Often I meet with SaaS companies who have a lot of good will but simply don’t know where to start. Even very successful SaaS companies sometimes need some guidance and some tips & tricks to become even more successful as many businesses are accommodating their sales model to comply with contemporary requirements.
Below are our top posts on these topics to help you get oriented in our Best Practices for SaaS and App Vendors:
Speaking with hundrands of SaaS businesses I grew to learn that this topic specifically is lots of companies’ weakness. Some don’t know how to conduct a Cohort Analysis, some wouldn’t know which metrics to measure and some are even not aware to its importance for their business success.
This is why I’ve grouped together our Customer Analytics material which could help in building a more solid background on these topics:
Today I’m going to share another interview with Tracey Kaufman, VP of Customer Experience at cloud9.
Tracey was watching the Totango demo and then answered some questions about what she thinks of the application from a Customer Experience point of view.
Tracey believes that anyone who has trial period in the SaaS business or has the need, like herself, to understand users activities and prevent churn, would want to actively know what customers are doing in their application during that trial period.
It is very important to understand users behavior – especially at the trial period in order to proactively prioritize customers to refer to during that time. This way you could know who is potentially at risk because they’re not using the product or – the opposite – you can spot customers who are using the product well and you can use them as a reference or a case study.
Tracey especially likes the integration Totango has with salesforce and the fact that sales people are exposed to information that shows the level of customer engagement. This will allow them to determine the priority of their calls – for example they can first contact the users who are actually evaluating the service and try and move them up in the sales cycle.
To read the full transcription of the video, click here
A: Hi, my name is Tracey Kaufman, I’m the a VP of customer experience for cloud 9.
Q: Since we just went through the demo of Totango, can you give me your first reaction and who do you think should look at the Totango product and what’s cool about it?
A: So i think, actually, you know, certainly any one in the SaaS business who has recurring revenue or has trials, whereas anything to do where they need to understand the activities of their users and really try to chart from the time that you say OK, we’re going and we’re deploying and I’ve launched you, then what happens?
If you have a trial it’s absolutely critical to understand what is your leave conversion? Right who using this trial. Because what are you going to do? You’re going to call. You’re going to say, here you go, have this 30-day trial. And then you sit and you call them 30 days later so if you are a sales VP or a marketing VP and you actually want to know what happens, and you want to get a proactive look at some key trick so that you know when to call them or when to send off an email.
You know, if you’re like me and your running customer experience and you want to understand churn, and you want to understand who is potentially at risk because they’re not using the product or on the other side, obviously, people who are really using the product and gang busters and you can use them as a reference or case study think, you know, marketing, sales, customer experience, i mean, product, what part of the product you’re using. So i think it’s widespread usage, actually.
Q: That’s great. What do you think is the most sticky feature of the product?
A: So, i really love the fact that, of course you’ve got these great analytics and you’ve got people who are individuals in executive positions who love numbers. But what I think is the best thing you talked to me about, was how you’re actually going to put the information back in sales force and that way your sales reps can go in and figure out “Oh wow, I have this trial customer and I don’t know whether they’re using it, but wow now I can find out who’s actually using the product. So now I know I’m going to call them, because they’re going to be hot. Because I’ve got these ten people who’ve started and tried using my product and I can call them and now maybe move them down the sales cycle. I just think that’s great.
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.
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.
We’ve held yet another very interesting lean-startup meetup on Thursday to discuss free to paid conversion best practices for cloud applications.
First, please find within the presentation I’ve used. It’s a collection of many ideas we’ve been working on at Totango collected into idea presented by this presentation.
I emphasized during the talk the need to focus on the ‘evaluating’ users – the ones that their actions indicate genuine intent to come up with a buying decision.
Many people still wanted to understand what to do with the other group. The short out of the sleeve answer would be: “It depends ”. Seriously, this question deserves a blog post on it’s own which I’m going to write later this week.
In the mean time, please feel free to enjoy the presentation. You will be able to learn a lot also by starting a ‘free trial’ for the Totango trial conversion product. So here’s the link for that as well.
If you enjoy this content, please be kind and share it with your friend. The links are above and below.
TOTANGO is at the Cloud Expo in Santa Clara today. Another day, another cloud conference! My head is spinning. So rather than a long update from the conference, this time a short list with the top 10 tweets from the conference to date. I still think these give a nice overview of the sentiment here. I have to say that my personal feeling is that the infrastructure storm behind Cloud is starting to die down a bit and that there is a lot of talk on: 1) how to protect and optimize the cloud infrastructure already built out and 2) how to make use of this wonderful new infrastructure. Of course trend 2 is good news for TOTANGO. The next wave may be new enterprise applications powered by the cloud!
Onto the Top 10 from CloudExpo:
@GarimaRT: 37% oracle customers have private clouds already deployed. Seems very high to me.
