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Customer Engagement customer retention customer success User Engagement

The State of Customer Success Management 2012

Customer Success

A White Paper / Report of the Customer Success Management Initiative

Webinar: Thursday; February 23rd 2012 10: AM PST

 

Over the past couple of years, a new position has been showing up in the open job listings throughout the SaaS/Cloud community.

The new role reflects the growing awareness that customer retention is a core requirement.
The signing of the first contract with a customer is a only a milestone, not a resting place. “Shelf-ware” or underutilized products are no longer an option. As a result, software vendors are now realizing that they must take a far more proactive role in ensuring the success of their customers.
But understanding that customer retention is a year-around effort, a commitment that requires a dedicated executive is only the beginning. There is much more to Customer Success Management than just establishing a new box in the overall corporate organization chart.

The work of the Customer Success Management Initiative, opened with two focused surveys. Further insight was gained through extensive interviews, ongoing online conversations in the CSM Forum and from in-depth review of a wide range of published content. The webinar presentation will include the research findings to date on the current-state of what SaaS/Cloud firms are doing in the areas of the Strategy, Process, People and Technology of Customer Success Management.

Attendees will receive a complimentary copy of the white paper when it is published in March.

Advance registration for the webinar is required, and space will be limited.



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The App Stores Effect on Customer Engagement

App-Store-iStock_000016976501XSmall

Last week , I had several interesting meetings with people who don’t want to spend marketing dollars on paid advertising and prefer to put all of their investment into product offering, as they believe their products will market and sell themselves.

This got me thinking in what is the nature of these applications and the changes in the delivery models which makes this all possible. The new SaaS delivery model enables new channel and distribution models.

Viral Adoption
Some B2C applications take advantage of the network effect to go viral. A very good example is Dropbox, a file sync service, which became extremely successful by allowing people to share files with one another. Now Dropbox has no need to invest in marketing – get people to download Dropbox, they need to make sure their application continuously creates value to their users and the product will ‘sell itself’.

App Stores
Not all applications out there share the same characteristics, especially applications which are business facing. For those apps, the emerging concept of App Stores is an excellent fit.

Much like Apple changed the landscape of music industry forever with iTunes music store, the emerging app store market on Google Apps Marketplace, Salesforce.com AppExchange and new and other enterprise marketplaces are making new applications visible and accessible for end users to try them out. That and a SaaS offering model, makes the entire experience of looking for new solution and evaluating its applicability to your business need a very simple experience.

A very good example of a company which is rapidly growing without any marketing dollars spend is myERP. I’ve met with Francois Nadal built the fastest growing ERP business by focusing on building a great and easy to use product (Nadal, is a UX guy) and channeled it’s adoption through the Google Apps Marketplace.

With such powerful distribution channels available, business owners should focus their resources on creating compelling product offerings which are easy to consume and sell themselves. This emphasizes even further the need to put the right infrastructure in place to monitor and manage customer engagement within the applications.

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Totango Analyzed Engagement and Optimized Sales with Over One Million Businesses

over half don't use their saas paid service

Today, I’m happy to announce that Totango has analyzed the customer engagement and optimized the sales and customer success interaction with more than one million prospects!

We sure learned a lot from our beta stage and this is the place to thank all our wonderful customers who were taking part of our beta stage.

Out of the massive data we’ve gathered, here are 4 main conclusions that could help sales and customer success teams to understand where to focus in order to increase revenues: from new sales, expansion sales and renewals.

  • Free trial users who are still active during day 3 of their trial were 4 times more likely to convert into paying users than the average customer

What can I do with that information?
SaaS sales teams could use this insight by focusing their time and close more deals

  • Active trial users who were contacted by a sales rep were 70% more likely to buy the paid service than those who weren’t

What can I do with that information?
This proves that timely and contextual engagement with prospects results in more sales

  • A full half of paid SaaS customers log in less than once a month or do not use their paid service at all. Another 19% is using their paid service less than once a week. Only 14% of paid customers use their service weekly and only 17% use it daily

PR-Usage-Frequency

What can I do with that information?
Have customer success team focus on the non-active paid users and the sales teams to focus on the frequent users to increase upsell

  • Most cancellations were preceded by a period of non-use

What can I do with that information?
SaaS customer success teams could use this insight to configure alerts for inactive users and to pro actively reach out to these customers and offer help

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More than one million businesses optimized and analyzed

Today, I’m happy to announce that Totango has analyzed the customer engagement and optimized the sales and customer success interaction with more than one million prospects!

