The Status Quo of Customer Success in SaaS

by Team Userlane

7 years ago ・ 7 min.

You may wonder, in terms of customer success, what do SaaS companies and Japanese food have in common?

Some of the most memorable experiences I connect to the time I spent in Japan are linked to restaurants.

Finding a new place to eat every night was exciting but even more intriguing for me was the fact that whatever place I would chose, I’d be up for a very new and intense experience.

When you go to a restaurant in North America, you pretty much know what to expect. You check the menu, get in, wait to be seated, get some water, check the menu again, exchange some funny remarks with the waiter who needs to be nice to you, order food and drinks, ask for the check, pay,and leave.

No matter where you go, the overall experience is similar and the outcome depends on the quality of the food you order, your waiter, and the atmosphere in the restaurant.

In Japan, every kind of restaurant offers a completely different customer journey!

Some places are similar to Spanish Tapas bars. You’re given a long list of very cheap dishes. Each portion is small so that you can try different sorts of food. To order, you have a buzzer on your table and you can keep buzzing every time you want to try something else.

In some other places you have a fixed menu (up to 15 different courses!) and you don’t need to do anything. A waiter is always there and takes care of everything from the moment you get in and put on some comfy slippers to the moment you put your coat or jacket on and leave.

Other places only have one single dish and you’re often given just the basic ingredients so that you or you waiter can cook it at your table . In these places, tables have a stove in the middle and you can cook your noodles or Shabu-Shabu, your Okonomiyaki or grill your meat.

And yet again, in other places, like Yakitori bars, you sit at the counter and directly ask the cook what kind of “shish kebabs” you want to have. And sometimes things go even faster, like when you go to some modern places where you simply order your food via touchscreen.

No matter where you go, though, eating out is an event. Every little detail contributes to the whole customer experience.

Restaurants, bakeries, and confectioneries usually have large display windows where they show plastic replicas of the food they serve. In the Japanese culture, the visual experience connected to food is as important as its taste.

From street vendors to high-class restaurants, eating in Japan is a journey rooted in specific rites that make the whole experience unique.

Part of the fascination is of course linked to the fact that I was just discovering a new and exotic world. But even local people expect certain standards and choose their favorite restaurants on the basis of the entire customer experience.

Customer Experience Design and Customer Success

More and more businesses focus now on the concept of customer experience in order to increase conversion and retention.

Particularly SaaS companies constantly deal with customer experience and customer success to optimize their customer journey.

The SaaS market is extremely competitive and transparent. Customers have access to all the information they need to make their decisions and it’s really hard to impress them with technical data and features.

The key to success is creating an overall seamless customer experience throughout the entire customer journey and making sure that each phase leads customers closer to their goals.

Customers don’t buy a simple piece of software. Customers buy success.

Every application customers subscribe to is just a tiny piece of the puzzle that fits in the ecosystem they create to achieve their goals.

In order to facilitate the process,  every step of the customer journey needs to add value and support the customer toward such goals.

The subject is not new. In other sectors like manufacturing for example, operations managers have always been dealing with supply chain optimization by eliminating non value-adding steps.

However, the concept of customer success for SaaS companies has become a hot topic in recent years even though some businesses already introduced this key element in their strategy way back in 2006.

The fact is that customer experience and customer success as fields have only been formalized over the past three to four years. These areas are now connected to specific key metrics and indicators while involving dedicated executives and units.

Concentrating on creating a great customer experience from the very first touchpoint to onboarding and success has an immediate impact on business performance.

Statistical Data that Prove the Importance of Customer Success

Some companies managed to reduce churn to under 1%  and we all know what the effects of customer retention are in terms of growth!

We’re all familiar with the 80:20 principle. Great customer success programs combined with key account management increase profit up to 95% according to a Bain & Co. study.

Customer retention is linked to much lower costs than acquisition and  since 70 to 90% of profit generated by SaaS companies is often generated through renewals, upsells, and additional after-sales services  each successful customer has a very deep impact on the bottom line.

