Sammy is the Managing Director and Cofounder of Blossom Street Ventures. Email him directly at sammy@blossomstreetventures.comWe’ve had the good fortune of learning from and investing in SaaS businesses with excellent customer retention and upsells. Below are some of the key learnings we’ve gathered over time.
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.
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 portfolio companies discovered 40% of those customers that didn’t receive onboarding churned in 6 months.
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.
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.
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. If they don’t recognize the value, then you need to find the customer that does (the “ICP”).
Your CS team should do nothing but CS. Customer success reps are not good at selling the product, trying to collect receivables, are do anything else that isn’t CS. They don’t want to do it, wont be good at it, and will only serve to alienate the customer. If a customer thinks a CS rep is going to badger them for a payment or try and upsell them, they may be less inclined to reach out when they have an issue and ultimately churn.
Be generous with users. If you’re pricing based on value and not users, make sure the client can add as many users as they want. The more users at the client, the more evangelists you’ll have.