Do you remember this Saturday Night Live advertisement skit with Lily Tomlin as a phone company employee?
Customer choice means vendors need to care
Now, just a few years (ok, decades) later, these same phone companies are struggling to reduce customer churn. They are (finally?) realizing that things have changed and the customer now has more power in the relationship. And customers are not afraid to use it.
SaaS vendors need to focus on keeping customers...
Like phone companies, SaaS vendors – or any vendor selling on a subscription basis – realize that reducing churn and keeping customers for as long as possible is essential to their success. Unlike the phone companies of yesteryear, they can’t hold customers hostage and just expect the money to keep rolling in.
…but what do they need to do to reduce churn?
Many organizations recognize the need to retain customers, but they are not sure how.
The secret is simple. If you want to retain customers, make sure they:
1. Are getting value from your product or service, and
2. They enjoy their experience with your organization
If you can do that, you will keep them. As soon as these two things fall short, your customer will leave.
Focus on customer success to reduce churn
Many companies have invested in improving the customer experience and increasing customer satisfaction ratings. Now they to focus on making sure customers are getting full value / benefits realization.
For many organizations, this means creating a Customer Success Management program. Customer success is not account management or even customer service. It is all about helping the customer achieve the measured benefits and ROI that is meaningful to them. It requires different methods, tools, and activities than before.
Do you have a Customer Success Management program? If not, why not? If so, how has it affected your customer churn?
Please share your thoughts and experiences on the Customer Success Practitioners group on LinkedIn.
When speaking with Customer Success Management professionals they consistently tell me they provide different CSM services depending on the customer. Even basic customer segmentation has allowed them to prioritize their efforts and adjust their services to meet the specific needs of different customer groups.
Not all customers are equalWhile all customers are important, they are not all equal. Some customers are more profitable. Some require more support and take more time. Some customers start small, but with a huge potential lifetime value, whereas others may have limited potential.
When developing your CSM program, make sure you understand both the needs and the potential value of your different customers. And then, prioritize accordingly.
Differentiate B2B or B2C
• B2B customers often have less individual control and discretion when it comes to the systems and tools they use. In addition to individual user habits, you have to navigate a plethora of organizational issues, including internal business processes, incentives, policies, procedures, technical and data quality issues.
• B2C customers tend to have a high degree of individual control and discretion when it comes to using your product or service. You may need to help them develop new habits that involve regular, sustainable use of your system.
Delivering B2B CSM services is more complex than B2C, but the revenue amounts at stake often make it a priority.
Differentiate size & budget
It will take some experimentation to determine the optimal size and budget for your CSM program. The type of CSM services you deliver will influence the number of customer success management staff you need. It will also affect things like the amount of travel (face-to-face) service vs. the amount of remote (web and phone) service.
Many CSM programs start relatively small and then grow as the customer base grows. When you building your CSM program be sure to include plans for how you will add additional capacity as your customer base changes and as their needs – and your software - changes.
Change your methods based on customer need and value
You can help customers be successful with your product or service in many different ways. For some customers, it may make sense to provide services that are largely automated and uniform. For others, especially those with a high potential lifetime customer value, you may need to provide more hands-on, customized CSM services. And, as your customers grow, you may need to adjust the level of service they receive.
Check out these great resources to help make your Customer Success Management program the best in the industry.
Most companies have a process for closing the initial sales
What was clear is that they have invested lots of time and money in creating a sales organization that knows what it is doing and can close deals. That is, they could close new deals.
But they don't have a plan for what happens next
And they lose a lot of customers at renewalsThe problem is this: the customer has a different renewal process.
Including Customer Success Management activities after go-live is critical to renewals
What a difference a year makes.
In November 2011, I wrote a blog post titled, “Is your IT system a Dreamliner?” discussing how revolutionary advances in technology also introduced new risks that need to be monitored and managed. I also wrote, “Do you think Boeing is going to monitor these risks and take action to mitigate them? You bet they are."
Looks like I was right.
While I am sure Boeing would rather have avoided all the problems they currently face with the 787 Dreamliner, I bet they are very thankful they had the structures, processes, and people in place to effectively manage the problems that have emerged now that their planes are actually being used.
Are you prepared to manage a crisis with your technology?
In my earlier article, I wrote:
“When implementing new IT systems, many organizations focus on getting the system live, but ignore what happens once it is in production. The value of your system – and the risks – only is introduced after the system is live. And they continue over the life of the system. This means that you need to manage the value creation and risk mitigation over the life system.”
This is what happened with the 787 Dreamliner. The plane went through extensive testing and government approval processes, yet the unexpected problems only emerged after the plane was live and being used on a daily basis. Just like with an IT system.
Boeing faced new risks when introducing new technology into their aircraft. Organizations face new and unexpected risks when introducing new IT systems. However, unlike Boeing, most organizations do very little to prepare for and proactively manage their new IT risks. And they do so at their own peril.
Do you have the right governance plan in place?
Implementing new systems – regardless of whether it is a proven cloud enterprise system or a custom-built application – introduces new risks and uncertainty into your organization.
For example, “social” applications, collaboration systems, and CRM systems all alter how your staff interacts with each other, with customers, with vendors, and with the public at large. You now have new risks that someone will release sensitive information, say the wrong thing online or fat-finger their touch screen and create a major public relations issue for your organization (can you say “viral”?).
When this happens, you need to have the right team and protocols in place. Do you?
What should you do?
Before you write a single check for a new IT system, map out exactly when you will get your ROI from the system and when new risks will be introduced. By doing this first, you will see that all of the benefits – and risks – happen after the system is live. And that they will continue over the life of the system.
Then, make sure you have people in place who have the formal authority, responsibility, tools, and resources they need to manage all the risks that will emerge over the life of the system. These same people should also be responsible for ensuring systems are fully adopted by end-users and that the organization realizes its full ROI goals.
Where to start? Two tools that can help.
When I talk with people about managing risk and user adoption after a system is live, they typically see the need for doing this. And they typically have no clue about where to begin. They need help.
1. Start with a user adoption strategy and team. By first understanding the issues you face and then identify the methods and infrastructure you need to address them. I recommend that you develop a user adoption strategy. And then consider a tool like MyUserAdoptionPlan.com to help implement the strategy and support your users.
2. Then, add risk and governance tools. There are a lot of risk and governance tools out there that can help. The one that we like best is the suite of tools from Confident Governance. This tool-set, which is built on the force.com platform, is fast and easy to configure and provides a wide range of capabilities to help you define and implement your risk and governance policies. Also, it has very affordable pricing and is within reach of most organizations.
Don’t let your IT system be a Dreamliner
You have invested a lot of time and money in your IT systems. The right systems can take your organization to new heights of success. And it can all go away with just one unexpected problem.
Don’t wait to manage your IT risks. Get started today.