Why Software for Customer Success?

When starting a SaaS B2B business you know there are two things that will determine your initial success: Sales and Product!

You start out figuring out the product/market fit and build a product.

Once you’re up and running you start building out your sales team.

As your sales team works it’s way through hundreds of prospects (per week?) it quickly becomes apparent that you need a good CRM to support the process. Lucky for you there are hundreds and hundreds of CRMs out there, a lot of them well suited for your B2B SaaS Sales Team.

As your prospects move through the sales funnel your CRM helps you keep tabs of all pending tasks, previous conversations, and basic forecasting. When the deal finally closes you typically find your sales team off to the next deal (as they should!)

The post sale function of most startups consist of an initial training of some sort followed up by random phone calls, support tickets and then...

For most startups, the onboarding process tends to be the only structured phase of the customer lifecycle.

Let’s assume your sales team brings 100 new customers onboard each year, and that because of insufficient engagement with your existing customers you lose (churn) 20% of them each year.

After the first year, you have 100 customers. After two years you have 180 customers, 100 new customers and 80 from the previous year (100 minus the 20% lost). The third year you would have 244 (= 100 + (180 * 0.8) and so on.

By putting more focus on your existing customers year one, you could end up with 200 instead of 180 customers year two. While every customer is important (especially taking into account the effect of referrals) it’s not a huge difference, and so most smaller businesses initially focus on new biz sales.

After some time, however, you'll reach 500 customers and realize that you are no longer growing – at all. Every year your entire new business effort is canceled by your churn which has now reached 100 customers per year (20% of 500). The first year 100% of your revenue came from new business, at this point (when you have 500 customers) it’s only 20%.

Somewhere along the journey your existing customer base became the main growth driver (that is a fact for any B2B SaaS company)

Now, it’s all about your customers!

The example above may seem dramatic and surprising to some – in reality, the shift happens even faster. That is because we’ve ignored (for the sake of simplicity) the often underestimated and un-exploited effects of having a simple but powerful customer success strategy (often called a customer success playbook).

Check out this article to understand the effect of churn, up-sales and new sales for your business.