Open Letter To SaaS CEOs: Now is the Time to Double-Down on Customer Success
Dear SaaS CEO’s,
Now, more than ever, is the time to double-down on your customers AND customer success within your company.
I’m writing this letter as one of you, and one of them.
I’m one of you because I’m a fellow SaaS CEO. I know firsthand the stress you’re going through right now doing everything you can to successfully navigate this Covid-19 crisis. Despite the many “experts”, “advisors”, and even board members who are trying to give you guidance on how to navigate this crisis, there’s no “playbook” to follow. We’re all writing the playbook as we go. Sure, there have been downturns in the past, but nothing in our lifetime with the same drastic and immediate impact as this one. Nothing with the uncertainty this brings. Nothing that has impacted our customers, our employees, their loved ones, and our loved ones as this has done.
Just like you, I’ve had many sleepless nights with anxiety, cold sweats, worries, and doubts. I’ve spent countless hours preparing contingency Plan A…through Plan Z. I’ve scoured every expense – from the biggest to the smallest – and cut everything I can to preserve capital and preserve jobs. Like you, I’ve stared at the harsh reality that we may HAVE to cut headcount to survive this crisis. And that reality is so painful. I know you don’t want to make those difficult decisions, just like I don’t. But you may be forced to, only because your #1 responsibility is to find a way to live another day, and that may require the painful decision to let some of your team members go. I get it….because I’m one of you. And it sucks.
As you work through those extremely difficult decisions, please consider one thing….
Now, more than ever, is the time to double-down on your *existing* customers and customer success within your company.
Unfortunately, I’ve seen way too many SaaS CEOs make the short-sighted decision to part ways with an excellent customer success leader and/or their entire customer success team.
What?? Really?? If you’re doing that, you’re in the minority of your SaaS CEO peers because most are doubling-down on customer success and relying on their customer success team more than ever. Let’s think this through.
As you look at the impact of the Covid crisis on SaaS businesses around the globe, it seems to be shaking out as follows:
- If you’re a SaaS CEO in a highly impacted industry such as travel & hospitality, retail, or food & beverage you’re getting devastated. My heart truly goes out to you. Your sales pipeline has completely dried up, a good portion of your customers are going out of business, and you’re doing everything you can to stay in business yourself. You’re literally fighting for your business’ life – one day at a time.
- If you’re a SaaS CEO in an ideal industry such as video conferencing, collaboration, health-tech, ed-tech, etc., you’re absolutely killing it! You’re doing everything you can just to keep up with demand. You’re hiring employees, adding server capacity, and setting growth records you never imagined before. You’re being pushed in all the right ways to scale your business and team.
- If you’re a SaaS CEO somewhere in the middle, you’re doing all you can to navigate this crisis with as minimal impact as possible. Your pipelines have pulled back significantly as your prospects have paused spending. You’ve cut expenses as far as you can to extend your cash runway. Your customers are asking for payment concessions, with some resorting to early terminations as they’re cutting expenses as well. And you’re doing all you can to avoid layoffs.
Regardless of your situation, now, more than ever, is the time to double-down on your *existing* customers AND customer success within your company.
In scenario #1, if your pipeline has completely dried up and many of your customers are going out of business, you’re in “save mode.” The only hope you have is to take care of and save as many customers as possible – and you may only be able to save logos and not revenue – at least for a period of time. Follow Jason Lemkin’s advice here, “a pause is better than a cancel, and a downgrade is not churn.”
In scenario #2, if you’re growing like crazy, you’re in “hyper-growth mode”. You’re adding new customers faster than you can keep up and are trying to still deliver an excellent customer experience through all the madness. Be sure you’re getting those customers set up properly otherwise when things settle back to normal, and they will, you could face a massive churn risk if the customers you acquire now don’t end up seeing long-term value.
