At Bolstra, when we are constantly speaking with B2B SaaS companies about the challenges that they face when it comes to managing their customers. When we speak with these companies, we see and hear problems from two different set of lenses, the executive’s lens and the frontline worker’s lens. Here are the some of the recurring themes that we hear in those discussions.
From an executive perspective, they struggle with:
- Customer Churn or less than desired customer retention. We all know that it typically costs far less to retain a customer than it does to acquire one. In the B2B SaaS world, it is imperative to retain a customer since often times the break-even point on a new customer acquisition isn’t until year 2 and beyond. In addition, we often hear that companies lack an ability to accurately forecast what their retention is going to be. In those cases, it is not uncommon to hear about customers that churn for no apparent reason. In today’s world of recurring subscription service software revenue models, reducing churn, or perhaps more importantly, maximizing negative churn (customer upsells minus customer losses) can radically impact your company’s overall revenue when factored out over years. For example, a 2 percent churn reduction across the board over a period of three years can nearly double the size of your company. (See Figure 1.). To address this, many companies are turning to the development of Customer Success teams within their companies, whose sole role is to help drive their customers in a more successful direction.
- Customer Adoption – In the event that retention is maintained, it is often the case that customers are taking too long to come up to speed on their products, leaving them vulnerable to churn during that time. Additionally, when pricing is “consumption based,” poor adoption significantly impacts revenue. By not having a well-developed process to help your customers quickly ramp up, revenue is lost that can simply never be recouped. For example, if your software model is priced based on numbers of users and it takes your customer 6 months longer to roll your product out to the entire user base than expected, those 6 months of less users simply cannot be recovered…ever, even if it’s the happiest customer on the planet. Consequently, having a life cycle map playbook in place to help guide your customers through a process that empowers them to quickly and successfully roll out your solution, is critical to maximizing CLV.
- Customer Satisfaction – We often hear from executives that they struggle with customer satisfaction in general. Some executives say they really don’t know what their customer satisfaction is because they simply don’t have a process in place to capture that information today. Others will state that they don’t trust their customer satisfaction ratings that they’re getting back from their teams because it doesn’t necessarily reflect what the retention and adoption numbers look like. The reason why this is the case is that simple surveying (e.g. Net Promoter Score or NPS) in and of itself doesn’t really give a clear perspective on the true satisfaction of B2B customers. For starters, the very nature of B2B can tend to make us fall into a trap of treating individuals as the company. For example, we may get excellent NPS scores back from our main sponsor(s), but get no responses or “crickets” from the user base. Then, when our sponsor moves on, we wonder why the customer decided to non-renew with us. Having a more holistic view of the customer is critical. Better yet, having processes in place to proactively make sure that your customers are attaining value by achieving their goals and objectives will put you in a much better place when it comes to customer satisfaction.
- Value Attainment – Another gap that many of our customers see is a lack of being able to show the value that they are delivering to their customers. This is an inherent problem when we fail to capture the customer’s desired outcomes combined with their current state very early in the process. i.e. establishment of a baseline. If we put a process in place to secure these at the time of sale and periodically throughout their lifecycle, we’ll be in a much better position to be able to articulate the value that we’ve brought forth. Armed with this information, securing renewals and adding on to the existing footprint becomes much easier.
- Acquisition Costs – Customer acquisition costs being too high is another area that can have its roots in the area of customer satisfaction. When sales teams are constantly being brought back into accounts to “fix things” they are not actively continuing their pursuit for new name business. Additionally, a lack of referenceability and low NPS scores will inherently drive acquisition costs up as a greater burden gets placed on marketing and sales efforts. Properly investing in customer success teams, processes and technologies can easily be justified by paying back on your sales and marketing fronts.
From the front line or CSM perspective, we hear them say that they struggle with:
- Productivity – It is not uncommon for CSMs to (confidentially) tell us that they often look back at a very busy week and don’t really know what they accomplished, even though they were never not busy. In fact, they of find that they don’t have the time to get all of their reactive tasks completed in a week. This leads to an inability to communicate value to their management or their customers. We often find that CSMs don’t have well defined processes to work through in order to ensure their customers’ success. Consequently, we often see CSMs keep spreadsheets to keep themselves straight with what they feel is the right things to be doing for their customers. This leads to inconsistent customer experiences and as a result, different brand experiences by your customers based on how effective the individual CSM is at planning and guiding their customer through a process using your solution. Having a best practice customer lifecycle model, complete with typical milestones to work towards, is a tremendous aid in helping the CSMs get out in front of their customers, thus becoming less reactive and ultimately more effective in their approach to driving success.
- Planning – We constantly hear CSMs talk about their hectic world in which they begin each week tactically waiting to catch customer issues and put out fires as opposed to working on more strategic, proactive value-added engagements with their customers. We also hear them talk about how the tools they have do not lend themselves to being able to line up or model their weekly activities. Consequently, it is not uncommon to see good CSMs planning their week with a combination of tools including Excel to better serve their customers’ needs. Again, this leads to your customers’ success only being as good as the individual planning capabilities of your CSMs. Having a frictionless mechanism to plan, distribute and record work using a predetermined lifecycle model as a guide can take a tremendous amount of stress away from the CSM’s job AND provide a much better and consistent brand experience to your customers.
- Task switching – A CSM’s life is often very hectic and full of task switching between accounts, especially when they are covering a larger number of customers (20 or more). As such, we often hear CSMs suggest that they don’t have the time to properly prep themselves to get into context before their next call. The result of this is that they feel like they’re making the customer repeat themselves to bring them back up to speed…and they are. This results in a much less than desirable customer experience. This is an area where technology can easily help, by having a system that can very rapidly inform the CSM of the latest context in terms of the account, the specific engagement they were working on and any desired outcomes that the customer is working towards. By having a dashboard where activities in their proper context are quickly available, the CSM can display a sense of confidence with the customer that they have their proverbial act together.
- Value add – As mentioned above an inability to easily describe the value-add that each CSM is delivering to their customers and or their company is another challenge. Without proper tracking and management of the work being delivered and the desired outcomes being achieved, it will always be a challenge. Conversely, by tracking and managing a baseline and each milestone achieved along the way, CSMs can easily communicate value to both management and their customers, making renewals and upsells much more likely.
- Forecasting – Often CSMs are responsible for forecasting their customers’ renewal probabilities. Even in companies that track things like NPS and usage metrics, they are still surprised to hear that some of their customers whom they thought were doing well fail to renew their subscription or suddenly minimize their usage (consumption based pricing model). Again, this is usually a problem with the fact that the health of the customer is not truly being identified. NPS alone cannot determine customer health. Neither can customer usage metrics alone determine customer health. In fact, combining the two still doesn’t accomplish the true perspective on customer health. Only when we include additional information around the customer’s health, such as goal and milestone achievement in addition to these other metrics can we get a true perspective of how successful, or not our customers are with our solution.
In summary, these challenges, while consistent and ubiquitous, are very easily overcome by a combination of people (e.g. CSM teams), processes (e.g. a good customer lifecycle model that is followed by the CSM team) and technology (e.g. CSM tools that include workload management capabilities).
At Bolstra, we have the technology solution that can help with this as well as the services team that can help guide you through a process to develop a good customer lifecycle model.