Building a sticky B2B SaaS business

SaaS = Success as software

The importance of retention to a B2B SaaS product is well understood.  Typically, a company thinks about building a customer success team to address churn when product/market fit and scalable acquisition have been mastered.  I fundamentally disagree with both the timing and approach.  Retention is so vital to growth, and therefore shareholder value, that it has to be built in from the off and a CS team is not the right way to begin to address it.  The primary vehicle for delivering retention and up-sell has to be the product.  Stickiness, ensuring retention, should be central to the design of the product and the business from the beginning.

B2B customers only buy your product to achieve something: they have a goal in mind.  Achieving those benefits and outcomes are what good sales people focus on.  The real challenge is that currently your product alone can’t deliver a customer’s goals.  The customer also has to change in some way.  They may need to change their processes, metrics, skillsets and/or the way they organise.  In some cases these changes may be minor; sometimes they can be significant.

Guiding customers through these changes is the role of customer success and should be an inherent part of your product.  After all, their goal is what customers are buying. It seems natural therefore that the product is designed to facilitate this.  Unfortunately, most B2B SaaS products don’t deliver.  They build a team of people to fill gaps in the product’s capability.  Worse still, this knee-jerk response is seen as the best practice.  Think that through: so called best practice is to add recurring cost to your business to address a failure to deliver on your value proposition – a product that helps customers achieve their goal.

Sticky by design

There is an alternative: build a product and a business that delivers success by design and is therefore inherently sticky.  Much of what I suggest is about expanding the product to take on tasks that are done but through other, typically people-based channels.  Anyone with experience of product support will recognise this as case-deflection: moving agent-based advice to self-service.  Let me add that I do not foresee the end of CSMs.  They will continue but in fewer numbers as more and more advice and guidance is productised.  The problems they focus will be of a higher order, requiring greater understanding of business processes and the psychology of change.

It starts with your choice of business

You have an idea for a new app and decide to build a B2B business.  I have done that and it’s not easy; especially if you have a young family to support.  Before you go all-in, ask this simple question:  does your solution address a problem that a company must fix if it is to service and grow?  In other words, is your solution a must have or a nice to have.  Sticky businesses almost always address the former.  Don’t ask yourself – you thought of the idea and of course you believe it is a winner.  Instead, ask the decision makers in businesses that would be your ideal customers.

Built on a deep understanding of customers goals and work

I think this is the part of the product design process that is most often missed.  We focus on what our app does and even how the customer uses it but not enough on their work.  Building a deep understanding of the jobs users do; what they do well and particularly why they struggle to achieve their goals guides how we can help them drive the changes they will have to make.  The goal is to develop a best practice process the customer can adopt to achieve their goals using your product.

For each use case, map out a typical customers process, highlighting the key challenges and the metrics used to track the process.  Use further research and discussions with customers to build out a best practice process.  Overlay your product’s role in this process: this will show where you need to provide guidance.

Where the CS process is at the core of the product

This is the heart of the concept of CS2.0 and as such requires explanation in depth.  I will therefore cover this in a separate article but here is a summary.

CS processes break down into the following stages:

  • Discovery: Understanding how the customer currently operates, including performance
  • Goal setting:  Establishing the objectives or desired outcome
  • On-board: Configure the app and train users
  • Track & advise: Collaboratively monitor goal progress & advise on change (see below)
  • Success: Confirm desired outcome and reset!

The key is to provide this capability in-app without making the process too cumbersome.  Many companies provide added-value content but do so outside the app.  The problem here is that the information is often out of context.  Delivering the content in-app, removes this by relating advice and guidance to what they are doing.  It will also force you to focus on the essence of the advice; the practical things customers must do to achieve value.

If this seems onerous remember this is about how you enable the customer, not additional work.  The approach is also more scaleable at higher margins than building an extensive CS team.

With tools to enable collaboration

To achieve their goals with your product, most customers will have to change the way they work.  The product’s job is to help them.  A shared workspace where you and customers can collaboratively solve problems will become part of most B2B apps to enable this.  The collaboration structure is configured around the changes the customer needs to make.

