What do customers want?

As I was embarking on an exciting journey of forming a Customer Success organization for our new SAAS business model, we discussed "what customer wants?". Everybody had different ideas: software, change in process, better productivity for their organization, more visibility into the business, more informed decision-making at a higher level, secured data, software that fits customer IT infrastructure, etc. We went on to have a list of 27 high-level items. And all those were valid. 

Part of my job is to create a vision for the organization. So I looked at those 27 items, categorized them, and abstracted them at a higher level. This thought process led me in a new direction, and finally, I came up with a one-word answer. Customer wants "value" from our software, and that definition of value could be a little fluid per customer, but that is what we need to enable for customers. 

The critical function of CSM is to understand what value the customer is looking for and enable those values. Customer Value can be classified before and after the purchase of the software. These can be viewed as "desired" and "perceived" values, respectively. Software undergoes multiple phases: acquisition, retention, value-added services enablement, and phase-out. In every stage, the perceived value of the software is different and can change over time. The challenge is to identify/anticipate such changes in value and enable those. 

In SAAS business, from a CSM perspective, the retention phase and value-added services enablement are essential as those are phases where values are maximized from the customer and vendor perspective. 

Customer Value Loop

The "Customer Value loop" is a framework that structures the thought process of value enablement. I describe a more straightforward format that can be customized to your organization-specific situations. 

The idea is to locate the bottlenecks in creating/adding value and address those bottlenecks. 

As software goes through different phases of its life cycle, value loops overlap and intersect with each other. 

1. Acquiring a new customer

Value: Your marketing message should resonate with the customer's desired value. For B2B, this is a very involved and complex process. And this could vary by customer. Generally, a customer will start looking for software or a solution depending on their needs. What you offer will differ from what the customer is looking for. So, you have to engage in the sales cycle to convince them that your solution will not only solve their current business problem but will also address additional unforeseen issues.

Verification: Mostly, there will be multiple stakeholders in the company: The business sponsor who needs your solution, the IT department who vets the solution from a technical perspective, and the procurement department who maintains a strategic view of spending. So it is your job to ensure all stakeholders are satisfied with the solution and business value is achieved using the solution. (For an in-depth discussion on stakeholders, kindly visit our article. (Click here).

Making a sale: The cost for the solution could be much higher than just spending a few $$ per month. For each customer, the decision to sign up is far more involved. Also, this will be a massive commitment from them (possibly multi-year). You also have to think about the seasonality of the industry, sales cycle length, and complexity of the organization while forecasting sales. 

2. Retaining/Renewing customers

Value: You have to focus on "perceived" value. The customer should feel and accept that your software and overall engagement provide value at or above par with the expectations set. In B2B businesses, customers are often already committed for a longer duration, ranging from a few months to a few years. 

Enablement: Having a good working system is simply enablement for the value. But operational, process, and system issues could hamper this enablement. Updates/upgrades to the solution can be complex and could involve updates to customized code. Software design should plan for smooth and backward-compatible upgrades. For any customized development and maintenance of the software, the customer should be expected to cover the cost. The cost for support and operations should be considered a customer retention cost. 

Early alarm system: It is crucial to have a usage tracking mechanism to track users and their behavior in the system. This report should be able to highlight changes per customer to provide an early-alarm system for churn. Identify all the "churn" scenarios that CSM can influence and have an action plan for that scenario. Sometimes you will have to create a customer-specific plan. 

Gaps in Value: There could be customized modules and/or customized integration requiring continuous support. As a SAAS company, you might incur the cost of data loads and/or running a few ad-hoc service requests. The agreement should clearly identify which services are included and which are value-added services. 

3. Value-Added Services Enablement

In the SAAS model, value-added services should focus on customer value enablement instead of making significant revenue from customers. Of course, every vendor must cover its costs, and most customers understand that. But focusing on making customer's life easy would fetch you higher longer-term results. 

Change in Value: The customer's needs and hence value perceptions will continually change. It is essential to have oversight of the customer's ever-changing environment to identify such value-creation opportunities. Customers often realize that they need additional value, which is your opportunity to upsell. 

Upsell: In most businesses, upselling can be achieved by charging extra for additional features/modules/number of users, etc. For each upsell, you should anticipate the ask so that you can strategize the upsell. 

Accelerated Roadmap: When you provide a SAAS solution, on the one hand, you are charging more subscription fees, while on the other hand, you promise free and valuable updates. These updates should be planned according to the product manager's vision of the product and corresponding roadmap prioritization. But now and then, some customers will want some features earlier than others. Since your roadmap will be impacted by accommodating their requests, there should be an "acceleration charge" for such requests. I recommend working with customers as a partnership and sharing the additional cost. The focus should still be on value-enablement for the customer.

Service requests: In B2B business, the major activity could be at the backend, where tight integration with ERP, Reporting, and Business Intelligence systems are managed. Any change in those integration means more change requests for your application. And as a software company, you must provide these services, or else your system is likely to get more isolated. The customer is likely already expecting to pay such amounts as they are the ones asking for the changes. Word of caution: these change requests should be limited to changes in the customized integration layer and should not affect core product/features/functionality. Again, the focus should be on value enablement. 

4. Phase-out

End-of-Life Threat: It is highly unlikely that a successful product will be phased out. What is more likely is that as you learn more about the ecosystem of your customer base, you will enhance your product offering or may come up with a net new product addressing the needs of an adjacency. Though you may find that some of the modules are being EOLed, features are getting discontinued, and APIs are getting deprecated. There could be a significant % of the customer base which might get impacted by this move. If there was only one opportunity to deliver value to the customer, it is here. The value for the customer is in the form of a seamless transition to newer modules/features / APIs.   Any hiccups here, and you will see a spike in your churn. You, the CSM, will play a key role in understanding the customer's concerns, analyzing their landscape, communicating impact, and ensuring a smooth transition by working with a cross-functional team to deliver a smooth experience to your customer.

In doing so, you have earned your organization a happy customer, more likely a renewal, and, most importantly, a referral, the highest value a B2B SaaS company can expect from its customers.

Value Realization Path - Quick Reference Table