Dani's Perspective on SaaS

Nostalgia
In 2003 I was managing the operations of Mercury Managed Services (today, HP SaaS). A large Mercury customer was about to give up on the product as he could not manage the complex in-house requirements, and was suffering from too much downtime. The capable account manager convinced the customer to switch to the SaaS model for a higher (!) price than what they were originally paying.
After a complex migration project the customer switched over and in the first week of the service we noticed a problem with the migrated data causing errors in the process. I called the application manager and apologized that we needed to take down the service for two hours until we fixed the problem (We abhorred the idea of more than a few minutes of downtime). The guy was ecstatic, happy as a puppy with two tails. I cautiously inquired why he was so pleased when I informed him of the service being unavailable. He told me that in the old model, no one would notice there was a problem, and when IT was notified of the issue it would take them two days to respond and a week to fix, and here we knew of the problem in real-time and service will be restored within two hours!
Obviously, customer satisfaction is a matter of expectations; within a few months this particular one got used to high availability and started complaining of less than outstanding response times.

So then, customer success is a combination of real value, of perceived value and TLC – Tender Loving Care.

Do it right the first time
As I have written in a previous post, the cost of acquiring new customers is between five to seven times more expensive compared to retaining existing customers, yet most SaaS CEOs/VP Sales are focused on new customers, optimistically hoping that ‘once a customer always a customer’.  
From a recent poll conducted by Totango it is evident that the fastest growing SaaS companies “…have a significantly better record on churn and upsell, underscoring the critical role of managing revenue from existing customers…”. In other words, being successful in the SaaS model means that you have to make your customers successful.
Bellow, I provide a list of best practices that a SaaS company should follow to improve Customer Success; of which Customer Satisfaction is a crucial but not sufficient factor.

Real Value – Perceived Value
Let’s start with something as trivial as bringing value to the customer. Obviously your service/product has to provide an advantage to the business that was not there previously, but many times the users may not be even aware of the real value. If the end user is coerced by her boss to use a certain business process without her seeing the value in it, it is not going to fly. Or, if the service was procured by a business manager that wanted a simple function that was not available or affordable prior, it could be that the users are not even aware of the full range of functionality (‘value’) of the offering.
Therefore it is crucial that the SaaS company be aware of the reasons why people are using (not using) the service, what their expectations are and how they perceive the value. This can only be done through engaging the end-user, not just the business entity that is paying for the service.
Which is a perfect segue into the next item…

Customer engagement
Remember the ‘good’ old days where R&D defined the product, the needs and the functionality? We’ve come a long way since, with Product Marketing defining the offering and releases; still, it is not clear how much real feedback is being collected and integrated into the roadmap.
How do you know what makes your customers successful? Ask them. Direct calls, forums, surveys, any means available to you. Involve the customer in the process. Ask for feedback on the product, workflows, and features. The end users typically would love to voice their opinion, to know that what they think is important.
The best venue for this kind of engagement is building a community around your service. Whether using a LinkedIn or FaceBook group or building your own community page in the corporate site. Create forums, discussion groups, a Q&A/FAQ section, an expert panel and blogs. This serves both as an invaluable source of knowledge into your customer’s deepest desires but also enhances loyalty. Consider gamification to promote participation in the community.

Branding
The community engagement is highly important for building your Brand Name. You want people to remember your name, and in a positive way. Twitter, FaceBook and other social media will kill you as easily as promote you. You must be aware of what is being discussed, chatted or Tweeted about you on any network and try to engage angry users and deal with their issues, real or imaginary.

Tell them they are successful
If you, as the service provider, know what brings the customer value, make sure they know it as well and can gauge it. Provide ‘success’ reports and ‘success’ dashboards as part of your product offering. Whatever metrics that you can define as gauging success, let them know how your service improves it, every time they use your software.

Know what is going on
“If you can’t measure you can’t improve”. There are two areas in which you must make sure you know what is going on. The first is Churn Management. You should be able to collect every bit of information on why customers left you, after how long, how big were they (revenue and company size), who was responsible for the engagement, etc. Only by analyzing, trending and reviewing this data will you be able to predict future behavior, identify telltale signs and reduce your churn.
The other area is how your product is being used by your customers. You could analyze log files and perhaps fields in your web pages, or use ready-made solutions such as Totango. Totango’s analytics and reports allow you to identify behavior indicating loss of interest, or patterns leading to disengagement. In addition, they can show you which components of the service are being used by whom, and when (e.g. EOD, Weekends), and which paths are abandoned in the midst of the flow. This can all be fed back to Product Management to improve the service and the experience, and therefore the customer’s success.

Integration
While your solution may be the best thing since sliced bread, your users do not live and work in a vacuum. There have been business processes in your client’s organization and other SaaS and onsite software in place long before you came into the picture. You must make sure that your SaaS application blends seamlessly into your user’s working day. This means allowing them to import or export data and tasks to the other applications they are already using the run their business and smoothly switching between applications (through SSO). SaaS entrepreneurs tend to focus so much on building a great application that they sometimes forget that true success occurs when you users start to see you not as an application but as a platform. Integrations are one of the ways to become a platform.

Having a good base of integrations also makes your customers decision to buy & use your product a much easier one. There is a wide variety of integration consulting companies and integration and SSO SaaS solutions out there. There is also a new breed of companies like Bondable which enable SaaS businesses to build integrations with other SaaS businesses, without having to constantly maintain these integrations.

Keep in mind that the more you are integrated with other services, the more ‘stickiness’ it adds to your solution and the more difficult it becomes to disengage.

Culture
In the next post I will talk about company culture and its direct impact on customer success. It is important enough to merit a standalone post.

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Originally published at http://saasperspective.blogspot.com/2014/02/saas-customer-success-best-practices.html