We sure learned a lot from our beta stage and this is the place to thank all our wonderful customers who were taking part of our beta stage.

Out of the massive data we’ve gathered, here are 4 main conclusions that could help sales and customer success teams to understand where to focus in order to increase revenues: from new sales, expansion sales and renewals.

  • Free trial users who are still active during day 3 of their trial were 4 times more likely to convert into paying users than the average customer

What can I do with that information?
SaaS sales teams could use this insight by focusing their time and close more deals

  • Active trial users who were contacted by a sales rep were 70% more likely to buy the paid service than those who weren’t

What can I do with that information?
This proves that timely and contextual engagement with prospects results in more sales

  • A full half of paid SaaS customers log in less than once a month or do not use their paid service at all. Another 19% is using their paid service less than once a week. Only 14% of paid customers use their service weekly and only 17% use it daily

PR-Usage-Frequency

What can I do with that information?
Have customer success team focus on the non-active paid users and the sales teams to focus on the frequent users to increase upsell

  • Most cancellations were preceded by a period of non-use

What can I do with that information?
SaaS customer success teams could use this insight to configure alerts for inactive users and to pro actively reach out to these customers and offer help

 

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Customer Engagement WebinarLearn How to Convert Free Users into Paying Customers in a 30 minute webinar
Register here!

 

 

About Totango:
Totango analyzes in real time customer engagement and intention within SaaS applications to help you grow your business

 

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Customer Engagement freemium SaaS sales User Engagement

2012 Year of Freemium Business Model in B2C and B2B

Free Button

It started in gaming – 57 out of top 100 app store games are freemiums.
huge companies like Zynga, Electronic Arts and Capcom or from startups like the makers of 2011 Nimblebit (Tiny Tower) and Spry Fox (Triple Town), the free-to-play model is attracting players, making money and, in some cases at least, making good, enjoyable games – it looks like Freemium has won!

Freemium apps to continue flourishing in 2012 (IntoMobile)

Freemium apps are obviously working both for consumers and developers/publishers, and the trend will continue in 2012. Already of the top-ranked 250 iOS apps across all categories, an average of 88% are free to download, monetized with advertising and in-app purchases. In that sense, the research company says that at this time next year in certain categories all relevant iOS apps will be free
>> Read more

Other big consumer apps like Evernote already freemium or moving there like LogMeIn, which is an interesting case because they were already successful:

LogMeIn Remote Control iOS App Goes Freemium (TechCrunch)

The once paid — and quite expensive app is now migrating to a freemium model. That said, users who paid for LogMeIn Ignition won’t have to cough up the dough for a LogMeIn Pro subscription, but they will get the added premium features including HD remote control (and HD streaming) from their computers to their iOS devices
>> Read more

We can see this trend spreading also to the B2B market:

Yammer’s Freemium Model Creates a Viral Effect Inside Companies (CIO)

Yammer, who was picked by Apple as 2011 top app, also has a freemium business model, which creates a viral effect inside a company that can spread like wildfire. Once the business value has been proven, organizations can choose to purchase Yammer for the entire organization. By having employees validate whether a product works or not prior to the sale, the company can see if it will be of value to the company. Evangelizing a product is a powerful force, more powerful than ads or sales pitches
>> Read more

Jive Gets Boost Following Billion-Dollar Cloud Deals (Bloomberg)

It’s interesting to see how Jive, who’s Yammer’s competitors which sells mostly to corporate clients and is using a high-touch sales model, had also come up with an offering of cloud services to reduce their client’s operational costs. It seems to be that the cloud advantages and business potential has found its way to all types of businesses – some of the world’s biggest technology companies, including Microsoft Corp., Hewlett-Packard Co. and International Business Machines Corp., are moving to the so-called cloud, where customers can save money by renting software delivered over the Web and accessing it anywhere, instead of installing it on their own machines.
>> Read more

However, we should also keep in mind, that for freemium to work it needs to engage users! In order to succeed, a business first priority should be in adding value to users and not earning money.

Matt Gilman, pocketgamer.biz writer said: “The biggest issue for me, in mobile gaming, is the concept of freemium vs premium. It’s hard to discuss it without using the term ‘ethical’ but in a recent conversation with Applifier CEO Jussi Laakkonen, he pointed out to me that what we should be really talking about is ‘fun’.

