Net Promoter Score (NPS) is a simple and highly effective way to determine the happiness of your customers. This one rating — how likely are you to recommend <company> — gives you valuable business insights from the need to fix specific issues quickly, to long-term trends. But what about the NPS follow-up question?

That’s where the more actionable insight comes from, because the customer is able to explain the “why” behind their rating with an open-text answer that gives you the good, bad, and the ugly of their experience. 

By customizing your NPS follow-up question, you’re better able to gain the insight you need to improve your customer experience (CX) and increase Customer Lifetime Value (CLV). We have four simple ways you can approach creating the optimal follow-up question for your specific needs.

The potential for machine learning to elevate the customer experience has everyone buzzing. AI-powered text and sentiment analysis can be an incredible solution for specific problems that CX pros face. 

But how do you know when the time is right to move to the next level of CX? Are there new tools you can purchase to step your game up? How do you know they’ll be worth it? 

There are clear signs that your CX program is ready for, and your company could quickly benefit from, text and sentiment analysis. And we’ll delve into them here.

Before we get going, some definitions:

• Text analysis takes qualitative customer comments and determines relevant themes. Software companies might see themes such as ‘feature request’, ‘bug’, or ‘pricing’. This allows you to quickly see what your customers are focusing on, and then dive in to see what they’re specifically saying about each topic.
• Sentiment analysis offers micro and macro insights into how your customers are feeling about your company and products. It determines whether the text received for each text theme is positive, negative, or neutral. It also analyzes the comment as a whole, assigning sentiment to the entire verbatim text.

Let’s look at the 7 signs text and sentiment analytics will be worth the investment for your company. 

1. You have a mature or quickly-maturing CX program.

Those of you considering text and sentiment analytics probably already have a few key elements in place:

•  A customer experience strategy and a Voice of Customer listening system
• A C-suite sponsor who has been fostering a customer-centric culture across the whole company with NPS as the guiding star
• A system asking for feedback through the entire customer journey 

Now that you have a relatively mature CX program, you’re wondering how to extract even more value out of it.

2. You receive 500+ comments per month (or you’re headed there.)

Ideally, you want to listen to all of your customers – not just a sample or the first to respond. In reality, at a certain point the sheer volume of incoming customer feedback is more than a CX program can handle without an upgrade. You know this is the case when:

1. You feel excitement and dread regarding the amount of feedback you receive.
2. You’re anticipating a whole lot more comments soon.
3. You’ve even had to cap the number of comments you receive in a day to avoid being overwhelmed with the task of organizing and responding to everyone.

Overwhelming amounts of feedback is an amazing problem to have, but a problem nonetheless. Using text and sentiment analytics, you can turn unstructured qualitative feedback, like NPS comments, into organized insight in a matter of minutes.  

Text and sentiment analytics allow you to analyze customer feedback using Natural Language Processing, looking something like this:

By combining text and sentiment analytics, you can search negative comments and quickly assess, for example, that 80% of your negative comments are about pricing. Or 45% of your customers in the Northeast region are talking about slow delivery times. That summary lets you know where to focus resources, and how quickly you need to make the change relative to other company priorities.

3. You’re sitting on a goldmine of feedback, but unable to get actionable insights.

Do you have a backlog of comments waiting to be read and sorted? Or maybe you’ve skimmed a few comments to answer the urgent ones, but you keep putting off the others.

One of our clients came to us with NPS survey comments from thousands of users. But rather than mining that information, they were running focus groups to prioritize feature requests because it was easier. They were duplicating efforts to get information they already had but couldn’t access and act on.

“The two biggest mistakes [in CX] are not doing qualitative research in the first place and then not putting it to use.” –Morgan Brown, Product Manager at Facebook and coauthor of ‘Hacking Growth’

If you’re feeling this pain, it’s time to automatically mine the insight from that pile of comments you’ve been sitting on. Turn anecdotes and hunches that you’ve got about your customer experience into evidence-backed insight by using. And do it quickly with text and sentiment analytics.

Source: CXInsight™ Dashboard

Sliced and diced organized feedback is easily available with many platforms that offer text and sentiment analytics. Doing this can help you understand the root cause of trends – like the needs of different customer personas or geographic regions – more comprehensively.

4. Manual feedback organization & categorization is insightful, but painfully slow.

While some customers duplicate efforts between data gathering and focus groups to get insight, other CX pros just bite the bullet and spend hours reading customer comments, labeling them, and funneling them into an unwieldy spreadsheet. They’re understandably frustrated by how difficult it is to get actionable insight.

By using text and sentiment analytics, humans can get huge quantities of customer feedback sorted and analyzed at the push of a button. Better yet, computers don’t have bad days or lose focus.

Once organized with tags, your time is freed up to look at the themes and trends that arise from the noise, then create actionable strategies based on those insights.  

Now you can jump straight into action and the interns can work on more interesting, valuable projects!

