Startups are the sprinters of the business world. To be competitive, they need to run lean, be agile and stay one step ahead of the competition.
Adding to the challenge is the pressure to build their business without growing headcount too quickly, and deciding which tools are necessary to the growth of their operation – and which investments can be put on the back-burner for when there’s more money, more staff to manage tech stacks and platforms, more customers and more business on the line.
Yet waiting to bring a customer success platform on board could be a costly mistake. Here are three reasons startups should consider investing in customer success early in their lifecycle, to ensure strong and sustainable growth going forward.
1. Broaden Capabilities Not Payroll
The right customer success platform can help startups grow their customer success capabilities without growing headcount. “Running lean” is the mantra of most startups. But a disproportionate focus on topline growth in the short term can come at the cost of the bottom line in the future.
Startups often don’t have the luxury of immediately staffing a large customer success organization, making it difficult to give growing customers all the attention they may need. Yet putting a priority on adopting scalable customer success technologies can and should happen with your very first dedicated customer success hire. Whether that person is an individual contributor or a future manager, that team member should make it a top priority to adopt tools that will scale with the organization to support the entire customer journey and lifecycle. Key questions to ask include:
- How well does this customer success tool integrate with the other tools in our stack?
- How robust are those individual integrations? For example, are they bi-directional?
- Do they work with each other in real time?
- Can they be set up and maintained with minimal operational support?
Management teams may also misunderstand the purpose of a customer success tool or make the mistake that a customer relationship management (CRM) tool can do the job of a customer success platform. CRMs are not built for project management, tracking in-product interactions, and they aren’t particularly user-friendly for customer success teams to operate out of on a day-to-day basis.
The right customer success platform is easy to navigate, enables you to effectively manage and track projects and tasks, and also yields actionable insights you wouldn’t otherwise have, such as health scores for unique customer segments, customer health score trends, custom metrics and more. The right tool is invaluable for measuring the impact of particular programs and surfacing customer success wins to executives.
2. Decrease Customer Churn
Implementing a customer success tool early can dramatically decrease customer churn, increasing net revenue retention. A 20% reduction in churn for a company with $5 million in annual recurring revenue will have a big impact on the bottom line. These gains will continue to scale impressively over time and as revenue increases.
Howeever, it can still be difficult to fully comprehend the ROI for a properly implemented customer success platform. The old “leaky bucket” analogy perfectly illustrates why decreasing customer churn is one of the most effective ways to drive sustainable growth. It quickly becomes more costly and time consuming to bring in enough new business to replace the business lost. This is especially important for B2B companies with limited total addressable markets. Every customer counts. There is a finite amount of ‘liquid’ that can enter the bucket. The opportunity cost of churning customers early goes beyond the missed revenue.
With the help of a customer success platform, customer success teams can accelerate growth by taking an informed, proactive approach to monitoring and addressing risks and opportunities for individual accounts as well as customer segments throughout the customer lifecycle.
3. Foster Stronger Customer Relationships
A customer success tool establishes a strong focus on the customer lifecycle and prioritizes the health and growth potential of customer relationships.
It’s often assumed that CRM tools can take the place of, or are interchangeable with, customer success tools, but that isn’t so. CRM platforms are focused on opportunity management, while customer success platforms are focused on managing the entire customer lifecycle.
Especially in a growing startup, lower-paying accounts today may become higher-paying accounts tomorrow. A customer success platform enables teams to more effectively focus on the highest-priority accounts at any given time. It also provides the metrics and insights to proactively guide the most valuable accounts through the customer journey.
The right customer success tool can also be invaluable in bringing potential missed opportunities to light. Without the information a customer success platform can provide, teams could fail to notice accounts that might be struggling during onboarding. Or it can be easy to miss signs that key customers are struggling to get traction with your product. Without knowing the health scores of customer accounts or even health score trends across different customer segments, sub-par customer support experiences can go undetected, resulting in negative customer reviews and sentiments – leading to the dreaded churn from the “leaky bucket.”
Making an early investment in a customer success tool sends the message to your whole organization that a strong focus on the entire customer lifecycle, journey and experience are core to your success. And the right platform will provide the data, tools and insights necessary to manage that entire customer lifecycle proactively.
Having scaled growth teams at a variety of startups myself, I understand the pressures to build the business while keeping costs down. Yet making an investment in a customer success platform as soon as you’re able will build a solid foundation for future growth that will fuel your startup’s success far into the future.