For B2B SaaS companies, understanding how your accounts are using your solution can give you valuable insights into who is likely to buy more now, who is likely to renew without a hitch, and who needs help adopting the solution. Operationalizing this insight can help your Customer Success teams drive significant increases in ARR with the added long-term benefit of reduced churn.
For example, if you have 400 customers, with an average ARR of $20,000 each, and you can identify the opportunity to get just 10% of them to increase existing spend by 20% – spend just an additional $4,000 each, that is $160,000 to the bottom line, or the equivalent of 8 new customers, without any acquisition cost incurred and those customers are now less likely to churn. Now more than ever, this insight and visibility is critical to the health and growth of your business.
SaaS companies use many reports of customer activities to run their businesses: marketing qualified leads, sales qualified leads, average recurring revenue, Net Promoter Scores, etc. But often the most critical and actionable information – how your customers are actually using your solution (ex. monthly active users, transactions, integrations, amount or types of data ingested) is either missing in action or not easily accessed on an account by account basis, in real time, by your Sales and Customer Success teams.
- Sales: Prioritizing existing accounts and identifying patterns to target high-likelihood to close accounts. Cost of Acquisition is high for many B2B SaaS companies, so getting more sales from existing customers is the key to turning the corner on profitability. Hopefully, you have a monetization model that allows you to gain more revenue as customers use your solution (if not, see my article on designing for sustainable revenue growth). If you can get visibility into key usage variables from your platform on a monthly basis, (transactions processed, monthly active users, integrations, use of other key functionality), and then show how it is trending over 6-12 months, Sales teams can use that information to prioritize accounts that have the potential for up-sell or increased deal size. For example a Silicon Valley data analytics company used this visibility to help their sales teams target accounts that would buy more and also shift more purchases to their SaaS solution. Once demographic patterns are identified in the most profitable and high growth accounts, Sales can use that information to refine targeting profiles.
- Customer Success: Growing and prioritizing existing accounts. Similarly, if the Customer Success teams have information on how customers are using the solution, which aspects of the solution they are using, and whether or not they are getting full value from it, they can start to identify patterns and then target those customers who are “falling behind” in their usage. For example, an E-learning company saw that their churn was significantly lower with those companies who opted to purchase upfront services to execute their first E-learning project. In response, the company built that service into the first-year offering, reducing churn by 5%. Customer success teams can identify critical points for intervention and communication to decrease churn and increase expansion.
- Renewals: proactively reducing renewal risk. One SaaS company analyzed their usage data over six months to identify patterns in churn. They identified two areas of functionality that seemed to be predictive: correlation data indicated that customers who stopped using these two parts of the solution were highly likely to churn in the next three months. To test this, the company prioritized and targeted those accounts, offering them support in some cases and in others a discount for six months until they were fully using the solution again. This reduced churn by 10%.
To sum up: If you give your Sales and Customer Success teams visibility into how customers are using your solution it allows you to: 1) drive efficiency in the operation because these teams can prioritize which customers to target, 2) accelerate the growth of your business by driving more sales and reducing churn, and 3) help your customers obtain more value from your solution, ensuring they remain a customer over the long term.
If this visibility can deliver so much impact – why isn’t this already a critical part of internal operations and reporting? Tune in for the next topic: How and why you should be tracking not only your customer successes but also your failures.
