real-time intelligence, the type of which is derived only from sophisticated rating and charging engines built to dig into data about actual usage (as opposed to forcing business people to pore over enormous reports after the fact, when opportunities have slipped away).
The next generation of billing has to enable business users to dynamically implement, enforce and change parameters on the fly. By implementing activity, usage or consumption-based billing, companies create more opportunities to innovate and drive new sources of revenue.
About the Author
Christopher Couch is COO and co-founder of Transverse, LLC. TRACT, from Transverse LCC, is the all-in-one activity, rating and subscription-billing platform that can bill for anything. SaaS, cloud, MSP, ISVs, telcos or wireless providers with TRACT’s pricing levers to rapidly build and evolve any business model: if it can be metered or measured, TRACT can bill for it. Learn more at www.tractbilling.com
This week we’ve added a section into our website which I believe would add value to the SaaS Community – I present our SaaS Resource Center!
The Resource Center is a place where we update the most important/informative/valuable articles on 7 of the hot categories that are most current these days in the SaaS industry and I believe this knowledge base would assist many beginners as well as veterans in this industry to learn on new trends in their fields.
Here are the categories the Resource Center approaches:
SaaS Best Practices – Will consist our latest SaaS business models and SaaS best practices and is updated with the hottest topics facing SaaS software and Cloud app vendors today.
SaaS Sales Tips – B2B sales tips on different sales models such as low touch or zero touch, sales metrics and the best practices to build the ultimate sales machine.
Lifecycle Marketing – Drive the usage and adoption of your application and maximize customer lifetime value. Nurture existing customers based on their specific needs and wants and their use of your application.
Customer Analytics – Perform customer, conversion, cohort, funnel, usage or churn analysis. Discover how big data and customer intelligence can increase SaaS revenues.
Nobody likes it when a customer cancels their subscription. In SaaS companies where the bottom-line is so heavily dependent on Customer Lifetime Value (CLTV), churn is particularly troubling. As Joel York explained in SaaS Churn kills SaaS Growth, unless you know and control churn, your chances of building long-term success for your business are slim.
Now the fact nobody likes churn doesn’t mean it wont happen. It will. The bigger question is, “What will you learn from each customer that churns?”, so you can build upon that for the future. We recommend the following:
The Churn Database
The most important thing to start off with is keeping a record of why customers cancel. It’s amazing how many businesses don’t do that systematically. If your business is of low velocity, this can easily be captured in a spreadsheet. If not, you may want to have something a little more robust. The point is to keep it simple and establish a practice where the data is captured and consulted on an ongoing basis.
We recommend keeping the following 3 data-points on each canceled account:
Reason: as stated by the customer – The best is to add a step to the cancellation process, but you can also get to this by email, calls etc. Most customers will happily give you candid feedback at this stage. Make it a point to ask each one.
Time from subscription to cancellation: How many months from the time they started till termination
Level of engagement the customer had throughout their subscription: At a minimum, did they ever get productive with your offering before cancellation, but you can and should get much more refined than that.
Analyze the data
When it comes to churn analysis, there are two major categories of causes you need to handle very differently:
No more need for the service offering
Ran out of business, was a tactical problem you helped solve and it no longer exists.
If this is the main reason for churn, you may want to consider finding a customer-base that is less volatile, structuring your pricing differently and so forth.
The point is that, if this is the core reason, the corrective actions you can take span beyond the realm of your product and customer-success practices. They may be the realities of your business which you need to factor for in your overall business plan.
Disappointment from the quality service offering
The other case relates to customers that still need the product – they just don’t want to use yours anymore.
If that’s what your churn analysis is telling you, focus should be on figuring out where the failure is and fixing it within your product and service.
Time to cancellation (2) will usually tell you if you have an onboarding problem (people leave because they can’t get established) or if people cancel because they outgrow your solution and move on. Here again, you need to invest in different areas depending on where the majority is.
Engagement level of customers with your application is another key thing to measure because it, almost always, gives an early sign of churn. Knowing that ‘customers typically churn after 3 months of inactivity’ is crucial for building a proactive churn prevention discipline and reaching out to them before it’s too late.
Is Churn really bad?
Finally, consider that churn isn’t by definition a bad thing. Some businesses even have a strategy accepting certain types of churn and compensate for that (see the case of 37signals).
But you must know why customers are canceling for this sort of business planning.
The research of The Customer Success Management Initiative is revealing that while many SaaS/Cloud companies are hiring individual Customer Success Managers, or even establishing entire teams of them, there is a wide range in the understanding the role. Given the lack of clear cut definitions, lines of authority and accountability, it’s no surprise that there would be an equally broad range in how the individuals and teams are equipped. After all, if your job is only about writing up case studies and customer references for use in marketing collateral, a telephone, laptop and perhaps a reasonable travel budget may be entirely sufficient. But if you’re truly charged with the responsibility for keeping customers and increasing their spending with your company, you’ll need much more.
A Question of Ownership
The first item on the CSM wish-list ought to be a clear charter. Who is to be responsible for what? What authority does the CSM role carry with it? Holding a professional (or anyone, frankly,) accountable for something over which they have no real operational control is a recipe for failure and turnover.
A “fire-fighter,” a customer retention specialist brought in only at the last moment to try to save a failing customer relationship, may only need to have the authority to make concessions within a determined range so that they know what they can and cannot offer to the customer. Their engagement will probably be of limited duration, and their performance metrics are likely to be based mostly on deals saved/lost statistics. However, if the customer retention manager’s responsibility also includes early detection of at-risk accounts, then Senior Management needs to provide appropriate access to data and tools to enable that aspect to be accomplished.
More than CRM
It’s an unusual company in this day and age that does not have a Customer Relationship Management system installed and in use. Unfortunately, in too many companies, the CRM system is really only about automating the Sales and Marketing functions, with a module or two for Case Management over in the Support group, In reality, there are three separate systems: Marketing, Sales and Support — that are designed and built for just those functions as individual activity areas. CRM systems are typically not designed for the Customer Success Manager, who needs to analyze a range of interaction data to detect patterns that indicate the actual health of the ongoing relationship between the customer and the company in time to do something about it when necessary.
An appropriate CSM system, for example, would alert the manager that a particular customer, one who perhaps represents 40% of the overall yearly corporate subscription income, was no longer using a key module of the product. This is not about a decline in simple logins and licenses, but in the usage of certain specific features of the application. Such a capability, vital to ensuring that a new customer is properly proceeding up the adoption curve, becomes even more important as a means of detecting an established customer that has started to disengage. To enable that insight, however, requires that you know which features of your product to track. That’s a subject for another day.
About the Author
Mikael 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.