Thoughts from my journey

The Totango team and myself are mentioned in this WSJ recent article. The article is about how the Steve Jobs biography impacts managers and founders. I think the article came out pretty nicely, although as always, you can find comments from people who don’t like Apple/Steve Jobs/Entrepreneurs in general.

Rachel, WSJ reporter, came about “Lessons Learned By Reading Steve Jobs Bio” which I wrote right after reading Steve Jobs biography. She then contact me via @guynirpaz on twitter and I’ve connected her to other members of the Totango team to learn more.

You can enjoy the article here.

Today I’ve interviewed Steve Bartel, Head of Analytics Team at Dropbox.

Dropbox no-touch sales model is a very good example to emphasize how important it is to increase customer value using different types of user approach activities (nurturing campaigns, application, etc.)

Those activities, if done correctly, would naturally increase customer engagement rate and are easy to perform when thinking of the customer’s life-cycle stage at any given time.

The most efficient way to conduct those activities is by performing them based on the customer life-cycle stage, rather than time based (as many companies still do) as the first approach refers directly to the user’s life-cycle stage in the application while the later assumes where they’d be at this time statistically.

If we refer to our users knowing their current stage in our application (instead of assuming that), we increase the chance users will be mature enough and be able to address our call and implement our suggestions.

See the complete interview with Steve to find out which other activities Dropbox is using to increase their customer engagement:

To read the full transcription of the video, click here

Video Transcription:
My name is Steven Bartel. I am responsible for the analytics team at Dropbox. And Dropbox is just a way to have your files wherever you you are, it also makes it really easy to share them. So dropbox does a lot of different things to increase user engagement. We use some of the more standard techniques.

For example, we’ll have tip e-mails, so early on in your Dropbox life, you’ll get an e-mail, saying “Hey, you haven’t tried out this feature. It might be useful for you.” We also do things around promoting our different features on our website. For example, in the top left corner when you’re browsing your files online you might see something that prompts you to share a folder with a friend, and maybe your photos.

Lastly some of our features our viral and they help help our users promote user engagement across each other. For example, we have shared folders, so when I put something into a shared folder, I’ll invite my friend to it. And, you know, they’ll start using DropBox again. We have a sales team. And what they’re looking into is how to sell DropBox for businesses.

The consumer product is entirely driven word of mouth and automated through our website. But we find that it’s, you know, very useful to have people to help explain the use case of DropBox for businesses. It might be, you know, if that’s a thing that will put more into this product, and we have a bunch of tools around, sourcing those leads, and figuring out who exactly might be the best fit for our sales team.

Paul Greenberg wrote a great blog this week defining Customer Engagement. I am much looking forward to his expanded paper on the topic.

Basically he writes that in 2012:

• Out: Social Business and Social CRM
• In: Customer Engagement

What’s the difference?

Ray Wang and Dion Hinchliffe define this more elegantly, but in simple terms CRM Systems hold customer records, whereas Engagement Systems facilitate customer interactions (company-customer and customer-customer).

Customer Engagement is fundamentally about a customer’s 1) voluntary, 2) ongoing interaction with a company and its products or services for the purpose of 3) mutual value creation. So yes, the company should derive value (profits or other KPI), but in my mind key to Paul’s definition of Customer Engagement is the creation of Customer Value.

Customer Value is NOT measured by the time that customers spend interacting with your marketing tools or even by customer loyalty, but rather by – well – the VALUE delivered to customers through your product or service. So if you are going to measure time spent, then focus on the time spent interacting with the product or software itself, rather than with sales and marketing materials. Even better, focus on metrics that are specific to your product or service: Tracey Kaufman from Cloud9 says it all in a recent video blog Your Customer Success is Your Own Success: (in essence) “if the goal of your product is to save customers money, then customer success if defined in terms of money saved (not time spent)”.
So, when you speak about Customer Engagement next, make sure to think not just about Customer Engagement before purchase (sales and marketing interactions) but especially about Customer Engagement AFTER purchase (using your product or service).

At Totango, we can help you model your customer lifecycle and define customer actions that correlate directly with customer value created. We recommend that you segment your customers in groups depending on whether or not value was delivered to them. Your customer success team can use this information to help lagging customers along. Your sales and marketing teams can use the actual benefits customers have gotten as a tool to up sell (at Totango we prefer “up serve”).
If you focus on Customer Value, the rest, including and especially customer referrals, will follow naturally.

