7 signs you need a Customer Success Function in place

7 signs you need a Customer Success Function for your B2B SaaS company [Part 2/11]

While you may hear a lot of great things about the impact that a Customer Success function can drive, often there is a dilemma around

i) Should you actually go ahead and invest in setting up a Customer Success function? Do they really need it?

ii) Is now the right time to invest in it or should you wait for your company to scale further?

Each company may have its own unique challenges and may be at a different stage of growth. However, I tried to put down some common signs/signals that can help realize the need for a Customer Success function to be in place:

1. You have a product that is fully functional; i.e. a product that works :)

May sound very obvious, but yeah no point trying to make the customer successful when your product constantly breaks down/has a lot of bugs. The primary focus should then be to fix the product using issues reported. Giving temporary workarounds and out of the product manual services will only worsen customers` belief in the product.

2. Sizable customer base without much insight into product usage by different customer profiles

I would say 200–1000 paid customers (depending on the ARPU) will require a double click on product usage and dedicated resources to proactively engage with these customers to find out about the same.

Often times customers surprise product companies by the kind of use cases they have. Validating whether the product is being used by the target customers that you had in mind and in that they are using the product in the way that you expected them to gives you lot of inputs (so you optimize your marketing spends, product roadmap etc. accordingly)

3. Your Product Roadmap has been constantly been driven only by Product Managers and Competitors and not CUSTOMERS

Is there a bridge between your product team and the customers? When you have smaller number of customers, it is fairly easy for PMs (Product Managers) to interact with all customers and be on top of use cases and feature requests. However, as your customers grow in number, you will need Customer Success Managers who are constantly are on top of customer use-cases, issues, requests; prioritize the same and share inputs with product managers.

Depending on your product strategy, you could decide what % of your Product Roadmap is driven by i)Customers ii) Your own innovation and iii) Competitor feature catch up.

4. Your Churn Rate is on the rise and you only know customer had issues ‘after’ he churned

If your customer base is primarily SMB and your monthly account churn rate is greater than 3%, its time you need to be thinking about a customer success function (given you have sizable number of customers as mentioned in 2)

For Mid-market & Enterprise customers, a safe churn rate to have is less than 1%

Fixing the churn problem early on is much easier than worrying about it suddenly when you scale to a few million.

The first step to reduce churn is to first understand why it is happening. Customer Success team starts off with collecting inputs on what kind of customers leave and why do these customers leave the product (Price, Features not being available, poor engagement, lack of training,business reasons etc.) Watch out for my detailed blog on churn prevention.

5. Customers leave even after using the product for more than 6 months or 1 year

Even though the customer really likes your product, there are lot of things that change over time:

i) Customer requirements ii) Stakeholder movements iii) Being approached by competition

Proactive post sale engagement is key to make sure i) implementation changes happen as per changing business requirements ii) Relationship with new stakeholder is created at the right time iii) Product value is regularly communicated to the customer

6. Low product adoption

Low product adoption may be defined as

i) not using all your suite of products that go with each other (when you are a multi-product company)

ii) Not all features and modules being used (eg:- If greater than 50% of your customers use only 40% of features that you have in the product)

One of the key goals of the customer success team is to proactively make customers aware of features in the product, train them and thereby increase product adoption.

7. You have very few referrals from you existing customers i.e. low advocacy

Word of mouth marketing, customer references and case studies come only through customers who have seen value through using the product over time. Proactive engagement by a CSM ensures customer derives value through the product and drives advocacy. So if your customer acquisition costs are sky-rocketing, you know what to do!

Do stay tuned and share thoughts :)

Next in line: The Customer Engagement Lifecycle — How does Customer Success fit in? [Part 3/11]