Hi, I'm Shawn McGinness.
I write about SaaS product, marketing, and customer success.
Best Service Wins
Enterprise customers are increasingly demanding – they actually want what you promised in the sales pitch. And the only way to make those promises come true is to have experts who can guide the customer towards maximum ROI.When your Customer Success team does this well, it becomes a powerful driver of growth and retention. No longer simply reactive, this type of Success team is something that becomes part of the sales pitch. It’s a differentiator.And just like any other product, it should be crafted and iterated using a product management mindset. What do your customers want and how do you give it to them in a way that optimizes for time-to-value, revenue retention, and LTV?
The Right Customer Success Metrics
If your head of product presented an update about the number of lines of code written last month, and how she’s targeting a significant decrease in average time per line next quarter, you’d wonder what was happening.So why, then, is there the tendency of customer success teams to talk about the number of tickets handled or the average time to resolve a ticket. This type of widget counting exercise doesn’t do anything to steer you towards better outcomes.The customer success metrics that should be tracked are revenue focused: Am I increasing the velocity of revenue (time-to-value)? Am I decreasing the amount of revenue that leaves (churn rate)? Am I increasing the amount each customer is willing to spend on me (lifetime value and average revenue per user)?To answer my own question, the reason success teams focus on efficiency is because the department is too often seen simply as an expense. So driving down expense per unit is desirable, but that’s the wrong conversation to be having.
What is 'Best Service'?
I said previously, the best service wins. Several years ago, every company (it seemed) had a marketing campaign urging you to make customers happy, delight your customers, or perhaps most stupidly, to surprise your customers. Maybe if you’re running a coffee shop or a toy store?In B2B SaaS, nobody wants to be surprised, and nobody is looking to you for their happiness. Great service means you give your customers the tools they need to use your software to its full potential. It means you can show them a significant measurable benefit that far exceeds what they are paying you.Having a properly staffed and trained customer success team isn’t a cost center, it’s a profit center. Customers will pay more for software that does more. Having a great Customer Success team allows your software to do more. That’s why the best service wins.
Infinite Regress
In ye olden days, marketing would write an email and send it to everyone in the list… check the open and response rates… tweak one thing, and repeat.Now, I can have AI write the copy. It will continuously optimize the messaging. It can figure out what channel is best – SMS, email, AI voice call. And it can do all of that uniquely for each segment… which can be a single prospect. Every single prospect can receive a message crafted specifically for them! That’s crazy and very exciting.What I’m wondering is, how do manage this? How do you make sure 100% of these messages comply with your regulations and internal guidelines? How do you even know what’s in them? I know the answer is to use AI to review them, but that feels dangerously close to an It’s-AI-all-the-way-down” situation.
MVP vs GTM
If you run a SaaS company and want to bring a new product to market, you will be faced with this choice:--1--
Build the new product as quickly and simply as possible, commonly called an MVP. The goal is to test the market, and the safest way to do that is by minimizing upfront investment. You can always do more later.--2--
Fully build the new product. This is still a v1, but it has most of the features and functionality included in the product vision. The goal is to bring something exciting to market, and the time it takes to build it can be used to create marketing momentum.Unless you’re a scrappy startup with an eye on your burn rate, option 2 is going to be correct more often than option 1. MVPs can too often be self-fulfilling prophecies – We launched a half-baked product and there wasn’t much demand.If you’re the head of engineering, you probably disagree with my conclusion. The opportunity cost of investing months of development effort into an unproven product is too great. The backlog is too deep.And if you’re head of sales or marketing, you probably agree with me. The go to market effort is too large to waste it on something that isn’t quite ready.Most companies try to straddle the line by quietly marketing the new product to a few trusted prospects (usually existing customers who would benefit from the new thing). Get their feedback and get their commitment to use it. This is smart and useful, but in the end, you still have to choose between option 1 and option 2. My vote is option 2.
Starting With the End
If you read professional advice online, you will see some version of “start with the end” – instead of figuring out the next step, first figure out the desired final result and work backwards from there.I had a conversation recently with a person who is in an executive role at a company where there is an opportunity to bring on significant new revenue. As we were discussing it, I asked him if he had started putting together a plan for capturing this revenue. How much of it do you think your company could get? How long do you think it will take you?His response was a masterclass in top-level thinking. He said, I don’t know how many customers will sign up or how long it will take them, but for the ones who do sign, I want to make sure they re-sign at the end of their first term.Yes! The project hasn’t even started, and he’s optimizing for the long-term results. And he’s doing it in a very clever way. By focusing his team’s efforts on revenue retention, he will automatically be in a better position to win the new customers.
