We’ve all heard the driving mantra behind Customer Success: it’s cheaper to keep an existing customer than it is to acquire a new customer. In fact, according to Harvard Business Review, it is 5 to 25 times more expensive to acquire a new customer, a fact that really hits home when you consider it in conjunction with Gartner’s research, which indicates that 80% of your company’s future revenue will come from just 20% of your existing customers.
Knowing all this, it follows that a SaaS business intent on thriving should focus its resources and efforts on people who are already using their product. Yet many SaaS businesses end up dropping the ball when it comes to effectively pushing upgrades and cross-sells with current customers.
If this sounds like you, never fear! In this thoughtful post, Glide Consulting explores several key strategies for convincing your customers to upgrade. We highly recommend checking out the full read but to get you started, here are the three strategies that we found the most intriguing:
- Provide in-app messaging: According to Kissmetrics, “One of the biggest reasons why people don’t upgrade is because they just aren’t aware of the other features that provide value.” Your 200-page knowledge base and community forum are meaningless if your customers aren’t using them. But as Glide astutely points out, “Don’t expect your users to use any asset except the tool itself. Any widget, popup, overlay, product tour, explainer video, tooltip, or hold-your-hand onboarding sequence should happen within the application or be sent to the user’s email account. There are exceptions for high-touch processes that use phone calls and face-to-face interactions.”
- Identify conversion activities: A conversion activity is an action that lower tier customers (or free customers) took before upgrading. Basically, you look at everyone who upgraded and determine what they have in common and what action(s) they all have taken. As Glide explains it, “This is an important metric because it gives you a clue as to what your customers find valuable. What happened that made them think ‘I need more of this, even if costs money’?” Once you start identifying conversion activities, Glide then recommends creating an activation funnel: “Activation is the moment a user first starts receiving value from your product. The funnel is the steps leading to the activation moment. Sync this funnel with your onboarding process so users are driven straight to the good stuff: value.”
- Cap your core functionality: It’s important to keep your core features open for all of your users. They’re less likely to upgrade to the higher tiers of your plan unless they’ve had an opportunity to play with those features. But of course, you can’t give everything away. What does Glide suggest? Capping the usage of your best features: “Unlocking [your best features] for complete access requires the user to upgrade. Add artificial barriers that prevent your users from gaining too much value without paying.”
Interested in more best practices for upselling and cross-selling? We recommend this read and this read. We also suggest checking out this read for an important reminder on why upsells cannot completely offset churn.
Customer Success Around the Web
- Tips for building effective customer surveys: The feedback and insight you can get from customer surveys is invaluable. It enables you to create a more customer-centric experience that positively impacts retention, referrals and your bottom line. But only if customers are willing and able to fill out the surveys and provide feedback. This quick but helpful read provides ten tips for creating effective customer surveys that give you the insight you’re looking for. A must read before you send out your next customer survey.
- Are your sales hampering your CS team? Many CS teams struggle with a certain level of discord between them and other departments, particularly Sales. And unfortunately when there is discord between Sales and CS, it is usually the CS team that gets the short end of the stick because of where they sit in the customer life cycle. In order to avoid unnecessary stress on your CS team – and on your customers! – it’s important to understand when and how Sales can impede CS. This insightful read explores common scenarios in which discord is bred and offers recommends on how to change and repair those dynamics. An great read for anymore who feels their CS is being overrun by their Sales team.
- 4 reasons why your customer retention matters to your customer acquisition efforts: Business growth depends on acquiring new customers and keeping them around for a long time. Yet businesses are over 2x more likely to focus on acquisition efforts than they are retention efforts. This interesting post discuss why businesses need to increase their focus on customer retention efforts, giving four reasons why customer retention is important to customer acquisition. An important read for anyone who resonated with today’s Churn Fighting Focus.
Word to the Wise
This week’s wisdom comes Vanessa Brangwyn, VP of Customer Success at Achievers, in a recent interview about how CS has evolved at Achievers over the last five years. Brangwyn provides an intriguing peek behind the scenes of CS at a rapidly-growing company; reading the full interview is absolutely worth your time. But her answer to the question “What role do you think Customer Success should play in developing the overall business strategy?” really caught our attention:
“As the Customer Success team, we are the voice of the customer, the advocate of the customer. We really do position ourselves as their trusted advisor within Achievers. It’s really important that our entire business is listening to what our customers are saying. In fact, much of the development and innovation that’s happened within our platform is a direct result of customer feedback. Our Product team does an amazing job of driving our solution forward. We are very closely partnered with them and bring them to many customer meetings to hear directly from the customer. Our Annual Customer Experience Conference is coming up and our Product team will be hosting a product advisory council where we get some of our top customers together and have planned a full day working session around hearing their feedback and suggestions. We also share some early stage ideas and plans that we have been thinking about to get their feedback.”