SaaS Customer Success: A Guide To Getting It Right

Shareil Nariman

21 min read
SaaS Customer Success: A Guide To Getting It Right

Which is easier for your business to do: acquire a new customer or retain an old one?

Most businesses, especially SaaS businesses offering complex business-oriented products, would quickly answer that retention is easier than new customer acquisition.

There’s plenty of data to back up this answer: one recent report pegged the cost of acquiring a new customer at between five and 25 times the cost of retaining an existing one.

It’s no wonder that businesses are increasingly turning to a customer success model to nurture and retain existing customers rather than focusing on new customer acquisition alone.

But what exactly should a customer success department look like in the SaaS world?

In this guide, we’ll show you:

  • What SaaS customer success looks like
  • The difference between customer success and customer support
  • The challenges and benefits facing customer success
  • The role customer success plays in SaaS businesses
  • Best practices for customer success teams

Let’s get started with defining customer success in a SaaS context.

What Is SaaS Customer Success?

In the SaaS world, customer success is the process of getting customers to first see the value of your product or service and then continue obtaining value over time through the effective use of the product or service. It’s a service in itself, related to customer support but with a longer-range goal of turning new customers into long-term, successful, satisfied customers.

Customer success has a role to play in many SaaS environments. The more complex or high-touch the SaaS product (and the more complex the onboarding process), the more value a customer success department tends to bring.

Customer Success vs. Customer Support

In general, customer success is a strategic approach to nurturing the customer relationship. It takes an active role in guiding the customer to find and experience the value of the product or service. Customer success is a vital part of the onboarding process, with specific customer success managers (CSMs) tending to the needs of specific customers over the entire customer lifecycle.

Customer service teams play a vital role as well, and they tend to be more passive, responding to issues as the customer mentions them. Customers don’t typically have a dedicated customer support representative; they get the next available rep when they chat or email or call.

Approach or mentality is another way to think about the difference between customer success and customer support. Customer success teams are proactive, seeking to educate and assist customers before issues develop into problems significant enough to warrant a ticket or a call to customer support. Customer support, on the other hand, is reactive, solving problems (often pressing ones) that the customer brings to the support team.

Learn more about the differences between customer success and customer support in our more in-depth guide: The Differences Between Customer Success and Customer Support.

The Challenges of Customer Success

Customer success is a crucial component for most growth-oriented SaaS companies. Yet a clean, efficient customer success strategy can be difficult to achieve. Many companies get tripped up during this process, often due to the following three factors. Each of these challenges can be met, in whole or in part, by implementing a strong customer success approach.

Successful SaaS Strategies Are Often Copied

Because the SaaS model itself is so successful, competitors abound in nearly every space and industry. You may already have numerous competitors. Even if not, when you follow a SaaS model and you succeed, there’s a greater than average likelihood that someone, somewhere right now is seeking to replicate the functionality that you offer.

Of course, the typical response to this reality is to differentiate: offer some core service or new functionality or better experience that the competition isn’t offering (or, even better, can’t match). But this alone can’t lead to long-term success; it just leads to a features arms race.

The value of customer success in this context is that it delivers experiences. You’re very likely to keep existing customers who enjoy how they’re being treated and who continue extracting maximum value from your solution with minimal friction.

SaaS customer success plays a vital role in delivering that experience. Yes, the product itself must be compelling, but so must the experience of learning and using that product.

It’s the companies that are winning on both of these fronts that keep their churn rates low, keeping most of their prospective customers past the trial period and turning them into long-term revenue sources.

Month-to-Month Contract Terms Are the Norm

Traditional business software sales typically relied on expensive yearlong licenses or even more expensive one-time purchases. The advantage of that model is obvious: there’s a certain degree of built-in loyalty when customers must pay up all at once (or for a yearlong license).

In the SaaS business model, month-to-month contracts are the norm. So when a first (or second) impression isn’t good, prospects and new customers have little incentive to stay.

The result? SaaS companies have much shorter windows in which to deliver that first moment of value, that “Aha!” moment that first hooks a new customer.

Intentional SaaS companies aren’t waiting for customers to encounter that moment on their own. They’re using the customer success model to help guide customers to value. This happens proactively, in collaboration with the company’s marketing and sales teams.

In short, the solution to month-to-month contracts is to impress with a quality product and proactively show customers how that quality product will make their lives better.

Creating Effective Customer Segmentation Remains Elusive

Few SaaS businesses are mono-functional, serving only one single company type in such a narrow way that all customers use the tool the same way for the same purposes. While niching down to meet specific customer demands is important, so is offering tools with broad enough appeal that they can be adopted at scale.

