Budgets are boring – as a rule. But Customer Success, once you realize how much it can do for your SaaS company, is thrilling. Customer Success has been an up-and-coming concept, and this year, it’s safe to say, it has arrived. More and more companies are looking for ways to shift their perspectives towards Customer Success, especially in SaaS industries. It’s the next big step towards ongoing, sustainable SaaSy success.
Gainsight’s CEO, Nick Mehta, took part in a webinar with Byron Deeter (Partner at Bessemer VenturePartners) earlier this year to talk about how to budget and plan for Customer Success in 2015. Here are the parts of their conversation I found the most useful, although they into far more depth on the numbers than I will here.
In a discussion of budget, these two surprisingly didn’t open the conversation with proving ROI, how much to pay new hires, and how many people to bring on board (although all of these issues were addressed later). Instead, they opened with what Customer Success is really about: a proactive strategy for drilling down to what delights your customers, and delivering it.
When planning your budget, before you break out the calculator, you have to break out the whiteboard and sketch out your Customer Success objectives for 2015. As Mehta says, “Customer Success isn’t ‘rinse and repeat;'” it’s about improving customer experience and predicting their changing needs and wants. However, it’s not just the customers’ needs and wants that may change over time – your company’s needs and wants will change too.
SaaS companies just starting out will likely want to focus their Customer Success efforts on retention, renewal and churn avoidance. But, a few years in, that focus may well shift from preventing the negative to promoting the positive (ie. up-sells and forming strategic relationships). Figure out what your focus is for this year, whether that is mitigating risks and reducing churn, or building on an already strong foundation. Define measurable goals with an eye to improving your ROI in order to gain support from the higher-ups.
When your goals for 2015 depend on bringing more people into your Customer Success department, you’ll have to really sell it to the boss. To do this, you need a value proposition to explain how these additional people will affect the long-term value of new and existing customers. When pitching, be prepared to explain the ROI already gained in terms of reduced churn and increased up-sells, and be ready with a plan to increase those numbers with more staff.
As a rule, fast-growing companies should have a lot of Customer Success staff. Gainsight, for example, is a 140-person company, and by the end of next year they expect to have 15 people working on Customer Success. That’s nearly 11% of their workforce! As Deeter put it, hiring five people may cost a million dollars, but if you can prove that you’ll make a million dollars on an ongoing basis, that’s a good trade in the long-term.
Enter your budget meeting with a list of processes you’ll be improving in 2015, focusing on two main areas: Efficiency and Team Effectiveness. To get the best results from your team, you need to invest money in automation and great content, and invest time into prioritizing initiatives, training, and ensuring your Customer Success reps are contacting your customers at the right time.
To prove the ROI of your efforts, track the customers who enter the “watch list” (ie. those who may leave) that your Customer Success department end up managing, and keep records of how many accounts you save (those who renew). Add up the total dollar amount saved, and you’ll have a compelling reason to invest more in Customer Success.
Mehta and Deeter summed it up eloquently when they said “The important part of Software as a Service isn’t the software – it’s the service.” When you have a great product paired with responsive, proactive service, you’ll strengthen customer relationships, reduce churn, and make bank.
But, for that to happen, you first need a strategy, people, and processes with metrics in place – which will inform your budget.
Slide deck from the webinar:
- CEO’s Guide to 2015 Customer Success Budget Planning (saastr.com)
- Customer Success Budget Template (access.gainsight.com)
- The Executive Primer to Customer Success (access.gainsight.com/csm-forrester)
- Customer Success: The Definitive Guide (sixteenventures.com)
- SaaS Customer Success Experts Resource Guide (sixteenventures.com)