For SaaS companies, repeated business defines success. Revenue comes from customers renewing subscriptions regularly. To retain users, companies need to develop more than just great products. With the rise of social media, and 24/7 support centers, businesses became more available, and customers now consider post purchase services as part of the product experience. Companies need to build a holistic journey that keeps users engaged, happy and most importantly: successful.
Optimising the customer experience requires company wide collaboration: Product Development, UX, Design, Marketing, Finance, HR, Sales, and Customer Service all have an important role in building the user’s journey, paving the way from brand awareness to continued loyalty.
So why are there so many SaaS companies with core functions still siloed, and misaligned? I hear this too often: Product doesn’t listen to user feedback, Marketing isn’t aware of new features getting released, Finance battles with HR on headcount vs. budget, UX Research reports market needs that are never met due to “more important business decisions”. It’s rare to find startups with well working cross functional product development strategies in place.
Startups don’t plan on ending up battling high churn and low product adoption rates. Most of them want to change the world (or at least provide a great solution to an existing problem). Under pressure to show quick and visible growth to investors, competitors, and the public, still many seem to sacrifice long term success for short term results. It takes less resources to put product-first, and get attention through a set of new features, than nurturing a cross functional customer-first culture.
With organisational evolution comes focus, and with focus comes specialisation. Everybody will have their own problems to solve, and without leadership defining collaboration as a key factor of individual success, survival instincts get triggered. Almost unintentionally, the company develops silos and becomes short sighted.
A good example on the difference between product-first and customer-first thinking is feature releases. A new feature should not be shipped, until all other functions: Marketing, Sales, and Customer Service are also ready to advertise, sell, introduce, and support it. It’s not about waiting for them. It’s about sharing engineering, design, UX resources with other teams ensuring a holistic release, which results a better user experience. Of course deciding on resources can’t be done on the fly. Every product organisation does regular capacity planning as they define roadmaps and set priorities. These meetings should include every stakeholder along the customer journey, and resources should be distributed taking functional dependencies into account.
These dependencies can be things like improving the help center engine, the blog, integrating new service tools, optimising metrics for marketing acquisition strategies, or maintaining existing technologies. A startup, where CS can’t integrate a simple AI assistant to their CRM for months, or where live chat tagging is broken because there’s no one to fix it, does not think about customer’s success. Ultimately this ignorance will hurt the overall experience, and the business.
With all the above, when I think of cross functional alignment, I am not only thinking about product and service development, resource planning, and dependency management. Siloed organisations fail to arrange functions around optimising their product’s core value proposition, and optimise time to first delivered value. Many SaaS companies admit that most of their churn happens within the first few weeks (even days) after registration. It’s well known in the industry that retaining an existing customer is 6 times cheaper than acquiring a new one.
Success is an experience that comes from the core value of the product. For Skype, it’s simple: free calls. For Lyft, it’s a ride in minutes. For Spotify, it’s having your music with you everywhere on any device.
Companies need to define their value propositions and align internal functions to help users get the value, and experience success early as their journey begins. That’s when the experience becomes sticky, and users start to feel empowered and engaged. Repeated usage drives repeated success, and ultimately: repeated revenue.
So what are the 4 key things SaaS companies should focus on to collaborate better, develop a holistic product experience, and build their businesses based on an integrated customer philosophy?
1. Break silos by nurturing a customer-first culture
Leadership has to define success top down by cross functional collaboration nurturing the customer’s journey. Don’t let functional autonomy result silos. All functions (departments) should ask: how do I best serve the customers?Set company-wide goals that represent the customer’s success, and break them down to team — and individual level KPI-s. Optimise values and processes to reflect on this. A McKinsey Insight Study from 2017 calls out that removing cross functional inefficiencies and breaking silos comes with 50% cost reduction for key processes.
2. Shift the company from thinking product-first to think customer-first
Translate the company vision not only to a clear product vision, but also to customer’s success. Turn product meetings cross functional. Enable engineering, design, and UX resources for Marketing, Sales, and Customer Service even if this slows down feature development. Set expectations accordingly. Make sure that resources cover dependencies across the board. QA should focus on the whole customer journey.
3. Research and define your core value proposition
A value proposition is a promise of potential value that a business delivers to its customers and in essence is the reason why a customer would choose to engage with the business. You need to understand the real value your customers experience using your product. Does it match your founder’s vision? What makes the product stick with customer needs? Once you understand, have all functions work together to deliver this value early, and drive repeated business. A clear value proposition also allows different functions to align by a common purpose, and break down silos.
4. Convert customer success to a growth engine
There’s more to having a customer culture embedded throughout the organisation than meets the eye. McKinsey’s recent 2018 study highlights that businesses where a healthy customer culture already exists, and where Customer Success teams primarily focused on churn reduction over the past years, now go further. They turn proactive, and generate growth.
Reflecting on current trends, more and more SaaS businesses understand that Customer Service has a much bigger potential than simply helping users understand their complex products, and getting through technical issues. The numbers prove them right: SDL’s Global CX Wakeup Call Report found that if satisfied by the overall customer experience, 73% of consumers will recommend a brand to others, and 46% say they will trust that brand’s products and services above all others.
Companies with a top down customer-first culture are able to provide full product experience, optimise retention, and deliver value faster. As recent studies show, the efforts pay off: those who do it right, already use customer service for business expansion.