5. Your CX program lacks a real-time issue detection system.

An important element to providing a good customer experience is making sure any issues are handled quickly and efficiently. If you can detect and address them before your customer has a real issue, your CX program has paid for itself.

One of the benefits of having text and sentiment analysis is that your data and insights are updated in real-time. This means you have a new issue detection system.

Source: CXInsight™ Dashboard

This works best for a more mature customer feedback program with an established baseline, or status quo. For example, you know that on any given day, in any given geographic region, about 10% of your comments are tagged with ‘out of stock’ as an issue. When you check in and see that in Texas, 25% of comments coming in are tagged ‘out of stock’, that raises a red flag. You can immediately dig into specifics, read through the verbatims, and send those comments to the right people for follow up before the issue blows out of proportion.

The CX dream of being proactive in solving issues can be achieved with the help of automated organization of qualitative feedback.

6. Your internal teams aren’t agreeing on CX priorities.

It’s a given that successful companies focus on customer needs and experiences. The question is: is everyone at your company seeing the same information in the same way? If not, you’re wasting time and costly resources with competing priorities, and it is definitely time to invest in tools to fix it.

By having your CX tech parse the text and sentiment of your 1K+ daily inputs of customer feedback, you can democratize the information and insights across every team at your company. And that will ensure team leaders can quickly align to address the right priorities. So product development and customer support will be on the same page, and features will get developed (or possibly de-bugged) to meet the most important needs of the customer.

How does that happen? Feedback from every customer touchpoint is analyzed, from in-product surveys to emails. In this example, support ticket subject lines are auto-categorized and everyone from support to service to product to the c-level can see what issues are hot items to address.

Source: CXInsight™ Dashboard

Looking at the text analytics, it quickly becomes apparent that 15% of the support tickets are related to bugs that need to be addressed. On the proactive front, product could also delve into comments tagged “feature request” and focus on user concerns about UX/UI.

7. You need to demonstrate the ROI of your CX program.

Companies are eager to hop on the CX bandwagon, but it can still be a fight to get the proper resources to make a CX program thrive. You’ve probably already shown the C-suite the correlation between CX and revenue growth, but there’s pressure to squeeze a little more ROI out of what you’ve established. 

Investing in a tool that pulls ROI from data is an expense. But it’s a more strategic spend than, and offers more immediate follow-up and action, than  performing passive data review and organization. It’s also a moredirect value-add and much less expensive than hiring a third party human operation. 

The cascading effects throughout the organization will increase ROI in the long-term as well.

• Product teams can prioritize and build with evidence-based confidence. 
• Marketing teams will gain an understanding of different personas and see customers excited to spread the word about your business. 
• Support and operations teams will have early warning of potential issues and have more context when dealing with problems.

In the end, qualitative data is crucial to extracting value out of CX initiatives. Having more data from engaged customers should not be an obstacle. 

Is this the point?

Are you seeing any of these 7 signs when you look at your company’s CX program? If so, do a cost benefit analysis. Typically, once your program has matured, the cost of tools that create actionable insights out of customer feedback are far cheaper than the cost of misaligned resources and long delivery times. Text and sentiment analytics make the resources you put into CX initiatives efficient, and turn the large quantity of unstructured data into an advantage by mining insight that would otherwise sit in limbo. Move this tipping point in your favor.

Financial markets are sliding, a pandemic is spreading around the world, and every company is scrambling to respond to quickly changing circumstances. Planned investments that were intended to drive growth — like hiring, media spend and software purchases — are being reevaluated as business leaders are forced to triage what they need to do to weather the storm. We’re all in survival mode, but survival is about prioritizing what is most important.

And what is most important to a SaaS business at this moment?

It’s not toilet paper.

It’s our existing customers.

Now more than ever, customer experience is job #1. 

We think the SaaS businesses that focus on retaining customers and building loyalty are the ones that will survive and thrive in this uncertain climate. 

Of course, the question then becomes how do you retain customers and build loyalty?

Shift from a growth mindset to a retention mindset 

This may not hold true for every business we work with – Zoom, GrubHub, and the e-commerce toilet paper company Who Gives a Crap are having quite a moment. But most businesses are facing contraction because people don’t buy in a panic. Budgets are being trimmed everywhere, and customer success and renewal conversations must be deeply empathetic to this.

So, if a customer is achieving goals with your software, and you have other features and capabilities that will make them even more successful in 2020, then, by all means, paint a bold vision of an expanded partnership. But, if that isn’t the case, and they want to reduce or leave, don’t come across as tone-deaf. It’s likely that everyone in their company has been asked to find ways to trim spend.

That means that it’s even more important to know that your internal champion can confidently advocate for you – because you are delivering value. Step up your customer success initiatives. Make sure you and your clients are recording successes. And don’t be afraid to change the conversation from trying to get the customer to buy more, to showing him or her how the company can get more value from what they’ve already purchased.