In scenario #3, if you’re trying to navigate down the middle, you’re in “maintain and retain mode”. You’re not taking for granted any customer and you’re finding creative ways to drive additional value for each customer. You’re now looking at every. single. renewal. for the next 3-6 months and working harder than ever to ensure each one comes through. Expansion revenue is manna from heaven because of your weak pipeline.
Regardless of the scenario, now, more than ever, is the time to double-down on your *existing* customers AND customer success within your company.
Most SaaS CEO’s get this, but some of you are going against all logic and getting rid of experienced customer success leaders and/or your entire customer success team. Maybe you’re still looking at customer success as a cost center (rather than a revenue generator), and it’s an easy cost to eliminate. Regardless of the reason, don’t do it.
Don’t get me wrong, I’m not saying customer success teams should be untouchable. If you have to make the tough decision to layoff employees into this environment, all departments and employees are at play, including members of your customer success team. Rather, I’m just saying don’t layoff your *entire* CSM team or a great customer success leader. Instead, empower them to double-down on your *existing* customers and possibly even shift investment over to your customer success team and strategies during this time as, I believe, that investment will pay great dividends in return. Any investment in your customer success team is an investment in your single greatest asset right now – YOUR CUSTOMERS.
Now, I’ll loop back to where I started when I said that I’m “one of you, and one of them”. What did I mean by that?
Well, I’m a customer success leader and professional at the core. I’ve spent most of my career building and scaling customer success teams, and I’m now the Founder/CEO of ClientSuccess – a software solution that helps drive customer success strategies for B2B SaaS companies. I eat, sleep, and breathe customer success every day. So, I’m one of them.
Am I just trying to protect my friends – customer success leaders and teams? To be honest, yes, there’s probably an element of that here. But, I also hope you realize that it just makes good business sense, now more than ever, to double-down on your *existing* customers AND customer success within your company.
Does that mean customer success leaders and teams get a free pass even if they aren’t executing effectively and proving their worth to your customers, your company, and to you as the CEO? No, of course not! I hope they’ve proven their worth over and over again and that you’re bought into the value of customer success. If they haven’t convinced you of their worth, have an honest discussion with your Customer Success leader and give her the opportunity to course-correct. There’s no better time for them to step up to the challenge as it will only benefit your customers and your company.
With that in mind, here are NINE important things you should expect from your customer success leader(s) and customer success team:
- THE WHY: Your Customer Success team should have a clear charter outlining their “WHY” and it must be understood, embraced, and endorsed by you, your Executive team, and your Board.
- THE ROLE: This should be common sense now, but remember that Customer Success is not sales or glorified tech support, and don’t look at them that way. Also, don’t assume your sales team or support team can fill the void of customer success. Expect your customer success team to clearly define their roles & responsibilities and distinguish the value they bring to the table that’s unique to them, and expect them to deliver accordingly.
- THE KPIs: What are the core KPIs that your customer success team is held accountable for? Are they defined and measured? Does your customer success leader report on the KPIs in your weekly leadership meetings, monthly town halls, and quarterly board meetings? If not, why not?
- THE CUSTOMER EXPERIENCE: Does your Customer Success team lead out in defining, designing, delivering, and improving the customer experience? If not, ask them to do so. There is no one in your company who understands the customer experience better than your Customer Success team so leverage that knowledge and experience to drive change in your company as you strive to deliver an extraordinary customer experience.
- THE INSIGHTS: Do you have the data and information you need to thoroughly understand customer health, including both risks and opportunities? Do you understand the “true” reasons why customers are churning, or (even better) why your best customers are so successful? Do you have a customer success solution that’s recognized as the source of truth for customer insights? Is your customer success team sharing the narrative around the data so your entire company can engage more intelligently for your customers and with your customers? If not, you’re flying blind and lacking the critical information you need about your customers, and that information is changing by the hour during this crisis. A happy customer today, could be a churning customer tomorrow. You need the insights – now.
