You Have to Know why Your Customers Churn

You Have to Know why Your Customers ChurnWhen 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 business, acquired, etc.) or – and MUCH more likely – they didn’t achieve their Desired Outcome through their interactions with your company.

In order to avoid churn in the future, we need to learn from the churn that has occurred in the past.

Which means every former customer must have a reason associated with them.

[Read more…]

Pricing Strategy Framework for SaaS Startups

pricing-strategy-framework-for-startupsPricing 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 customer you want to do business with.

And of course in SaaS, pricing is tightly coupled to the product itself, which is different from other types of software and non-tech products where the price is decoupled from the product.

Which is why I can’t recall a time where a SaaS company came to me with a “pricing problem” and there wasn’t something else that was going on, too.

In fact, their “pricing problem” often had little to do with the actual “price” – the numbers – and more to do with pretty much everything else (chosen revenue model, customer segmentation, value proposition, marketing strategy, conversion optimization, etc.).

So, when those in an early-stage startup – or those bringing a new product to market within an existing company – ask me for help on pricing, I always say that you won’t get it perfect out of the gate, but you can get it as right as possible.

And then I give them a high-level pricing strategy framework, which I thought I’d document and share with you in this post.

[Read more…]

Qualifying Leads in a SaaS Free Trial

qualifying-leads-in-a-saas-free-trialI 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 comes to Free Trials?”

I thought that was an awesome set of questions because it indicates the person asking is starting to look at their Free Trial as a true sales pipeline; something more people and companies should do.

So I loved the question and I thought my answer was equally awesome (if I do say so myself), so I decided to expand on it a bit and share it with you, too.

[Read more…]

The Fiction that Friction Improves Customer Onboarding

The Fiction that Friction ImprovesA few months back an article was published that talked about how this popular brain training game (I can’t remember what it’s called) made their onboarding process MORE complex – not less – and increased their active users by 10%.

While the article was very clear on when to add friction, most of the discussion around the article that I saw fell into the category of “yes, that’s brilliant! I hate my users and customers anyway, so I’ll add MORE friction to our onboarding and we’ll improve like crazy!”

Crazy is the right word… but the context is wrong.

What they should have said was “I’d be crazy to simply add friction and think for a second that the outcome would be in some way positive.”

Unfortunately, this idea of adding friction has come up a few times recently on a few Clarity calls, so I feel the need to dig into why adding friction all willy nilly is simply one of the stupidest things you could do.

[Read more…]

Customer Psychology and the Wasted Power of Surveys

Customer Psychology and the Wasted Power of SurveysSurveys can be dangerous if used wrong, but can be super-powerful if used correctly!

Whether it’s the Net Promoter System to gauge customer satisfaction, doing pre-launch customer development work for your startup, or one of the myriad methods we use to interact with and learn from our customers, prospects, and other people, surveys are by far the easiest to implement and most effective feedback mechanism at scale.

The problem with surveys, aside from all the ways that people generally mess them up (too many questions, leading the witness, not specific enough, poorly targeting / segmenting the audience, etc.), is that the underlying psychology of surveys is rarely taken into consideration.

Now I’ve said before that I’m not a big city psychologist, but I spend a lot of time studying psychology and human behavior as I try to figure out why people do what they do and also how to get them to do what I want them to do.

And some of that studying led me to realize that many of the behaviors we employ around surveys – especially in the Customer Success world with the use of NPS surveys – can have a very negative impact that does the exact opposite of what we’re trying to do.

In this article I explore how we use surveys and suffer the often-unintended consequences.

[Read more…]

How Social Proof Actually Works in Marketing

How Social Proof Actually Works in MarketingI’m not a psychologist, but I play one every day as I try to figure out why people (users, customers, visitors, etc.) do what they do… and how to get them to do more of what I want them to do.

I spend a lot more time reading books about – and otherwise studying – human psychology and the way our brains operate, than I do on specific marketing techniques, growth hacks, or the latest viral sensation.

Those things are fleeting, but the way our brain works is much slower to change.

One of the people I’ve learned the most from when it comes to human behavior is Dr. Robert Cialdini, starting with his game changing book Influence. He and others from his Influence at Work group have released other books that provided real-world examples of how to leverage the principles of Influence – or avoid them – but Influence is still my go-to resource.

Dr. Cialdini has posited that there are six principles of persuasion – Reciprocation, Liking, Consensus, Authority, Consistency, and Scarcity – each of which has the power to elicit certain behaviors (simply due to how our brains work) in those at whom the principle is focused.

In this article I want to explore the Principle of Consensus, otherwise known in marketing as “Social Proof” and in Customer Success as “Advocacy.”

[Read more…]

Customer Success Starts at Sales Done Right

Greg Pietruszynski - CEO - GrowbotsAfter getting a demo of their new product from their Chief Data Officer (Luke Deka) while I was in Poland, I was excited to catch-up with Greg Pietruszynski, CEO of Growbots, when I got back to San Francisco.

We talked about lots of different topics, but the post that my friend Steli Efti from close.io shared a while back – 4 Sales Mistakes That Lead To High SaaS Churn – came up.

Greg said the post was a brilliant summary of tactics that can help you focus on the right customer segments and therefore decrease long-term customer churn.

But then he said something that I thought would make a great post… it’s one thing to know who to sell to; it’s quite another to actually make the sale.

It’s yet a another to make the sale with Customer Success in mind.

Luckily, Greg agreed that this topic would make a great post.

I have a few things to say in the After Word about how churn hurts your Total Addressable Market, but until then, take it away Greg.

[Read more…]

Achieve Network Effect on a Smaller Scale

Piotr Zaniewicz - Right HelloI was talking to my friend Piotr Zaniewicz the other day about the importance of network effects on SaaS businesses.

I mentioned how the common misconception around network effects is that, in order to achieve a real network effect (this is the reason some people say B2B SaaS can’t be “viral”), the level of critical mass necessary for network effects to take place usually requires a lot of time, effort, energy, and resources to develop, on top of that ‘mass’ of users and customers.

But Piotr, the CEO of RightHello, an outbound sales startup based in Poland, and I know different. We started talking about this really awesome way he came up with to generate network effects, but on a small-scale. This is exactly what he did for his company.

I told him – as I do – to write it down and let’s publish it so everyone can learn about it. He obliged and his post is below.

I have a couple of notes and some more resources for you at the end that you’ll want to read, but for now… take it away Piotr.

[Read more…]