Listen to your customers even more carefully – and respond

Even when you’re focusing on your existing customers, don’t make the mistake of thinking they’re the “same” customers – they’ve changed. We all have. Because our needs change in a downturn. Companies that are on the pulse of those changes by proactively listening are better poised to adapt, innovate, survive, and serve.  Make calls to key customers.  It’s even more important now than it usually is to listen and respond to concerns quickly. 

Take care of your people

Your employees, your teams, are the key to your customer relationships. They may be concerned about their health or the health of their parents, or grandparents. They may be struggling to find childcare options if their schools are shut down. They may be stressed about their 401K balance. Whatever it is, empathy and flexibility are going to be key – and so is prudent business planning. How can you plan to support your employees through these challenges?

Be a good citizen

For the collective good, and for the good of your brand, it’s so important right now to prioritize the good of the community and show conscientious, caring judgment. To do this, you may need to make some tough calls that hit your short-term profits, but protect people. We’re all making sacrifices – the New York Times dropped its paywall for coronavirus news and Zoom is giving K-12 schools free video conferencing. Is there a way your company can help people in need right now? You’ll be remembered for it. 

Establish a company policy of flexibility

Just as you have to be flexible with your employees and their quickly-changing challenges, you also have to be flexible as a company. For example, if a client calls customer support to request an extended payment plan, empower your support team to deviate from your standard policies and allow it. Be open to changing how you usually do things if it makes sense and shows compassion. You’ll likely prevent avoidable churn.

Jessica Pfeifer, Chief Customer Officer at Wootric, shared this recent story with our team:

“I just had a customer reach out about putting their subscription on hold. They operate in the hospitality sector which has been particularly hard hit. We offered to work out a plan to enable her to continue to get customer feedback during this critical time. Her response was ‘That would be amazing! Thank you!’ I know we’ve strengthened customer loyalty.”

Customers notice the companies that support them in difficult times, so be flexible when you can, and you’ll build loyalty for the future.

Close the loop with customers when they offer feedback

This may be built into your CX program already, but if not, now is the time to double-down on listening and responding to customers. Ensuring your customers feel heard and cared about in times of high stress carries more weight than when times are easy. So if a customer responds to one of your surveys, be sure to close the loop and let them know you value their time and will take appropriate action. 

Customer success managers can reach out one-on-one via email or phone, but that isn’t always practical. Closing the loop can be automated when you have your feedback readily available in systems like Intercom or Salesforce. Here’s a quick guide on how to automate closing the loop on customer feedback.

Improve customer experience at customer journey touchpoints

In SaaS, this often means using an NPS survey to gauge overall loyalty and surface any issues that may affect renewal. To get serious about retention, consider asking for feedback at critical SaaS journey points–after onboarding, support interactions, and during product/feature use.

This isn’t about quickly adding a slew of new surveys overnight; it’s about prioritizing improvements to moments that, if not successful, can sow the seeds of churn. Now is the time to double-down on understanding and improving the customer journey.

Also, remember to analyze the qualitative feedback from these surveys. A customer who is “satisfied”  but mentions a concern over price may now be at a higher risk of churn.

Focus product development on reducing friction for existing customers

In the software business, product experience is the all-important driver of customer experience. So, to foster customer loyalty, think about what you can do to create more ease for existing users.

Blake Barlett at OpenView says product-led growth is the key to success in the End User Era. In this era, end user annoyance spells opportunity. Think Slack vs. email, or Zoom vs. Hangouts.

In financially uncertain times, a product-led development philosophy can hold the key to faster end user adoption and increased retention. Tune into those day-to-day annoyances – they hold the key to retention.

Accelerate end user adoption

Happy end users make your application stickier, so if your champion is struggling to persuade others in their company to use your platform, you need to know why. You may need more in-app cues and guidance to make tasks easier. What is “so annoying” about your product? Ask your customers that, and you may find exactly what you need to reduce friction – which will pay off in retention.

Now is the time to deepen relationships and partnerships with promoters

Guneet Singh, Director of Customer Experience programs at Docusign, spoke about this in a recent Voice of the Customer webinar. He looks for champions among his promoters who have a common pain point, and then brings them together in councils that engage with DocuSign’s product team. Through this customer advocacy program, his customers learn from each other, get a first look at new product features, and provide valuable insights for the DocuSign product development roadmap.

How do you begin a customer advocacy program like this? Pay attention to customer requests and “start with small wins,” says Guneet. “If you complete the feature that a customer asks for, by listening and acting on their words, you’ve won that customer for life.” 

We couldn’t agree more!

The most valuable commitment we have is to our customers. And as much as we work to grow, to scale, to expand — it’s times like these where we have to remember to appreciate the people who already support us and show them support too. We’re all in this together.

“What grade did you get?”

