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Just as CRM software has become a must-have for sales forces, and marketing automation solutions like Eloqua, Act-On and Marketo have become de rigueur for marketing departments, a new category of software has emerged which serves the needs of an area which is becoming more and more critical — customer success.
As more and more companies move toward a cloud-based delivery model, fewer companies are selling packaged software solutions for a one-time perpetual license fee. It is no longer acceptable if a product becomes “shelfware” with limited customer usage, engagement or satisfaction. Today’s customers do not buy once (see previous blog post, “The Rented Business: The Shareconomy Hits IT Infrastructure”), but instead vote with their feet and quickly drop products and services which do not continue to fulfill their needs. If left unattended, churn can become a major issue for companies.
Every day companies must fight this leaky bucket problem. For every dollar they spend on sales and marketing to acquire a customer, it is doubly as critical that companies maintain these valuable customers and keep them from falling out of the bottom of the bucket. It is becoming even more critical to look for key indicators before churn becomes an issue. If churn isn’t predicted and then managed appropriately, even if customers are added at a rapid pace, revenues will flatten or even become negative. For every 2% of churn a month, an enterprise must grow its customer base by more than 30% annually in order to maintain flat revenue—and this is to maintain revenue growth at zero, my friends.
Companies today need to turn one-time buyers into lifetime customers—Customers for life. It is almost criminal to recognize there is a problem by waiting for a customer to churn-out. Vendors must adopt a fire prevention attitude over a firefighting mentality.
Sales, marketing and support teams must focus on maintaining customers forever, which means a laser focus on customer satisfaction and retention. Enabling and arming the customer success team for victory is more important than ever. In order for customer success to prosper, companies need the ability to measure overall customer health—satisfaction, product usage and resolution of outstanding issues. To manage churn, enterprises must empower their teams with the right data as well as a mandate to make changes if necessary. Beyond mitigating churn, companies must also work to identify their best customers in order to expand potential lifetime revenue with great customers.
We have found the answer, and today we are pleased to announce our investment in Bluenose Analytics.
Bluenose is developing a software platform to give businesses the customer analytics to find, keep and grow their best customers. With the increased adoption of SaaS and cloud-based business models (“By 2016, the cloud software model will account for $1 of every $5 spent on software” – IDC), enterprises are constantly challenged to find more dream customers– customers which are efficient to acquire, loyal, repeat buyers and advocates for your brand. By providing easy-to-discover insights about high- and low-performing segments, Bluenose connects customers to valuable insights and allows automated engagement to foster stronger relationships and increase customer engagement and retention. Customer analytics provide scoring engines for customer health, value and potential, as well as predictive algorithms (such as Kaplan-Meier). This approach adds value to all customer-facing teams, and in particular, the customer success department.
Retaining customers is a difficult problem because multiple areas within a company affect retention. Product and engineering must build a solution which is both useful and usable for customers. Marketing must help to position and get the word out on the product, while sales is charged with identifying and closing the right customers. Finally, the customer success team must onboard, train and support customers. The customer success team is the first stop for customer feedback and must pass critical information back to product and marketing. This is a team sport and the right tool is needed for success.
We believe the Bluenose team has the right DNA to tackle this challenge. Don MacLennan, founder and CEO, is a seasoned product executive with deep experience in SaaS and subscription model businesses. His co-founder, Todd Graham, also excelled in prior roles managing diverse areas at leading enterprise companies. Both executives deeply understand the pain that can come from churn as well as the huge opportunity inside an existing customer base.
As many companies move toward cloud-software models, it will become even more important for companies to understand their user base is a very important asset and to allocate their resources in the most efficient manners possible to drive higher ROI for themselves as well as their customers.
We look forward to partnering with this talented team at Bluenose to not only enhance customer success, but to create customers for life.