Last week, I spoke at SaaStr Annual 2018, one of the most influential SaaS events in the world where thousands of SaaS founders, VCs, executives, and enthusiasts meet to talk about what it takes to grow SaaS businesses faster, stronger, and with more success.
With experience in every stage of customer success growth, from running a scrappy startup team to IBM’s billion-dollar SaaS portfolio, I’ve learned a few things. In my session, I talked about the critical fundamentals that customer success teams should master to drive predictable and meaningful user adoption. Here’s a recap of those fundamentals of user adoption and a few tactics for getting underneath it for your organization.
Why user adoption is vital for SaaS businesses
If you’re not quite sure about the strategic value of strong user adoption, consider this: Better adoption is the path to higher retention. Venture capitalist Tomasz Tunguz illustrates how a business with a -5% monthly customer churn rate can add an additional 73% in revenue annually versus one with a 5% monthly customer churn rate. That’s huge!
While churn has completely legitimized an entirely new role, department and business operating philosophy that should be viewed as the most critical growth engine of your business, it’s also driven many companies to act from a position of fear and defense, and that in itself is weakness that I want to address.
Don’t get me wrong: churn is important, absolutely. It’s a metric that every single one of us care about as an indicator of growth for our companies. But here’s the thing: that fear, the idea that churn is deadly and if you have it, you need to do something about it urgently is how Customer Success was born; it was born out of the fear of churn. There is nothing wrong with that—customer success is a necessary department for any SaaS company—but it’s a tough starting point because it means the entire orientation is inherently reactive from the beginning.
At UserIQ, we look at customer growth as multi-step journey through several phases – retention being just one of them. It’s not a walk in the park; it’s more like a series of steep climbs you need to get through. It’s hard work.
And the reality is that a lot of companies are still trying to get their act together and figure out where to even start, and often they want to skip right to customer retention. But here’s what I’ve found: there are no shortcuts on the journey to customer growth. And too many companies (my own experience included) have skimmed or even completely skipped over adoption and have paid the price for doing so. I’ve even seen this problem happen the bigger the company grows. These “high-growth” or later-stage companies take shortcuts to retention, expansion, and advocacy despite having sufficient resources not to, and they miss out on building stronger foundations for their users in doing so.
And let’s be clear: User adoption is not just a customer success challenge. User adoption is even more critical if you are a marketer or sales executive because, as Jason Lemkin predicts, we have entered into the golden age of freemiums. That means there will be 100 low-touch and freemium unicorns by 2025-2028. If you have a freemium model or are a product that offers a free trial, there are a few things to note:
- Your users are your buyers.
- Onboarding and adoption is happening before purchase.
- Your longtail is your secret marketing weapon.
Even if freemium is only 20% of your revenue, if it represents 2,000 customers that are happy, spreading the word, tweeting, telling their friends … that’s powerful. All the best software companies are built on word-of-mouth. The more happy customers you have, the faster that positive word-of-mouth spreads. So here are a few fundamentals to help you drive stronger user adoption and WOW! your users to becoming your advocates.
Start with the “why”
“The defining characteristic of a simple (read: good) product is not the abundance of features but rather the relevance of those features to its users.” – RRE Ventures
One of the best ways to get at the “why” of user adoption is to ask yourself “Who are my best customers?” We have a ton of new tools available to us to help us see who our at-risk and possibly our “worst” customers are (i.e. the now familiar “health dashboard”), but to me, it’s more important to know what makes a great customer. I’m constantly surprised by how often I ask this question and hear crickets. We tend to dig deeper when fear of churn is front and center and we don’t take the time to understand specifically who our happiest users are, what actions are they taking in our platform to achieve desired outcomes, and why.
Once you know who your best customers are, you can start to identify the WOW! Moments that got them there. Invented by David Skok, a WOW moment refers to the moment where your user suddenly sees the benefit they get from using your product and says to themselves WOW! Even better, a WOW! moment might result in a conversion activity for you, like trial to paid or an upgrade from one version to the next.
So what are your WOW moments? What are the top reasons that people come to you and use your application? What value and business outcoming are you providing?
The usefulness of each of your features and their ability to generate WOW moments is what matters. Users want reasons why they should adopt your product. They need to see the bigger payoff. So start asking yourself: Why is your application part of your customers’ tech stack? What is motivating them to stay subscribed month after month?
