Customer Success Managers Will Save the Universe. Here are 3 Ways to Help Them Do It.
SaaS companies are no longer growing a billion percent per quarter which means we're doomed! As analysts predict how many layoffs it will take to keep Wall Street bonuses flowing and stop these stocks from going the way of crypto, all "as a Service" companies should take a breath and focus on how they can retain their customers. To do this, we need to actually pay attention to Customer Success teams. So, let's talk about how to help customer-facing teams improve client retention.
SaaS companies are no longer growing a billion percent per quarter which means we're doomed! As analysts predict how many layoffs it will take to keep Wall Street bonuses flowing and stop these stocks from going the way of crypto, all "as a Service" companies should take a breath and focus on how they can retain their customers.
To do this, we need to actually pay attention to Customer Success teams. So, let's talk about how to help customer-facing teams improve client retention.
According to the research firm, Meritech, average SaaS forward revenue multiples – the primary valuation methodology for public SaaS companies - are down almost 80% from their peak in November 2021.
Ouch.
Ironically, as this recession sinks in, companies outside of the software industry continue to shift towards "as a Service" offerings. The flexible framework remains attractive both for companies and clients.
But one big downside to this businesses model is that subscriptions are easy to turn off. This isn't like the good old days where ERP companies would literally laugh at their customers who threatened to change providers. Now everyone has to play nice, especially as the economy tanks.
What better way to tighten belts than to cut monthly license or service fees, especially those who don't show a clear return on investment?
This is where the Customer Success Managers (CSM) come in. They are responsible for keeping clients happy. Happy clients tend to stick around, and it is the CSM who stands between sexy forward revenue and the dreaded customer churn.
When the fit hits the shan, panicked micro-managers rush in pushing CSMs to upsell and keep clients from leaving without providing clear guidance, tools and coaching. Bad idea.
Instead, let's help these guardians of the galaxy. Here are 3 areas to help boost CSM success:
- SET (or RESET) CLEAR ROLES & RESPONSIBILITIES
The chart below, created by Russ Drury shows common CSM roles and responsibilities depending on maturity and size of the company. Fast growth from past years has resulted in unclear responsibilities and this tends to piss off clients. Use this as a guide to review how your SCMs work with sales teams and investigate any gaps that exist.
2. GET CSMs BETTER DATA & TURN THEM INTO TRUSTED ADVISORS
- Often CSMs do not have access to useful customer user data and / or they aren't providing the best advice on what customers can do moving forward to maximise their investment.
- The most common problem here is that the insights communicated back to clients are, well, not that insightful. Do monthly reviews focus on past performance that customers already know, or do they provide future recommendations that can help them get where they are trying to go?
- One warning sign to look out for: if clients are not interested in ongoing CSM meetings ("just e mail me the info"), this is a red flag. It typically means the information is not that beneficial OR it's not being communicated effectively.
- The big question to ask here: What insights create the highest ROI for this client?
3. PROVIDE PROPER CONSULTATIVE-FOCUSED SALES TRAINING & COACHING
If CSMs are responsible for renewals, or encouraged to up-sell, then they need to avoid acting like traditional pushy salespeople. This is the fastest way to lose customer trust! BUT, they need to be able to think like professional salespeople. This is about knowing how to probe for problems and make recommendations. It is not about selling stuff in order to hit some sci-fi level growth forecasts.
I wrote about the dreaded "as a Service Hole (aaS Hole)" here. Basically, CSMs need to know how to solve customer problems, profitably.
The "as a Service" universe depends on it.
One final idea:
The Customer Success role was coined by #Salesforce several years ago. They invented this stuff and have seen what works and what doesn't. You know all those SaaS layoffs happening? There are around 8,000 soon-to-be ex-Salesforce brains out there and some of them will most certainly be great resources to help you on your "as a Service" journey. Hire them and send me the referral fee.