Do you remember getting asked that question in grade school? Or maybe you were the one asking it? Humans like to know how they’re doing compared to everyone else.

This carries over into customer experience as well. At Wootric, we advise companies on setting up an effective Net Promoter Score (NPS) program. We get asked questions about NPS industry benchmarks all the time.

In general, we believe focusing on an external NPS benchmark is not incredibly helpful.

The Net Promoter System is the quantification of customer loyalty and the process for improving it over time. The power of this system lies in the analysis of feedback and the action taken based on that analysis.

However, net promoter score benchmarks are still useful in certain cases, which is what this article is all about.

If you’re unfamiliar with NPS, here’s a quick rundown:

Net Promoter Score (NPS) is a customer loyalty metric between -100 and 100 that captures the propensity of a company’s customers to attract and refer new business or/and repeat business.

NPS also stands for the Net Promoter System®, which was built around the Net Promoter Score. It is a model that ties a corporation’s bottom line to customer happiness and loyalty.

In the NPS survey, customers rate their likelihood to recommend your company on a scale of 0-10. To get your Net Promoter Score, take the percentage of people who are happy and willing to recommend your product or service (those who respond with a 9 or 10) — “promoters”– and subtract the percentage of people who would not be willing to recommend your product or service — (score of 0-6) “detractors.”

For example, a +50 NPS means that the company has more than 50% promoters and less than 50% detractors, so generally an NPS score of +50 is, indeed, great! You may see scales out there that say +30 is a decent score, and that +80 or greater is the ultimate dream score.

To learn more about NPS, get the ebook, The Modern Guide to Winning Customers with Net Promoter Score, which teaches how to modernize your NPS program for growth and higher loyalty.

Net Promoter Score industry benchmarks

There are two different types of NPS: absolute and relative. Absolute NPS refers to the NPS in and of itself, and comparing the score with what is generally considered a “good” or “bad” score. Relative NPS is taking into account the average NPS within an industry, which takes into account the factors that could affect an average Net Promoter Score, and can change the NPS benchmarks you set.

While an absolute NPS goal is nice and simple, it can be helpful to take a look at what others in your industry have been able to achieve, since every industry is different and has unique relative NPS results. The relative Net Promoter Scores generally achieved in each industry help construct what are called the NPS industry benchmarks. NPS Industry benchmarks give you a way to evaluate your NPS relative to your competitors. They help control for factors that often create major differences in what is considered a good NPS score.

Oftentimes, other companies in your industry have established an average NPS for you to use as a net promoter score benchmark. If you make smartphones or other tech hardware, for example, companies like Apple have been tracking NPS for years.

To get averages and examples from your industry, try reports from the Fortune 500.

NPS Benchmark variance between industries

Let’s take a look at some examples of net promoter score benchmarks according to your industry.

Let’s say you have an NPS of +50. As we explained, that’s already pretty good! But if you’re a department store or specialty store, you are actually below the NPS benchmark (+62) for the industry.

Walmart pharmacies have an NPS score of +32. Considering the highest score is +100, you’d guess that they’d be lukewarm with this score, but I’m sure that the folks in charge of customer experience there are actually ecstatic. Walmart pharmacies have one of the highest NPS scores within the drug store & pharmacy industry.

Compare this number to the software industry, where +34 is the average. Becoming a leader in the software industry would mean having an NPS in the +60 range, like Salesforce (+66) and Adobe (+62).

Caveats for using NPS industry benchmarks

Unfortunately, NPS benchmark programs aren’t always as helpful as you’d hope. This comes down to the nature of surveying for feedback. There are so many contributing factors to an NPS benchmark, such as:

• Which channels you use to survey customers
• Demographics and habits of your customer base
• Customer tolerance levels
• The size of your competition
• The difficulty of building brand loyalty
• External circumstances (such as a global pandemic)
• When and how often you ask
• Whether you have enough data to be statistically significant or not

All of these factors can have varying effects on your overall NPS score. For example, your competitor may ask the NPS question within the context of a longer annual brand survey, while you survey using just the NPS question after a transaction. These will have different consequences for the feedback you gather. If you don’t have enough feedback coming in, your NPS may vary significantly from quarter to quarter or month to month.

Bear in mind, a ‘good NPS score’ doesn’t just depend on your industry, since it’s not difficult to game the system. It’s not always fair to compare your NPS score to another company’s NPS score because you don’t know their survey methods, or their employee compensation plans.

When competitive individuals are incentivized based on NPS score, things can get ugly.

A motivated person or company could improve their numbers by letting their customers know that positive feedback would mean a lot to them or by only showing the survey to customers who are positively inclined. They might offer incentives to customers to complete the survey. Clearly, the feedback received from these methods will lead to an inflated NPS score that is not a useful comparison for those using a more objective survey process.  

Setting an NPS goal if you don’t have a benchmark

If no Net Promoter Score benchmark exists for your industry, benchmark against yourself.

