Traditional v. Performance CS, infatuating your customers, advice on ideal SaaS pricing
Customer success is a relatively new discipline in the SaaS world and consequently there are many unanswered questions about how best to build and manage great CS teams. Because the financial impact of a great CS team is compounded monthly and can meaningfully increase the growth and decrease the cash needs of SaaS startups, it’s critical for CS leaders to get it right.
One major discussion topic is the best way to structure and motivate CS teams to balance both customer care and account growth. Currently, most CS teams subscribe to Traditional Customer Success Management, where a quota-carrying salesperson transfers a post-sale customer to a non-quota carrying CSM, who is responsible for account management and account growth. And while some companies do create a small up-sell quota for the CSM, many do not:
The shortcoming in this approach, however, is that is it difficult for a single individual to effectively care for an account and also effectively up-sell an account; the two goals can sometimes inherently be at odds. As a result, an alternative approach to the traditional structure has been emerging, one that is focused on maximizing performance for both customer care and account growth: Performance Customer Success Management. This model adds a third person the the team, an Up-Salesperson:
With Performance CS, the sales team first engages and signs either a pilot or full contract with a customer. Second, an account manager, tiered by customer size, engages that customer through the initial deployment. As time passes and the customer’s usage of the product grows, a third person becomes involved: the Up-Salesperson. Around the time of the customer’s renewal period, the Up-Salesperson begins a new sales process to grow the account and the account manager disengages during that process. The Up-Salesperson carries a quota and is compensated with a sales structure, while the CSM is salaried. By splitting the responsibility of the customer care/happiness from up-selling responsibility, the team as a unit is better able to satisfy customers and grow accounts effectively.
In addition, the Up-Sales team is structured and managed in an identical way to the Sales and the CS team, which could be by region or by product/solution or customer account value. This is important because it builds strong relationships across departments, since the same Sales, Up-Sales and CS members work together and provides a consistent experience for customers.
Interested in more potential ways to structure your CS team to maximize performance? We recommend this read on flawed CS frameworks, this read on where CS belongs in the org chart and this read on comps plans that produce results.
Infatuating your customers
There is no such thing as a perfectly and permanently satisfied customer (sadly, as our jobs would be a lot easier). Put another way, customers by nature are insatiable and continuously yearn for things they don’t yet possess. Their satisfaction frontier is always beyond their grasp.
Therefore, trying to enduringly satisfy your customers is dangerously misguided. Instead, you should strive to infatuate them – over and over again. Infatuation implies a very strong yet short-lived attraction, which captures the true essence of customer experience. Understanding its implications is critical for your ability to maintain ongoing relevance at every stage of the customer life cycle:
- New customer: Any successful and well-received offering first creates an infatuation interval in which customers are fixated on its novelty, seduced by its perceived benefits and blinded to its potential shortcomings. However, such an interval is by definition fleeting.
- Onboarded customer: As the veil of infatuation wears off, customers will no longer feel privileged but instead fully entitled to receive the offering’s benefits. Their shift in attitude represents the transition to the entitlement period, in which customers will take notice of and express all the things that could make the offering even better for them. If you let your customers enter and then linger in the entitlement period without heeding their suggestions or demands, they will become increasingly critical and at some point turn away from your offering altogether.
- Renewing customer: To retain customer attention, companies have to continuously refresh the customer experience, introducing new dimensions at just the right time to keep the flame of infatuation burning. For insights on what fresh features to introduce to create new infatuation intervals, collect and analyze customer feedback regularly and rigorously.
Keeping your customers infatuated can often come down to making sure you are always customer-centric, always looking for new ways to spark their delight. Check out this great read on ways to help your organization stay customer-centric.
Is your product too cheap?
(Excerpt from the Chargify blog. Read the full post here.)
Startups often undercharge for their product for a number of reasons, including inexperience, lack of confidence or just plain laziness. But the decision to undercharge always comes down to one thing: they’ve discovered the easiest way to be competitive in a crowded market is to be the cheap alternative.
But there are two huge problems with this strategy:
- Low retention rates: In most cases, the lower your price, the higher your churn. Being cheap might yield high initial traction, but it almost always leads to low retention. The less you charge, the less invested your users are. The less invested they are, the less incentive they have to stick around.
- Price Wars: Marketing yourself as the affordable solution only works as long as you remain the affordable solution. What happens when a new startup comes along with a cheaper product? If you don’t lower your price, you won’t survive. And how many times can you afford to lower your price before you lose your profit margin? Don’t assume you’re going to be the next Dropbox. The truth is, very few startups can survive a marketing plan centered around being cheap.
So what is the alternative? It’s increasing your value.
When someone says, “Your product is too expensive,” they’re really saying, “Your product doesn’t provide enough value to justify the price.” To resolve this, most startups take the easy route: lowering their price to match their value.
But a smart startup does the opposite: They increase the value to match their price. Here are a few ways you could add more value to your SaaS product:
- Add relevant features,
- Remove irrelevant features
- Streamline your interface
- Provide better support
- Focus on customer success
If you constantly strive to create a more valuable product, you could charge practically anything and your customers will pay it. Check out the full read for more great advice on pricing, including how to go about finding the right price for your product and how to raise your prices without upsetting your customers.
Word to the Wise
This week’s wisdom comes from Adii Pienaar, the founder of Receiptful, in a podcast where he breaks down the onboarding process for a complex product and how to make customers feel comfortable by building trust along the way. Take a listen:
Interested in another story about customer success done right? Check out this podcast with Jeff Vincent, head of product at Wistia, where he dives into how Wisitia structures their entire team around providing incredible customer experiences.