Today I talked to Dave Boyce, the CEO of Fundly to hear his angle about Customer Success.

Fundly is a social fund raising business which help people rase money for causes they care about. Fundly don’t charge anything to get started and rewarded only based on customer success, meaning it only get paid if the fund has been successfully raised and that makes customer success the main metric Fundly measures and analyses.

In order to push for customer success, Fundly set up the “Social Ninja” Program which is basically a collection of Social Media Marketing experts that their sole goal is to bring to their customers success and by that to increase company revenue.

In today SaaS and web application world, customer success become more and more popular as the customers are in the center and they decide which service give them value and help in “relieving their pains”. Of course customers will choose to only pay for what truly give them value and this is where customer success becomes the goal of any successful SaaS business.

What about you? do you know how to measure you Customer Success?

Do you know how to measure your Customer Engagement?
Our SaaS Dashboard can easily do that for you!
Try it now for FREE

In my last “Top 10″ series for this week, I chose to review another Jeff Bennet’s article: Top 10 Things We Have Learned about Client Retention.

Client retention is a critical component to any organization, especially for subscription based revenue model organizations.

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:

1. 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.
2. 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.
3. 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 3^rd 12 month term less likely for renewal. Therefore, it is important to measure retention rate per subsequent renewal years
4. 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.
5. 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.
6. 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.
7. 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.
8. 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.
9. 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.
10. 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.

For the full version of the tips, please refer Jeff’s post on ServiceVantage blog

The subscription-based economy is thriving.  Netflix’s well-known model (and subsequent public relations mess in changing it), and the recent announcements from Google and Apple have set it in stone.

The subscription model, like many of the B2B sales models in the SaaS industry, is all about the customers – listen to your customers and have your service to comply and you’re on the right direction!

Here are 10 tips that can assist subscription based companies to get by in the industry:

It is more critical than ever to make sure customers get started and find value during the first days, weeks and months after signing up for your SaaS service. Customers sign up long before they start paying you and only if they see value, month in month out, they will (continue to) pay you. This means that in addition to a sales funnel, successful SaaS companies now also use and track a customer engagement funnel (see picture).

There are six steps to successfully on boarding a new SaaS customer:

1. Sign Up: provide self service sign up

Take all friction out of the sign up flow. Ask for as little information as necessary to setup an account. As long as you can track usage and prioritize prospects later on, you can keep the top of the funnel wide.

2. Activation: provide clear instructions

Provide clear instructions to get your new signups up and running as soon as possible.

3. Active Use: include ample examples

Usually active accounts are only 35% of monthly sign ups. To move the needle on active users, demonstrate immediate value. Make sure that you include default settings and, if necessary, some demo data. Also include examples of how others have been successful with your product.

4. Paid Use: personalize customer engagement

Free to paid conversion is difficult to achieve. The key is to personalize your communications with the user at this moment. You should know what features they have tried and target your sales pitch. With the right message delivered at the right time, you can increase free to paid conversion by 37% or more.

5. Renewal: check in with the user often

The key to high renewal rates is to predict which customers might be unhappy and to pro actively engage these users. If you know that a customer hasn’t logged in recently you might e-mail or call. If you see they are not using certain features, perhaps they need a helping hand.

6. Expansion: increase lifetime value

If customers are happy, you may have the opportunity to sell them more. It should be possible to achieve negative churn: this means that the total revenues derived from your existing customer base is growing over time through a combination of high renewal rates and expanding existing customers.

I’ve conducted an interview with Chris Yeh, VP Marketing from PBWorks and thought it would be interesting to share.

As you know, I declared more than once that the customers are kings which means companies should be able to understand their customers behavior and trends and interpret it correctly into customer engagement level in order to know which customers to focus on later at the funnel.

Chris explains why customer engagement is so important when using the land and expand strategy – for example once a large company is starting to use their services their goal is to have that company to use them more and more and eventually to spread into an enterprise wide deployment.

So tracking and enhancing the customer engagement level is very important. The metrics to know that could be i.e. how much a user is using the products, how many usage days they have per week, the total volume of transactions, etc.

I agree with using those metrics in measuring customer engagement and every company should pick the right metrics for its business. At the same time, there are acceptable metrics that every SaaS company should use which are elaborated in our SaaS Business Metrics Survey Results. Using those metrics  will not only show the engagement level but the whole business overview which every successful SaaS business should act upon.