@wrecks47: New applications move cloud sooner than extensions to existing applications – observation based on latest @IOUG survey
@DrJCL: Oracle claims its customers are adopting #PaaS faster than #IaaS.
@GarimaRT: Department apps, home grown apps are most frequently run in private clouds.
Overheard @ #CloudExpo in Santa Clara today “all the vendors are here, all our customers are back east”.
@AddThis The Web of APIs = the Web of the Future #Cloudexpo #cloud : http://t.co/Im1FeRC9
@jorke Liking presentations that actually demo stuff like #Terremark and #newrelic … Far too much markitecture in other pressos… #CloudExpo
@centerdigital At #cloudexpo: “There is no way IT can avoid a move to the cloud” BTIS tp
@threshershark #cloudexpo 20% of cloud VM’s are idle – provisioning needs to change too and so do charging models
@sec_prof @randomuserid: #cloudexpo security panel: 10% corp laptops undetected bots; 30% personal devices.< FUD. So over 1billion infected devices?
Next I am going to walk the expo floor. Perhaps more on that tomorrow.
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I attended Jeff Kaplan’s Cloud Channel Summit today. It was a very interesting conference. Clearly cloud channel sales is in its infancy, but there were some companies here with successful channel strategies including Salesforce.com (1400 partners and counting), Scribe and others. What follows are six tips that stuck with me:
Lesson 1: Think how you will compensate cloud channels
By: Jeff Kaplan, Managing Director THINKStrategies @thinkstrategies
Jeff opened the conference by highlighting the 4 Common Fears of the use of the Channel in Cloud: Cannibalization, Confusion, Disruption of the corporate environment and operations, and Channel conflict. After listening to most of the conference, I would have added to his list: How to compensate the channel to create a win-win relationship (as we discussed in our blog post on 3 Recommendations for Sales Compensation for SaaS from earlier today).
Lesson 2: Your job starts when you sign-up a new customer
By: Ron Huddleston, SVP ISV Alliances, Salesforce.com @Rhuddles1
Your job just begins when you sign-up a new customer: you need to focus on customer success (as a vendor and also working with your partners). With cloud and subscription based businesses, you have to build deeper relationships that last much longer. This is true not only for partners, but also for your relationships with your customers. Also in this context: don’t overestimate ramp & return, don’t underestimate initial investment.
Lesson 3: In the cloud, you have to earn your business on a daily basis
By: Gil Zimmerman, Founder & CEO of CloudLock @giljzim
This one speaks for itself and is re-iterating Ron’s lesson in different words. Customers can vote with their wallets and cancel their subscription, often on a month-to-month basis. I have written on this topic on this blog as well such as in my blog on Customer Engagement is Key for SaaS.
Lesson 4: The primary role of the cloud channel today is integration
By: Carolyn April, Director of Industry Analysis, CompTIA @CarolynAApril
In a CompTIA study Carolyn found that the primary role for channels in cloud today is integration, not sales. This makes sense considering many attendees and speakers felt that we haven’t figured out commission plans for channel sales yet. That being said, I believe there will be major opportunities for the channel in on boarding new customers as well as sales, both initial and up selling, that will increase Customer Lifetime Value and Customer Experience.
Lesson 5: Use the coloring book approach to onboard cloud channels (and customers)
By: Brian Anderson, Global Business Development, Dell
The best way to onboard new partners (but this could also be new customers): take the coloring book approach – give them direction, success stories and examples. I really like this analogy and plan to maybe write about it in the context of on boarding new SaaS customers.
Lesson 6: Let customer success own the relationship with the customer
Michael Blaisdell, The Customer Success Management Initiative
Who owns the customer: sales or support (customer success)? If customer success owns the customer it really changes the tone with the customer and creates much more trust with the vendor. In reality, customer success probably doesn’t own all of the relationship, but it should at the very least be responsible for the ‘farmer type sales’: renewals and incremental sales. Totango is sponsoring some of Michael’s research and we recommend you check it out. It’s fascinating stuff and an important area.
So there you have it.
Thanks Jeff, for organizing a very insightful conference! We hope to be back next year. Perhaps we could even present our experiences on how cloud vendors are sharing customer trial and usage data with their partners in order to increase cloud sales?
If you’re part of all the excitement around Dreamforce 2011 be sure to come and meet us. You’ll recognize us right by the Tango dancers (what can we do, rhymes with Totango…).
We also thought that this would be a great opportunity to introduce Totango to a wide audience of SaaS sales and executive teams. For that end we’ve started a twitter campaign at www.totango.com/win-ipad2. People who help us spread the word may win a new iPad2 and more importantly will be able to use Totango to get meet their quota.
If you’d like to schedule sometime to discuss Totango in more details please write me at firstname.lastname@example.org