Predicting Churn

Reducing Churn is the primary goal of every customer success organization.  Having low churn rates will lead to a very healthy company which is able to be more and more profitable.  Customer Success is in a unique position to effect this because they know the clients best.  They are on the phone with them every day.    In order to reduce churn you need to know why customers do churn.  The hard part of that however is that it’s more of a rear view mirror.  You only know once they have canceled.  So its important to dig deeper and try to predict the churn.  Once you can do that, you then can try and get in front of it by having an action plan in place each time a leading indicator of potential churn is triggered.

The place to start is to quantify the reasons clients do churn.  Try to be as specific as possible.  For example, having a churn category titled “switched to different solution” is not very helpful because you don’t know why they did.  They could have switched because certain features were missing that they wanted, they were not a product fit in the first place or they wanted to spend less money.  So pick reasons that get at the root cause.

From there, look into triggers that could put a client on a path towards churn.  For example, if you know you lose a lot of clients when the leadership of a company changes or changes priorities, monitor the usage of those key stakeholders.  If you notice a key stakeholder has not logged in or deleted their account, that should trigger the Customer Success team to find out why and attempt to get in front if it if possible.

From there, you will want to analyze and edit.  Review how many potential churn triggers you tasked your Customer success team with and how many resulted in a retained client VS a churned client.  Look at the churned clients, did you actually trigger Customer success to reach out.  If not, why.

Your Churn reasons and triggers should be agile.  Changing them frequently is not advised but don’t hesitate to edit them as the nature of your product changes or the client profile you service changes.  Having an agile list that you review and track performance on is exactly what you should be doing.


Value Based On-boarding

Buying new software is an exciting process filled dreaming about how the software is going to help solve many different business challenges.  It is filled with optimism and dreams of a better life.  A purchase often happens because buyer believes the product is going to benefit their business.  They see the value.  Then, what happens next is often the most challenging.

The phase post sale is often referred to as On-boarding.  The concept is simple, take an existing business and get them using the software they purchased by migrating data, configuring and training.  The execution is challenging.  It is very resource expensive for the business that purchased the new software.

Value based onboarding is essential.  Basically, instead of talking about a clients business, understanding how it works and then enabling features, you make each conversation about the value the feature delivers the business.  Its not more work, its just a different mindset.  You are mapping the on-boarding of the software to the dreams the client had during the sales process and then turning those dreams into a reality.

But what if the dreams were not realistic.  This often happens so knowing how to set great expectations during sales and then post sales is necessary.  If sales and on-boarding are aligned regarding expectations, it is really easy to speak to proper expectations and conversations that happened during the sales process.

The two requirements to show value is to have a deep understanding of the industry the client works in and deep understanding of how the software is designed to solve those problems and show value.

The Key to Great Customer Success in SAAS

Customer_Success_and_SatisfactionTrust.  Your clients must trust you.  Excellent customer success  hinges on your ability to be a trusted voice to your client’s problems.  Over your clients life cycle, you will be spending more time with your clients than anyone else in the organization and your focus must be one of creating a relationship built on trust.  So how do you do that?  Relate to your clients, keep perspective and work towards aligned goals.

Relate to your client. You must learn relate, empathize and understand exactly what your client is going through.  Put yourself in their shoes.  Ask a lot of questions and make sure you get them talking so you can understand their story.  When you are able to do that, you are able to meet the client where they are at.  Ironically, great sales reps are excellent at relating the clients and selling value.  It is even more important for Customer success  reps to do the same.  You are on the hook for actually demonstrating value to the client.

Always keep perspective.  As a customer success representative you know that many times you are speaking with a frustrated client that is struggling with your software.  They are angry and they are taking everything you say personally.  That is because to them, it is personal.  To them, they are paying your company money to solve a business problem they don’t feel like is getting solved.  Keep this in perspective.  Being able to understand their frustration and work together towards a solution is much more effective than characterizing them poorly because of their lack of professionalism when they are speaking with you.

Your goals should always be your clients goals.  You have your own goals like cases closed, clients on-boarded, survey feedback, etc.  Don’t get in the habit of always trying to meeting your goals without considering the goals of your clients.  A narrow focus on your goals does not lead to success however a laser focus on your clients goals will.  Maintaining focus on meeting your client goals will in return allow you to meet your goals much more effectively.  It also makes the job more fun because both you and your clients are working towards the same thing.  The job becomes difficult when you feel like you are working against your clients or they are working against you.  This should be a sign that your goals are not aligned to theirs.  Figure out how to get that done and your success will increase tremendously.

Top 3 Plays in your Software Implementation Manager Playbook

playbook2A Playbook is essential to scale any Customer Success Department effectively.  What are they?  Much like in sports, it is a simple list of plays that contain tasks to accomplish if faced with a certain situation.  Maybe you notice a client is going through a business change that will impact their use of your software.  Or maybe the client is looking to use the software the handle a certain business problem and is having trouble figuring it out.  Getting Customer Success reps to be able to identify an issue the client is facing or opportunity for up-sell and then giving them a script and list of tasks that is proven to work is essential to scale the organization.

