The Fiction that Friction Improves Customer Onboarding

The Fiction that Friction ImprovesA few months back an article was published that talked about how this popular brain training game (I can’t remember what it’s called) made their onboarding process MORE complex – not less – and increased their active users by 10%.

While the article was very clear on when to add friction, most of the discussion around the article that I saw fell into the category of “yes, that’s brilliant! I hate my users and customers anyway, so I’ll add MORE friction to our onboarding and we’ll improve like crazy!”

Crazy is the right word… but the context is wrong.

What they should have said was “I’d be crazy to simply add friction and think for a second that the outcome would be in some way positive.”

Unfortunately, this idea of adding friction has come up a few times recently on a few Clarity calls, so I feel the need to dig into why adding friction all willy nilly is simply one of the stupidest things you could do.

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Customer Psychology and the Wasted Power of Surveys

Customer Psychology and the Wasted Power of SurveysSurveys can be dangerous if used wrong, but can be super-powerful if used correctly!

Whether it’s the Net Promoter System to gauge customer satisfaction, doing pre-launch customer development work for your startup, or one of the myriad methods we use to interact with and learn from our customers, prospects, and other people, surveys are by far the easiest to implement and most effective feedback mechanism at scale.

The problem with surveys, aside from all the ways that people generally mess them up (too many questions, leading the witness, not specific enough, poorly targeting / segmenting the audience, etc.), is that the underlying psychology of surveys is rarely taken into consideration.

Now I’ve said before that I’m not a big city psychologist, but I spend a lot of time studying psychology and human behavior as I try to figure out why people do what they do and also how to get them to do what I want them to do.

And some of that studying led me to realize that many of the behaviors we employ around surveys – especially in the Customer Success world with the use of NPS surveys – can have a very negative impact that does the exact opposite of what we’re trying to do.

In this article I explore how we use surveys and suffer the often-unintended consequences.

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How Social Proof Actually Works in Marketing

How Social Proof Actually Works in MarketingI’m not a psychologist, but I play one every day as I try to figure out why people (users, customers, visitors, etc.) do what they do… and how to get them to do more of what I want them to do.

I spend a lot more time reading books about – and otherwise studying – human psychology and the way our brains operate, than I do on specific marketing techniques, growth hacks, or the latest viral sensation.

Those things are fleeting, but the way our brain works is much slower to change.

One of the people I’ve learned the most from when it comes to human behavior is Dr. Robert Cialdini, starting with his game changing book Influence. He and others from his Influence at Work group have released other books that provided real-world examples of how to leverage the principles of Influence – or avoid them – but Influence is still my go-to resource.

Dr. Cialdini has posited that there are six principles of persuasion – Reciprocation, Liking, Consensus, Authority, Consistency, and Scarcity – each of which has the power to elicit certain behaviors (simply due to how our brains work) in those at whom the principle is focused.

In this article I want to explore the Principle of Consensus, otherwise known in marketing as “Social Proof” and in Customer Success as “Advocacy.”

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Customer Success Starts at Sales Done Right

Greg Pietruszynski - CEO - GrowbotsAfter getting a demo of their new product from their Chief Data Officer (Luke Deka) while I was in Poland, I was excited to catch-up with Greg Pietruszynski, CEO of Growbots, when I got back to San Francisco.

We talked about lots of different topics, but the post that my friend Steli Efti from close.io shared a while back – 4 Sales Mistakes That Lead To High SaaS Churn – came up.

Greg said the post was a brilliant summary of tactics that can help you focus on the right customer segments and therefore decrease long-term customer churn.

But then he said something that I thought would make a great post… it’s one thing to know who to sell to; it’s quite another to actually make the sale.

It’s yet a another to make the sale with Customer Success in mind.

Luckily, Greg agreed that this topic would make a great post.

I have a few things to say in the After Word about how churn hurts your Total Addressable Market, but until then, take it away Greg.

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Driving SaaS Customer Acquisition w/Success Metrics

saas customer acquisition metricsAs a SaaS business matures, the importance and value of SaaS metrics increase. Most SaaS businesses begin their journey down the SaaS metrics path by tracking recurring revenue in relation to customer acquisition costs. After building a solid customer base, churn becomes a priority. These fundamental SaaS metrics are all apparent in the standard SaaS profit equation below.

