Customer Success: The Definitive Guide

Customer Success- The Definitive Guide 2016Customer Success is transformative.

Whether you have a subscription business or you sell one-off products or services and simply want to do business with your customer more than once, Customer Success should be your driving purpose.

In the two years since I first published this “Definitive Guide to Customer Success,” the transformative power of Customer Success has shown again and again.

Customer Success has its roots in the Software-as-a-Service (SaaS) world and my original definition was very much SaaS-centric.

But since then, companies that are not SaaS, or even technology companies at all, have recognized the transformative power of Customer Success and embraced it as their new operating model.

If you aren’t familiar with exactly how Customer Success is transformative, I’ll lay that out for you below in great detail in this guide.

I don’t know what will happen with Customer Success in the next couple of years, but I wouldn’t be surprised if sometime down the road we’re no longer talking about “Customer Success” as a separate function within a business, but simply as part of the way you do business.

Even today that’s how you should view it.

Why? Simply put; No Customer Success = No Your Success.

You make sure your customers are successful and they’ll make sure you’re successful. It’s a Win-Win!

On the flip-side, if your customers are not achieving “success” with your SaaS, your success is at risk.

Of course, what “success” looks like for your customers is 100% unique to your customers, in the context of your product or service.

So while there’s not a one-size-fits-all definition of lower-case customer success – that’s up to you to know – as far as the concept of upper-case Customer Success is concerned, I’ve attempted to define that for you here.

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Success Vector – The Logical Evolution of Customer Health Score

Success Vector - The Logical Evolution of Customer Health ScoreCustomer Success is a Growth Engine. Investing in Customer Success-driven Growth is an efficient way to drive revenue and company valuation, and we need a metric that is designed to measure that growth. Introducing, Success Vector.

Customer Health Score is  too much of a moment-in-time snapshot; a lagging indicator. We need something more forward-looking.

So, looking at Customer Success as a growth engine, we need a KPI that we can use to ensure we’re on track to meet the growth potential Customer Success will unlock.

Real Predictable Revenue

Every company wants predictable revenue, but most turn to new business Sales. But it doesn’t get more predictable than being able to look at your existing customers, say these 100 customers will reach this Success Milestone in the next month, that milestone has a logical upsell associated with it, the value of that upsell is $1000/ARR, and the percentage of customers that should take the upsell based on their Success Vector is 90%.

That means, for that cohort, we’ll add $90k/ARR next month. Then, by combining all of the milestone cohorts, we can give an accurate prediction of the revenue we’ll generate from our existing customers. Predictable Revenue.

But Customer Health Score – historically a Key Performance Indicator (KPI) for Customer Success – wasn’t going to give us what we need, so I went into my lab (probably a Starbucks or on an airplane) and tore the idea of a Customer Health Score apart with the sole purpose of giving us a real way to see not just what’s happening with our customers today, but where do we think they’re going in the future. And Success Vector was born.

To date, only my clients know about Success Vector as a Customer Success KPI… it’s time to let everyone in on it.

Let’s dig into Success Vector, shall we?

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Don’t Mix SaaS Free Trial and Churn Metrics

Don’t Mix SaaS Free Trial and Churn Metrics

Any metric that's not acted on is a vanity metric, right? Sure, but that doesn't cover every situation.Sometimes we measure things because we're "supposed to" but honestly don't know what to do once we have the result (add that to the list of … [Continue reading]

SaaS Free Trial Conversion Rate Benchmarks

SaaS Free Trial Conversion Rate Benchmarks

I'm frequently asked about SaaS Free Trial Conversion Rate Benchmarks; after being asked for the 97th time - this week - I decided to publish this post.First, a bit of a disclaimer. Benchmarks are neat... it's cool to see how you stack up against … [Continue reading]

Churn is a Symptom, Not a Disease

Churn is a Symptom, not a Disease

Churn is when customers cancel their account, don't renew their contract, or remain your customer but pay you less; the latter is referred to as "revenue churn" and includes discounts, down sells, etc.Now, many companies find out about Customer … [Continue reading]

