Value In SaaS
It is unfortunate how many SaaS companies still consider customer success as a cost center (and the responsibility of a single team). When they talk about scaling customer success it’s usually about automation and standardization so that CSMs can serve more customers.
While 1: n tools and services, like automated E-mail sequences, webinars, FAQs etc., definitely have their place you have to use them the right way. They are complements to cover the low-level stages of the customer success journey but hit their ceiling of usefulness as your customers move forward.
The minimum viable customer value
Helping your customers to become (more) successful remains the goal of customer success at any time. If your customers won’t find enough value (anymore) due to more generic and less personalized human services they will churn.
All they care about are their outcomes, not whether it’s been efficient for you to help them get there. Customer expectations are on all-time highs. Because they have all the power from unlimited choices.
If you don’t put in the effort to understand your customers’ business and goals and deliver a personalized customer experience, your competitors will. Delivering the minimum viable outcome is not a recommendable strategy in highly competitive markets like SaaS.
Besides, optimizing your costs is playing a defensive game with limited results. There’s certainly a quality level you can’t fall below without causing a mass exodus of your customers.
The maximum possible customer value
You’ve guessed right, if there’s a defensive game there must be an offensive one as well. It requires a fundamental shift of mindset where customer success changes from cost center into a growth function.
In this diametrically opposed approach your goal is no longer to optimize your costs but grow the revenue per customer. Here, scaling refers to grow the gap between revenue and costs from the revenue side where the ceiling is much higher.
However, it’s not only a change of mindset but also a change to the customer success manager role. You have to grow from product educator to advisor and problem solver. Because customers can only become as successful with your product as their skill level allows.
The truth is that bad input leads to bad output. If you want to grow your customer value further and further you have to help them to build excellence on the job for which they are using your product. No matter if they are project managers, sales reps or accountants.
Monetization and growth
Improving your customers’ skills is an investment that is supposed to pay dividends over time through significantly higher ACVs and LTVs. How far you go in every case depends on your customers’ growth potential. And obviously also on your own capabilities so I propose you’ll invest into your personal growth as well.
If you are selling E-mail-marketing software chances are that you’ve created content about how to write better cold E-mails and build automated sequences. But in the end, it depends on the customer whether they become successful with.
So additionally you can:
- Understand your customers’ businesses and their customers and help them create tailor-made (cold) E-mails.
- Help your customers to get more contacts for their list.
Why would you do that? Let’s say your lowest pricing tier allows the customer to send 10k mails for 50$ per month.
How could you charge 60$ for instead without any kind of upselling? Help your customers get more value per E-Mail – most likely to close more deals and increase revenue. If your customers get 5k additional revenue per month they would not mind paying 10$ more would they?
This can be considered as a qualitative customer value increase. It’s obvious that you can raise your prices only if you can grow the value for a considerable amount of your customers. However, a price increase is a massive growth lever as it affects all your new customers, renewals and expansions.
What would it take to upsell your customers to the next tier? 100k E-Mails for 150$ per month? Most likely, they will need a bigger list and you help them build it. Help them create better landing pages, better content, better newsletters etc to collect more addresses. This is the quantitative growth of customer value.
This is why customer success is a growth function. You can always grow your revenue further than you can reduce your costs. There is almost no limit to how far you can grow your customers’ value in the long-run and if your customers grow, you grow.