- THE VALUE: Your customer success team should be delivering tangible value to your customers. Do you recognize the value they are driving? Do your customers? Is your team relentlessly focused on your customer’s definition of value, desired outcomes, or key business objectives? If not, that needs to change immediately. After all, that should be at the center of their WHY.
- THE REVENUE: The days of Customer Success teams getting by without owning a revenue number are over. Has your customer success team stepped up to the plate to own a number – either renewal, expansion, or both? I get that there are situations where it doesn’t make business sense to have them solely own a revenue number (i.e. very complex negotiations, in-experienced team, etc.), but they should at least share the number, and be held accountable. I’ve heard every objection in the book against CSMs owning a number, most notably that owning a number diminishes the CSMs “trusted advisor status”. I flat-out disagree. I believe the best CSMs demonstrate the purest form of “solution selling” because they intimately understand their customer’s business, goals, needs, and requirements and can naturally suggest and deliver solutions. Trust me, most of your customers would rather have those discussions with their trusted CSMs rather than one of your Sales reps. Give your Customer Success team a number and expect them to own it.
- THE RETENTION: One of my biggest pet-peeves is when a CEO looks at her Customer Success teams as the “retention team” or as “churn preventers”. That’s such a defensive outlook on the team and downplays the true potential of any customer success team as a critical part of the company’s growth engine. However, during this crisis, retaining customers at all costs is legitimately what your customer success team may be required to do. And that’s fine. They know your customers best and can rally around them, bring resources to bear for them, love them, show empathy, deliver value, or whatever it takes to retain that revenue (or at least the logo, as mentioned previously). However, please don’t limit your view of them over the long haul as the “retention team”. And please don’t make them the easy scapegoat for churn. There are many reasons for churn, and usually your customer success team is not one of them. Is your product delivering the value it should? Is your sales team closing bad fit customers or setting improper expectations? Is your support experience adequate? Oftentimes, Customer Success is doing everything in their power to prevent churn that’s tied to factors outside of their control. So, be sure to spread the accountability appropriately across your functional groups. For now, your customer success team is critical to retain every customer possible, and retaining a customer is much cheaper than finding a new customer.
- THE GROWTH: If your Customer Success team is delivering on the 8 items above, they will likely also be an integral part of your company’s growth engine. With the relentless focus on driving adoption of your product and value for your customers, expansion growth will naturally follow. In times like this, expansion revenue within your current customer base can be the easiest and the cheapest (and maybe the only) revenue you can generate.
How do these nine factors play into your difficult decisions during this unprecedented time? First and foremost, remember that your CUSTOMERS ARE KING right now and your customer success team is essential to care for, retain, and (hopefully/possibly) grow your customers. The great Sam Walton once said “[The Customer] can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.”
If your customer success team is executing on all nine points above, count yourself lucky and invest in your customer success team, even during these times. Your investment will pay dividends for your customers and your company.
If your customer success team is executing well on most of the factors above, encourage and enable them to adopt the others with more rigor and relentless execution, and I’m confident you’ll see incremental retention and growth across your customer base. If you’re not seeing it, call me, and I’ll help you diagnose what’s wrong.
If your customer success team is flat-out failing on most or all of the factors above, you might consider changing out your customer success leader (which pains me to say – but I’d give you this advice in both good times and bad). But, don’t get rid of your entire customer success team! You need them now more than ever and there are so many talented Customer Success leaders on the market at the moment who can help you quickly right the ship.
So, as one of you, and one of them, if you’re in the unfortunate situation in which you need to layoff employees to ensure your company survives this Covid crisis, I get it and I feel for you. But, please don’t make the short-sighted and irrational decision to get rid of your entire Customer Success team. Instead, appreciate your Customer Success team and empower them to take care of your customers better than they’ve ever done before. Your customers are watching how you respond to their needs during this time and they won’t forget whether you leaned into the relationship, or leaned back.
Now, more than ever, is the time to double-down on your customers AND customer success within your company.
Best wishes navigating this very difficult time!
Dave Blake || Founder/CEO || ClientSuccess