Then get to the “what”
Once you’ve discovered the “why” for your product and its features, you have to ask yourself “what are the features in my product that get my users to their WOW moment?” You can think about this as: “What are the top actions that your most retained users do?” You’re looking for a set of behaviors exhibited by users who stay, not behaviors exhibited by users who leave. Getting to that answer shouldn’t be hard. You can do it in a couple of ways:
- Segment the actions your most retained users take and compare that against your most most churned users and see if there is a list of actions that have no correlation between the two. However, chances are you won’t get that lucky and it’ll take a little more digging. You’ll also find value in taking a smaller sample of a few retained users and a few churned users. But finally, and this is where the real money is, compare most of your retained users to a few of your churned customers. You’re looking for correlations here that help you get at what exactly your users are trying to solve for with you product.
- If you are just getting up and running and don’t have a large sample size or aren’t collecting this data, just pick up the phone and ask! You will be surprised how much users will share with you if you are just asking for input and not selling them something.
Getting to the “what” and the “why” will directly impact how you get to the WOW! To answer these questions, you need data, and that requires departments in your organization to work in tandem.
Customer success & product managers need alignment
The best place to look for your what’s and why’s are most likely within your Product and Customer Success teams. The problem is that they are often focused on those areas separately and they often do a mediocre job merging to two.
In fact, most of the time, these teams live in separate applications and are looking at completely different sets of data even though they often want to answer similar questions when it comes to user adoption.
We facilitated a benchmarking survey in collaboration with SuccessHacker and ProductCamp to hundreds of customer success and product management executives to find out how these two teams work together today. This survey was the first of its kind and we uncovered a lot of insightful data, like the fact that 80% of product and CS teams work with separate applications. We also found that most of them felt least aligned on who their ideal customer was. That’s concerning to think about when knowing your customer and understanding your users is so critical to success.
I ask you to consider the same thing. Regardless of what role you are in, if you asked peers in your other departments who your best customers are, would you all come up with the same list of common characteristics? Not knowing your audience is pretty scary, and becomes even more complex when you have different types of users and multiple product lines.
One way to go about aligning your customer success and product teams toward the customer and their success is to consider how you can merge your efforts. Take a look at the user flows your customer success team is thinking about (moving customers along the customer journey) and the user flows your product team is thinking about (guiding customers through key features) and look at ways you can combine these into one map of the customer journey as it relates to your product.
The takeaway here is to bring together your product and customer success teams more often to discuss what they’re seeing, to share data, and to ultimately come to a conclusive idea about who your ideal customer is and how you can WOW! them both online and offline.
Offline behaviors and Moments of Truth
User adoption (or lack thereof) plays an integral role in shaping both online and offline behaviors that can drive Moments of Truth. Moments of Truth are interactions that have a disproportionate impact on your customer’s long-term mindset about your brand. Let’s talk about a few critical offline moments you should be aware of:
- Change in relationship: When users are showing signs of weak engagement or WOW attainment, right after they purchase you, or right after they finish onboarding. Questions to consider:
- Do they have a strategy?
- Do they lack resources or capacity?
- Has something in the organization changed?
- Crisis: When the customer shows lots of early WOW moments and engagement but then you notice a sudden drop off. Questions to consider:
- Did your champion leave the company? Were they promoted?
- Bigger strategic issue or priority (i.e. acquisition)?
- Personal issue (again capacity, frustration, etc.
- Unexpected Delight: When your customer does something positive that you didn’t expect them to do, celebrate and reward WOW achievement. Acknowledgments to consider:
- Send badges, gift cards, or other swag
- Deliver a “high-five” via email or in-app
- Invite them to write a blog post or speak at an event to discuss their success and advice to other users who most likely share similar aspirations.
Implementing your user adoption strategy
Here are my final thoughts: If you are already tracking logins and clicks and product engagement, that’s great! But understand that adoption is just not about activity, it’s about building confidence in your product and in your product’s vision and mission.
If you approach user adoption right, which means:
- Merging the what and why by making user adoption a collaborative effort in your company between product, customer success, sales and marketing, and
- Looking at what’s happening in your product as a way to engage with your users OUT of the product so you can get them closer to your company mission and feeling more emotionally connected to your brand
Then you are grasping the fundamentals of user adoption. You are building a foundation that isn’t built on getting rid of churn, you are preventing it from happening in the first place. And in the process, building a really strong fortress against other competitors to come in. Because if you don’t WOW your users, someone else will.
We have spent the last decade focusing on the buyer and the buyer journey, but everyone has woken up to the fact that customer success is the engine to incredibly exponential growth. User adoption is the FUEL to that engine.
Our platform has been designed to help SaaS businesses accelerate user adoption by scaling onboarding and improving time-to-value. Contact us to talk more about how better user adoption strategies have helped our customers WOW their users.