7 Ways Customer Success drives Company Valuation

7 Ways Customer Success drives Company Valuation

I've been saying for years that Customer Success is transformative; driving exponential value for both the vendor, as well as the customer. In fact, it's that value growth for the customer that truly drives the value growth for the vendor. What goes … [Continue reading]

Stretch vs. Bad-Fit Customers

bad-fit-vs-stretch-customers

What are the characteristics of a Bad-Fit Customer for your business?It's great to know who your Ideal Customer is (my Ideal Customer Profile Framework is constantly updated), but it's much easier - and I say required - to first identify the … [Continue reading]

Two Ways to Reduce SaaS Cancellations

2 Ways to Reduce SaaS Cancellations

Fairy Tales have happy endings.That's why they're so popular; even if they include scary moments with monsters and evil blended family members, everything is pulled together nicely at the end when the naive protagonist is magically okay.In … [Continue reading]

The Only Two Reasons Customers Churn

The Only Two Reasons Customers Churn

Churn is the antithesis of growth.When you lose a customer, in order to grow by one customer, you have to first replace that customer you lost, and then add a new customer.And when a customer leaves, they take the revenue they were paying you … [Continue reading]

You Have to Know why Your Customers Churn

You Have to Know why Your Customers Churn

When customers churn, that’s a problem.Even if their churn was “unavoidable” it still hurts.Churn hurts on several levels: from lowering revenue to hurting employee morale.And churn means something happened to the customer (out of … [Continue reading]

Pricing Strategy Framework for SaaS Startups

pricing-strategy-framework-for-startups

Pricing doesn't exist in a vacuum and is therefore not something you can tackle on its own.Pricing is a function of marketing and determines, among other things, your market position. It also indicates - or is ideally derived from - the type of … [Continue reading]

Qualifying Leads in a SaaS Free Trial

qualifying-leads-in-a-saas-free-trial

I got this set of questions on Twitter: "Is there a certain level of activity during the free trial that is likely to predict conversion from free to paid? Also, how do other companies handle Sales vs. Marketing Qualified Leads (SQL vs. MQL) when it … [Continue reading]

Customer Success and Logical Account Expansion

customer-success-and-logical-account-expansion

Customer Success is a powerful growth driver.Sure, in the early days when you're putting out the fires of churn, Customer Success seems less like a growth driver and more like a stop shrinking driver.But once you move past churn busting - or … [Continue reading]

Reasonable SaaS Free Trial Conversion Rate

Reasonable Free Trial Conversion Rate

What's a reasonable conversion rate from free trial to a paid customer?I get some form of this question from time to time and I've answered it several times over the years.Well, I got it again so it's time to revisit this very simple … [Continue reading]

Acceptable Churn Rate for Small Accounts

acceptable-churn-rate-small-accounts

What drives a company to focus on Customer Success is changing. In the past, churn (or retention, depending upon how you look at things) was generally the catalyst.Once churn is under control, the catalyst changes to expansion; driving use, … [Continue reading]

Success is Uncomfortable

success-is-uncomfortable

I've talked before about holding customers accountable and how customer success isn't about making customers happy.Sometimes you have to push customers out of their comfort zone and - if you'll allow me to channel my inner Tony Robbins -progress … [Continue reading]

The Risk (and Opportunity) in Stealing Customers

risk-opportunity-stealing-customers

Picture it, São Paulo, Brazil, October 2015.After one of the sales and customer success workshops I did, a few of us went out for a snack - fried polenta sticks - and to talk shop... and the idea of Success Gaps came up.In particular, we … [Continue reading]

A Foolproof Way to Get Testimonials Without Asking for Them

A Foolproof Way to Get Testimonials Without Asking for Them

Personally, I've always found it difficult to ask for testimonials. It just doesn't come naturally to me.In fact, one of the reasons I like doing calls on Clarity is that the platform closes the loop with the client for me, asking for a star … [Continue reading]

Success Milestones and the Path to Desired Outcome

success-milestones

I talk about Success Milestones all the time, not just in the context of Customer Success, but in the context of the overall success of my SaaS clients and the companies I work with.The concept of Success Milestones is a relatively simple one to … [Continue reading]