At the moment, people are making a lot of money, and it’s hard to pinpoint many freemium titles that would deliver ‘fun’ to traditional gamers through a freemium model. Hence, 2012 needs to be the year that freemium truly delivers fun, not derivative rehashed versions of financially successful twaddle, but legitimate gameplay to be proud of.
And of course you need to put compelling offers for upgrade or in app purchase in front of engaged users if and when they have fun”
>> Read more

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CloudBees Use case – Automate Customer Engagement with Totango

CloudBees Logo

“For the first time, we have visibility into what our users are doing on our platform and can interact with them based on usage.”
Sacha Labourey, CEO, CloudBees Inc.

Those of you who’ve read my posts before probably know how I preach for customer success and customer value, especially in the zero-touch and low-touch sales models, where your success is actually your user’s success.

This week I’ve interviewed Sacha Labourey, the CEO of CloudBees Inc. Cloudbees is running a freemium business model with zero-low touch sales which is based on pure customer success and is using Totango for their performance measurement and level of engagement with their service.

Sacha Labourey-CloudBeesWho are you and what do you do?
My name is Sacha Labourey and I am the founder and CEO of CloudBees. CloudBees provides a Java Platform as a Service (PaaS) for enterprises and software developers.

What is your business model?
Our business model is based on the usage of our platform for the building and running of Java applications. We also utilize a freemium business model to enable developers to try our platform for free while they become familiar with many of our core platform services and their value.

What is your sales model?
We strive for a zero touch or a very low touch selling model.

What problem or problems are you solving with Totango?
We are using Totango to gain visibility into user activities and to automate customer engagement, especially via e-mail for now. Instead of nurturing our user database based on a fixed timeline, we personalize content based on their actual usage of our product. Depending on how they are (or are not) using specific features we may be able to offer helpful tips via e-mail.

How did you do this?
We monitor how developers are using our platform. Based on their actual usage of the product, we send helpful e-mails. We have integrated Totango with Salesforce.com and our e-mail marketing system to automatically send the right e-mail to the right users at the right time. The goal is to make our users more successful with the CloudBees Platform. If our trial users are successful they will hit the paid tier of our service at some point. In this sense the interests of the customer and of CloudBees are completely aligned.

What results did you achieve so far?
We have been able to see how our users are using our platform and engage with our trial users providing them with information to ensure their success with CloudBees.

Who was responsible for the Totango implementation and how long did it take?
This integration was all very easy to perform. It took us a few days of work (over a few weeks time) to establish an initial monitoring of our platform and an integration with Salesforce.com. It took us a few more weeks of ramp-up to define how we wanted to best leverage the collected information to automate our interaction with our users and customers.”

Did you look at other, similar, services? If so, what did you like about Totango?
We considered building some of these capabilities into our platform, but decided against it. We know our requirements in this area will continuously grow and strategically prefer to rely on a partner like Totango for ongoing enhancements, as well as industry best practices.

 

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3 Steps to Measuring User Engagement with your Web Application

Engagement in Application

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

LifeCycle Table 1

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:

Customer LIfecycle Table 2

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)

Growth Trends Over Time

 

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!
 

SaaS Executive Dashboard

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

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Added Value b2b sales Best Practices customer satisfaction Customer value free trial freemium prevent churn saas industry SaaS sales subscription base User Engagement

10 Tips for B2B Sales in the Subscription Economy

Subscribe

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:

1. Keep it simple

Ease of use is a key aspect of the subscription economy.  Subscribers want the one-stop shop, and their attention will not be kept easily.  Frustration, which might lead to churn, can be easily ensues if they can’t find what they want or need.

2. Customize to the consumer

Bob’s business is not the same as Mary’s.  Can you offer flexible payment options (weekly, monthly, annually)?  Family versus individual?  Basic versus premium?

3. Curate

More is better, but more can also be overwhelming.  Netflix’s popularity is in part because it offers customized selections based on its subscribers’ viewing history.  If the subscriber never, ever watches foreign language films, they don’t want to have to scroll through them to get to the good stuff.

4. Make it social

Can your subscribers see what others think of this product?  Can they easily share it through social media?  Social media has the power to sweep many others and help in distribute your message – and it’s free, so you might as well use in your business favor.