The problem here is that non-single-purpose SaaS solutions end up with diverse customer bases with differing use cases, pain points, and points of value. A single customer success “script” (such as driving all customers to a specific killer feature) doesn’t work.

Yet segmenting current customers successfully can be tough: pinpointing exactly why a customer values (or should or will value) a product isn’t always straightforward, and sometimes it’s impossible.

Some SaaS companies can develop multiple approaches following various “Aha!” moments common to the product, but an element of flexibility and ability to pivot will always be crucial traits for customer success reps. Assigning individual dedicated customer success agents to specific customers also helps reduce the danger of poor segmentation: agents quickly learn their assigned customers and can customize their outreach efforts accordingly rather than follow inflexible scripts.

What Are the Benefits of Customer Success for Companies?

SaaS customer success departments can solve many of the challenges SaaS companies face, including those mentioned above. But the benefits of customer success go far beyond those challenges: they can help companies grow revenue over time, gain better insights on customer behavior, and even refine their products to become more user-friendly.

Growing Revenue Over Time

Increasing revenue is a central goal at every company, and customer success teams contribute to this in several ways.

First, customer success plays a direct role in customer retention. In a SaaS model, retention directly correlates with recurring revenue. By lowering customer churn and increasing retention, customer success teams protect existing revenue.

Second, happy customers are much more likely to upgrade, bolt on, sign up for parallel products, and so forth. Whatever value-add revenue opportunities your business offers, you’ll have an easier time selling them to customers that are happy with what they’ve gotten so far — and with how you’ve helped them succeed.

Numerous other small factors contribute to revenue growth over time: your happiest customers can become your greatest product evangelists, channeling more leads to your sales team. And as your product development team improves your product based on feedback collected in customer success (more on this in a moment), your conversion rate should increase as well.

Giving Your Business Insights on Customer Behavior

You’ve heard it said that no plan survives first contact with the enemy. Software is no different: no engineer’s intended approach to using a technology product survives contact with the users.

No matter how much you beta test, there will always be a gap between how the internal team expects customers to interact with a product and how the customers actually interact with that product. Sometimes these gaps result in happy accidents, but often the outcome is frustration for the user.

With a customer success team in place, companies can gather business insights on actual customer behavior in the field in a way that support alone won’t accomplish. This valuable feedback can help you build future roadmaps, plan for new features, and adjust messaging in marketing and sales efforts.

Making a More User-friendly Product

When new user behavior or customer expectations don’t match what your business expected, something usually needs to happen. Sometimes, the right answer is customer education: CS agents can help guide the customer back to the intended use or show them another way to accomplish what isn’t working.

However, the customer isn’t always the problem. (We don’t want to say “the customer is always right,” but you get the idea.)

Sometimes the problem is with the SaaS product itself. SaaS businesses are often iterating, and you may need to sand off some rough edges or add some UX finesse. You may also need to add new features or customize solutions for specific users.

But all of this assumes you’re getting customer feedback that’s honest, frank, and actionable. Customer success teams are uniquely situated to gather this feedback, given their regular, consistent contact with clients.

By the way, if you’re leading a startup and all of this feels a little too large for where you’re at right now, we get it. You may not be ready to implement a robust customer success department quite yet, but we’re still pretty passionate that customer success isn’t just for the big corporations. To see how customer success can improve outcomes at a smaller scale, check out our Startup CEO’s Guide to Customer Success.

What Role Does Customer Success Play in Business?

The role of a customer success department in a business — where it sits in the hierarchy, how it relates to other departments — will vary based on the nature of the products and services offered, whether a company offers high-touch or low-touch solutions, and so on.

To determine what the role should look like in a particular business, start with answering this question: Which problems are customer success teams solving for a company directly?

These are three of the problems customer success teams most commonly solve.

Mitigating Churn Risk

Churn is the enemy of growth and is a persistent concern in any subscription- or recurring revenue-based business. Not all churn can be avoided: some customers will conclude that your solution isn’t the right fit no matter what you do to try to convince them to stay.

But customer success teams are instrumental in mitigating churn risk. Consider all the functions and benefits we’ve already mentioned:

  • Showing value
  • Showing empathy
  • Building relationships
  • Improving the customer experience
  • Educating and onboarding customers

These are all, in a sense, churn-preventers.

Businesses should expect that some customers won’t be able to fully connect the dots between how a product or service solves for their pain or solves for their job. Customer success bridges the gap, connecting the dots and showing customers how they’re going to get from point A to point B.

