4 Ways Customer Success Pays for Itself – and Then Some by @NikkiElizDeMere

Image created by Yasmine Sedky (@yazsedky).

Subscription-based services, from smartphone apps to old-fashioned newspapers, need one simple thing to thrive in today’s market. They need customers to keep coming back. With more companies shifting to online subscription products and services, the focus for online marketers in every industry, but especially SaaS, becomes not just acquiring clients – but keeping them.

If your SaaS company hasn’t gotten on board the Customer Success bandwagon yet, it’s likely due to “focusing on other things,” or “we don’t have the budget for that right now.” But prioritizing Customer Success initiatives pays such big dividends in returning revenue that you can’t afford to put it on the back burner. Here are 4 reasons to bring Customer Success front and center, whether your SaaS enterprise is on day 1 or year 20. Feel free to share them with your boss.

4 Ways Customer Success pays off

1. Reduces churn

Reducing churn is where Customer Success shines, because instead of being reactive, like customer service or customer support, success teams can identify at-risk customers before those customers call in with a problem. By the time an unhappy client contacts you, it’s already too late. But if your Customer Success team has been helping them along and answering questions every step of the way, customers won’t have any reason to leave unless your product really can’t do what they want.

As Lincoln Murphy says,

“Customer success is about more than delivering service or support. It’s about having real-time visibility into the issues customers are facing and finding smarter ways to manage those issues.”

If you’ve found that your churn rates are high, customers are clearly not getting what they need. A Customer Success initiative can save your lost contracts and increase up-sells, cross-sells, upgrades and referrals in one fell swoop.

2. Increases lifetime value

How many of your clients have been with you for a long time? How many stay for a certain period of time? How many check in and check out without even finishing your demo? Now: How much money do you spend on advertising to acquire each of those segments? The answer is probably: A lot. And, the customers whose dollars pay for that marketing are your long-term clients. They bring in the most revenue for the least amount of spend, which makes it well worth the investment to keep them around.

3. Lowers cost to acquire new customers

Cost to acquire a new customer (CAC) is a metric that encompasses product cost, research & development, and marketing – everything it takes to attract and convert a new customer. According to KISSmetrics, it can cost as much as 7 times more to acquire a new customer than to retain a current client, and current customers become more cost-efficient with each subscription cycle. That high cost doesn’t have to be a given – your Customer Success efforts should target lowering CAC as a primary goal, because with happy, successful customers come referrals. And referrals are free.

4. Hello, Negative Churn

Brand advocates are how you can go from decreasing churn to producing negative churn. Negative churn happens when the revenue from existing customers expands and more than offsets revenue lost from churn – essentially, it’s Lifetime Value on steroids. Negative churn happens from three types of sales:

1. The cross-sell: Customers purchase add-ons for the central product or service.
2. Resource expansion: Customers use more of the product, like buying more space in DropBox.
3. Seat expansion: More customers within the same company buy the product.

All of these expansion methods result from Customer Success teams helping clients achieve their goals and find such value that they become brand advocates.
Ultimately – why spend all of your time, money and focus bringing in customers who may, or may not, find what they need with your service? It’s a far more economical choice to find out what success means to your customers and actively help them reach it.

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