Customer Success Needs To Be In Your SaaS DNA: 3 Reasons Why

6 min readOct 17, 2017

How does Customer Success fit into your SaaS business model?

As a stand alone role, team or function focused exclusively on onboarding new customers passed over from Sales? An aspiration or cultural value for your otherwise new-logo driven Sales team? A go-to-market friendly buzzword to replace the name of your Support or Professional Services team?

Yes?

That needs to change. As a SaaS company (and any subscription revenue business), Customer Success must flow through your business DNA. Customer Success is your economic lifeblood. It needs to infuse every single strategy in your recurring revenue model. ‘Customer Success Science’ as a domain is now needed.

Here are 3 reasons why Customer Success needs to be in your SaaS business’s DNA:

1. Customer Success Drives Your Financial Health

SaaS unit economics should be used to measure the financial health of your subscription revenue business. Ihope your Board and/or Investors are asking to see your:

Customer Acquisition Cost (CAC)
Customer Lifetime Value (LTV)
Revenue Churn
Customer Churn
Net New M/ARR
Expansion M/ARR…

…and various ratios and formulas using the above SaaS unit economic metrics. Today, I’mnot going to dive into into the definitions of SaaS unit economic metrics. If you want to learn more right away, I highly recommend this legendary post by David Skok:

SaaS Metrics 2.0 — A Guide to Measuring and Improving what Matters

If, worryingly, the Board/Investors behind your SaaS company aren’t asking to see your unit economic metrics, as leaders of a SaaS company you should be measuring these anyway. When analyzed correctly, i.e. as part of a KPI, the health of your SaaS unit economic metrics will guide you on the growth, profitability, and valuation potential of your business.

The health of your SaaS unit economic metrics, i.e. your financial DNA, is dictated by the design and execution of your customer success strategy.

SaaS unit economic metrics span what I think of as the Customer Success Lifecycle:

An effective customer success strategy will take an interdisciplinary approach of synthesizing customer acquisition, adoption, retention and expansion strategies to achieve value realization for both the customer and the SaaS provider across the customer lifetime. This interdisciplinary approach is Customer Success Science.

How do you start the journey towards an effective customer success strategy? By mastering planning, delivery, monitoring and maintenance of your customers’ Adoption of your SaaS solution. This is done by designing and executing Adoption Methodologies: repeatable and scalable activities that achieve defined Value-based Outcomes prescribed to your customers.

Future blog posts will drill deeper into what Adoption Methodologies are and, more specifically, how they can be used to optimize SaaS unit economics by reducing CAC and increasing LTV. Topics that will be covered include:

Achieving a more efficient CAC by integrating Adoption Methodologies as part of sales and presales strategies
Minimizing churn risk by integrating Adoption Methodologies as part of sales and presales strategies
Reducing churn by more accurately predicting and more effectively triaging churn risk by using leading indicators from Adoption Methodologies
Predicting and closing expansion M/ARR opportunities by integrating Adoption Methodologies with product utilization tracking

2. Customer Success Matches Your Product DNA To Your Customers’ DNA

The economics of a subscription revenue model dictate that long-term relationships based on recurring value realization between SaaS provider and customer are essential. The type, size and frequency of value realization that you as a SaaS provider can deliver to a customer is determined by the degree of match between the DNA of your product and the customer’s DNA.

By product DNA, I mean the feature/functions that combine to deliver the product capabilities intended. By customer DNA, Imean the roles, activities and data that define the job(s) of your target customer segments and therefore the Value-based Outcomes each segment desires. A well designed and executed customer success strategy can perform the mapping required to assess the degree of DNA match and then maximize the degree of match.

For you multi-tenant SaaS businesses (presumably 99% of you), the DNA of your product always evolves but this evolution should(!…see comment in italics below) be largely scheduled and planned well in advance. Prospect/Customer requests for feature/function customization will rarely be delivered at that point in time unless the customization is already scheduled, progressing towards delivery and can be accelerated without too much complication. This enables the DNA of your product to be relatively easily mapped and kept up to date.

(Note: I agree, that in reality, the topic of feature/function customization is one topic that is guaranteed to have your Chief Product Officer curled up in a corner quietly rocking and sobbing. In the quest for that next new customer logo or top 10 annual renewal, your teams involved in these pursuits often regard that one new feature/function requested by the customer as a do or die scenario. The pressure to deliver that customization is immense. As SaaS business leaders, you need to ask the question: how did the sale or renewal get to the point where it hinged on this left-field customization? An effective customer success strategy can help prevent this. Stay tuned for a blog post on this.)

Similarly, the customer DNA is relatively fixed. For B2B customer segments this is especially true. The core definition of your target customer segments’ job(s) is unlikely to change dramatically or, at least, without them having advanced warning. This means the Value-based Outcomes that the customer desires are also unlikely to suddenly change. So as with your product DNA, this enables the DNA of your customer to be relatively easily mapped and kept up to date.

A well designed and executed customer success strategy will:

Obtain and continuously update its expertise on your product DNA as mapped by your Product team
Map and maintain the mapping of your customer DNA and match this to your product DNA

With matching between customer and product DNA complete, two keys to enabling a successful subscription revenue model can be identified and executed:

The parts of your product DNA needed to be adopted by each customer segment to achieve Value-based Outcomes important to their specific customer DNA
The content, activities, roles and metrics needed to plan, deliver, monitor and maintain this necessary Adoption. These are your Adoption Methodologies.

3. Customer Success Provides a Common Bond Across your Employee DNA

Diversity is key in any business. The DNA of your top salesperson will most likely differ significantly from your top engineer. Channeling this diverse employee energy towards a common goal is how youcan optimize the value of the greater team. The common goal in question must be universally appealing to all types of DNA in your team for this to work.

In today’s millennial-dominated workplace, money is definitely no longer the universal motivator uniting individuals and teams in businesses. I’m not sure it ever has been. Even if it was, achieving perfect correlation between roles to ensure that the success of each role benefited the monetary success of all the other roles has been virtually impossible. Take the friction between making a sale and meeting a product deadline referenced in section 2 as a case in point.

So what should the common goal be that forms the bond across all your employees. You guessed it. Customer Success.

A well designed and executed customer success strategy will enable all employees to unite, work together and optimize their combined value.

As explained in section 1, an effective customer success strategy will drive the financial health of your SaaS business. SaaS employees that are fundamentally motivated by achieving financial targets to earn money, will/should have targets aligned with SaaS unit economics. These targets and the resultant commissions/bonuses are therefore going to be achievable in large part through customer success.

As explained in section 2, an effective customer success strategy will align the capabilities of your SaaS product and the value realization of the customer through Adoption Methodologies. SaaS employees that are fundamentally motivated by seeing and knowing that customers are realizing value from the products they’ve helped design/ engineer/implement, will want to see if, and to what extent, customers have adopted these products. Customer success enables the ability to achieve, measure and then improve adoption.

Then, of course, there are the employees who just want to ensure their employer can keep the doors open and allow them to come to the job they love. For a SaaS business, an effective customer success strategy keeps the lights on.

How does Customer Success fit into your SaaS DNA?

Originally published at valuize.co on October 17, 2017.