Running a successful B2B business is a balancing act. From product innovation to customer success to revenue growth, B2B companies are looking to deliver the right combination of product features and engagement while attempting to minimize customer churn as they grow.
Because customer churn is often detected long after the customer has disengaged, B2B businesses are struggling not only with understanding how to prevent customer churn, but also identifying ways to detect it in advance. The critical question in the B2B space is how do you retain customers and create new opportunities for growth?
Unquestionably, the demand for a more personalized customer experience is at its peak. Today, people remain loyal to companies that provide continuous and optimal value. Forrester refers to this as the “age of the customer” where deep relationships represent long-term business value.
With the rise of recurring revenue and subscription-based online services, companies no longer have the same amount of opportunity to engage with customers face-to-face or even over the phone. Ironically, communicating product value in personalized ways is more important than ever. This is the new normal of customer buying behavior, yet not all companies are adapting at the same pace.
A number of studies show that it’s between 4 and 10 times more profitable to retain a customer than to gain a new one. In David Skok’s 2015 SaaS survey with Pacific Crest, they found that “the CAC for renewals is $0.13, or 11% of the CAC to acquire each new customer dollar.” With your competitors just a click away, businesses that fail to deliver against unique buyer needs and effectively communicate product value are estimated to experience a level of churn equal to millions of dollars in annual revenue.
For B2B companies with complicated, often technically-heavy products, communicating value is even more difficult.
Why are customers churning?
While most B2B companies have hired Customer Success teams to help minimize the risk of churn and scale high-value customers, many professionals find that developing meaningful relationships at scale is difficult. This is due to a lack of useful data collection and engagement tools available as well as problems with controlling the quality of personalized customer experience on a one-to-many basis.
The most common problems Customer Success teams face include:
- Less than effective onboarding. In order to eliminate churn and turn a buyer into a brand advocate, B2B companies, like their B2C counterparts, must communicate the value of their product to new customers immediately. If customers aren’t aware of all the features and functionality of the SaaS platform they purchased, how can they realize the total value that this platform offers? This includes product upgrades as well as new product applications. Customers want to see and test how the software and applications they purchase will make their lives easier and companies that fail to show this at the beginning of the customer relationship will experience greater churn.
- Failure to fully maximize potential. Customer success teams lack the type of actionable intelligence that can allow them to make data-driven decisions about how they interact with their customers. They spend a large majority of their time reacting to issues than being proactive at preventing issues. Instead of spending time bouncing between trying to get relevant data from their Product Managers and trying to maintain meaningful relationships with customers, Customer Success teams need to be given useful, relevant data so they engage with customers appropriately. BIA/Kelsey and Manta research tells us that a repeat customer spends 67 percent more than a new customer. That means customer success must be empowered to be proactive in retaining and expanding accounts.
- Problems with accurately understanding who needs help and what type of help. When companies have a large customer base, it’s difficult for them to identify which users need help, which are at risk for churn, or which customers could benefit most from a new feature. Especially without data to indicate overall health, barriers, and opportunities. Customer success teams cannot only rely on support tickets alone as a sign of churn or indication of a problem; they need a comprehensive health dashboard, account-specific intelligence, and a variety of engagement types to reach the right customer with the right message at the right time.
- Failure to determine what processes can be automated. This is a constant balancing act for companies supporting a large customer base. While automation is necessary, what sets a company apart from competitors is its ability to deliver a human element to communication and customer engagement. That’s why customer intelligence and operationalizing customer success processes is critical to understanding which elements can be expedited through high-tech and which require high-touch.
Problems with current customer scaling strategies
For B2B SaaS companies, the customer success landscape has shifted to more subscription-based models, where subscription renewals are more likely to be impersonal email prompts instead of a phone call or face-to-face conversation. Still, personal relationships remain just as important to scaling customers and growing product adoption. Today, buyers can switch to a competing service with the click of a button, so maintaining a personal connection is more important than ever.
Currently, SaaS companies are deploying certain tactics to help communicate product value to large numbers of customers in the hope of a successful upsell, but these tactics aren’t working.
