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The most successful Enterprise SaaS companies know that growing revenue only through new customer acquisition is the less efficient way to scale. Rather, they understand that growing revenue within your existing customer base - through up-sells, cross-sells, and expanded use - is the most profitable way to scale. In fact, Enterprise SaaS companies that grow revenue - and company valuation - by expanding revenue within their existing customer base also know the key to making this work is to focus on - and operationalize - Customer Success. This presentation - How to Drive Growth with Customer Success Metrics - is from Pulse 2014, the biggest Customer Success industry event ever and included panelists Aaron Ross, author of Predictable Revenue, Jason Lemkin of Storm Ventures, Tomasz Tunguz of Redpoint Ventures, and Brian Stafford McKinsey.
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How to Drive Growth with Customer Success Metrics
Aaron RossPredictable Revenue Jason Lemkin
Storm VenturesTomasz TunguzRedpoint Ventures
Brian StaffordMcKinsey
Aaron Ross
Author, Predictable Revenue
• #1 best-seller, called “The Sales Bible Of Silicon Valley”
• Created outbound sales machine @ Salesforce.com • Helped multiple clients break $100M in revenue• 4 kids + 4 more on the way
Lessons From $1B+: What Customer Success Isn‘t
• It’s not about customer satisfaction
• It’s not free help
• It’s not an afterthought
It‘s A Growth Driver On Par With Sales &
MarketingScalable LeadGen Drives Growth
1. Seeds = Customer Success2. Nets = Inbound Marketing3. Spears = Outbound Prospecting
Show, Don‘t Tell, How You Make Money
Example, @ Gild:1. Renewals2. Upsells3. “90 Day Adoption”4. Product roadmap feedback
Jason M. Lemkin Managing Director, Storm Ventures
• Managing Director, Storm Ventures -- $650m Investor in SaaS/Enterprise
• SaaStr – Largest Web Community of SaaS Founders – 600k+ views month
• CEO and co-founder, EchoSign/Adobe
Job Title, Company
Hire Early in Customer Success – It Always Works
• One CSM per $2m – But Hired in Advance, Not
Arrears
• Will more reps work? Maybe
• Will more marketing spend work? Maybe
• Will making your customers successful work?
Definitely. Always.
Secord Order Revenue – The Key to Long Term Success
• Customer Success is the Most Accretive
Thing You Can Do – In the Medium Term
• All great companies’ customers come from
one main source – Word-of-Mouth
• This is accelerated, and much more
measurable, in reccuring revenue models
Customer Success is 5x More Important than Sales
• Sales is only there at the very start
of the relationship.
• CEOs and Founders – Get on a
Plane and Visit your Customers,
Not Just Your Prospects
I Never Lost a Customer I Visited. 5 Visits + 2 Badges Rule.• Unhappy customers don’t (always)
churn.
• Unvisited customers that never complain
-- do churn. Need attitudinal, not just
behavioral, loyalty.
• Required: 5 on-sites / month, period. 2
badges from your customers.
If You Can‘t Measure It, It Doesn‘t Exist
• Whole point of Customer Success =
Increasing Net Negative Churn
• Need tools, processes to measure and
improve here
• Can’t be a soft science. Cannot be. No
best efforts.
Tomasz TunguzPartner, Redpoint Ventures
• I write about SaaS startups at tomtunguz.com• Redpoint works with many as-a-Service companies
including Stripe, Twilio, Zendesk, Looker, Infer, Tidemark, and Expensify
• Former PM at Google; statistics nut
Why CS Is CriticalHappy customers, better productGrow fasterDecrease capital needs
Hypothetical SaaS Company$50k in MRR50 customers at $1k ARR each$1250 in CAC, Sales Efficiency of 0.8Growing 15% m/m
How Much to Spend on CS?Expected Value = Save Rate x Value of Extension =30% x 12 months x $83/month = $298 or about 30% of ACV
Return on Investment?2 pp decrease in churn- Increases revenue by 50%- Decreases S&M spend by 30%
Brian StaffordMcKinsey
Q & A
