Business leaders are constantly thinking about how to efficiently scale their companies.
One of the most important things to remember is that growth isn't fueled by the sheer volume of new prospects but rather by identifying companies with problems that your product or service can solve.
That, in a nutshell, is customer success. There's a reason why it has become one of the biggest buzzwords in business. Sure, scale is about bringing in new customers, but it's also about keeping current customers just that – customers – for the long term.
Think about what success means for a customer and what that entails at your business. The best companies do it from the day they make their first dollar, instilling it in their culture, empowering employees to do what it takes to delight customers, and investing real dollars to maximize their chances that when a prospect walks in the door, they stay.
Here are four things to consider when building customer success into your business.
1. Start early.
From the time you first make money, your company should build a framework for customer success. While you won't have an executive dedicated to it for at least a year or two, you need to have a smart and scalable process in place from the beginning.
The best way to start is to ensure your earliest customers stay happy, renew their contracts, keep paying you and refer their colleagues to you early and often. Growing your business isn't just about closing new accounts; it's more about which ones stick around and are advocates for your company.
Depending on which numbers you believe, acquiring a new customer can be anywhere from five to 25 times more expensive than retaining an existing one. Put differently, if you don't retain a majority of your customer base, there's a good chance you'll go broke. Software companies, which rely on subscription models that operate on recurring revenue every month, know this better than anyone.
Customer acquisition also factors into the customer growth and success equation. Get into the habit of only signing up customers you think you will be in it for the long term. In software, it usually takes more than a year to make a customer profitable. If you think they'll leave before the first year, don't sign them up.
2. Map it out.
Customer success is no different than more established fields of business development or sales. You need to map out the customer journey within your business and industry, starting with when the prospect first engages to executing the sales process and every subsequent milestone thereafter.
Since your customer's journey starts well before your prospect officially becomes a customer, customer success needs to be baked into your marketing and sales processes. Most organizations do a thorough job of mapping out the key steps of the sales process; however, they fail to apply that same rigor to the engagement process once that prospect becomes a customer. Ask yourself: "What are the different milestones along the customer journey, and how can I consistently capture them?" This ensures you are applying the same rigor to retaining your customers as you did when you acquired them.
For our business, the most important milestones are "time to go live (i.e., how many days after the contract was inked is the customer using our software) and "time to referenceability" (i.e., how long it takes for them not just to use the software but agree to say good things to other customers or analysts about their experience).
I've seen companies measure more granular customer engagement, such as frequency of performing key tasks in applications or changes to the number and frequency of logins. (In order to efficiently capture metrics such as these, your product and production environments must be appropriately structured to provide the company with these types of metrics. This is another key reason that it is so important to be thinking about customer success from outset.)
These metrics will continue to evolve over time as you learn about your growing customer base, but it's essential to capture the initial set of metrics. If you measure success against it and track trends over time, you'll identify where there's friction or where you have issues to address.
3. Ask hard questions.
Once you have some data, you can start to ask questions that get to the root of customer success and where to best allocate your limited resources.
The questions I've asked our company – and the ones I've advised other companies to ask themselves – include:
- What is our customer churn rate and how is it trending?
- What is our dollar churn rate and how is it trending?
- What are the root cause issues creating churn both in terms of customers and dollars?
- What is our average customer acquisition cost and how is it trending?
- What is our average customer lifetime and how is it trending?
- What's our average amount of add-on dollars per customer and how is it trending?
- What's our average number of support cases per customer and how is it trending?
- If the champion leaves, do you get a new champion? Did the champion bring us on at their new gig?
- Are our customers happy?
Unfortunately, many companies focus on answering these questions one-dimensionally. To truly understand the impact of these metrics on your business, you need to be able to answer each of these questions across various dimensions, such as product line, customer segment, geography, customer tenure, etc.
That last question can be challenging. Not all paying accounts are created equal – just because customers are paying doesn’t mean they're all happy. Even if they are happy, that's only one variable in a complex equation of customer success. According to Bain & Company, 60 to 80 percent of customers who describe themselves as satisfied do not go back to do more business with the company that initially satisfied them.
It is vital to figure out what percentage of your customers would recommend you to colleagues versus what percentage are angry and frustrated (but who are not speaking up and are still paying you). Many companies leverage Net Promoter Score (NPS) surveys to measure customer satisfaction levels and conduct customer support surveys once a case is closed. For customers that take the time to respond, it's a great mechanism for receiving direct feedback.
Unfortunately, most organizations that run surveys rarely get significantly relevant response rates. Another way I've found to measure account engagement is through customer communities. At my company, Sage Intacct, we specifically look to see how many advocates each company has and how often they log in. We then compare that to previous months, as we've found a decrease to be a leading indicator of brewing issues.
4. Listen to the data.
While everyone talks about NPS and customer satisfaction surveys, I rarely see companies use it as direct feedback to improve their product, processes and overall brand experience. The true value from these surveys comes not from quantitative scores but from follow-up conversations with customers who indicated they are "passive" or a "detractor," or that rated you poorly in some fashion.
If you are going to do these surveys, it's imperative you invest the time and resources to really understand the root cause for the poor rating. There is nothing more frustrating to a customer than to take the time and provide constructive feedback only to see it ignored.
Additionally, the root cause is often something the company was unaware of that can easily be solved with the focus of resources or a process change. By defining a clear customer follow-up process, taking the time to understand the root causes of customer dissatisfaction and letting customers know you're listening, companies can better focus on the areas that have a large impact on overall customer satisfaction.