The great thing about NPS is that it is an actionable metric. It’s a number that you can rally the company around as a north star to guide improvement efforts.

“A good NPS score is one that is better than the last.”
– Jessica Pfeifer, CCO & Co-founder of Wootric

Remember, NPS isn’t just a score. It’s a system that’s meant to drive business improvement in product and customer experience. It helps you identify and close the loop with unhappy customers and solve their specific problems in real time.

Your goal is to boost customer loyalty and retention, and that happens by reading verbatim comments to understand the why behind the scores you receive. By making changes based on customer feedback, and responding quickly to detractors, you will naturally see your NPS improve. And gains in NPS correlate with revenue growth.

How to report NPS

After all this, you will want to report numbers to the rest of the team on a regular basis. NPS should be shared along with other monthly or quarterly metrics like revenue, new customers and customer churn.

We understand that, so here’s what we recommend:

• Instead of fixating on your score in the absolute sense, we recommend focusing on improving your score over time. Understand NPS as a trend over several periods, like if you were looking at a stock’s price.
• Determine the business goals of your NPS program, then report NPS in relation to the goals. For instance, if you are trying to improve retention, report NPS alongside churn data.
• Pay attention to trending topics in your verbatim responses. Reporting these topics will help everyone understand what’s important to your customers, and the pain points they experience. Share what customers love and what they don’t love about your company with internal stakeholders. Then you can work to make those points as frictionless as possible. 

Note: For startups, be sure to read and respond to every single comment. As you grow, you’ll start needing aggregate and to pull themes from customer comments. To automate that process, check out AI-powered text and sentiment analysis.

• Segment your Net Promoter Score by relevant customer groups. For example, this could be by user role (in the SaaS example above), geography, or size/frequency of purchase–whatever drives your business. This will help you pay close attention to groups that are critical to your business success. Learn more about segmentation here.
  
• If you want to compare your score to a competitor, choose a company in your industry that you admire and use their score as an aspirational benchmark. Many companies have volunteered their NPS scores to research and reports such as this one by the Fortune 500.

Measure NPS and work to improve it over time.  Dig into customer comments and close the loop with customers. You will learn their needs, and their pain points, and have plenty of guidance to make those improvements. Both your NPS and your customer retention rates are sure to improve. 

As the co-pilots of Wootric’s product team, we’re excited to share all the progress we have made in the past twelve months, and also give you all a peek into what’s on the immediate horizon for Wootric.

Expanding our offering while boosting customer happiness

At Wootric we prioritize people, product, and process–in that specific order. At the end of day it’s people who build products and support our customers; process is there for people to be productive, not to get in their way. We are very pleased to see that in this competitive job market we have not only retained all our team members but have also grown the team to deepen our machine learning and big data prowess.

As you can imagine, we work hard to “walk the talk” of boosting customer happiness.  I’m happy to report that Wootric’s Net Promoter Score has improved 7 points year over year. We are especially proud of this trend as we have grown (rapidly) and the capabilities of our platform have developed exponentially. As we drive innovation in customer feedback management, our own customers — like Docusign, Mixpanel and Hootsuite — are seeing the value of our platform and the way we prioritize their success.

Ensuring our customers have the insights they need to improve customer experience

Now let’s talk about product. One sentence that would describe our evolution this past year? We have evolved from an Net Promoter Score survey tool to a platform that effortlessly turns all of your customer conversations into insights. In a world where customer experience is the new battlefield for competitive advantage, this empowers you, as a business, to shift from product-led growth to the holy grail of customer-led growth.

Here are new features to back up this evolution claim:

• New survey types: Customer Satisfaction Survey (CSAT) and Customer Effort Score (CES) Survey, in addition to NPS
• New survey channels: Email and SMS, in addition to in-app web and mobile
• New Integrations: Salesforce, Mixpanel, Intercom, Slack, Zendesk, Webhooks
• Email Templates: Mailchimp, Intercom, Marketo, Hubspot, Salesforce Pardot, PersistIQ, Zoho, Amity
• Survey respondent profiles
• API your way to almost everything
• Big Data warehousing through partnerships with Stitch Data and XPlenty
• Accessibility improvement.  Wootric surveys, now compliant with Section 508 standards, can be filled out by the visually impaired — highly valued in education and government services.

Among these features, if we were to pick the two that most impact our customers’ growth, they would be (a) launching our Salesforce Managed Package on the AppExchange and (b) the integration with Intercom. Both Salesforce and Intercom are two-way integrations in which Wootric enriches your CRM and Customer Support software with customer feedback and at the same time allows you to trigger surveys to customers based on events in Salesforce and Intercom. This has a huge impact on renewal and upsells because your sales and success teams have more context into what your customers think of your product and services.

