In the world of SaaS, building and maintaining long-lasting relationships with customers should be a top priority. For businesses to truly thrive, the leadership and customer success teams need to be aware of this, and, frankly, everyone else in the organisation, as they also have a role to play. At Rydoo, we’ve had a customer-centric approach from day one, so we’ve been able to see first-hand how much it can propel business growth.
Since Rydoo was founded, we’ve focused on designing a customer experience that keeps customers happy and involves their perspectives in the organisation’s strategic trajectory. This approach to customer relationships has been crucial to growing our client list from just a few key names to more than 200k active users worldwide, and achieving a Net Retention Rate (NRR) of 121% in 2023.
But although business leaders across industries generally agree that the customer experience is critical for achieving performance targets, the idea that customer success teams are, from a financial perspective, solely cost centres can limit the impact of what they can do for a company.
For SaaS companies, customer retention’s value — directly driven by customer happiness — cannot be understated.
In 2018, McKinsey shared the idea of “Customer Success 2.0,” detailing a new approach to SaaS customer success in which CS teams were seen as key revenue drivers for an organisation instead of focusing solely on customer happiness. The truth is that customer success professionals often have the best perspective to keep retention rates high, directly increasing profits. Research by Bain further supported this refreshed approach, highlighting that a 5% boost to retention rates can increase profits by 25%.
Because customer success teams have valuable insights into customer issues, industry changes, and evolving needs, they can do so much more. They can drive revenue growth , contributing to SaaS expansion and other financial KPIs.
CS is more than keeping customers happy
In Rydoo’s early days, we focused a lot of our customer success efforts on talking to customers, understanding their needs, and doing our best to keep them happy. But as the business has grown and our customer relationships have evolved, there is more opportunity to bring customers into our product development process.
Of course, we’re still committed to keeping customers happy; if they reach out with issues or a question about how to best use our tool, customer success experts should be able to manage those needs without hesitation. Especially for SaaS companies, customer retention’s value — directly driven by customer happiness — cannot be understated.
Customer insights are crucial to continuously improve the product and make it desirable.
But once that foundation is in place, a new world of opportunity opens up. When a customer success manager truly understands their customer’s needs, they can recommend add-ons to optimise efficiency, transforming customer happiness into revenue.
A vital partnership: how CS and Sales need to work together
SaaS leaders know the importance of tracking the right Key Performance Indications (KPI) to ensure they’re on the right path. Out of these important numbers, Net Retention Rate (NRR) stands out, due to its impact on revenue. After experiencing a 37% Annual Recurring Revenue growth in 2023, the connection between retention and revenue has never been clearer to me and my team.
But this revenue growth wasn’t simply due to our account management team — which is often thought of as the main revenue driver — but rather to the seamless collaboration between account managers, our customer success team, and our product team. Because the lines between these teams tend to blur, they must be well-rounded in their approach to working with customers.
When a customer success manager truly understands their customer’s needs, they can recommend add-ons to optimise efficiency, transforming customer happiness into revenue.
To meet customer needs, the CS team must listen carefully to what customers are saying, relay this information to the account management team, and then let the Account Manager handle the sales aspect of the relationship. While the CS team should always identify potential revenue opportunities, they shouldn’t be the ones discussing pricing or transaction details with customers.
When SaaS companies achieve this internal balance, the benefits of a well-managed customer relationship will naturally lead to increased revenue.
Reducing Churn Through Effective CS Management
When it comes to customer success metrics, SaaS businesses should be very careful when adding sales-driven targets to the mix. We see a lot of SaaS companies fall into this trap because of how the role of CS teams has changed, but customers can feel that, and it can have a negative impact.
It’s important for everyone on the team to clearly understand what their role entails and what part they play in the customer’s journey. That’s why, when I stepped into my role as the Chief Customer Officer at Rydoo, we split our customer success team into three categories: an onboarding team, a retention team, and a support team. This tactic helps us easily direct clients to the right resources and get the right people in the right roles.
Today, whenever we interview for new positions, our hiring managers ask questions that help us place new hires onto the right teams, ensuring they’ll be successful. Recognising the significant difference between hiring an onboarding manager and hiring for a Customer Success role is essential. While both positions are crucial, they require distinct skill sets and attributes to excel.
