Tim's Saasiness

4 Critical Elements to Customer Health

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Almost all subscription companies track the health of their customer in some combination of excel sheets, CS software, customer surveys, QBRs, CSM surveys and NPS/CSat scores.  It is no surprise that customer lifetime value is maximized through retention.  However, these same companies are then often surprised when “green” clients churn.

While there are many reasons for churn that have nothing to do with your performance as a company, I have found that maintaining good customer health really comes down to four elements:

  1. Customer Experience
  2. Customer Communication
  3. Scalable Technology and Processes
  4. Incremental Value

Let’s take a closer look at each of these areas.

Customer Experience

You can have a technically great product and great CS tools in place, but if your customer has a bad experience with your platform, all is in vain.  Customer Experience is the critical factor in today’s subscription economy.  Take the time to analyze each step of the Customer’s Value Journey (information gathering, sales, onboarding, adoption and retention experiences).  Find where confusion or a sub-par experience exists and change that experience for the better.

Customer Communication

Customer Communication should not be relegated to the realm of “sins”.  Be proactive in your communication to set forth expectations at each stage of the customer lifecycle.   Celebrate successes and share best practices.  Promote new features and relay important industry news.

Even sins can be overcome through truthful and timely customer communication and lead to strong customer relationships.  Have a platform outtage? Communicate.  Miss a deployment deadline?  Communicate.  Get a poor CSat score?  Communicate.  Haven’t spoken to the executive sponsor in several months?  Communicate.

Scalable Technology and Processes

Unless you have a very high CSM touch model with relatively few clients, you must deploy technology that will consolidate all of your identified customer health factors into one place.  I am a big fan of Customer Success software packages (Gainsight, Frontleaf, Natero, Totango, etc.), and big data.

When configured correctly, these platforms consolidate customer usage data, support, training, and financial data into configurable alerts that can allow your CSMs to focus on the right accounts at the right time.  As your data matures, you can identify leading indicators of churn and take a more proactive approach to client management.

Incremental Value

An often overlooked part of the subscription business is found in delivering incremental value.  In XaaS, revenues increase with usage (license counts, feature packages, metered usage, etc.).  You must deploy additional offerings to continually deliver more value or you will find your customers start pressuring your on your pricing.  If high ROI is there, this conversation is much easier.

Similarly, in subscription models, you must continue to offer more value or your customer will find new value with a competitor.  For example, Netflix doesn’t stop adding to their significant content library.  To the contrary, they constantly add new titles and use their internal data to produce user desired content to extend customer retention.

“Good” Health

The contributing factors to good customer health must necessarily vary from company to company and offer to offer.  However, the critical elements of Customer Experience, Customer Communication, Scalable Technology and Incremental Value are inherent in any subscription model business.  I encourage you to identify your specific health factors and develop a program with these critical elements in mind.

timschukar4 Critical Elements to Customer Health

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