It’s been a fun challenge to keep a balance between new feature development and upgrading our infrastructure to handle our growth.  Our already ‘big data’ platform has exploded this year, with 300% growth in survey responses, and over 800% growth in REST API calls.  (To reiterate: API all the things!)  Our tech stack now includes Elastic Search, PostgreSQL, Redis, and several Amazon (AWS) and Google Cloud (GCP) services.  Our infrastructure and devops are ready to handle the growth we foresee in next 12 months.

But that’s all in the past!

Our current focus is to add more intelligence to our service.

We are working on being smarter about who to survey and when to survey so that you can converse with more of your customers. And, once we have your customers’ feedback, we will provide better and more automated insights through the use of artificial intelligence.

AI-powered insights trained by millions of survey responses

Because the survey data we receive is unstructured text, it’s a great use case for the meeting ground between machine learning and Natural Language Processing (NLP). Besides leveraging the Google Cloud Platform, we are creating our own industry-specific machine learning algorithms that analyze open-ended human-generated feedback.  CX Insight™, our text and sentiment analysis product–trained by millions of survey responses–focuses first on SaaS, e-commerce, and media use cases. As with all things Wootric, this has been a customer-led effort. Our customers expect that AI-powered insights will provide them with a game-changing ability to improve customer experience.

Wootric is at the forefront of a revolution in customer experience intelligence and we look forward to sharing this journey with you.  Thank you.

BOOK A DEMO
SEE OUR CUSTOMERS

If your SaaS company hasn’t leapt on board the Customer Success train yet, it’s likely due to “focusing on other things,” or “we don’t have the budget for that right now.” But prioritizing a customer success program pays big dividends in returning revenue – so much so that it’s gaining the reputation as the ultimate growth hack. That’s not hype – Customer Success is how SaaS businesses raise retention rates and increase referrals while paving the road for cross-sells and upsells.

Why Should You Establish a Customer Success Program?

If you’re focusing most of your resources on acquisition, you’re missing out on one of the greatest growth engines at your disposal.

Customer Retention

Acquisition may get the ball rolling, but retention is where the big money is. Big, sustainable money that costs less and less to make. And, this alchemy only works when customers achieve the successes with the product or service that they’d hoped for upon signing up. Customer success programs are large factors in reducing churn and helping increase long-term customer retention.

Expands Business

Statistically, successful customers:

• Spend more money over time
• Are highly likely to consider additional products and services
• Serve as enthusiastic brand advocates that reduce the Cost to Acquire new customers (CAC)

Easier Future Acquisition

That last point, customer evangelism (aka. brand advocacy), is the most significant benefit of Customer Success and the one that leads to spending less on acquisition efforts, while acquiring more customers.

When your company understands what success means to your customers, then ensures they receive what they need to achieve it, those customers respond – on Facebook, on Twitter, on Yelp, on Linkedin, and in person. They become not just your fans, but your best salespeople, helping your company grow.

But how do you start a customer success program from scratch?

First, let’s start with what customer success really is, because any time a term becomes a “buzzword” it tends to lose its original meaning.

What Is Customer Success?

Customer Success is how you help customers achieve their desired outcomes, even if those outcomes are outside of the product or service you provide. 

With this as our definition, Customer Success is really about one thing: Giving your customers everything they need to be successful with your product – within and outside of the product.

For example, if a person downloads a SaaS budgeting app, they don’t want to budget per se, but they do want to pay off their credit card debt and start saving for a kitchen remodel. That is what success means. Not using the app. Not budgeting. But finally running your hands over smooth quartz countertops and showing off that Big Chill refrigerator when the neighbors come over.

That is success. Your product or service is merely the means to get there.

Sure, you can pile more tasks onto your Customer Success department, like planning upsells and cross-sells and customer referral rewards programs. But if you don’t have that one thing in place first – their success – you can’t move onto anything else.

It’s why I advocate building Success Milestones into Product Development’s user flows.

What Are Success Milestones?

Success Milestones are when customers receive value – value that they recognize – from using a product. It’s when that budgeting app customer saves their first thousand towards that Big Chill ‘fridge.

Building Success Milestones into your user flow is a useful way to chart what’s happening within the app and link it to wins happening in real life.

For businesses looking to build a Customer Success program from scratch, this is a key concept. Your process begins by understanding your ideal customer’s real life.

You need to understand how your product fits into their lives, helps them achieve their real-life goals, what frustrates them, and what blocks them from achieving those goals.

Which leads us to Step 1.

How to Start a Customer Success Program

Step 1. Get to know your ideal customer really well (through qualitative data)

When your company was merely a gleam in your founder’s eye, there was (hopefully) a process in place to identify ideal customers and find out what problems they needed to solve, which pain points felt the worst, and what they deeply wanted to achieve.

If your founder followed the Lean Startup methodology, customer interviews happened to ensure product-market/problem-solution fit well before Product Development set to work.

But, if your company skipped those steps, you’ve got a lot of qualitative data to catch up on.