Tomorrow I will post another tip by Chris about Freemium Sales Models for B2B and SaaS.

To read the full transcription of the video, click here

Video Transcription:
I’m Chris Yeh. I’m the VP of Marketing for PB Works, which is a SaaS company that does collaboration software for various markets, like advertising agencies, law firms, and of course general business. Customer engagement is super important to us because a lot of times we have, what we call, a land and expand strategy.

So often times a large company will start to use us in just a small group, maybe just one team that’s using PB Works to be more effective. And what we want to do is to have them use us more and more to bring in more and more people and eventually to spread into an enterprise wide deployment. So what’s very important for us is to be able to track and enhance the level of customer engagement, how much they’re using the product.

We look at things like how many days per week are they using it. We look at things like what’s the total volume of transactions and things that they’re doing and all this is really important for our marketing and for business in general.

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).

It was a jam packed day at Sales 2.0 in Santa Monica today. It was a great opportunity to meet with and learn from some of the brightest in the Sales 2.0 community.  I have summarized my key takeaways for Sales 2.0 leaders below:

#1 – Attract many, then focus on filtering

If your prospects do research online, will they find your company, or your competitor? Mark Roberge, VP Sales from HubSpot argued that you should keep the top of your sales funnel as broad as possible. Attract as many people as possible to your website through good content. HubSpot itself is attracting 50,000 leads a month, of which 40% get passed to the inside sales team and about 400 (or less than 1%) convert into new customers.  The leads that don’t convert still help to reinforce the HubSpot brand and trust. With so many leads, strong filtering and lead scoring algorithms are keys to sales success.

#2 – Give all sales people a social media address

Scott Holden, Senior Director at Salesforce.com argued that not just companies need to be discoverable, but also individual sales representatives. Social pages are often the first ones to come up in search results.  Darren Suomi, VP Sales from HootSuite called it “giving all sales reps a social media address”. He said it is no different from issuing a rep a cell phone and e-mail. IBM indeed has done just that, said Douglas Hannan, BU Executive at IBM: all 1,000 IBM sales reps have a web page with built in 2-way video and chat. They are also asked to get on Twitter and LinkedIn. IBM marketing maintains a social messaging calendar to make it easy for reps to find content to post.

#3 – Deliver value first, sell later

Jim Cathcart, the well-known author of “Relationship Selling”, defined what customer relationships are all about: in a relationship people know each other and have an exchange of value. Ask yourself: who is truly glad to know me? In a sales relationship, provide value first, sell later. Don’t talk about up selling customers, but rather up serving them. If you do a good job others will vouch for you and recommend your services. Scott Holden summarized this as moving from self-promotion to social referrals: “trust me, he is a great lover” and not “I am a great lover”.  I expressed a similar sentiment in my blog earlier this week on Genuine Customer Engagement.

#4 – Use online demos to drive sales

Salesforce.com recently did a survey of 1 million influencers in the buying process and found that 50%-70% of sales processes start long before a sales person ever gets involved. The most important deciding factor in the sales process was “online demos”, not sales person interaction.   HubSpot data points in the same direction: the most reliable indicator that a lead will convert into a customer is a request for a demo (46%) as compared to download a white paper for example (22%). As we discussed in many blogs including Trial Conversion is Top Priority in SaaS, I would add that interaction with a free trial version of your product has an even higher correlation with conversion to customer.

#5 – Consider a territory model based on social proximity

A somewhat radical idea was presented by Michael Lodato from Network Hardware Resale. He argued that in a commodity business (he sells network hardware) buyers are deciding based on personal relationships and customer service. Therefore he moved to an open territory model, where leads are assigned based on the personal relationship of a rep to the lead, rather than geography. On paper this social proximity model sounds great, but in reality it is still difficult to implement. Michael admitted to have a team of marketers manually assigning leads based on social parameters.

#6 – Move towards a lower touch model

Gerhard Gschwandtner pushed speakers to learn from B2C selling models:  Amazon has $30 billion in sales with ZERO sales reps. B2B companies need to learn from this and move to lower touch selling models, wherever possible. One of the speakers, Rini Das from PAKRA, has achieved just that. She is closing 95% of her business based on social media leads. She has hardly met any of her clients in person, but is still doing $30,000 to $150,000 in revenues per customer each year.  

Gerhard and gang; thank you so much for a great conference!

Tomorrow: Enterprise 2.0!