Every SaaS business needs customer success – a department as well as a focus. It’s a proactive measure wherein you step in even before your customers get back to you regarding a concern about your service. It’s a strategy to decrease customer churn and increase upselling.
In this episode of SaaS-Story in the Making with host Matt Wolach, Puneet Kataria covers everything you need to know about customer success. This can be summed up to the following: the best metrics to identify if your customer success efforts are working, the difference between customer success and customer service, and the best things your business can gain from having a practical customer success approach.
Podcast: SaaS-Story in the Making
Episode: Episode No. 181, “How to Gain Extra SaaS Revenue with Effective Customer Success”
Host: Matt Wolach, a B2B SaaS sales coach, Entrepreneur, and Investor
Guest: Puneet Kataria, Founder at CustomerSuccessBox
TOP TIPS FROM THIS EPISODE
Track Your Customer Success Efforts Efficiently
For SaaS companies, determining the quality of your customer success efforts is possible, whether you do it simply by tracking just one metric or identifying many metrics.
According to Puneet, the golden metric is net dollar retention. You want to make sure that you start trending towards 125% net dollar retention or above. For instance, if you’re at an 80% net dollar retention, set up the goal for 85% or 90%. It’s not going to get to 120% overnight. It’s going to be a journey.
“The seeds of churn are sown in the initial onboarding stage,” he notes. So make sure you’re tracking the onboarding success in multiple ways that are data-driven.
For the onboarding, ensure that you deliver values that are meaningful to your customers. One of the best ways to measure is by looking at data instead of a narrow view.
Be able to track a leading indicator that informs you if your customers are getting value or not.
If your customers are not getting value, be proactive and intervene. For Puneet, it’s all about bringing value to your customers and ensuring that they are experiencing it.
Be on Top of Your Customer Success Journey
Customer Success in the subscription economy is the heart and soul of your organization, Puneet highlights.
Hire customer success managers and customer success leaders to keep track of your journey.
Most importantly, “No matter what stage you are in, make sure you’re data-driven,” Puneet says.
Sometimes, opinions could come from the referral of friends and family. A social obligation wherein biased opinions may take place. That’s why for Puneet, data is more reliable.
Have a datasheet and check if your customers are logging into your platform. Instead of relying on opinionated views, be driven by information.
The Golden Benchmark of Net Retention
In the SaaS space, a lot of data shows that the goal is not just to retain customers at 100% level. According to Puneet, you would aim to have the ability to go beyond what your customers are initially paying for.
So instead of looking for customers paying you the same million dollars, you would want to grow using expansions and upsells. You would like to deliver more value. As a result, your customers would purchase more of the services or products you offer.
In terms of statistics, only 10% of SaaS businesses are above the 125% net dollar retention today – this would be your golden benchmark.
If you’re a smaller business, Puneet says the gold standard should even be higher.
Exceed Your Net Dollar Retention
Churn is inevitable. It’s one of the many challenges businesses face. It’s either beyond their control or difficult to manage.
To make up for the lost revenue and even gain more of what you’ve lost, Puneet says you would want to take care of your upsells and expansion.
The first thing to address is how to take care of your customers. Customers stay when you are delivering value. The value your customers are looking for is what you promise them. It’s what your marketing strategies shout from the top of their lungs, says Puneet. It’s what your sales commit to.
If you’re able to deliver value to your customers, chances are they’re likely to stay forever. This is what enables you to exceed your net dollar retention.
Customer Success vs. Customer Service
The core of customer success is the subscription economy, wherein you do not wait for the customer to ask for help, but you already provide them with more than what they need by being proactive.
In customer service, you are reactive. You act after receiving a trigger, which is your customer asking for help.
While both are equally important, it’s better to be proactive than be reactive, says Puneet. In customer service, silence means bliss. It indicates that your customers are having no problems with your services. On the other hand, in customer success, silence is deafening. You have no idea whether or not your customers are using your platform.
Customer service representatives need to make sure that the tickets are being responded to. Meanwhile, through the customer success approach, you are ensuring that your recurring revenue not only comes in at 100% of the renewal but more.
The bottom line is that customer service responds to concerns, whereas your customer success approach drives growth.
In customer service, you make sure you understand your customers and address their challenges. In customer success, you make sure you proactively reach out to your customers, deliver the value of your services, and make them remember the deal.
[02:39] “As a partner, we need to deliver value because the authority with which customers are now subscribing is empowering them.”
[09:25] “You will be able to keep your customers forever if you are delivering value.”
[17:10] “We can’t purely be relying on [being] reactive. We need to be proactive.”
[20:54] “The seeds of churn are sown in the initial onboarding stage.”
[03:37] “That’s the beauty of SaaS. You’ve got the opportunity for recurring revenue.”
[03:54] “[The customers] could leave at any time, so you’ve got to continue to show that you know they belong there that they’re going to get value.”
[07:14] “The net revenue retention number is significant when you start thinking about investing. Investors love that number.”
To learn more about Puneet Kataria and CustomerSuccessBox, visit https://customersuccessbox.com/.
You can also find Puneet Kataria on LinkedIn at: https://www.linkedin.com/in/katariapuneet/.
For more about how host Matt Wolach helps software companies achieve maximum growth, visit https://mattwolach.com/.