In a rapidly evolving yet tight-staffed Saas startup, Customer Success is often overlooked as a growth driver. Most Saas startups focus on customer attraction and acquisition, forgetting that taking care of existing customers and ensuring retention is equally important. In addition, because startups typically begin with a limited budget, Customer Success is usually placed on the backburner and is seen only as a cost. It’s time to change this mindset.
Churn is a major issue with startup companies. Given the compound effect of customer loss, a company could end up spending even more down the road just to stay afloat. A company could have 100 customers in January and by December, after losing almost half of their customers, they may find themselves struggling to break even.
For this article, CSM Practice spoke to Jennifer Chiang, the Head of Customer Success at Yup Technologies, a young startup, and author of “The Startup’s Guide to Customer Success: How to Champion the Customer at Your Company.” Chiang talked about the struggles of creating a Customer Success team in a startup setting, discussed tips and metrics on hiring the right people for the job, and shared some of the basic tools that startups can use to support their Customer Success efforts.
Why SaaS Startups Need Customer Success
According to Chiang, it’s normal for members of SaaS startups to wear many hats and work at different levels of the company simultaneously. The extra flexibility is often necessary given their limited budget and manpower. Because a startup’s operation is in its infancy, founding members tend to work extra hard at acquiring new customers, spending lots of their time drawing up presentations and meeting with prospects to get customers to sign up. However, what most new companies forget is that taking care of such customers after signup is just as crucial as bringing them in.
Churn rates at SaaS businesses vary depending on the customer base. For example, a small company with low contract costs and low revenue retained will likely have a higher churn rate than a large organization whose contracts are more expensive and drive higher revenue. This is simply because it’s easier for those who have invested little in a product to let it go as quickly. For a SaaS startup whose revenue relies heavily on transaction count, a Customer Success manager is necessary to ensure that this number stays high and customers keep subscribing.
How to Pitch Having a Customer Success Team to Startup Executives
For Chiang, who started out in sales and business development, pitching the idea of assigning a dedicated person or team to handle Customer Success was a challenge. “Customers need to feel welcomed and to feel that somebody is taking care of them in their journey with the product or service but, at that time, I first needed to show proof of the value of Customer Success,” she shared.
In order to convince startup executives to invest in Customer Success, Chiang used a three-pronged approach to solidify her pitch.
- Align values with the CEO or the executive team. How are they thinking about the customer’s lifetime value?
- Show qualitative data. Demonstrate the impact of having a Customer Success manager on board. Highlight customer stories of how having a dedicated customer-focused resource paid off for others. Show testimonials and mention the number of new clients and referrals made from a customer who had a positive onboarding experience.
- Show quantitative data. Compare using numbers. Demonstrate that the company has low retention rates because nobody is onboarding customers properly and how this can turn 180 degrees by introducing a purpose-driven Customer Success experience.
More than their soft and hard skills, which should be a given, Chiang stresses the importance of culture fit and how a person approaches ambiguity. Because of the tight company size, SaaS startup employees are typically expected to wear many hats, and the person who enters a Customer Success function should be able to adjust and adapt quickly. Another key trait is that the person should love looking at and analyzing data, which is at the core of all decision-making activities in a Saas startup.
The Role Data Plays for Customer Success at Startups
More often than not, SaaS Startups will not have much data to benchmark on. Teams will have to be comfortable with going out in the field to acquire raw data and organize findings to create the basis for operations. That said, in order for a Customer Success manager to thrive in a SaaS startup environment, he or she will have to be passionate about working with other teams and specialists to build benchmark data.
“At my startup, I was a one-woman show for about a year, doing everything; from going to clients in person, to onboarding folks, to crunching the numbers, to building out minimum viable products (MVPs). When I had a better understanding of what worked and what didn’t work, I started building simple process playbooks. I was then able to identify what I can automate, what I can outsource, and what exactly I need a team member to do,” said Chiang.
Basic Tools or Software That Startup Customer Success Teams Need
With a SaaS startup that doesn’t have a Customer Success team in place yet, simple tools like Google Sheets and email will suffice. However, as your client base grows, you may consider larger-capacity applications or Chrome extensions, like MailMerge (free) or ActiveCampaign. However, Chiang noted that it’s not so much about the fancy tools with a Saas Startup. For most companies, having Slack (to communicate), an email automation tool, and a reminders app will work nicely.
The key is to keep things simple and to bootstrap where possible. You can even utilize free tools like Zoom and Google Meet for webinars if needed.
“The fewer platforms, the happier we are,” said Chiang.
Successful Customer Success in a Saas Startup
Overall, being a Customer Success Manager or installing a Customer Success team in a SaaS startup means being willing to wear many hats and embracing ambiguity. Startups generally open with a very small team of five or even fewer, so a Customer Success Manager should be able to operate as a single unit in the beginning. When the company eventually has the resources and bandwidth to accommodate a team, Customer Success specialists should also be comfortable with a rather high customer to manager ratio.
Regardless of the size, however, one cannot discount the value that Customer Success brings to the company, particularly in retaining customers and reducing churn. Sales and marketing teams may be very aggressive at acquiring new customers, but it is the role of the Customer Success manager to ensure that they keep renewing and stay for a long time.
How Can CSM Practice Help
CSM Practice is a leader in the Customer Success space that helps small to enterprise-level businesses succeed in building their own Customer Success practice. We work with Customer Success executives to define the proper organizational structure, define Customer Success roles, key performance indicators, and other success-related opportunities. We specialize in the technology and services industries, offering a diverse portfolio of startup to enterprise solutions to achieve successful and scalable results. Our Customer Success Strategy program enables you to better understand customers’ ever-evolving needs through positive customer experiences in order to achieve desired business outcomes. Learn more about our services here or contact us for more information.