Do not panic. You don’t have to start at the beginning, because you have a product and customers already. What you need to do now is focus on the segment of customers who fit into your ideal customer profile.

Your ideal customers are: Customers who love your product, use it, and tell other people about it because they love it so much.

You can identify which of your existing customers fall into this category by tracking brand mentions, but you can also just ask.

When it comes to identifying your best customers, a Net Promoter Score survey is fast and efficient. You can send the survey via email or within your app (a less disruptive option), and ask existing customers “On a scale of 1 through 10, with 10 being most likely, how likely are you to recommend this product to friends and colleagues?”

Anyone who scores a 9 or 10 is a “Promoter.”

Promoters are the people we want to speak with when developing Customer Success Program strategies because we know, for certain, that they have problem/solution fit. Not all customers do. Customer Success can only do so much, and if there isn’t that problem/solution fit from the start, you can’t manufacture it. So you have to identify it, attract more of it, and nurture it.

Customer Success is as much about identifying customers likely to be a good fit as it is helping them achieve their ideal outcomes.

Ask some of your Promoters – those who scored 9s and 10s –  if they’d be willing to speak with you, or at least fill out a detailed open-ended-question survey, so you can confidently identify your ideal customer’s needs, wants, pain points, ideal outcomes and more. This qualitative data will allow you to create solutions that speak uniquely to them.

Sarah E. Brown, Head of Customer, Community and Brand Marketing at ServiceRocket, uses a Voice of Customer program with NPS to understand how well they’re delivering outcomes for customers and improve marketing at the same time:

“VOC is executed through our marketing function in conjunction with our Customer Success team, and together we are able to identify high NPS customers as brand advocates and follow up with them to create high-value marketing collateral like co-hosted webinars, case studies, podcasts and video testimonials.

Through our NPS review program, we have an incredibly clear picture into our customers who are using our product to achieve successful outcomes. Then we channel them into becoming vocal advocates who bring in new customers and help current customers love our software even more.”

Step 2. Build Your Team

Once you understand who you’re serving and what they’re trying to achieve, you need to put your team together. Sure, you could hire an experienced Customer Success manager or consultant, but you can also look inside your own building – at the Sales department.

A good salesperson already knows your product and your customers, which makes for a relatively easy transition. The key, however, is to shift the sales mindset from selling the product to setting up customers for success.

That can be a substantial challenge. Because sometimes, a customer’s success won’t come from being upsold, and it can run counter to the salesperson’s gut instincts to not jump at an immediate sale, and say “Hey, your company is on the smaller side. I don’t think you need this additional service yet. So let’s focus on how we can help you grow to the point where this service would be really useful.”

Customer Success can, sometimes, mean delayed gratification. But the loyalty you build by giving advice that is 100% to the customer’s benefit is priceless.

When assembling your Customer Success team, there are a couple more very important characteristics to watch out for: You’ll need people who are good team players and great communicators, because the most effective Customer Success teams are those that work closely with Sales, Service and Product to find ways to bridge success gaps.

Step 3. Determine What Structure You Need to Help Customers Reach Their Ideal Outcomes

If you have the resources, investing in a full-service Customer Success platform, like Gainsight, is a great way to begin. But these solutions can be out of reach, budget-wise. If that’s the case, then you may have to DIY and create your own processes.

Things you’ll need to consider:

• Customer segments – do you have one “ideal customer” or an “ideal customer” for each user segment?
• Do your user segments require different levels of help to reach their ideal outcomes? Often, one segment of users needs a higher-touch approach than another segment (and no, you shouldn’t base higher-touch vs. lower-touch solely on how much the segment pays – a lower paying segment might have high-paying potential with the right nudge).
• What are the desired outcomes for each segment? Do they require different resources to reach them?
• How do you intend to track customer health? What can you identify as “red flags” of disengagement?
• Do you have a way to mark different customers according to their life stage – and whether/when they are reaching their Success Milestones?
• If you have an existing product and the ability to track user behavior within it, where do users drop off?
• Is there a process in place to identify when certain Success Milestones are reached and present opportunities for logical upsells?
• Where are success gaps happening for each segment? (A success gap is the space between what your product does and the user achieving his or her desired outcome).