- Growing customer success teams: Companies that don’t use automation tools use customer success teams to support users. However, as companies add more customers at a rapid rate, they’re forced to add more salaried employees to support new clients. This makes it nearly impossible to grow a company at the same rate as customer acquisition. Further, the level and quality of customer service significantly drops as customer experience teams are bogged down with too many clients to support.
- Enhancing product engineering: Another frequent tactic that B2B companies use to engage with customers about new product upgrades and features is to plug this communication into the product itself with a custom development of surveys, web-application messaging and guided tours. Yet, building this in-house is very expensive and can interfere with the work that developers need to do on the core SaaS product. In many situations, this type of request is simply not a priority versus core items on the product roadmap and, as such, is typically pushed to the back of the development queue.
- Focusing efforts on high-value customers: A common practice to scale existing customers is to focus only on those that demonstrate the highest upsell potential. Unfortunately, this tactic can negatively impact overall customer scalability as the customer success team tends to neglect the rest of its paying customers, and, in the end, misses out on generating revenue from expansions and advocacy.
Where high-tech meets high-touch
Preventing customer churn is critical for both B2B companies and large enterprises, yet it remains an enormous challenge. Customers have come to expect – actually, demand – a more personal engagement and clearer communication about product value as it relates to their needs, challenges, and goals.
While manually engaging with each customer is not a scalable option, there are ways that companies can use automation more intelligently in order to make communication and customer experience more personal. A PwC report on customer churn compares this concept with how doctors treat the flu. Once companies identify churn symptoms, they can “diagnose” and “repair” customer churn and put customers back on the path towards success.
- Insight vs. Action According to IDC research, less than 1% of customer data is analyzed by businesses today. This leads to a finding that roughly 77% of customers are not engaged with the companies with whom they do business. The more a company knows about their customers, the better they can provide relevancy and scale their business. User intelligence provides the means to send data-driven messages to encourage engagement. The more personalized the message, the more “human” the connection your customer will have with your company.
Gathering customer data about completed or incomplete software downloads/upgrades and product views, as well as demographic data, means that companies can enhance products and software applications by personalizing messages based on the insight this data provides. Automating the data-gathering process will not only eliminate manual labor analysis, but will also make data analysis faster and more accurate, creating a clearer picture of users and how they are interacting with your product. This process will help companies better communicate with the right kind of customer in the right way.
- How much automated engagement should I implement? Automating all engagement – from social media and customer service to emails and newsletters – has proven unsuccessful time and again. There are, however, a few things companies can put on autopilot to save time and resources without sacrificing the benefits of personal touch.
The ratio where we’ve witnessed the greatest success among our customers is by deploying a steady 2:1 “personal” versus “automated” balance. We begin by gathering and sorting customer data using “churn indicators”. This can help companies better automate certain customer engagement tactics more intelligently. Key churn indicators that we utilize include:
Key Churn Indicators:
- Frequency of software usage
- Usage of key product features
- Customer sentiment or Net Promoter Score responses
- Technical issues (support tickets)
- Financials (such as expiring credit cards or unpaid bills)
A good way to determine the right message for target customers is to model existing successful customers and build out engagement behavior based on these criteria. For example, which customers are included in your ‘loyal’ client category and what do they have in common? Then find users that exhibit similar behavior or demographics but are not yet considered successful. Those are the customers you should consider engaging with more personally and with a human touch.
How UserIQ can help
The ability to quickly and effectively identify who is at risk of churn, which customer is a potential expansion opportunity, or who may be ready to become an advocate is critical to the overall success or failure of businesses large and small. Reducing churn has a huge impact on annual revenue, and retaining and scaling existing users is much more affordable than attracting new customers.
In the balancing act of successful B2B companies, customer relationships are just as important as the quality of the product a company offers – and customer loyalty is dependent upon a company’s ability to effectively communicate that product’s value. This puts immense pressure on companies to constantly communicate in a relevant way to an audience that demands more personalized, intelligent engagement than in the past. The way forward for companies is to deploy intelligent automation.
That’s where UserIQ comes in. UserIQ helps SaaS companies effectively reduce churn by combining user intelligence with highly-targeted engagements to deliver what each customer needs to be successful throughout the customer journey. UserIQ allows companies to track every action their customers are taking inside web applications and append any type of data, such as demographics and CRM insight. With deeper insight, companies can enhance their product usability and craft more personalized messages.