Home Why Customer Success is a Vital Discipline for Growing Software Companies

Why Customer Success is a Vital Discipline for Growing Software Companies

by Samantha Kalany
Customer Success

Estimated reading time: 3 minutes

Every software company wants to see customers successfully using its software. However, customer success is more than something to high-five about at the end of the day. It’s critical to your business’s viability.

You may have created a knowledge base or answers to FAQs to give users a self-service resource to help them learn how to use your software. Or, you may have a great customer support team that reacts when users encounter issues or have questions. But ensuring customer success often takes more, particularly if your software is complex or designed for teams or enterprises. Users need training, but they also need someone to lead them to the “aha” moment in which they realize how your software can help them reach productivity, efficiency, or profitability goals. Customer success resources work proactively to partner with users to help them build your software into their processes and show them how to get the most value from it.

Consider these three reasons that prioritizing customer success is good for business:

If you work in a competitive space, your users have choices. And they’re going to use the software and deal with the company that delivers the best experiences. PwC research has found that 73 percent of people say experience is a significant factor in purchasing decisions, and just a few bad experiences can act as a catalyst for finding a new provider. And with the Software as a Service (SaaS) model, it’s not difficult to make a change.

If you lose customers due to bad experiences because they can’t use your software successfully, you need to invest more time in acquisition. You can find numerous studies on how much it costs – HBR compiled them and concluded it’s somewhere between five and 25 times as much to acquire than retain customers. The truth is, it will vary from company to company. You can add costs associated with marketing and sales to find customer acquisition costs (CAC) for your company versus the costs of servicing and maintaining accounts. Even though the multiplier could differ from industry averages, retention is more cost-effective than acquisition.

The SaaS model has various benefits, from building recurring revenue to providing customers comprehensive solutions and service packages at a monthly OPEX they can afford. However, there’s a downside for businesses that don’t make customer success a priority. Because of that low monthly fee that you offer, SaaS profitability doesn’t occur for a year or more after customer acquisition. If customers can’t use your software successfully and churn before the break-even point, your team is continually chasing new customers to replace, but you never see growth.

How Do You Measure Customer Satisfaction and Success?

How successfully your customers can use your software may seem like a qualitative assessment, but analysts have created ways to quantify it. One option is Net Promoter Score® (NPS). With this method, you ask one question: “On a scale from one to 10, how likely are you to recommend our business to a colleague or friend?” The rationale is that if users are happy with your software, they would likely recommend it. People who respond with a 9 or 10 are considered “promoters,” people who respond 6 or lower are “detractors,” and people who respond 7 or 8 are passive. To calculate the score, subtract the percentage of detractors from the percentage of promoters. You can monitor NPS over time or compare your score to industry benchmarks.Customer Success

However, you can develop methods using internal data to better understand customer success. For example, you can monitor user adoption, daily use, or specific features, indicating that your customers have built your software into their workflows. Or you can track renewals or expanded contracts as a sign that your users are finding your software valuable. Moreover, once you’ve created an accurate profile of how successful customers behave and interact with your business, you can evaluate others against those metrics – and intervene when you detect signs that they may be at risk for churn.

Customer Success and Brand Reputation

Another consideration regarding how customer success impacts your business is that successful customers are likelier to speak well of your software in the marketplace, agree to provide testimonials or case studies, and may even make referrals. Users that don’t experience success with your software, however, can share information that hurts your brand and impede growth.

Dedicating resources, time, and attention to customer success can help you build a reputation that will elevate your brand in your market and among investors. It can also lead to increased revenues from existing customers, reduced churn, and greater profitability. Successful software business leaders prioritize customer success, technology, and innovation to ensure growth.