Additionally, successful SaaS companies often mention referral as their main source of leads. Giant corporations as Hubspot or Salesforce generate 70 to 80% new customers through word of mouth. Not only are successful customers more loyal, but they’re also more likely to become ambassadors and bring in new business.

This snowball effect triggered by customer success management has led companies to shifting focus from marketing and sales to customer experience.

According to a very thought-provoking research carried out by Walker, by 2020, customer experience programs will surpass any other product or marketing activities in terms of budget and allocation of resources.

The number of companies that decided to introduce dedicated customer success units went from less than 40% to almost 90% in the past year and customer journey analysis and optimization have become the main tool of conversion and retention in over 80% of businesses.

This is obviously connected to strong indicators which proved that companies that invest a lot in customer success are almost six times more likely to convert a new lead than companies that only focus on product and growth.

In general, statistics show that SaaS companies that invest in creating a smooth customer experience and introduce strong customer success programs grow exponentially by doubling sales on a yearly basis.

Data and Facts About Customer Success Managers

About 25% to 30% of executives that are directly in contact with clients are now being compensated on the basis of customer retention metrics.

Experts in this sector earn on average between $75,000 to $175,000 a year according to seniority and their remuneration structure is often linked to a 50% performance-related bonus. Only in rare cases (<20%), customer success managers rely on a commission-based compensation.

The field of customer success is still relatively unknown and linked to lack of experience. 60% of organizations implemented a formalized customer success program only in the past two years and therefore, they often rely on external consultants to define their strategy and recruit experts.

Nonetheless, 90% of marketers in 2017 seem to agree on the fact that designing a successful customer journey and working at close quarters with customer success represents their top priority.

A study conducted by Totango, revealed that 43% of executives who work in customer success come from sales or account management while only 24% previously worked in success. The remaining 33% of experts have different backgrounds, from marketing to product or engineering, consulting or finance.

Main areas for customer success managers include: product adoption, Learn more about employee training and support, churn reduction and retention, customer support, customer advocacy programs and upsell.

However, in the majority of companies, customer success is not directly linked to sales or support. Only 40% of customer success managers are involved in support and only 20% of them are expected to work on upselling activities.

The Future of Customer Success

Being a relatively new field, there still is a lot of room for improvement.

50% of customer success managers revealed that they’re still uncertain regarding what metrics need to be implemented in order to evaluate performance.

Some companies still need to define how they can actually evaluate their contribution to their customer’s success and some of the KPIs seem to be more vanity metrics than actual values that can be used to make data-driven improvements.

Despite the fact that the majority of B2B marketing executives agrees on the importance of  customer success programs, only 23% of them focus on a customer-centric strategy instead of dealing with channel or product-centric structures.

Less than 20% of companies admit that they’re truly efficient with customer journey mapping and management. Most of the B2B companies still struggle to implement successful programs, evaluate their effectiveness and align their organization to the new structure.

50% of businesses still don’t know how to track results even though over 80% of executives are aware that in the near future they’ll have to boost interaction with their customers through different channels.

Many SaaS providers still need to familiarize with customer success tools and introduce specific solutions for different stages of the customer journey.

Only 34% of customer success teams are structured as stand-alone units reporting directly to the CEO, while 14% of them are still considered sub-divisions of marketing or sales.

And whereas big data, data mining, and data visualization play a pivotal role in customer-centric business strategy, most of the companies still consider themselves laggards in the sector of artificial intelligence and machine learning.

In order to be fit for the future, SaaS companies need to reorganize their business structure and concentrate on providing a memorable and fully-immersive customer experience.

Customer success is more about creating relationships than anything else. It is all about listening and understanding what each single customer requires in order to achieve their goals.

With the right tools and the right strategy, SaaS providers can convince their customers that dealing with their brand is a lot more than using a software product.

SaaS companies need to go from offering features to creating a whole experience and, much like eating at a Japanese restaurant, the journey can go from a simple routine task to a great event!

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