When you guide customers to their point B (their driving goal, the outcome they told sales or customer success drove them to your solution), you greatly reduce the risk of churn.

Supporting Product Expansion

Another way that SaaS companies extend customer lifetime value is by continuing to expand the features and functions of their SaaS product.

Clearly, adding features at random or as the engineering team thinks them up isn’t a strategic approach. Customer success teams can be the key to narrowing down where to expand product offerings. Using the feedback that CS teams gather from customers can provide product teams with the needed context to roadmap out future product expansions. This feedback can even outline the need for entirely new products to capture unmet market need.

Customer success teams can also leverage expansion and contraction metrics to identify which paid add-ons are seeing the most adoption and to attempt to avoid “partial churn” if a customer is canceling an add-on.

Growing Revenue After Initial Sale

Additionally, customer success leads to multiplying revenue after sign-up. Most SaaS upsell, cross-sell, and add-on opportunities follow the same payment structure as the original signup (monthly or annual recurring revenue). So an upsell or add-on creates compounded revenue growth that recurs over time. A $500 account is better than a $300 one (add or subtract zeroes to fit your context), so this kind of revenue growth is strategically important.

While customer success and onboarding shouldn’t be viewed primarily as an upselling initiative, these processes are crucial in gathering information about customer needs and educating them on available solutions. Customers can’t pay more or succeed more with better tools and add-ons if they don’t know about available options. Customer success teams bridge this gap, educating customers on further (and revenue-generating) ways to use the tools or service.

Customer Success Best Practices

Now that we’ve established the value of customer success, there’s another crucial question we need to cover: How exactly should businesses like yours set up a customer success department?

Below, we’ll outline five best practices most businesses should follow in establishing customer success departments or in refining their current CS efforts.

The content below should be valuable to businesses of any size, but it does assume a certain scale. Startups just beginning to dabble in customer success should check out our guide on what your first CS hire should do in their first three months.

Have Conversations With Your Customers

The value found in talking with customers and receiving feedback is nearly incalculable. Without customer success, businesses may not even know a customer is frustrated before that customer leaves. Having productive conversations with customers gives businesses opportunities to salvage unhappy customer relationships. It also gives teams opportunities to change and optimize products.

If you’re transitioning existing customers to a customer success model, you’ll need to have an entirely different conversation to start that process. Assume the customer is unfamiliar with the approach, and clearly lay out how things will be different under the new model.

Pro Tip

Unsure how to start these conversations? Consider these tips:

  • Work to identify the right party at your customer’s company, ideally a person who is both in a position to answer and willing to do so.
  • If onboarding is handled within customer success, schedule out your onboarding process. Make this as transparent as possible with your client: there should be no mystery about what’s happening when or why.
  • Once the onboarding process is complete, schedule regular check-in calls via phone or video chat. Make sure the customer knows why you’re calling (that this isn’t a sales call and that you want to know if they’ve encountered any issues with your solution).

Create Informational Onboarding Content

The most delicate time for any new client is the period between sign-up and reaching that first moment of value. For most companies, this period is called the onboarding process.

Whether you’re providing high-touch or low-touch SaaS products, you need informational content for your clients during the onboarding phase. Ideally, this content will be visually rich, easy to absorb, and provided in a logical sequence.

What this content looks like can vary. On-demand webinars that explain your product’s basic features (and don’t look like outright sales collateral) can be extremely effective. For higher-touch products, a live webinar or Q&A may be a better or complementary choice. Lower-touch products might rely on an email sequence instead.

Pro Tip

If content creation is a bit outside your wheelhouse, here are some ideas to get you started.

  • Create an effective email sequence using one or more of our customer onboarding email templates.
  • If you lack a media department, you can create simple webinars using screencasting tools like Screencastify, Loom, or Screencast-O-Matic.
  • The danger with any of this content is that you can’t force the customer to open, read, watch, or attend. Knowing your market and your customer is crucial: some might prefer video and others email.
  • Be completely clear and compelling in your content. If an already-paying customer thinks they’re just on a marketing email list, they aren’t going to click.

Identify What Value Looks Likes in the Eyes of Your Customers

Next, you must know what success and value look like to your customers. One frequent trap here is to assume that all customers have the same priorities and want to accomplish the same things. Unless your product is ultra-specific, this just isn’t the case.

Customer success teams must help customers reach that point of value — but first, they must determine what that point of value is.

The simplest way to do so is to ask. Discuss with each customer what their desired outcome is or what they’re needing your solution to accomplish for them.

