The Ultimate Guide To SaaS Customer Success

SaaS Customer Success


When it comes to the growth of a SaaS company, it’s not just about getting new customers. It’s also about keeping your existing ones for as long as possible.

In fact, for a SaaS business model, customer retention is more important than customer acquisition.

Did you know that winning more customers costs up to 25 times more than keeping your existing ones?

That’s why you need to prioritize your customer retention strategies, such as SaaS customer success, customer support, and rewards programs.

This article will be an ultimate guide for SaaS customer success. So buckle up and let’s get started.


What Is SaaS Customer Success?


In a nutshell, SaaS customer success is all about ensuring that your customers are getting the most value out of your software.

It’s not just about providing them with the best possible product experience. It’s also about helping them achieve their desired outcomes and business objectives.

In other words, SaaS customer success is making sure that your customers are successful with your software. And when they’re successful, they’re more likely to stay longer as paying customers.


Why Is SaaS Customer Success Important?


We’ve brushed up a bit on this topic during our introduction. But a top-notch customer success process can open doors for a lot of benefits, such as the following:


Customer Success Reduces Churn


When you’re in the SaaS industry, “churn” is one of the words that you would least like to hear.

Well, it does refer to customers canceling their subscription to your SaaS product. And that means losses in recurring revenue.

The good news is that a successful customer success strategy can help you reduce your customer churn rate.

After all, they would only keep using your SaaS solution if it can really help them achieve their goals.

And SaaS customer success is literally about helping them reach their business objectives using your SaaS product.


Customer Success Leads To Upselling Opportunities


When your customers are really doing well with your software, they might want (or even need) to consider upgrading to a higher subscription plan that comes with more features.

After all, the best indicator that your SaaS product is effective is whether or not they themselves are growing. As they grow, they would eventually reach the limits of their current plans and need better inclusions in order to scale their businesses further.

And when they’re ready to scale up, your SaaS customer success team should be more than happy to assist them.

This is just one of the many SaaS upselling opportunities that you can take advantage of once you have a good customer success strategy in place.


Customer Success Maximizes Your Customer Lifetime Value (CLV)


The customer lifetime value (CLV) is the total amount of revenue that a customer will generate for your business during their entire relationship with you.

It’s not just about the subscription fees they pay every month. It also takes into account other factors, such as add-ons, renewals, and referrals.

And the best way to maximize your CLV is to keep your customers happy and engaged with your SaaS product for as long as possible.

After all, the longer they stay with you and the higher the plans they subscribe to, the more revenue you can generate with them over the course of their subscription.


Customer Success Increases Customer Referrals


When your customers are happy with your SaaS product, they would be more than happy to tell their friends about it. In fact, they might even refer your software to other businesses in their industry.

And when that happens, you can enjoy a snowball effect of organic growth without having to spend too much on marketing and advertising

This is the power of customer referrals. And it’s one of the many benefits that you can enjoy with a good SaaS customer success strategy.


SaaS Customer Success Metrics You Need To Track


Now that we’ve discussed some of the benefits of SaaS customer success, it’s time to take a look at how you can measure its performance.

Below are some of the most important metrics that you need to track:


Customer Churn Rate


As we’ve mentioned earlier, customer churn rate is one of the most important indicators of your SaaS company’s health.

It’s a metric that tells you the percentage of customers who cancel their subscription to your software within a given period of time.


customer churn rate formula


In a perfect world, the churn rate would be zero. But in the real world, it’s almost impossible to achieve that.

The good news is that as long as you keep your churn rate low, you’re on the right track. In the SaaS industry, having an annual churn rate of around 5% to 7% is generally considered to be acceptable.

Still, you need to consider a churn rate benchmark that matches your industry and SaaS company’s maturity.


Customer Retention Rate


The customer retention rate is the opposite of the customer churn rate. It tells you the percentage of happy customers who stick around and continue using your SaaS product.

Ideally, you want to have a high customer retention rate. After all, that’s what SaaS customer success is all about.