It’s important for everyone on the team to clearly understand what their role entails and what part they play in the customer’s journey.
Having the correct people in the role builds customer trust, which plays a significant role in customer retention. Having perceptive and commercially minded individuals on the team builds customer trust, which can help reduce churn and effectively increase profit.
Retaining Customers Despite Market Changes
Because SaaS businesses use subscription-based models, focusing on expansion revenue – boosting revenue from existing customers – is vital for survival. While many businesses around the world are cutting costs in anticipation of market slowdowns and other changes, SaaS companies have to work even harder to retain customers in volatile market conditions.
Not only are we seeing leaders change where they’re spending money, but we’re dealing with many mergers and acquisitions. When there is a risk of churn for any reason, but especially during volatile market periods, SaaS leaders can lean on data and tools to manage that risk. In Rydoo’s case, the CRM tool we use for customer success flags at-risk customers in a variety of different scenarios. These small insights help our team respond quickly, adapt if needed, and foster those customer relationships with intention.
On the other hand, the flags within our CRM tool allow us to predict churn more accurately and ensure it is reflected in our financial forecasts. We can also monitor other customer success KPIs, such as Net Promoter Score (NPS) or Customer Lifetime Value (CLV ) to get an even more accurate forecast.
SaaS companies have to work even harder to retain customers in volatile market conditions.
Beyond using tools to anticipate customer behaviour, its crucial to gather their insights and work closely with the rest of the team to continuously improve the product and make it desirable to customers. It’s no use for the customer to use a tool that has been outdated for years when there are more advanced solutions on the market, and if SaaS companies want to continue growing, they need to up their game.
At Rydoo, the CS and Product team work closely together to understand what the customers need so we can provide it for them. Our most recent launch, Rydoo Smart Audit, is the perfect example of what happens when the customer success team, sales team, and product team collaborate effectively.
The feature uses Artificial Intelligence to automatically identify potentially fraudulent expenses, saving money without compromising productivity, which adds value to their overall experience. Our team took these insights in mind and communicated them to Product, who developed the solution. This allows our Customer Success and Account Managers to share it with customers, supporting customer success and retention goals.
How CS and Finance Achieve Balance
Collaboration between CS, sales and product is crucial to driving revenue, but there’s another team with whom CS often collaborates on the side-lines: finance.
Understandably, finance teams see the customer success function as a cost centre. There’s no denying that the costs associated with customer acquisition and retention are quite high, especially when considering the number of people and tools they need to operate successfully as a business function.
The idea that customer success teams are, from a financial perspective, solely cost centres can limit the impact of what they can do for a company.
However, finance teams make their decisions based on data, so it’s up to the customer success leaders to use the right numbers to showcase the impact their team can have in growing the business. By tracking the right customer success KPIs, SaaS leaders can help finance teams clearly see the relationship between customer success managers, retention, expansion revenue, and the organisation’s bottom line, proving how CS can be a true revenue driver.
To redefine CS’s role within an organisation, highlighting stellar results in key customer success metrics it essential. So, if you’re not tracking customer success metrics like NRR, churn, ARR, NPS, and CLV, these are all great places to start.
As CS evolves, it’s time for companies to adapt
Today, CS teams no longer sit in call centres, fielding simple questions and administering surveys; they are now key players in the customer lifecycle. By establishing long-lasting relationships, understanding how customer needs translate to product usage, and partnering with the right internal teams, customer success is now at the heart of SaaS business growth and overall success.
By continuously supporting and engaging with customers, customer success teams are reducing churn and boosting retention numbers every single day. They’re also identifying helpful cross-selling and up-selling opportunities and even sourcing expansion revenue. With all this, it’s time for leadership teams to adjust their processes and start leveraging the full potential of their talent pool if they don’t want to leave money on the table.
As the SaaS customer experience evolves, more concrete evidence exists that these committed, hard-working teams are vital to the bottom line. Leaders have the responsibility to help the rest of the organisation see this shift; with the right approach, CS managers have the power to shift internal mentalities, improve the customer experience, and break business performance records simultaneously.
If CS isn’t a revenue centre, I don’t know what is.