Pro Tip

You likely already have some baseline ideas about popular value propositions, but don’t assume you’ve learned them all. Use these tips to learn more from your customers.

  • Reach out to existing satisfied customers first. Ask them to list the top two or three reasons they’ve stuck with your solution.
  • Reach out to customers you know are unsatisfied or frustrated, if you have the data. Ask them what success would look like to them and what’s missing or in the way of them achieving it with your solution.

Build a Customer Journey Map

One of the pitfalls that can hamstring a customer success department is poor planning around the customer handoff (typically the sales to customer success handoff). Mature or established businesses that are adding a customer success department to an existing, functioning matrix of departments must take special care here.

In complex onboarding processes, the line between departmental responsibilities can become muddy. Where does the sales funnel stop and the customer success process begin, and what information must be transferred at that point?

Building a customer journey map is a highly strategic way to mitigate these internal pain points.

Discuss the role that a customer journey map plays in customer success. In short, a customer journey map is a visualization or document that shows every step in the customer’s journey, from lead to satisfied long-term customer, along with everything your teams need to do at each step in that journey.

We’ve explained customer journey maps in greater detail elsewhere, so if the concept is unfamiliar to you, check out How to Build a Map of Your Customer Success Journey.

Iterate Your Customer Success Processes Regularly

Customer success relationships can’t be reduced to a single phone call, webinar, or onboarding session. These relationships are ongoing, with multiple touchpoints throughout the customer journey.

Along the same lines, customer success processes also can’t be reduced to a single event. No company gets their customer success processes 100% correct in version 1.0. And even if a company manages to do so, those processes must grow and change along with your products and your customers.

As you run into aspects of “Customer Success 1.0” that don’t quite work as well as you expect, iterate. The same goes when your product teams release new features and deprecate old ones. By continuing to refresh and update your processes, you’ll increase customer satisfaction by keeping your CS efforts timely and accurate.

Pro Tip

Try these tips to help you better iterate your CS processes:

  • Set a recurring (quarterly, semi-annually) time where key stakeholders make recommendations and update your customer success processes.
  • Create an environment where all CS agents are encouraged to send process-related feedback in the moment, which key stakeholders can use to inform their recurring meeting.

Acquiring Customer Success Tools

Crucial to the success of your customer success teams is having access to the right tools and apps. Most customer success departments will need tools from a range of categories, including the six listed below. We’ve offered a top choice in each category for your consideration:

  • Customer onboarding tools for customer success: Arrows
  • CRM software platform: Salesforce
  • Billing or finance systems with CS data: ProfitWell
  • Communication tools: Screen-sharing apps like Teams or Zoom
  • Shared resources and ecosystem software: Google Drive
  • Learning management system: SkillJar

These are just representative picks in a few categories. For a deeper dive on the top tools used by customer success teams, check out 27 Customer Success Software Tools That Teams Are ACTUALLY Using.

Measure the Right Customer Onboarding and Success Metrics

Last, your business needs to know whether your customer onboarding and success efforts are succeeding. Without the right metrics and KPIs in place, you won’t be able to accurately measure the effectiveness of your teams and agents.

Of course, knowing that you need to measure the success of your teams isn’t enough. You need to know what to measure, and you need a strong degree of confidence in the results. Most of the common metrics are qualitative rather than quantitative (you can’t exactly assign a number to happiness, even if many have tried).

These are some of the most common customer success metrics in use today:

  • Time to value
  • Customer acquisition and customer retention costs
  • Net revenue retention (percentage of recurring revenue coming from existing rather than new customers)
  • Onboarding process completion rate (What percentage make it to the end?)
  • Customer/revenue churn
  • Free to paid conversions (if offering a free tier)

Many of these metrics aren’t intensely valuable alone or without further analysis. Churn rate is only meaningful within a context, and analyzing which customers are leaving can provide deeper insights than the number alone.

If you’d like more information on truly effective customer success and onboarding metrics, here’s our full list of 16 of the most effective metrics for SaaS customer success departments.

Learn How Arrows Can Improve Your Customer Success Program

Customer success and onboarding can be tough to get right, but the right tools can make all the difference. The more complex your SaaS offering, the more complex your onboarding and customer success workflows become. High-touch SaaS companies need a centralized place for their onboarding and educational content, a solution that can automatically increase customer engagement and track their progress.

Arrows is the onboarding and customer success platform that high-touch SaaS businesses rely on to bring organization and order to their customer success programs. See what Arrows can do for your business!


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