SaaS-ification
We've talked about applying product thinking to non-product areas of a SaaS company. For example, how a person might transform the professional services department by thinking of the service as a product, rather than a transaction. In my experience, this is helpful and useful and generates good results.If you zoom out a bit, you might then wonder about applying SaaS thinking to non-SaaS businesses:- A laundromat might offer monthly bundles or unlimited washes for some fixed fee. (I think all car washes do this now?)
- A restaurant might offer a VIP membership package for their regulars. (I would buy this!)
- The rise of fractional CMOs, CROs, CPOs is SaaS-yThe financial model being applied here favors locked-in predictable income over slightly higher unpredictable income. Software companies are generally valued based on annual recurring revenue, and not simply total revenue. But do restaurants and laundromats, who do not enjoy zero marginal costs, benefit?Is it good for non-SaaS companies? Is it helpful and useful? I don't know. I think it can be. I'm positive there are opportunities to create more value for the business owner while also creating more value for the business customer, just as I'm convinced it will eventually become overused and irritating.
Our Homemade Churn Reduction Action Plan
(OH CRAP)
One of the benefits of cloud software is that customers can easily buy and scale up their usage of your product. This reduces friction, makes the initial sale a little easier, and makes revenue expansion much easier.The downside for you, of course, is that scaling down is easy. And buying your competitor’s product is also easy.So here’s something that will happen:
1. A large customer will tell your sales team, “Because of <<entirely plausible and non-alarming reason>>, we’re going to reduce our license count.”
2. You will discuss internally. The salesperson will talk about the long and trusting relationship with the customer, and how they plan to increase license count next year. “It’s nothing. I’ve got this.”
3. Six months later, the customer will leave entirely.Here’s my rule: Any reduction in usage by a single customer (i.e, other customers not reducing) is an indicator the customer has started the process of leaving.People avoid awkward conversations. Your customer will not tell you they’re leaving. This reduction in usage is the only leading indicator you will get.Here’s my recommended action plan for a customer I want to save (note: works best if Product leads the efforts):-- 1. Do the research --
You’re looking for some hint of what went wrong. What support tickets has the customer submitted over the last year? Were those resolved? Timely? When was the last conversation about product roadmap, and what was the feedback? Has the customer attended any conferences or webinars?-- 2. Do the analysis --
You’re building a profile of the customer. What are their plans for the next 12 months? How does your product help them achieve those plans? What processes have you recently put in place that would have helped whatever went wrong?-- 3. Create your talking points --
• Product team: Near-term roadmap and why this is a perfect fit for the customer
• Success team: Recent and near-future process improvements that will result in less need for support and better support when it is needed
• Sales team: An upsell pitch. You want to hear the customer tell you ‘no.’ That is your opening to find out why they are leaving and get it turned around.-- 4. Schedule the conversations --
If it’s a big enough customer, go to their office. There are two pieces to this step – you want to talk to the executive that controls the buying decision, and you want to talk to the admin responsible for internal configuration and maintenance. Select and edit your talking points appropriate for each audience.If you do this, there’s some chance you’ll save the customer, and there’s a 100% chance you will learn something worthwhile to your business.
Customer Success is the New Product Manager
There was a time when project managers were the heroes of the corporate world. They were the Person Who Glues Everything Together. They owned the tasks, the timelines, the Gantt charts. The Gantt charts! Project management training programs popped up everywhere, and companies couldn’t hire project managers fast enough. Second graders wrote “Project Manager” on their “What I Want to Be When I Grow Up” posters. (eh... it’s possible)But eventually, we all realized something: project management isn’t just a job, it’s a skill set. Figuring out what needs to be done, creating a plan, managing expectations... these are things everyone should be doing. So, we all became project managers. Not full-on certified PMPs or anything, but good enough to get by.Fast forward to today, and we’re seeing the same thing with product managers. Their toolkit is undeniably valuable: understanding what customers want, finding ways to deliver it profitably, influencing teams to make it happen, and crafting compelling value propositions. Slowly but surely, everyone’s becoming more product manager-ish. And just like before, the formal role is becoming more specialized. Less reliant on soft skills.So, who is the PWGET now?We will climb out of the current customer-centricity nadir, and as we do, the torch is passing to the Customer Success leader. CS leaders are the ultimate soft-skills pros. Their job is to bring together resources from all over the company to deliver on customers' demands, retaining and expanding revenue along the way.And here’s the kicker: what customers want most these days is better, faster, more responsive service. Customer Success is the team making that happen. Further, what's selling right now is AI, and successful enterprise AI products are very services-heavy. So, if you’re wondering who the next PWGET is, look towards your CS leader.