More on the Role of the Customer Success Function in the SaaS Business Model

Last year, I posted a blog about the SaaS business model and the role of Customer Success, titled, “VP Customer Success — Critical to the SaaS Business Model“.

For anyone who has run, is running, or plans to run a SaaS company, you quickly learn that the SaaS model is highly dependent upon two major apertures in its revenue generation funnel; the first is revenue in the top and the second is churn out the bottom.

It’s doesn’t take a degree in rocket science to understand why successful SaaS companies must keep the top aperture of the model as wide open as possible through lead generation and the to keep the aperture at the bottom as closed as possible. That’s why Churn Rate is such a critical performance indicator for SaaS companies and why I contend that just as there must be a group that wakes up every morning worried about that top aperture – revenue generation – there must be a corresponding group responsible for the bottom aperture – customer success.

I thought it might be beneficial to follow up that initial article with an interview of someone whose job it is to keep that bottom aperture closed. I decided to ask one of the best people in this role I know – Tracey Kaufman,  Senior Director, Customer Experience at Cloud9 Analytics –  her thoughts on what it takes to manage a customer success function for a SaaS company. Cloud9 is one of my portfolio companies focused on delivering Sales Forecasting applications, initially targeted at the ecosystem. 

Tracey held a similar position in my OnDemand division at Siebel Systems and did a fantastic job there.  At Cloud9, she has kept churn rates in the low single digits on an annual basis so she knows what it takes to develop a customer success program that delivers positive results.

Q. Tracey, what would you describe is the role of Customer Success at a SaaS company?

A. The Customer Success or Customer Experience role – which is what we call it at Cloud9 Analytics – has multiple dimensions:

Customer success

  • We are involved in the full customer lifecycle starting post-contract and continuing throughout their subscription period.
  • We develop customer programs, processes and best practices including a deployment blueprint and tips for using the product.

Voice of the customer

  • We are responsible for identifying and codifying the key components of customer success and communicating them cross-functionally to inform the product roadmap, sales and marketing messaging and services processes. 
  • We collect customer feedback via interviews, focus groups and surveys.

Community development

  • We must work cross-functionally to build a Community Portal that serves as a central repository for product information, promotes customer engagement and provides value-added resources.
  • Work with Marketing to conduct customer events and Products to build a Customer Advisory Board

Executive visibility

  • We provide the executive team with a Customer Experience dashboard summarizing the overall health of the customer base.  We develop key indicators to identify at-risk customers and have established a critical account management process.


Q. What are the key objectives of your position?

A. I’m responsible for driving customer loyalty and ensuring that our customers are satisfied and are realizing measurable value from our products and services.

Q. How are you measured?

A. We are measured as a percentage of referenceable customers, subscription renewals vs churn, customer satisfaction, product adoption and usage.

Q. What are the key issues you deal with on a daily basis?

 A. The biggest issue is trying to change the behavior of the sales organization. Despite industry data showing that implementing a dynamic pipeline management process informed by analytics results in higher close rates, increased sales velocity and improved forecast accuracy, sales reps don’t like entering data into CRM systems and sales managers are more comfortable using spreadsheets as opposed to an interactive analytics application.

Q. How do you work with your counterparts in your company?

 A. I’m fortunate to work at a customer-centric company with people who truly value customer input. In general, my colleagues look to me provide them with an assessment of the health of our customer base, identify customer reference candidates for sales and marketing efforts and serve as the voice of the customer to inform the product roadmap and customer-facing business processes.

Q. How do you work with your customers? Who do you work with?

 A. I engage with our customers at many levels of their organization.  My primary contact is our key stakeholder(s), who can be in Sales Management, Sales Ops, the Executive level and occasionally IT.  I work with the business champion to:

  • Establish deployment objectives and success criteria and help them develop a plan to achieve those objectives.
  • Conduct periodic health-check calls to review the status of their deployment. Based on the customer’s disposition, this may lead to moving them along a reference track or developing a set of remediation steps to address issues. 

 I handle product training as well and that provides me the opportunity to connect with all of the end users.  For a start-up company, this kind of hands-on interaction with the end user is a great source of product input and has been critical in developing a set of best practices.

Q. What are the warning signs that concern you with respect to customer churn?

A. The first warning sign is product usage.  We receive weekly usage reports that provide information on customer logins.  When I notice low usage, I contact the customer to review the status of their deployment in order to understand the obstacles to adoption.

Q. What do you do to anticipate and avoid customer churn?

 A. Engaging early in a customer’s deployment is critical. I’ve identified the key ingredients for customer success and work with our champions to ensure that they have the necessary people and processes in place.  For example, they need to be able to articulate a clear business problem to their end-users that deploying our product will solve. Additionally, since adopting a new software solution is typically a challenge for sales people, I work with our champion to integrate the use of our product into their existing sales management cadence and focus on the carrots instead of the sticks – namely, the ways that our product can deliver results for the things that matter to them — closing more deals, faster and improving their forecast accuracy.

Q. What is the most challenging part of your job?

 A. Our product is easy to deploy and both the purchase and rollout is typically managed by the business instead of IT.   While that is a key benefit, it also means that customers often don’t have a formal approach to the deployment as they would with a large scale enterprise software application.  For example, customers purchase the product because they realize that they have a relevant business problem, but haven’t established measurable success criteria or a set of baseline metrics that they can track. Additionally, success with any software product requires broad user adoption.  Too many people take the Field of Dreams, “if you build it they will come” approach, which doesn’t often work — especially with sales users.  Rather, the business champions need to proactively communicate a set of best practices including the what, when, how and most importantly why to encourage usage.

 Q. What is the best background for someone who is chartered with Customer Success?

A. Personality is more important than work background. To be successful in customer success, you need a customer-centric perspective, the courage of your convictions, the belief that “facts are our friends”, good listening and problem solving skills and enough gumption intermingled with interpersonal effectiveness skills to tell the Executive team things they don’t often want to hear. Thus said, the majority of customer success candidates I’ve interviewed for jobs at software companies come from a Customer Service, System Integration and Post-Sales Account Management background. From a work experience perspective, it’s important that the person has a deep understanding of what customer success means — both quantitatively and qualitatively for their business, has experience working cross-functionally and can effectively serve as the voice of the customer.

  • Excellent post Bruce. I am midway through writing a post myself on who “owns” the customer in a SaaS model and making case for a Customer Success role being the overarching and critical role. This is a lot of great information.

  • Just stumbled across your two posts Bruce and they are both excellent. Great information.
    Have you written any other material since this article?  Thank you.

  • vinodhinee

    This article is great. Thanks