5. Offer continuing value

Make sure your offers will always consist of an added value. Can some ancillary information help your subscribers?  Partner with other companies that add value.  Also, what new thing can you offer?  Can you surprise them with how good it will be?

6. Keep it open

Remember what we said about the ancillary market?  Is your forum open enough to allow add-ons?  Don’t keep things so proprietary that spontaneous creation is stifled.  Think of Flickr, for example – would it help or hurt their business to team with a photo editing application?  It would help, of course, and they’ve allowed just that.

7. Give it away

If you still haven’t done so, consider  using a free-trial or freemium model for your product. Subscription economy is likely to be ruled by the free-to-join.  For example, you can make your overall platform free and have advertising, add-ons or premium offerings in order to make it profitable.  Think Facebook – free to join, but not likely to go broke anytime soon.

8. Don’t charge for that which was once free

How would you like to have nearly 9000 pages of complaints about your new pricing structure?  That’s what Netflix got for their announcement that they were nearly doubling their prices, removing services their subscribers had gotten used to having included, and offering no additional value in the exchange.  Calling it a great deal just added fuel to the fire.  (If you can’t give it free, keep it as low as possible!)

9. Keep the customer relationship as thy first priority

With the Netflix debacle, it’s not just about the pricing.  Their customers felt personally betrayed.  If you succeed in accomplishing a real relationship with your subscribers, where they recommend your service not for incentives but because they’re real fans, the worst thing you can do is spoil that relationship in a “money grab.”  Nurture your relationship.  Keep customers in mind as you consider changes.  Get feedback on proposed changes.  Don’t sell their information to spammers or let slimy advertisers in.  Business is more personal than ever.

10. Enjoy

Customers in the subscription economy are more savvy than ever.  They can tell if you honestly love your own offerings or if you’re just using sales tactics.  Let you enthusiasm shine through and it would be a win-win situation!

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Best Practices Business Insights Customer Engagement customer engagement funnel customer success Customer value free trial RC-SaaS Customer Engagement saas customers SaaS sales sales funnel software as a service successful saas companies User Engagement

6 Steps to On Boarding Software-as-a-Service Customers

Customer Engagement Funnel

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).

Customer Engagement Funnel

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.

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b2b saas Best Practices customer success free trial free trial period freemium Interview pbworks RC-SaaS Free Trial & Freemium sales model sales revenue trial period User Engagement

Freemium Sales Models for B2B and SaaS

PBWorks

As promised, here is the second tip from Chris Yeh, VP Marketing of PBWorks about freemium sales models for b2b and SaaS.

Knowing of the advantages of free trial / freemium models, I agree that companies that are making the adjustments towards those sales models have an advantage in today’s online market where users can pick their products without a moderator (sales person) and pay for it only it it’s valuable for them

Similarly, Chris believes that the way to business success is establishing a trial for its product. This way customers feel they’re not taking a risk by buying a product but they test it first and understand how the product works before paying for it and this is tremendously important for building up a Successful contemporary business.

In his blog post: Bought vs. Sold (Why Jive is a dinosaur & Dropbox is the future), Chris compares 2 types of companies that have similar revenues achieved it in very different ways. The first company is Jive software and the other is Dropbox.
Jive is a 10 years old traditional enterprise company who spent millions of dollars in marketing and still not profitable and on the other hand there’s the 5 years old Dropbox, who has 40 employees already and a hundred millions in revenue.

To read the full transcription of the video, click here

 
 

Video Transcription:
I’m Chris Yeh. I’m the VP of Marketing for PBworks, which is a SaaS company that does collaboration software for various markets like advertising agencies, law firms and, of course, general business.

Well, it just so happens that I wrote an extensive blog post about this, comparing Jive Software with Dropbox, two companies which, interestingly enough, have almost the same revenues, but have achieved them in very different ways. Jive is a traditional enterprise company that was started almost 10 years ago and has spent hundreds of millions of dollars in marketing to get to where they are today and are still not profitable.

On the other hand, we have Dropbox which was started in 2007, has something like forty employees in a hundred million in revenues and so where I really see this going is that you know, certainly the tradition enterprise world still applies to large complex products but the ability to get a trial going, the ability to get people to say, okay I’m not taking a risk by buying this product, I know that it can deliver for me, is tremendously important for building up the business, so somebody like Dropbox or somebody like PBworks who offers the ability for people to really understand how the product works before they have to make a six figure commitment I think and that’s the way to go.