Desired Outcome is a Transformative Concept

desired-outcome-transformativeOne of the most powerful concepts I’ve ever come across in business is the idea of the customer’s Desired Outcome.

And if you’re thinking “one of the most powerful concepts in business” seems like a pretty hefty charge, you’re right; this concept has transformational properties.

When I first introduced Desired Outcome, I explained that this idea came about as a simple replacement for “what does Success mean to your customer?”

But it’s SO MUCH MORE than that… let’s dig in.

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The Seeds of Churn are Planted Early

seeds-of-churn-are-planted-early“The Seeds of Churn are Planted Early” is a phrase I came up with in early 2013, published shortly thereafter, and have said and used many times since.

I wanted to go on record with that – BTW, if you see the term’s use outside of my work or that of Gainsight’s, maybe send them this link – but I also wanted to give the origin story of this powerful Customer Success concept.

It was late December 2012 when the CEO of a startup that had a major churn problem contacted me.

They were losing far more customers than they were bringing in – and they were bringing in a lot of customers – and he knew this was clearly not sustainable; I could tell he was worried.

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Aligning SaaS Customer Acquisition

saas marketing - saas customer acquisition alignmentSaaS businesses can be overwhelmingly complex. If the multi-tenant, cloud-based technology isn’t enough, there’s the recurring revenue model which creates all kinds of challenges from accounting to sales compensation to funding. Then, there’s the marketing. Getting noticed on the Internet gets harder every year and almost every SaaS product category has a crowded field of competitors. And of course there is mobile, which should come first right? In my own SaaS experience, be it scaling a sales and marketing team, consulting for SaaS startups or bootstrapping my agile marketing SaaS, Markodojo, I find myself returning to a common theme that always cuts through the complexity: SaaS customer alignment.

This is the second post in a series that explores the importance of aligning the goals and actions of the SaaS customer with the goals and actions of the SaaS business. The first post in a series introduced a simple framework for understanding SaaS customer alignment and its many benefits. This post digs deeper into the challenges of achieving SaaS customer alignment in the early stages of the purchase process. Along the way, we kick-off a list of tips to help SaaS businesses improve SaaS customer alignment at every stage of the SaaS customer lifecycle.

Not Everyone Needs Your Stuff

We love our SaaS companies and we love our SaaS products. They’re our babies! But, your baby always looks cuter to you than it does to everyone else. Selling to everyone is one of the biggest causes of poor SaaS customer alignment. Some people just don’t need your stuff, and they will never appreciate the unique qualities of your baby. Selling to everyone is an ill that inflicts many businesses, not just SaaS businesses, because it is baked into the economics. When growth is the primary determinant of SaaS company value, then there is always pressure to expand your available market. Unfortunately, your available market was probably determined a long time ago when your baby was conceived. Expanding your available market generally requires a new product module, a new SaaS product or even a new business unit.

saas marketing - poor saas customer alignment

SaaS customer acquisition should focus on maximizing available market penetration, not increasing available market size, and to do that you have to have a very clear picture of your target SaaS customers. Who truly needs your stuff? Why do they need it? What do they get out of it? How many are there? And, how can you reach them? This information goes by a lot of different names: market segments, qualification criteria, pain points, buyer personae, customer profiles, use cases, etc. The important realization is that they are all the same thing in the end: tools that reinforce SaaS customer alignment. The primary difference is in the depth of data; because you tend to have more of it the deeper the SaaS customer proceeds into the purchase process.

SaaS Customer Alignment Tip #1

Create a Common Customer Understanding

saas marketing - saas customer alignment knowledgeChances are your SaaS Marketing VP has some version of market segments, buyer personae, and lead scores, while your SaaS Sales VP has some version of qualifying criteria and pain points, and your SaaS Product VP has some version of users and use cases. Do they match? Are they shared? Do they use the same language? Continue reading "Aligning SaaS Customer Acquisition"

5 Situations When Massive Churn is Just Fine

5 Situations When Massive Churn is Just FineThe mantra of “grow at all costs” – that seems to include acquiring wrong-fit customers (those who aren’t your Ideal Customers), churn be damned – has popped up several times lately and my reaction to it is two-fold.

First, I immediately thought how stupid this is and how it flies in the face of everything that has to do with customer success and what I’ve been preaching for the last few years, but also goes against the core fundamentals of building a high-growth business (of which not losing more customers than you bring in is kind of important).

But then I thought maybe this could be a fun thought experiment where we can explore five situations where having high churn is actually just fine… in fact, it’s totally acceptable.

Cool, let’s do this.

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5 Lesser-Known Ways Churn Hurts your Company

5 Lesser-Known Ways Churn Hurts your CompanyThe common refrain by SaaS experts that think business is just a math problem is that if a customer stays long enough to pay back the cost to acquire them (the metric is called Customer Acquisition Cost or CAC), they became a “profitable” customer (“unit economics” don’tcha know) and everything is great.

Just do more of that and you’ll be a unicorn.

But the fact that your customers churned out – even after becoming “profitable” – likely means you didn’t get all the value you could from them and they definitely didn’t get all the value they should have from their relationship with you (you didn’t help them achieve their Desired Outcome).

Those customers you paid to acquire – that your company put time, energy, resources, and money into acquiring – are leaving, and there’s a cost that comes along with that that you might not have considered.

Let’s explore this, shall we?

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Podcast: Getting Inside the Minds of Your SaaS Customers

LincolnMurphy-mdiHow do you define success for your SaaS customers?

While it sounds simple, it’s not.

Success is only achieved when your customers reach their Desired Outcome by their interactions with your company.

But first, you have to understand what it is that your customers want to achieve — and that can take some work.

I was recently a guest on the business analytics podcast, Million Dollar Insights, and I spoke with host Cara Hogan about how SaaS companies can begin to define and invest in customer success, from identifying an Ideal Customer Profile to reducing churn.

If you want happy, engaged customers who rave about your product, you should take a listen.

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