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How to Drive Growth with Customer Success Metrics

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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

  1. 1. How to Drive Growth with Customer Success Metrics Aaron Ross Predictable Revenue Jason Lemkin Storm Ventures Tomasz Tunguz Redpoint Ventures Brian Stafford McKinsey
  2. 2. 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
  3. 3. Lessons From $1B+: What Customer Success Isn„t • It‟s not about customer satisfaction • It‟s not free help • It‟s not an afterthought
  4. 4. It‘s A Growth Driver On Par With Sales & Marketing Scalable LeadGen Drives Growth 1. Seeds = Customer Success 2. Nets = Inbound Marketing 3. Spears = Outbound Prospecting
  5. 5. Show, Don„t Tell, How You Make Money Example, @ Gild: 1. Renewals 2. Upsells 3. “90 Day Adoption” 4. Product roadmap feedback
  6. 6. 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
  7. 7. 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.
  8. 8. 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
  9. 9. 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
  10. 10. 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.
  11. 11. 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.
  12. 12. Tomasz Tunguz Partner, 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
  13. 13. Why CS Is Critical Happy customers, better product Grow faster Decrease capital needs
  14. 14. Hypothetical SaaS Company $50k in MRR 50 customers at $1k ARR each $1250 in CAC, Sales Efficiency of 0.8 Growing 15% m/m
  15. 15. 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
  16. 16. Return on Investment? 2 pp decrease in churn - Increases revenue by 50% - Decreases S&M spend by 30%
  17. 17. Brian Stafford McKinsey
  18. 18. Q & A

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