Strategy

5 Things Every Company Must Do Right Now for Customer Retention

By 
 on 
July 28, 2022
August 29, 2022

At Next Coast Ventures, we are built by entrepreneurs for entrepreneurs. We continue to focus on improving the way we support our founders in their entrepreneurial journey. We heard from our portfolio that beyond day-to-day oversight, a key way to provide support is by engaging the best experts to talk about specific topics. So we are pleased to share the takeaways from our first speaker event of the summer “Customer Success: Retaining Your Customer Base in Challenging Times” with Mike Smerklo and Nick Mehta.

Our Head of Platform, Kaitlyn DeBernardo, is constantly engaging with both our portfolio companies and our expert network to surface high-impact, relevant, content. This event was invite-only to our portfolio but the insights were so strong that we wanted to share them with the entire entrepreneur community. 

We think Mike and Nick were the perfect pair to double-click on the topic. Prior to co-founding Next Coast Ventures, Mike was the CEO of ServiceSource, a leading provider of outsourced inside sales, customer success, and renewals management solutions for enterprises worldwide. Nick is the CEO of Gainsight, which provides companies with insights on scalable, durable growth through product-led, customer-led, and community-led strategies. So Mike and Nick are the OGs of Customer Success (maybe more the “O” than the “G”, but still pretty smart on the topic). With the tech market pull-back and the talk of a possible recession, now seemed like the perfect time to have this discussion - and Nick exceeded expectations!

Takeaways:

  1. Customer success is critical. A decade ago, when Gainsight was in its early days, tech companies were only just beginning to invest heavily in customer success alongside sales. Now it’s something you simply can’t afford to ignore.

Fun fact: in 2013 Nick recalls customer success manager roles numbering around one thousand. Today that number has grown to over 300K. What’s more, a company’s customer success is a core topic among its C-suite, at its board meetings and with leading early and late stage investors.

“The move to SaaS and cloud shifted all the power into the customer's hands. [Customer success] went from something that was important to something that was just existential. And now, 100 percent of tech companies have customer success teams,” says Nick.

  1. Customer success should be part of the sales process. Making customer success a core part of news users’ experience can make all the difference between a short-term customer testing out your product and one who sticks around over the long term. That’s because customers today are more likely to think of purchasing a SaaS product as an experiment. Unlike subscription-based models of the past (think gym memberships and cable subscriptions, where you’re either locked in for a certain time period or have little alternative choice), today’s SaaS products are typically relatively easy for customers to leave if they aren’t getting value.

Without customer success baked into the recipe, Nick says, “especially for early stage companies, you think it's a sale. [Customers] think it's a pilot. That's the bottom line.”

This reality is fueling an industry trend among early stage startups towards hiring customer success team members early – even before sales. That way, companies have the chance to integrate customer success into the user experience from the beginning. While you can fix a sales problem, it’s far more difficult to course-correct a fundamental disconnect between your product and your users’ perception of the value it’s bringing.

  1. There are easy, no-brainer ways to creatively engage customers for customer success at scale. Long before it’s renewal time, keep thinking about new ways your customer success team can connect with customers, answer their questions, solve their problems and help them successfully use your product. The biggest challenge for an early stage startup? Doing this at scale – without hiring tons of new team members. 

A great example is working well at Gainsight, where the customer success team hosts regular office hours, something companies can easily do to engage customers and increase retention. The set up can be simple:

  • Schedule a regular virtual meeting using your customers’ favorite platform of choice. 
  • Invite them to join, ask questions and get the answers they need to successfully use your product. 
  • You can host Office Hours with themes around specific best practices and then open the discussion up to allow customers to get tactical, technical help when they need it.

Other options for scaling customer success without hiring include building product walkthroughs, online communities for your customers or automated guided tours.

  1. Customer health is all about D.E.A.R. Determining overall customer health is a key challenge for startups seeking to retain customers and reduce churn. But it can be tricky to assess. Dig in, and it’s easy to find more questions than answers: What matters more, net revenue retention rates (NRR) or net promoter scores (NPS)? How do you incorporate your business results, i.e. sales of your product and customer result from using it, into engagement metrics such as daily average visitors? Is there a recommended way to score overall customer health?  

Nick’s recommendation is D.E.A.R, which stands for deployment, engagement, adoption and ROI. Let’s break that down:

  • Deployment: a measure of a customer’s use of the product suite, both in terms of the number of features and the frequency of use
  • Engagement: a measure of both the frequency and quality of customer conversations
  • Adoption: a measure of users adopting your product
  • ROI: a measure of your customer’s return on investment and outcomes since using your product

🎧 Listen to Nick talk about D.E.A.R. and why it works 🎧

  1. Staying competitive means thinking broadly and automating often. As customer success teams look to drive impact, automation is key to staying competitive. Lean into solutions that will streamline processes while encouraging engagement, including automated email sequences and reminders, product guides and walkthroughs, chat functionality and reporting tools. 

Along with that, Nick says SaaS companies need to think broadly about product, sales, and customer success together as equal drivers of success vs. operating from independent silos. On a practical level, this can look like customer success managers meeting monthly to determine common themes they’re finding in their interactions with customers, then working to uncover why those themes are present. From there, it is much easier to relay the takeaways from customer success to sales and product teams effectively. On that note, automation can come back into play using tools like recording software to share snippets of customer’s feedback directly with relevant teams. “There's no substitute to hearing it in the customer's own voice,” says Nick. 

Want insights from our team and future events like these? We’re planning them for portfolio founders all the time. The best way to get to know us better and follow along: start by subscribing to ATXnology, our quarterly newsletter focused on the pulse of Austin’s startup scene. We’re excited to continue bringing you insightful content from the resources we’re continuously building for founders. If you know an amazing founder who you think needs to know about our approach, send them our way. We’ll be here.

Many thanks to Nick Mehta and the Gainsight team for your participation in this recent portfolio event.

Share:
By 

Click here to read the article.

Related Articles