Customer Success models for SaaS businesses

I come across a wide variety of SaaS vendors in the marketplace  and, in many cases, we see Customer Success leaders struggling to define what our friend Nils Vinje calls the “Four P’s”:

  • Purpose: Does the Customer Success team exist to drive renewal revenue? Customer satisfaction?
  • People: What type of person is best suited to the needs of the team?
  • Process: What are the core processes the team must support?
  • Platform: What automation will enable these people and processes?

Answering these questions is key for determining which Customer Success model is right for your SaaS business.

Start With your Selling Model

One way to approach these questions is to start with how your products are sold and deployed in the first place.

Are you selling online without sales assistance? This implies a relatively inexpensive product on a unit basis and a low-touch provisioning process. Your post-sale experience will probably be low-touch as well. What will the role of your Customer Success people play in this case? Perhaps they will operate systems like online communities and marketing automation tools to enable “digital touches” only.

For the sake of contrast, imagine instead that you’re selling a complex product using outside sales resources. Your annual contract value is closer to $100,000 and your Professional Services team does the implementation. In this case, your Customer Success team is probably at the center of the post-sale experience. They’re delivering a high-touch, consultative experience to a low number of customers per Customer Success Manager.

Of course, many SaaS vendors sit between these polarities. In this case, a mix of people-driven and digital touches might be right for you. Which leads to another way to look at the problem.

Charting the SaaS Vendor Growth Journey

Another way to define the Customer Success team’s mission is to consider where you are in the growth journey.

We’d argue that a young SaaS vendor is operating a single, low- or no-touch selling motion. Your product is a basic version of what it will become, and your capital constraints mean that expensive sales resources aren’t affordable yet. Your Customer Success model is probably low-touch or no-touch in turn.

As you reach later years of growth, your customer base has become heterogeneous. Small customers continue to come through the front door, because who would stop using an efficient, online sales model to acquire new customers? However, your outside sales team is now landing larger customers too. And some customers grow year-over-year thanks to upselling. The Customer Success model in this case is multi-tier. Digital touches are used for the lowest tier while people-driven touches are used in the highest tier. A combination of the two is used for customers in the middle.

Last, I see some larger SaaS vendors start to look homogenous again. Their product has evolved into an Enterprise offering with high-touch selling and high Annual Contract Values (ACV). Small customers are no longer attractive to the acquisition sales team, and this determines the high-touch Customer Success model that follows.

Summing it up

As your define your Customer Success team according to the “Four P’s”, the first question to answer is whether you’re aligned to the selling model. If not, what are the gaps and how does your organization close them?

Second, has Customer Success evolved along with the business to support a multi-tier model? Has your business become a single-tier model again, thanks to very large customers? Are there gaps to fill?

My take: The most prevalent gaps are when Customer Success teams are focused solely on the highest-value customer tier. This is a somewhat understandable approach but is also a recipe for churn. Successful organization find a scalable way to gain a deep understanding of every end user, as well as a programmatic way to reach out to multiple accounts.