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Tip on How to Reduce Churn (Even in Low-Touch Models)

HootSuite Tip

Another tip taken during Sales 2.0 from Darren Suomi, VP Sales at HootSuite – this time regarding self service model and how to adjust it to reduce churn.

You know how it is that you get many leads and you just don’t know who to refer first? This situation is common in many SaaS companies.

With the right metrics and cohort analysis, it’s easy to decide who are the more engaged customers that are ready for sale and it’s usually more likely that if you’ll approach those customers, they’ll signup for your product.

Darren is also claiming that even in a self service model (low-touch model) like HootSuite, once they find out who are their active users in their service, they proactively reaching them and by that they reduce churn.

Tomorrow I will publish a tip by Mark Roberge, VP Sales at HubSpot who will explain the difference between the hunters and the farmers skill sets.

To read the full transcription of the video, click here

 
 

Video Transcription:

I’m talking to Darren Suomi, VP of Sales from HootSuite.

Bring me a model which where we play, it is a self-service model. So, we’re really trying to look at it from turning down the churn. I guess I’m looking at what people are trying to play instead of going from just a self-service. We’re actually just playing with the model in terms of a little bit of more of a high touch point. So, we are really taking a look at our customer who are quite active on social media. We are actually proactively reaching out of them and seeing where we might be able to help them versus just letting them fend for themselves.

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3 Outright Strategies to Improve SaaS Customer Success

Outright Image

Totango is now (also) located in Mountain View, CA! Having a new Totango home in California is great and allows me to meet many cutting edge businesses with free trial or freemium business models while here. Today I caught up with Laura Messerschmitt, VP Marketing at Outright. Outright helps small businesses to organize their finances. Over 100,000 users worldwide are tracking the health of their businesses with Outright. Outright is a free service, with a premium product available for a monthly fee. The sales model for Outright is entirely customer driven: the sales process is self-service (zero-touch selling).

What struck me most about Outright is it’s commitment to customer success. Making existing customers successful is the highest priority for the company. In my blog on “customer engagement is key for SaaS” I have written about the importance of increasing customer lifetime value and preventing churn in SaaS business models.

Here are a couple of things Outright is doing to align it’s entire company with it’s customer success (and thus customer lifetime value):

1. Define a customer engagement funnel

Key to customer success is realizing that not all customers are created equal. When a visitor to your website first signs up to your service, you have not yet won a new customer. In fact, a large percentage of sign-ups may never activate the service. I discussed this phenomena in my blog on “3 ways to do cohort analysis on SaaS churn“. In the case of Outright, they have explicitly modeled the different stages in what you might call the “customer engagement funnel”:

Stage 1: Sign-up, user has registered
Stage 2: Activation, in the case of Outright has started using the product
Stage 3: Use, in the case of Outright has continued to use the product over time

While you can get a lot more fancy with this and define further actions and life cycle stages (including those that include up selling and expansion opportunities), just recognizing the difference between a sign-up, an activated user and a truly active user is a huge step in the right direction.

2. Make customer success metrics central to the business

You cannot manage what you cannot measure so the next step for Outright was to develop a dashboard that shows sign-ups, activated users and active users and the conversion ratio between each of these stages. Outright is looking at this on a daily, weekly and monthly basis via cohort analysis to see how the service value which is delivering customers is improving over time. If you want your company to be customer driven, you have to give everybody in the company access to these metrics . Only if you make the customer success metrics central to all your management meetings, will the entire team be laser focused on improving customer success.

3. A customer driven organization chart

The most innovative thing Outright has done is to align their entire organization chart with the different stages in the customer engagement funnel. There is a dedicated team, including product managers, developers and designers, focused on improving the product for those users who have just started using the product. The focus is on making it easier and easier for these customers to help themselves and get more value out of the product. Automated e-mails are sent with helpful tips to help customers along the way. Then there is a separate team, also with its own product managers, developers and designers to improve the value in the service for those customers who are already active.

Thanks so much to Laura for sharing. I am looking forward to check in with Outright again in a couple of months to see how their customer driven organization chart has impacted the key conversion metrics of their customer engagement funnel.