To calculate your customer retention rate, simply take the number of customers at the end of a given period and divide it by the number of customers at the beginning of that period.


retention rate formula


For example, if you had 100 customers at the start of the month and 95 customers at the end of the month, your customer retention rate would be 95%.

Drawing from the SaaS churn rate benchmark we mentioned above, a good target retention rate generally should be no less than 93%.


Customer Lifetime Value (CLV)


As we’ve discussed earlier, customer lifetime value (CLV) is the total amount of revenue that a customer will generate for your business during their entire relationship with you

To calculate your CLV, you need to consider two more metrics: your average revenue per user (ARPU) and your average customer lifespan.

If it’s not that clear, the ARPU is the average amount of revenue that each paying customer generates for your business every month. While the average customer lifespan is the average length of time that a customer remains subscribed to your software.

Finding the CLV usually takes these two metrics in terms of years.

To calculate your CLV, simply take your annual ARPU and multiply it by the average customer lifespan.

For example, if your annual ARPU is $1,200 and the average customer lifespan is 5 years, then your CLV would be $6,000.


CLV formula


Net Promoter Score (NPS)


The Net Promoter Score (NPS) is a metric that measures how likely your customers are to refer your SaaS product to other people.

It’s a valuable metric because it gives you an idea of how satisfied your customers are with your software. And the more satisfied they are, the more likely they are to refer your product to others.

To calculate your NPS, you need to survey your customers and ask them how likely they are to recommend your SaaS product on a scale of 0 to 10.

You can then group the responses into three categories:

  • Promoters (score 9-10)
  • Passives (score 7-8)
  • Detractors (score 0-6)

Once you have the numbers, simply subtract the percentage of detractors from the percentage of promoters. This will give you your NPS score.


NPS sample survey and formula


For example, if 60% of your customers are promoters, 20% are passives, and 20% are detractors, then your NPS score would be 40%

Generally speaking, a good NPS score is anything above 0. But the higher, the better.

Some of the most successful SaaS companies of our time have NPS scores ranging from 70 to well above 90.


Customer Satisfaction (CSAT) Score


The customer satisfaction (CSAT) score is another metric that measures how satisfied your customers are with your software.

It’s similar to the NPS in that it also uses a survey to collect data. But instead of asking customers how likely they are to recommend your product, you’re asking them to rate their level of satisfaction on a scale of 1 to 5.

Once you have the numbers, get the percentage of the total number of customers who answered with a 4 or 5. They are the only ones considered to be truly satisfied with your SaaS product.

For example, if you surveyed 100 customers and 60 of them said they were satisfied (4 or 5), then your CSAT score would be 60%.

The goal is to have a high CSAT score. But just like with the NPS, the higher, the better.

A good target CSAT score should be above 80%.


Customer Engagement Score (CES)


The customer engagement score (CES) is a metric that measures how engaged your customers are with your software.

It’s important because it gives you an idea of how often your customers are using your product and how much value they’re getting out of it. The more engaged they are, the less likely they are to churn.

There are three steps you can take to find your CES:

Define your engagement events: The great thing about CES is that you can define the specific events that you want to track. This would depend on what kind of SaaS solution you are offering.

For example, let’s say you have a project management tool. In this case, some of the events you might want to track are creating a project, adding a task, and marking a task as complete.

Assign an importance value for each event: Each event you define would have a corresponding value based on how important it is in a project management process.

For example, creating a project could have a value of 5. Adding a task could have a value of 1. And a big thing like completing a task could be worth a value of 10.

Sum up all your event values: To get your final CES, you first multiply the number of times your customer performs each of these events and their corresponding values. Then add all the resulting numbers together.

So for example, let’s say that a customer created 3 projects, added a total of 10 tasks, and completed 5 of those tasks.

That gives you the following values:

  • Projects created: 3 x 5 = 15
  • Tasks added: 10 x 1 = 10
  • Tasks completed: 5 x 10 = 50

That gives you a total CES of 75.


Best Practices For Your SaaS Customer Success Strategy


Now that you know the three essential metrics for measuring customer success, it’s time to put them into action.

