Do you believe that SaaS should mean FREE services? Why do so many SaaS companies struggle to develop a CS model that is profitable? Some how over the last 10 years, the industry has developed a mindset that you should include on-boarding and support services free with software subscriptions. The question is why? Companies have been paying for services and maintenance contracts for over 30 years when investing in technology. Most companies think of services programs as their insurance policies to ensure the technology investment is successfully implemented and integrated into their operations.
Customers buy technology to improve their company’s ability to drive revenue streams and/or save costs, thus improving profitability and growth potential. So why wouldn’t they invest in the appropriate services required to ensure the technology is utilized to achieve their business innovations?
Most of the top software companies charge for software and services. They know the secret to growing and scaling their business profitably is to charge for services and that customers plan and budget for services to support their technology investments.
The only difference between selling software historically and today is the delivery model. Instead of shipping a CD to the customer, we send them a link to register and login. How can a SaaS company provide top quality customer delivery for free and lower the price of the software and create a profitable software company in a reasonable time frame? The answer is that is very challenging.
One approach is to include services in your software-pricing model. If you do, the assumption is that you will do a detailed cost analysis to determine the types of services and headcount hours required to get a customer fully operational and adopted into their technology. However, many SaaS companies have not done this analysis and therefore are not generating a revenue stream to support the investment in CS required. Without the proper level of investment in your CS organization it will be difficult to manage your customer base effectively to predict high retention rates and set up customers for continued investment growth in your solution.
Another approach is to have a separate set of services offerings that create flexible options for a customer depending on how much help they need to integrate your solution successfully. Remember, these programs can be designed as ARR programs.
While investing in the management of Sales, Marketing and Product is important because without a product that works and sales to acquire new customers you don’t have a customer base to manage, however, it is just as important to invest in customer success at that same time. What happens when you get the sales engine going and you haven’t made the investment in Customer Success? You end up with a churn problem in the early growth stages.
This is why it is so important to have the right level of investment in your CS model to define your customer lifecycle model, customer success programs, processes, best practice methodologies, training, support and the right content and effective online self help center. It is how you can establish a solid repeatable, high quality on-boarding experience to plug customers into. You need the momentum of an outstanding customer experience in the first 30 days. However, It takes time to build a high quality CS team, train them, certify them and create the programs, methodologies and content to ensure a high quality, repeatable experience for customers. This is what is needed to guarantee they get up and running on your technology with high value outcomes in the first 30 days. If you don’t know what your on-boarding and continuous support roadmap is that establishes ROI for your customers, then your customers will always be a risk.
So, Why not give customers options for various market segments? You could consider developing the right CS program(s) that ensures specific high value outcomes for each target market. First, you could determine what kinds of services and content that are required to deliver on those high value outcomes that can be repeatable, and delivered consistently. Then determine the right price point based on what it costs you to develop and maintain those services and content on a continuous basis that is relevant for customers. Finally, create these programs as annual services programs that customers will have the option to renew as needed.
Once the sales team is trained on how to sell these CS programs as your best practices approach, they will realize that these programs can be differentiators in your competitive market and set you apart as the experts and thought leaders in your space. With this new revenue stream, you will be able to scale the services and customer success teams required to deliver on these programs and expand on your abilities to create consistent customers for life as you grow profitably.
I welcome your thoughts and comments.
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Jackie A. Golden