The Big Bold Secret to SaaS Growth in 2020!
*This is an updated version of the article, “The Big Bold Future Of SaaS Growth Is Customer Success” that I originally published on Software Executive Magazine in May 2019.
The Fundamental Shift You Need To Make
Do you want to boldly grow your SaaS company in 2020 – and beyond? If so, it is time to move beyond the features and functions of your software, beyond the freemium price models, beyond the quick installations and beyond offering unlimited integrations and partnerships.
Instead, you need to understand why your customers are not getting value from their investment in your software and then take bold action to help them actually achieve the results and success they need.
This is incredibly different than just delivering software.
This is fundamentally changing your business model and your mindset.
THE BROKEN SAAS BUSINESS MODEL
The birth of Software as a Service (SaaS), which brought us the great promise of the subscription revenue business model, was closely followed by the inevitable afterbirth – customer churn, revenue destruction, and slow or negative growth. The next generation of this business model, led by the creation of customer success (CS), is ushering in a new growth engine.
But only for those organizations that are brave and bold in how they embrace and approach customer success!
When subscription software first came on the scene, many people naively assumed that it was just another revenue model for the vendor. They assumed that if they just continued to deliver great features and functions that customers would naturally stay with them in perpetuity.
What they didn’t realize was that what they really introduced was a new consumption model for buyers, where the buyer would only be willing to pay for what was used and what was generating value for them. And so, the trouble began.
SOLVE THE PROBLEM YOU NEED TO SOLVE, NOT THE PROBLEM YOU KNOW HOW TO SOLVE
The core problem that emerged was not the technology and getting systems deployed quickly, but rather that most buyers’ organizations are not really good at using technology effectively to solve business problems and create clear, measurable value.
This is not a new problem for buyers.
Most organizations, regardless if they are investing in SaaS, perpetual license, or home-grown systems, can often get the system live. What they struggle to do is to get their people to use it in a way that creates the required business value.
- With perpetual license and home-grown systems, buyers’ organizations pay for the value upfront (sunk costs) and then they are stuck with it whether they get the value or not.
- With subscription software, they only keep paying (renewing) when they are getting value. This is very bad news for SaaS vendors.
Now the SaaS industry is facing a challenge the likes of which they have never known before, and a problem for which they are ill-equipped to solve using current tools and methods.
At the core, the problem that SaaS vendors need to solve is figuring out how to get their customers to successfully, effectively and efficiently get the people in the customer’s own organization to change the way they work and utilize systems in a way that actually generates expect business outcomes.
…And then they need to figure out how they keep people creating value from technology, year over year, while working in a world of perpetual change.
BEWARE – ICEBERG AHEAD!
The good news is that SaaS companies are beginning to wake up to the fact that their future growth and survival depends on them doing more to help customers achieve results.
They are embracing a customer success mindset, investing in building customer success teams, and slowly trying to align their organizations around delivering customer outcomes, not just software.
The bad news is that very few SaaS vendors have figured out how to solve the root-cause problem, that is, how to get customers to drive effective adoption and use technology to create value within the customer’s organization.
Instead of figuring out how to solve this problem, many SaaS vendors are rushing to do what they know how to do, what they are comfortable doing, or what they have done for years when marketing and selling to new customers.
For example, many CS teams get very focused on developing success metrics, defining new internal processes, building playbooks, and trying to automate a lot of the customer success process. While these approaches work great for marketing, sales, and internal operations, they do very little to solve customers’ internal adoption and value problems.
Sure, on the surface, a lot of these activities make sense, and they will deliver some value to customers. But these approaches alone are not enough.
Customer success teams that only apply old problem-solving techniques to the new challenges of user adoption and customer value creation are effectively trying to Feng Shui the deck of the Titanic. Sure, you can do it, but it probably won’t solve your problem.
CUSTOMER SUCCESS IS WHERE YOU NEED TO COMPETE
Given the need to deliver business value AND the new realization that customers struggle to achieve business value on their own, puts the spotlight on the new future of SaaS growth.
The race is not to deliver more product features, it is to deliver quality, effective, scalable, impactful customer success services. This is where software companies need to compete!
To do this, they need to be bold in their approach.
What SaaS vendors need to realize is that driving adoption and value creation, especially in B2B businesses, is a people and organizational problem, not a technology problem. It is about getting people – large groups of people – to change how they behave at work, and how they perform their jobs.
People have a lot of their own motivations and personal identity invested in their jobs and their sense of professional success.
They also have many organizational factors, in the form of organizational structures, business processes, communication practices, and corporate culture, that all limit individual freedom for how they behave at work.
This combination of individual motivation, identity, and organizational factors, all impact how users adopt technology and use it to create business value. And alarmingly, these factors that most impact customer success are often misunderstood or outright ignored by SaaS vendors and buyers.
GO BIG and GO BOLD with CUSTOMER SUCCESS …OR YOU WILL GO AWAY
Being bold about customer success requires you completely re-envision what success looks like from your customer’s point of view. Think long-term.
- What would it take for the customer to achieve so much success from using your product that they renew for the next 20 years (or more)?
- What actions do they need to take within their own organization to achieve this level of success?
- How can they get their people to effectively collaborate using your software as it is designed and intended?
- What are they not doing today that they need to start doing?
- What do they need to do differently?
- What do they need to stop doing that is preventing them from achieving success?
Think about the people in their organizations.
- How can they get their people to embrace technology?
- How do your customers need to address all the motivational, identity and organizational issues that affect user adoption?
- How can they make sure they keep their current and future people using the evolving systems, in a changing world, over the next 20 years?
Now work backward.
BE BOLD TO DELIVER A HIGH-IMPACT CUSTOMER SUCCESS PROGRAM
- What will customers need from their vendors to achieve success over the next 20 years?
- What is their ideal vendor profile and how do you become it?
- What services, expertise and resources do you need to bring them?
- Where will you get them or how will you develop them? How will you engage your customers differently to help them focus on their 20-year success?
- How will you prioritize your investments in marketing, sales, product development, support and customer success to make sure you are providing the resources (not just the software) that customers need to renew for the next 20 years?
- How do you need to engage with customers differently during the marketing and sales process to get to them focus on 20 years of success?
- How do you get your marketing, sales, product, and customer success teams to align to deliver on this vision for the future?
Now let me ask you – what happens to your company if you don’t figure out how to solve these problems and your competitor does?
And believe me, your competitor is working to solve these problems.
Bold Customer Success Driven Growth in Your Future
Does this sound a little overwhelming?
I hope so.
When you look closely at the challenges ahead, you clearly see the foolishness of the approach many SaaS organizations take to approaching sales, renewals and customer success.
Hopefully the magnitude of the challenge – and the opportunity ahead – demonstrates why you need to be bold in your approach to customer success.
This is both the challenge and promise of customer success.
If SaaS vendors can figure out how to deliver results, not systems, then customers will heap great financial rewards on them.
Much like a drug-dealer tries to get their users hooked on a chemical high, SaaS firms will find that they can get their customers hooked on the high of achieving great business results. When done effectively, this customer high delivers the great renewals, expansions, and referrals that all SaaS vendors want.
This, not new sales, is what will lead to the biggest, boldest growth in SaaS businesses in 2020 (and beyond).
About the author:
Jason Whitehead is CEO of Tri Tuns, LLC. Tri Tuns works to bridge the gap between buyers and sellers of SaaS software to help accelerate user adoption and value creation so both organizations are successful. He is co-founder of Customer Success Mastermind, a frequent blogger, and co-host of the popular podcast series, “The Jasons Take On…” that advocates for taking bold action to drive customer success.