Here are some best practices to help you get started:


1) Identify Your Customer’s Goal


Customer success is all about helping your customer reach their goal. So naturally, the first and most important thing to do should be to find out what that goal is.

What is it that they want to achieve by using your software?

This might seem like a no-brainer, but you’d be surprised how many SaaS companies don’t really know what their customers are trying to accomplish.

Your job is to figure that out and use it as the foundation for everything else in your customer success strategy.


2) Identify Potential “A-ha!” Moments For Your Customers


In order for your customers to feel like they are making a bang for their buck in purchasing your SaaS product, they need to experience its value.

In other words, you need to guide them to their “a-ha!” moments.

These are the moments when they finally realize how your software can help them achieve their goals in a big way.

If you can successfully make it happen for them, your SaaS product wouldn’t just be something that’s nice to have. It becomes an essential part of your customer’s life or business process.

And there can be a lot of possible  “a-ha!’ moments for a single SaaS solution.

For example, let’s say you have a project management tool. A customer might have their “a-ha!” moment when they see how much time they’re saving by using your software to automate tasks that they used to do manually.

Or they might have their “a-ha!” moment when they realize how much easier it is to collaborate with their team using your software.

Whatever the “a-ha!’ moments are for your SaaS solution, it’s important to identify what they are so that you can find which ones align with your customer’s goals.

And when you’ve found that alignment, you can focus on helping them achieve those moments. Your customer ends up very happy with your SaaS product and you get to keep them as a loyal customer for a very long time.


3) Provide An Excellent Customer Onboarding Process


A huge and essential part of SaaS customer success is onboarding.

This is the process of getting a new customer started with using your software and it’s important to make sure that it’s as smooth and easy as possible.

The goal is to get them up and running with your software so that they can start experiencing its value as soon as possible.

To do that, you need to have a well-designed onboarding process that covers all the essential steps. That might include creating an account, adding team members, connecting to other systems, and configuring settings.

You also need to make sure that your onboarding process is tailored to fit your customer’s specific needs.

For example, if you’re onboarding a customer who’s already familiar with project management software, you can skip the basics and go straight to more advanced features.

On the other hand, if you’re onboarding a customer who’s new to project management software, you need to take things slow and make sure that they understand how to use the basic features first before moving on.

You can also use different onboarding methods depending on your customer’s preferences.

Some might prefer a more hands-on approach with one-on-one sessions while others might prefer a more self-paced approach using video tutorials or documentation.

The important thing is to make sure that your onboarding process is designed to help them get up and running with your software quickly and easily.


4) Make Sure Your Customer Success Team Is Easy To Reach


Your customer success team is the group of people who are responsible for making sure that your customers are happy and successful.

They’re the ones who will be working closely with your customers on a day-to-day basis, so it’s important to make sure that they’re easy to reach.

That means having multiple channels of communication open such as email, phone, chat, and social media.

It could also mean having someone available 24/7 in case a customer needs help outside of normal business hours. Still, this one depends on your customer’s needs.

The important thing is to make sure that your customer success team is easy to reach and available when your customers need them. If you can’t offer 24/7 customer success operations, at least make sure that your team can get back to them first thing in the morning.


5) Create A Self-Service Customer Success Portal


A self-service customer success portal is a great way to provide your customers with the resources they need to be successful.

This could include things like how-to guides, video tutorials, FAQs, and knowledge base articles.

It’s also a great way to keep your customer success team from getting bogged down with small questions that could easily be answered by a resource.

The important thing is to make sure that your self-service customer success portal is well-organized and easy to use. Otherwise, it won’t be of much help to your customers.


6) Track Your Customers’ Usage Data


Usage data is essential for understanding how your customers are using your software.

This information can help you identify areas where they’re struggling and need more help.

It can also help you see which features are being used the most and which ones could be improved.

There are a few different ways to track usage data. The most common is through log files, but you can also use things like analytics tools and customer surveys.

The important thing is to make sure that you’re tracking this data so that you can use it to improve your customer experience.