Today I am going to discuss 5 plays that every implementation or on-boarding team should have.  Implementation is often the first impression a client has of the Customer Success department which will be their primary point of contact for their lifetime as a client.  Its an important first impression to get right because it has so many downstream effects.  Most importantly, retention.

Play 1 –  But Sales told me …..
Every Implementation Manager has heard a client explain to them the promises that they received in sales when you give the client news about a certain functionality limitation of the software.  Dealing with this objection successfully leads to retaining the account however dealing with it in correctly can lead to churn.  You should have a script that allows you to get a better understanding of where the client is coming from and why this is an important issue.  You should also know how to gracefully exit the call on a positive note if you are not able to address the objection.  Every organization is different so the specifics to the play will vary but this must be in your arsenal.

Play 2 – I don’t have any time to devote to this right now ….
This is always an interesting one.  Your client just invested a lot of money into the software because they think it is going to give them a significant return on investment.  Its like saying, I don’t have time to make more money.  Good sales teams take notes about the return on investment and pass them to the on-boarding team.  These notes are your key.  Getting into the psychology of why the client feels overwhelmed is extremely important to accomplish quickly in order to re-capture the positive energy that lead the client to purchase the software in the first place.

Play 3 – I’d like to cancel service …
This is probably the most challenging but also the most important play in the book.  We should never be surprised when we hear this one and if we are, there are bigger issues.  So this play should actually get going if you suspect your client might say this.  Call it the Pre-request to cancel.  It’s important to be honest as well.  Is this a bad deal that we should cancel quickly or is this worth fight for.  Be honest and remember your paycheck comes from paying customers.  If the deal is worth fighting for, having your play well defined is going to be vital to saving the account.  You might need to coordinate with other departments and spend time on this.

I’d love to hear about any other plays people have in their playbooks. Feel free to comment and we can discuss further.

How a SAAS company should focus

The business model of Software as a Service (SAAS) is very different from transitional software in which licences are sold.  SAAS relies on subscriptions and consequentially offers a lower barrier to entry.  Because of this, it is extremely import for SAAS companies to keep their users for long periods of time.  In fact, the software has to be built to keep users engaged and finding value from the software.  Lets take a look at what the software product must focus on.

Lifetime Customer Value (LCV).  This is an important concept in SAAS businesses.  The lifetime customer value is the recurring revenue the company can expect to gain over the period of time the company expects to keep the customer.  To increase LCV, the company has two options.  One, increase the amount the customer is paying.  The other, increase the amount of time the customer is a client of the company.

So the software has to always be evolving and offering new services to its clients to increase the potential its clients can be paying the company.  It also must be relevant to the client for as long as possible.  So it must stay current with changes in the market and be able to grow with the customer.

Churn.  Churn is when a customer cancels their service with the company.  To fight churn, companies must have a product that is sticky and always showing value.  On top of that, they must have a support team that is doing the same.  Keeping clients happy and making sure they understand the value the software is providing them.

Customer Acquisition.  The product must be attractive enough to acquire new customers.  Sales must be increasing for the company to be growing.  So building a product that is easy to sell and easy to demonstrate value is very important to a software company.

Out of the 3, the most important is likely to be churn.  It costs a lot of money to acquire new customers.  It is also much easier to sell something to existing customers.  So reducing churn keeps current clients paying and keeps the pool of people to sell new products or services to large.

This means the product has to focus on reducing churn.  It should take a look at where churn is most likely to happen, why it does happen and then solve for those reasons or situations.

One of the most likely places a client will churn is during implementation or shortly there after.  Sales and Implementations teams have to set great expectations but at the same time, the barrier to entry or the resources needed to implement the software should be as limited as possible.

Evolution of Customer Success

Software as a service is changing the customer service standard as a whole.  Prior to SAAS, customer service in technology was either non existent and sold as technical support with a heavy price tag OR it was very simple.

What the SAAS model is doing is forcing companies to provide a high quality of service because customer retention is key to the companies growth.

The name has changed.  It once was customer service and is now customer success.  Its about successfully getting customers using the software to make their business better.

The great thing about this is, rather than just helping a customer user the software, the customer success department has the opportunity to change the way the customers runs their business because of the software.  That is where the value is to the end user.  Being able to speak to someone who knows how to leverage technology to make their lives better.

This is how customer success departments must hire, train and evaluate themselves.  Its not about how happy the client is with the software or how well they know how to repeat their normal business functions in it.

The excellent customer success department must evaluate its success on how well they can understand the clients business needs and solve their business problems efficiently and effectively with the software tool their company sells.  Its about feature adoption but more importantly its about demonstrating value.

Great customer success members must intimately understand the clients business AND intimately understand the software tool being used to solve business problems.

That is where customer success is headed.