Every SaaS company taps into new levers for growth over their lifetime. This has led to popular approaches like growth marketing, product-led growth, and customer-centric growth that are transforming traditional functional teams into data-driven growth centers.
But much like diet fads, which ultimately come down to how you manage calories in and calories out, these growth strategies all center around how to bring in new customers and keep them.
Whichever way you look at it, you want to bring new customers in and continue delivering value and raise each customer’s lifetime value (CLV). Eventually, with up-sell or cross-sell, you can increase the average contract value (ACV) and further fuel your growth.
This is fundamentally how SaaS companies grow. Getting there is a lot more complicated.
Product-led growth and customer-centric growth give us two ways to improve retention throughout the customer journey. These two strategies come at growth from different directions but aren’t mutually exclusive. And to maximize their impact they need to complement one another inside your organization.
After all, as we’ve said before - retention is everyone’s responsibility. And this includes both Product and Customer Success teams.
As a Product or Customer Success lead, you need to ensure that the respective teams are aligned in order to optimize efforts. Read on to learn strategies to ensure your product and customer success teams reinforce each other's work while achieving their core purpose.
Product and Customer Success (CS) teams ultimately want users to succeed, but they approach it from different perspectives. And this distance can stifle collaboration and raise the risk of misalignment in their respective initiatives - all at the cost of the customer experience.
While it’s easy for product teams to focus on feature usage and CS to solve current customer issues, neither perspective alone captures how customers actually evaluate a company.
For example, users that have high feature usage may still be experiencing friction that frustrates. Take a ‘create new report’ function. Customers may use it frequently but all the while really want a ‘customize report template’ function. And Customer Success Managers (CSMs) may hear about that friction, but may overcome it with workarounds for their accounts.
When Product and CS stay in their separate corners, it makes it difficult for either team to put together all the pieces of the customer experience. And that can cause friction in the customer experience and contribute to churn.
Because your users interact with your company across channels over a long period of time, any single event can’t capture their perspective. It’s the accumulation of these experiences that matters.
Consider that the average churn rate in the software industry is 5.33%. The 2019 Benchmarking Report on Customer Success and Product Management found that in respondents with a <1% churn rate, 87% had CS and Product teams that were fully or somewhat aligned.
Aligning Product and CS gives both departments more information to work with, enabling them to better deliver on their part of the customer experience.
If staying in separate trenches makes it more difficult to create a positive experience across user touch-points, then why aren’t more CS and Product teams aligned?
CS and Product attract different personalities, cultivate different skill sets, and have different definitions of user success. They also have different missions, or purposes. Product aims to create intuitive and innovative features and drive adoption while CS seeks to help users realize the full potential of your products.
Given that divide, it makes sense that there would be some distance and even friction between the two functions. But both have evolved significantly over the last decade to be more data-driven and to focus on the customer experience in order to drive growth. This has positioned these teams to have shared objectives within an organization.
The problem is that organizational design hasn’t caught up yet
Because of this, when customers and users inevitably run into snags, need guidance, and look for help throughout their customer journey, CS and Product teams naturally approach the problem in a different way.
A CSM may say, “I’ll call them and walk them through it,” whereas a PM might say, “I’ll fix this part of the feature to be more intuitive and put it on the roadmap list.”
The reality is that in most cases both approaches are needed and the best user experience will be a blend of human touch (via CS) and in-app experience (via Product). Finding the right balance between these two requires constant collaboration and alignment between CS and product teams.
As Kevin Meeks, Vice President, Global CSM and Renewals at Splunk said, “Customers don’t buy products and they don’t buy customer success, they buy solutions for complex business problems. If product and customer success aren’t aligned to help them, it creates extra work for both teams.”
Only 5-30% of a SaaS customer’s lifetime value comes from the initial sale. Most of a customer’s value comes much later in the lifecycle through renewals, up-sells, and cross-sells.
But as we’ve noted, friction in your user’s day-to-day experience can cause them to churn before they mature. And unfortunately, the source of this friction might not reveal itself in any one data point.
When Product and CS align, these issues can be addressed quickly. This allows the product roadmap to be more impactful and CS to focus on customer growth instead of filling product gaps. CSMs can focus on becoming your customer’s advocate, build success plans, and help users continue through their customer journey. Not fighting fires.
To align CS and product teams, you need to break down silos, make data transparent to both teams, and create regular pathways for collaboration that shorten feedback loops.
Let’s take a look at how to start this process.
The first step in making a culture of collaboration is to find commonalities in the team's approaches to user success.
As team lead, you need to spearhead this effort. The shift to collaborative ways of working needs to be facilitated by leadership because you can determine the shared objectives from the perspective of the organization. This could include churn rates, feature adoption, NPS score, and even CLV.
Without leadership’s support, any collaboration between CS and Product will be piece-meal and inconsistent and not yield the results you’re striving for.
But if successful, this work will put your organization at an advantage. After all, according to the 2019 Benchmarking Report on Customer Success and Product Management, one in three organizations have no shared success metrics between Product and CS teams and 57% don’t fully share customer data between teams.
To get started, we suggest using these guiding questions for aligning CS and Product operations described in Gainsight’s Essential Guide to Product-Driven Customer Success.
In order to work together effectively, both teams need to be able to interpret data from their own perspective. Otherwise, you’ll simply have a system of handoffs where one team sends their own conclusions and action items to the other.
Based on the shared objectives for the organization, CS and product teams need to have visibility to customer data at multiple levels. This does not mean that every system needs to be used by both teams. Instead, where data would allow both teams to become more proactive and collaborative in improving the customer experience, you should make an effort to make that data accessible to everyone.
This might only mean that each team makes reports with relevant data for the other. It could also be that some systems are completely shared. Regardless of how it looks for you, leveraging customer data across the company has demonstrated benefits.
According to Zendesk’s Customer Experience Trends Report 2020, the companies in the top quartile in leveraging the most customer data see 36% faster resolutions and a 79% reduction in customer wait times. Sharing data helps teams improve the customer experience.
Shared metrics and data set the stage for collaboration - but it also needs to be integrated into your way of working for it to last. You need to set up a regular cadence of check-ins.
Often CS and PMs are part of regular calls that sales and marketing conduct. However, there’s an increasing number of topics that CS and PM teams care about that don’t need to include a sales or marketing team member.
For example, deep dives into customer segment usage and adoption may be best for Product to present and review with CS. And discussing feedback from top customer accounts may be an ideal topic for CS to discuss with PMs regularly.
Wherever your CS and Product teams overlap in their missions, you need to create regular meetings for collaboration on those topics. Involve team members from CS and Product to identify how best to do this. This will not only create buy-in from both sides but also ensure that the cadence you create fits into both functions’ workflow.
This collaboration between CS and Product is being seen more often in high-performing organizations. The 2019 Benchmarking Report on Customer Success and Product Management found that 31% of respondents have weekly meetings with the two departments, 66% produce updates for other departments, and 29% share feedback on demand.
Outside of regular discussions, you can also foster connections between CS and Product team members. Using apps like Donut that facilitate discussion, or encouraging team members to simply reach out to an individual can go a long way.
Additionally, encourage both teams to prioritize requests from the other. For example, when a CSM asks for help, PMs should prioritize helping them find a resolution to their issue.
We hope you’ve enjoyed our Retention Rules series. Be sure to check out the first and second blog in this series if you haven’t already. Also, subscribe to receive updates on our latest content for more insights on how to achieve success in your SaaS organization.
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