What’s more, tracking your customers’ usage of your SaaS product can help you find upselling opportunities.

For example, if you see that an existing customer is using a lot of data storage and are almost reaching the limits of their current subscription tier.

You could reach out to them, explain how an upgrade would level up their processes even more, and offer them an upgrade to a higher-tier plan.

Speaking of reaching out to your customers…


7) Be Proactive In Offering Customer Success Services


The main difference between customer support and customer success is who initiates the conversation.

With customer support, you are more reactive. Your customer comes to you with a problem and you fix it.

On the other hand, customer success requires more proactivity on your part. You need to reach out to your customers on a regular basis, even if they don’t have any problems.

The goal is to build a relationship with them and help them be successful with your product. That way, they’re more likely to stick around in the long term and become loyal customers.

There are a few different ways to be proactive in offering customer success services:

Offer help based on their usage data: As we mentioned before, tracking your customers’ usage data can help you see where they’re struggling. You can use this information to reach out and offer them help before they even ask for it.

Send regular check-ins: Even if everything seems to be going well, it’s still a good idea to reach out to your customers on a regular basis. This could be through email, phone calls, or in-app messaging.

Send automated emails: Now this is a little bit of both the practices we just talked about. You can set up triggered emails based on their usage data.

For example, let’s say that you have a customer relationship management (CRM) solution. Imagine that an existing customer just hit a milestone of adding 100 new contacts to their database.

You could set up an automated email that congratulates them on their success and offers some helpful tips on how to make meaningful conversations that turn leads into customers.

Not only do you celebrate with them. You also proactively offer to help them towards their next goal. In other words, you would be guiding them to the next “a-ha!” moment.


8) Provide Useful Content and Resources


Your goal as a customer success manager is to help your customers be successful with your product.

One of the best ways to do this is to provide them with useful content and resources. This could be in the form of blog posts, webinars, tutorials, videos, etc.

Basically, anything that would help them understand and use your product better.

This content can be used to address common problems that your customers face. It can also be used to show them how to get the most out of your product and reach their goals.


9) Build An Intuitive Customer Feedback Process


Your customers are the ones using your product day in and day out. They know what works well and what could be improved.

That’s why it’s so important to have a customer feedback process in place that allows them to easily share their thoughts with you.

There are a few different ways to do this, but one of the simplest is to just add a customer feedback widget to your product. This could be a pop-up or a link in the menu that takes them to a form where they can submit their suggestions.

Another option is to send out regular surveys. You can use these surveys to ask specific questions about their experience with your product.

The important thing is to make sure that you’re regularly collecting customer feedback from your customers. This will help you identify areas where you need to make improvements.


10) Establish Your Offboarding Processes Too


Okay, we mentioned that customer success is all about preventing customer churn.

But when a customer has already decided to stop using your SaaS product, offboarding is your last chance to keep them or make a final impression.

Here are some things you can do for your offboarding process:

Find out why they are leaving: The first step is to find out why they are leaving. You can do this by talking to them directly or setting up a questionnaire. You can use their answers to find out the key areas of improvement for your SaaS product.

Highlight what they are missing out on: This could be in the form of an email or even a personal phone call. The goal is to show them what value they are missing out on by not using your product.

Make it easy for them to come back: If they do decide that they want to come back, make it easy for them. Don’t make them jump through hoops just to reactivate their account.

Make it easy for them to leave: Even if you can’t get them to stay, you can still make the offboarding process as smooth as possible. This means providing instructions on how to cancel their account and export their data.


Final Thoughts About SaaS Customer Success


SaaS customer success is all about reducing customer churn by helping your customers be successful with your product.

Its goal is to make your product not just a helpful tool in their business processes, but an essential part of it.

The best way to achieve this is by knowing their goals and helping them achieve these goals using your product.

Still, customer success is just one piece of the puzzle when it comes to customer retention.  You also need to have a strong product and excellent customer support.

But if you can get customer success right, it will be a huge boost to your retention rates.

Want more guides and tips to grow your SaaS business? Visit our blog here.

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Ken Moo