SaaS profit =
current customers x ( avg recurring revenue – avg recurring cost )
– new customers x avg acquisition cost

However, it quickly becomes apparent that fighting churn requires a SaaS metrics toolkit that digs significantly deeper than simple financial metrics. Operational metrics are needed that connect day-to-day business reality to financial performance. It is this realization that gives birth to the new Metrics-driven SaaS Business as it discovers the goldmine of SaaS customer success metrics and predictive analytics that enable it to eliminate churn before it begins.

But what about the other half of the profit equation? Is it possible to apply SaaS customer success metrics to customer acquisition? The answer is most emphatically yes! Prospects are merely future customers, and their success lies in the purchase of your SaaS product. It’s a SaaS best practice to provide a seamless customer experience from visiting your website to trial to purchase to use, therefore the metrics used to describe this process should be seamless as well. In all cases, the goal is to help customers become happy users of your SaaS product, i.e., successful customers. SaaS customer acquisition is merely SaaS prospect success.

saas customer success metrics kpi dashboard

Customer success metrics are equally applicable to SaaS customer acquisition,
because prospects are merely future customers whose success lies in purchase.

This is the third post in a series inspired by my ongoing collaboration with Bluenose Analytics that explores the new Metrics-driven SaaS Business based on emerging best practices in SaaS customer success metrics. The last post discussed the promise of SaaS customer success metrics for churn reduction and upselling. This third post examines their use in SaaS customer acquisition.

Improving Trial Conversions

Marketing automation vendors built an entirely new software category based on the idea of facilitating purchase by helping B2B companies engage more effectively online with the New Breed of B2B Buyer. Unfortunately, marketing automation products focus all their attention on trying to get prospects to read your content, not use your product. Continue reading "Driving SaaS Customer Acquisition w/Success Metrics"

Bluenose Enables the Metrics-driven SaaS Business

bluenose customer success metricsWe are witnessing a dramatic change in the way SaaS businesses are managed. While SaaS financial metrics, such as recurring revenue, acquisition cost, service cost, churn, growth and lifetime value have dramatically increased our understanding of the economics of SaaS businesses, they have proven inadequate for managing them. As useful as they may be, SaaS financial metrics look at the past, not the future. They can tell you that you have a problem with churn, but they cannot tell you what you should do about it. Motivated by the need to better understand churn, many SaaS businesses have been independently exploring a new class of customer success metrics and have begun to embed them in SaaS customer success workflows with the hope of preventing churn before it occurs. We are witnessing the emergence of The Metrics-driven SaaS business.

Two weeks ago, I kicked off a new blog

Bluenose Analytics Enables the Metrics-driven SaaS Business
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The Metrics-driven SaaS Business

saas business metricsMy first serious lesson in the criticality of SaaS metrics was about six years ago when I was unexpectedly stumped in a board of directors meeting. I had just presented the booking plan for the year and one of the Director’s in the meeting said that the plan was good, but we really needed to increase our booking rate. My first reaction was something like: “Well our current booking rate is pretty strong and we’re a SaaS business, so even with no immediate improvement to bookings we’ll continue to pile up revenue quarter after quarter, right?” Wrong! I had totally neglected the impact of churn. At the time, SaaS investors and executives were still getting their heads around the SaaS recurring revenue business model, so there were very few resources to turn to for support. Yet as the person in the room primarily accountable for the top line, I had to have the answer.

Fast forward to today. In 2014, we not only have a much better understanding of the financial levers that drive SaaS business success, we are on the verge of a metrics revolution in the way SaaS businesses are managed. Unlike licensed enterprise software, the SaaS recurring revenue business model offers a much higher degree of stability, measureability and predictability. These three factors form a foundation that enables SaaS executives to take a much more analytical approach to driving SaaS business success. SaaS business executives are uncovering new operational metrics that connect SaaS customer success to SaaS financial success, and in the process are creating recurring revenue machines. Today we are witnessing the emergence of The Metrics-driven SaaS Business.

metrics driven saas business machine

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This is the first post in a new SaaS metrics series inspired by my ongoing collaboration with Bluenose Analytics. This series explores the promise of customer success metrics and their role as the glue that connects SaaS customer success to SaaS financial success. This first post discusses the unique qualities of SaaS that enable a more analytic approach to management than was possible with licensed enterprise software and introduces the concept of the Metrics-driven SaaS Business.

The SaaS Metrics Mandate

Why are metrics so uniquely important in SaaS? Continue reading "The Metrics-driven SaaS Business"