That is ridiculously easy to use

Your product might do everything your customers want but if they struggle to use it, churn will grow.  How many training sessions have you had to use Facebook or Twitter?  Software that just works out of the box is an expectation.  Recognise that different users will have different needs, capabilities and experience.  A one-size fits all approach will not work.  New or inexperienced users mayweed more help and guidance.  The key to this is a switchable interface: CS guided for new users and task based for experienced users.  Better still, let the user design the interface they want and tune it as they progress.

And exploits nudge theory to form habits

Positive reinforcement and suggestions help customers to form the habits needed to make and, more importantly, sustain the change.  This might exploit gamification, league tables and mini-case studies to suggest and reinforce good practice.  These prompts are not directional

That enables multiple use cases

Take a lesson from the Hubspot playbook.  Initially focused on inbound marketing, they have expanded their value proposition into adjacent challenges.  They now sell a broader marketing capability, sales opportunity management, CRM and they are about to enter the customer success space.  Note that most of these are ‘must-have’ processes.

Multiple use cases gives multiple points of contact in the customer.  It embeds your application in multiple  processes, making it more difficult to strip out the application.  It also helps improve net revenue retention by providing cross-sell opportunities.

That are sold in-app

Make it easy for the customer to see the additional functionality, products and services you offer in the app.  As they master their goals, show them how you other offerings can expand their success by enabling them to achieve their goals better or easier and tackle new goals.

With extensive and simple integration

The number of applications in use in a company continues to grow: no application can exist in isolation because processes are inter-connected.  Integration is therefore essential and, of course, increases stickiness.  My first SaaS business grew by providing the best CRM integration on the market.  We made a virtue out of not having functionality that competitors had in their software by stressing the importance of a single customer view and the challenges with multiple systems.  85% of customers bought Clicktools because of the power and ease of the integration.

Don’t reinvent the wheel; there are many ‘integration as a service’ products on the market.  Ensure you have a rich API that enables two-way exchange of information.  Key to this is that your product has rich and robust API’s.  A good API allows your customer to link your product into their technology stack.  This again makes removing your application more difficult to remove.

Which exploits a rich ecosystem

Your product is unlikely to provide all the functionality a customer needs and you don’t have the time and resources to build it anyway, so don’t.   Salesforce recognised this early and created the AppExchange to fill gaps customers needed.  It is now a multi-billion dollar business in its own right and many have copied the model.  You should too.  An ecosystem improves stickiness by making it easier for customers to meet their specific needs whilst you focus on your core business.  It also provides great data on what functionality customers need, guiding roadmap and acquisitions planning.

It will happen

I am confident that product-based customer success will become the dominant model of customer success for four reasons:

  • Customers are getting fed up with constant, low value interventions driven by the supplier’s need to ensure retention and sell more.  Much of what goes under the guise of customer success is really supplier success.  Great customer success prompts customers to buy because they see the value they are getting.  It is win:win selling.
  • Product-led CS scales at higher margins, generating improved financial performance.
  • Embedding the CS process into the product provides richer data on which customers achieve success and the steps they take to get their.  Making this data available to technologies like machine learning and AI which will improve the quality of advice and guidance that can be provided.  Eventually, we will reach the stage where the data is rich enough and the application won’t advise the customer what to do, it will just do it.
  • But mainly because it focuses products on the essence of customer success in a B2B SaaS context: delivering the customer’s desired outcome out-of-the-box.  That is the promise companies sell but so far the vast majority have failed to deliver.

What will stop it happening?

Too few companies understand deeply their customer’s goals and the challenges they face in achieving them.  They lack the basic understanding of what drives customer success.

Many, particularly older SaaS companies, will struggle because they lack the joined up data and organisations needed to deliver this agenda.  The biggest barrier is one that has dogged companies for years: legacy mindsets!  I can hear the naysayers already saying that this is pie in the sky, that people-based relationships are the key: that there is already too much on the roadmap.  They argue that their customers and products are too complex.  Ask the same people how they respond to constant interruptions from suppliers wanting to help them or if they understand their own goals and the plans they need to put in place to achieve them.

Most of what companies put in place in the name of customer success today is to address failings in building a business and, particularly, building a product for customer success.  I do not expect companies to solve this challenge in one go.  It will take an iterative approach; building understanding, testing and proving solutions before chopping the top off the next bit of the iceberg to appear.

Most of all, it will become mainstream because it is already happening.  I am talking to a number of startups that are taking this approach from the off.  If you are doing this, I’d love to hear from you.


Graphic from Pixabay