By Jason Whitehead
Very few SaaS vendors have figured out how to solve the root-cause problem: how to get customers to drive effective user adoption and use technology to create value.
The birth of SaaS, which brought us the great promise of the subscription revenue business model, was closely followed by the inevitable afterbirth — customer churn, revenue destruction, and slow or negative growth. The next generation of this business model, led by the creation of customer success (CS), is ushering in a new growth engine — but only for those organizations that are brave enough to be bold in how they embrace and approach CS.
When subscription software first came onto the scene, many people naively assumed it was just another revenue model for the vendor. They assumed customers would naturally stay with them in perpetuity if they continued to deliver great features and functions. What they didn’t realize was that they really introduced a new consumption model for buyers, where the buyer would only be willing to pay for what was used and what was generating value for them. And so, the trouble began.
SOLVE THE PROBLEM YOU NEED TO SOLVE, NOT THE PROBLEM YOU KNOW HOW TO SOLVE
The core problem was not the technology and getting systems deployed quickly, but rather, that most buyers’ organizations are not really good at using technology effectively to solve business problems and create clear, measurable value. This is not a new problem for buyers. Most organizations, regardless of whether they are investing in SaaS, perpetual license, or home-grown systems, can often get the system live. With perpetual license and homegrown systems, buyers’ organizations pay for the value up front (sunk costs) and then are stuck with it whether they get the value or not. With subscription software, they only keep paying (renewing) when they are getting value. And this is very bad news for SaaS vendors.
The SaaS industry is facing a challenge they have never known before and a problem that they are ill-equipped to solve, using current tools and methods. At the core, the problem SaaS vendors need to solve is figuring out how to get their customers to successfully, effectively, and efficiently get their people to change the way they work and to utilize systems in a way that actually generates outcomes. Then they need to figure out how they keep people creating value from technology, year over year, while working in a world of perpetual change.
BEWARE — ICEBERG AHEAD!
The good news is that SaaS companies are beginning to wake up to the fact that their future growth and survival depends on them doing more to help customers achieve results. They are starting to embrace a customer success mindset, investing in building customer success teams, and slowly trying to align their organizations around delivering customer outcomes, not just software.
The bad news is that very few SaaS vendors have figured out how to solve the root-cause problem; that is, how to get customers to drive effective user adoption and use technology to create value. Instead of figuring out how to solve this problem, many SaaS vendors are rushing to do what they know how to do, what they are comfortable doing, or what they have done for years, when marketing and selling to new customers. For example, many CS teams get very focused on developing success metrics, defining new internal processes, building playbooks, and trying to automate a lot of the CS process. While these approaches work great for marketing, sales, and internal operations, they do very little to solve customers’ internal adoption and value problems. Sure, on the surface, a lot of these activities make sense, and they will deliver some value to customers. But these approaches alone are not enough. CS teams that only apply old problem-solving techniques to the new challenges of user adoption and customer value creation are effectively trying to feng shui the deck of the Titanic. Sure, you can do it, but it probably won’t solve your problem.
GO BIG, GO BOLD … OR YOU WILL GO AWAY
The need to deliver business value AND the new realization that customers struggle to achieve business value on their own puts the spotlight on the new future of SaaS growth. The race is not to deliver more product features, but to deliver quality, effective, scalable, impactful customer success services. This is where software companies need to compete!
To do this, they need to be bold in their approaches. What SaaS vendors need to realize is that driving adoption and value creation, especially in B2B businesses, is a people and organizational problem, not a technology problem. It is about getting people — large groups of people — to change how they behave at work, and how they perform their jobs. People have a lot of their own motivations and personal identities invested in their jobs and their senses of professional success. They also have many organizational factors, in the form of structures, business processes, communication practices, and corporate culture, that all limit individual freedom for how they behave at work. This combination of individual motivation, identity, and organizational factors impacts how users adopt technology and use it to create business value. And alarmingly, these factors that most impact CS are often misunderstood or outright ignored by SaaS vendors.
Being bold about CS requires you to completely re-envision what success looks like from your customer’s point of view. Think long-term. What would it take for the customer to achieve so much success from using your product that they renew for the next 20 years (or more)? How can they get their people to effectively collaborate using your software as it is designed and intended? What are they not doing today that they need to start doing? What do they need to stop doing that is preventing them from achieving success? Think about the people in their organizations. How can they get their people to embrace technology? How do your customers need to address all the motivational, identity, and organizational issues that affect user adoption?
Now work backward. Ask yourself, what will customers need from their vendor to achieve success over the next 20 years? What is their ideal vendor profile, and how do you become it? What services, expertise, and resources do you need to bring them? Where will you get them, or how will you develop them? How will you prioritize your investments in marketing, sales, product development, support, and CS to make sure you are providing the resources (not just the software) that customers need to renew for the next 20 years? How do you need to engage with customers differently during the marketing and sales process to get them to focus on 20 years of success?
Now let me ask you — what happens to your company if you don’t figure out how to solve these problems but your competitor does? And believe me, your competitor is working to solve these problems.
BOLDLY GOING INTO THE FUTURE
Does this sound a little overwhelming? I hope so. When you look at the challenges ahead, you clearly see the foolishness of the approach many SaaS organizations take to sales, renewals, and CS. Hopefully, the magnitude of the challenge (and the opportunity ahead) demonstrates why you need to be bold in your approach to CS.
This is both the challenge and promise of CS. If SaaS vendors can figure out how to deliver results, not systems, then customers will heap great financial rewards. Much like drug dealers try to get their users hooked on a chemical high, SaaS firms will find that they can get their customers hooked on the high of achieving great business results. When done effectively, this customer high delivers the great renewals, expansions, and referrals that all SaaS vendors want. This, not new sales, is what will lead to the biggest, boldest growth in SaaS businesses going forward.
JASON WHITEHEAD is CEO of Tri Tuns, LLC. Tri Tuns works to bridge the gap between buyers and sellers of SaaS software to help accelerate user adoption and value creation so both organizations are successful. He is also frequent blogger and cohost of the popular video and podcast series, “The Jasons Take On …” that advocates for taking bold action to drive customer success.