Step 4. Must-Have Metrics

1. Customer Lifetime Value (LTV) is the foundation for a strategy to increase ROI and sustain growth, but its shortest definition is: The revenue earned from a single customer over time. LTV includes Cost to Acquire a new Customer (CAC) and Churn rate – how quickly customers leave. However, most calculations fail to include cross-sells, up-sells, and the value of referrals for each customer, which increase LTV. To affect LTV, your marketing strategies should take these other factors into account as well. LTV is, perhaps, the most important metric CSMs in subscription-based businesses can track because it’s the best at predicting success… or failure. Cost to Acquire (CAC) is intimately connected with LTV because if your CAC is higher than or equal to your LTV, your business is FAILING! The Cost to Acquire number comes from tracking metrics like  manufacturing costs, research, development, and marketing – everything you need to convince a potential customer to buy. While the equation is simple enough – just divide the total costs of acquisition by total new customers within a specified time period – adding up every acquisition-related activity is where companies get bogged down.
2. Net Promoter Score (NPS) works better than churn to score how well you’re doing at delivering desired outcomes. Sometimes, an unhappy customer won’t get around to churning – the effort is just too low on their to-do list. But if you ask that customer if they’d recommend you to a friend (the NPS question is “How likely are you to recommend us to a friend or colleague?”), you’ll get an honest answer. Many NPS platforms also allow you to segment your surveys for even deeper insights. This is a great number to use if you haven’t got time to creat a complex customer health score system.
3.  Churn is important to track, but more so in the context of understanding what causes churn and how you can proactively prevent churn. Yes, you need to know how many people are leaving. But that number is too little, too late. What you really need to track are the leading indicators of churn.
4. Customer Effort Score – Traditionally used by support teams, CES can also be used to get feedback on user experience in onboarding, new feature setup, and to identify obstacles to users finding value.

There are others. Groove reduced churn by 71% by using what they called “red flag” metrics, including:

•         Length of first session
•         Frequency of logins
•         Total number of logins 
•         Time spent on individual tasks (the longer the time spent, the more trouble the user is probably having, and the more likely they are to churn)

Whatever metrics you track, essentially, you need to know how well your customers are doing at any given time, identify when they’re experiencing success, be alerted when they run into trouble, and have a plan in place for helping them to grow and succeed even more (by using more of your product when it can benefit them).

It’s helpful to plan all of this within the context of the Product department’s user flows, which brings us to…

Step 5. Collaborate

Customer Success can’t do its best work separated off from other departments, keeping its data in a silo. It won’t do you any good to collect all of this data on your customers if you can’t share what you learn with departments able to act on that information.

To really begin to see the results of your Customer Success program, you’ll need to open lines of communication with Sales, Customer Service and Product Development so you can work together to identify and bridge success gaps for customers. Better yet, invite one person from each department to be part of the Customer Success team.

One example of effective collaboration is between Product and Customer Success. Customer Success needs Product Development to address product-specific success gap issues, and Product Dev needs to understand the broader concept of ideal outcomes, and where success gaps are occurring, from Customer Success. A good place to start collaborating is to align behind customer feedback. Use that to start discussions and to lay the foundation for the solutions you can find together.

When you bring these two departments together, you can achieve all of that and more, like building in Success Milestones into the app itself so users can track their own successes (and sales teams can keep tabs on their progress and introduce upsell suggestions when they make sense).

Step 6. Focus on One Thing at a Time

Is it retention after onboarding? Identifying upsell opportunities? Filling success gaps? Once your customer success program is set up, it can be hard to figure out what to focus on next. Kayla Murphy, Customer Growth, Advocacy and Success at Trustfuel works with early-stage Customer Success teams and recommends focusing on one thing at a time.

“Start with one focus and build processes to go with it. Institute QBRs (Quarterly Business Reviews) or regular check-ins. Start tracking your usage data and figuring out which metrics give you the best picture of customer health.

Just start.

Many of the teams I work with felt a great deal of analysis paralysis at the beginning of their customer success journey. They were worried about annoying customers, tracking the wrong metrics, or focusing so much on unhealthy accounts that morale dies. You have to start somewhere and no one knows more about your customers right now than you. Start being proactive and consistently evaluate your processes.”

Just start, perhaps, is the best advice.

How it All Works Together

Let’s pretend that customer acquisition is a game of “Who can prove their worth the fastest?”

The players are you and your competitors.

When a new user signs up to try your product, it triggers a series of events – the goal of which is proving your worth before that user gets bored and signs up with your competition.

When a new user signs up…

–          The new user receives a welcome email from a Customer Success agent who asks them what they would most like to achieve with your product.

–          The new user is impressed that somebody cares (they care! They really care!) and replies: “I’d like to sell more balloon poodles at the next county fair.”

–         The Customer Success agent replies “I love balloon poodles! So cool! Would 50 more balloon poodles be a realistic starting goal for the next 3 months?”

See what happened there? The customer success agent keys in on the new customer’s desired outcome, then creates a specific, measurable, attainable goal that they can keep track of. Maybe there’s even a page built into the website that helps the customer track their own progress towards their goal.

These steps don’t need to happen over email (although this is exactly what Slack does during onboarding). They can happen within your product too. Or a combination, like using a simple in-app how-to program to guide newbies through their first several actions. Then you might use customer feedback on their desired outcomes to send them an appropriate ebook or link to relevant blog posts to help them achieve it.

Essentially, you prove your worth by making your customer’s success a priority – and making sure they know it!