Capabilities: 6 Ways To A New You

XaaS Key #4:??Capabilities

Part 2:??E.T., Phone Home A Lot!

Customer Data:??From Marketing To Everything?

A major software company I worked with made the transition from packaged software to SaaS.??Again, the transition wasn’t simple, and many critical issues were figured out after launch, on the fly.??After several months, the company realized that it had no customer renewals strategy – and not to beat a point to death, but the XaaS money is in renewals.

The company realized it had no information on how customers were actually using the product.??In the past, the company would send live human beings out into the field, literally watching over customers’ shoulders as they used the product.??The data returned was subjective, spotty, hard to analyze.

After moving to SaaS, the only regular communication between the company’s servers and its software was a single monthly ping, to see if the customer had paid and still enjoyed usage rights.??Jokingly, we said that E.T. was phoning home, but only once a month.

Analytics Throughout The Lifecycle

To be successful at XaaS, and get that critical renewal money, E.T. needs to phone home much more often than once a month, and with far more information than just whether the customer has paid.??

We’re all familiar with capturing customer data to make marketing more effective – witness the success of Salesforce.com’s Marketing Cloud, and Adobe’s Experience Cloud.??These focus on the discovery stage of the lifecycle.

But just as the sales funnel goes beyond purchase, as I discussed in?XaaS Success Key #3:??Go-To-Market/Part 1:??The XaaS Sales Funnel:??Deeper Than You Think, customer data and analytics goes beyond purchase all the way to renewals.?

Customer behavior – on many levels – can be collected and analyzed to maximize the value of your customer relationship throughout the customer lifecycle.??I’ll pull out a few examples to highlight:

·??????Customer support:??Most companies track customer support calls to identify major incidents and track customer satisfaction.??But a major SaaS player determined that the number of customer support calls were a key indicator of propensity to renew.??Zero calls meant the customer likely wasn’t even using the product, and therefore was unlikely to renew.??More than 3 calls indicated the customer was dissatisfied or having problems, and also unlikely to renew.??One to two calls indicated the customer was using the product and engaged with the product enough to likely renew.

·??????Product usage:??As Marc Benioff, founder and CEO of Salesforce.com says in his book?Beyond the Cloud, he realized he was sitting on a goldmine of information, in that his cloud-based software could see how customers used the product.??Regular on-premise software companies were, like the software company in the story above, flying blind.??Data can be collected to determine which features customers use most, which ones they have problems with, and then correlated to key value indicators such as propensity to use more product, to buy more services, and to renew.

Figure 1 shows a (very limited) sample of the type of analytics you can perform throughout the customer lifecycle.

For Product Companies Too

These methods of learning about customers are not limited to SaaS companies.??Hardware companies that deploy IoT – sensors and connectivity – are also able to learn dynamically and digitally how their customers engage with them throughout the lifecycle, enabling the same types of benefits that SaaS companies enjoy.

Keep It Private?

Of course there are data privacy tradeoffs and regulations to be considered, which are beyond the scope of this article.??Overall I’m not implying that you spy on your customers.??You can anonymize the data, aggregate it, and look for patterns.??

What I am recommending that you get to know your customers’ behavior so deeply that you can provide them with more value from your product.??They, in turn, will provide you with more value.

And that value comes through particularly when considering renewals and upsell, which I will cover in my next article.