The 11 Commandments of Customer Success

We had the good fortune of talking to a Company called Apptentive about their customer success methodology and best practices.  Apptentive provides software that powers conversations (2 way messaging) and communication (surveys) between clients and their app users.   Their customers are happy and sticky, which can be seen in Apptentive’s very impressive net retention figures.  Below are some of the things we learned from Apptentive as well as other portfolio companies about Customer Success.


The Customer Success Team is not the only group in charge of customer success.  Preventing churn is everybody’s job, so your engineers should talk to the clients’ engineers often, the CEO should greet as many customers as he/she can and have direct communication with the largest customers (every customer should have the CEO’s email address), the sales people that won the initial contract should check in monthly to see how things are going (and look for upsells), and the head of onboarding should also touch base to make sure customers don’t need a refresher on the product. 


You should make your customers the defacto “Head of Product”.  The feedback of customers should drive the direction of the product.  Make sure your customers know their feedback is important and make them feel ownership.  The result will be customers that feel appreciated and invested in the product. 


Contract structure is important.  All contracts should have auto-renewal.  In addition, instead of paid pilots, give customers a 90 day out when they sign up.  This will lower the barrier to customer acquisition. 


Give onboarding away if you have to.  You should always try and charge an upfront fee for onboarding, but if a customer won’t pay it, then give them free onboarding anyways.  Customers are won and lost in onboarding so making sure they’re well versed in how to use the product is critical.  One of our current portfolio companies (not Apptentive) discovered that since January 2015, of the accounts that received onboarding, 82% were still customers.  Of those that didn't receive onboarding, only 38% were still active.  The difference onboarding makes is dramatic. 


The first 3 months predict the next 9 months.  Your team should be especially high touch in the first 3 months.  A customer’s experience in these formative stages when they’re paying the most attention to your product must go well, so be especially attentive and proactive. 


Touch, touch, touch. Every customer should be touched at least once a month, big customers should be touched once a week, and your most important customers should be touched multiple times a week.  A “touch” is not an automated email by the way.  It is a custom, sincere email or better yet, pick up the phone. 


Low usage or unwillingness to adopt features can be warnings.  If a customer isn’t using your product, isn’t reaching out to you with questions or issues (customers reaching out to you for help is a good thing!), or if a customer isn’t adopting new features, reach out and make sure nothing is wrong. 


The Rule of 40.  For a SaaS company with enterprise clients, generally you need one customer success rep for every 40 clients.  Don’t overwhelm the customer success team with a ratio far outside 40:1.   


Educate the customer.  Make your customer better at using your product by educating them constantly, and share ways in which other customers are using the tool.  Customer feedback drives the product roadmap and customers feel like they have ownership in the product because their suggestions are incorporated. 


New features are great, but not critical.  Adding new features, while great, is not the route to keeping the customer.  More important is making sure the customer understands how to use the current features well and recognizes the value your features are providing. 


Your customers are your best new clients.  You should always be exploring ways to upsell your current clients, adding seats, features, etc.  They’re the cheapest source of new customers so make sure you’re maxing out their interest in your product.  As the table below shows, net retention for public SaaS companies is 103%+, so that should be your goal.  Of course there is a fine balance between upselling and being annoying, so use judgement. 


        2015 2014 2013
NET RETENTION Ticker Time Period TTM Revenue Retention Retention Retention
2U TWOU Annual $150 120% 112% 144%
Benefitfocus, Inc. BNFT Annual $185 95% 95% 95%
Box, Inc. BOX Annual $280 126% 136% 144%
Castlight Health, Inc.  CSLT Annual $75 116% 103% ---
Cornerstone OnDemand, Inc. CSOD Annual $340 95% 95% 95%
Cvent, Inc.  CVT Annual $188 102% 102% ---
Demandware, Inc. DWRE Annual $237 100% 100% 100%
Five9, Inc.  FIVN Annual $129 96% 96% 100%
HubSpot, Inc. HUBS Monthly $182 99% 93% 83%
Marketo, Inc. MKTO Annual $210 105% 109% 100%
New Relic, Inc. NEWR Monthly $162 130% 110% ---
Proofpoint, Inc. PFPT Annual $265 90% 90% 90%
RingCentral, Inc. RNG Monthly $296 99% 99% ---
SecureWorks SCWX Annual --- 105% 102% 99%
Veeva Systems Inc. VEEV Annual $382 136% 166% ---
Zendesk, Inc. ZEN Annual $209 123% --- ---
Instructure INST Annual $82 100% 100% 100%
Xactly XTLY Annual $76 104% 102% ---
Median     $188 103% 102% 100%
Average     $203 108% 106% 105%


I hope this is helpful.  Please feel free to add any thoughts or your experiences regarding customer success in the comments section.  Big thanks to Apptentive and our portfolio for providing the data in this article.    

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