Thursday 19 September 2019

Startup diary: 'Investing in customer success is crucial in securing your own'


Customer is king: 'Negative churn is the difference in revenue lost from existing people leaving, and gained from existing people increasing their usage. If Voxgig doesn’t achieve negative churn, we’re dead. It’s that simple'
Customer is king: 'Negative churn is the difference in revenue lost from existing people leaving, and gained from existing people increasing their usage. If Voxgig doesn’t achieve negative churn, we’re dead. It’s that simple'

Richard Rodger - Voxgig founder

One the most important business functions in a Software-as-a-Service startup is 'customer success'. In Voxgig, we plan to start building this team in the second half of the year. Right now, we have live customers in our private trial that also need support, and we have no customer success function. How are we managing?

Before we get in our mindset on this challenge, let's step back and look at what customer success is supposed to do. It's not traditional customer support. It's not something that should be considered just a cost to the business. Properly executed, customer success can generate more revenue growth than sales.

Your product should not aim to be awesome, but should aim to make your customers awesome. By helping your customers solve their business problems, you are providing real value. This is the context in which you should approach customer success.

It's about putting in place a structure in your organisation that can help your customers move forward. It's not about getting them off the phone on support calls as quickly as possible, which is what we often experience as consumers. A business-to-business relationship has to be maintained by having real insight into what your customers need.

We don't do this altruistically. We operate a freemium model. That means you can use a subset of our features for free, forever. We do this because we want to build up our network of users, and there is a great deal of value for our users when they can find each other on our platform.

The technology events industry is very connected, and all the participants need to be able to work with each other.

The alternative model in the business-to-business SaaS space is the free trial model. In this model, you get to use the system for a short period of time, but then you must pay.

This is more suited to services that don't have a built-in network effect. For example, online accounting software is better with a free trial as the mechanism to gain new users - you always need do your accounts, but it doesn't matter to you if the company next door is on the same system. If you are a speaker at an event, one of our primary users, then it does matter a great deal if a conference organiser is also on our system- it makes everything much easier.

With a freemium model, because you don't generate revenue from the majority of your users, it is vital to nurture and grow the paying users that you do have. Luckily, if you are delivering business value, your user base per client company does grow over time. To get technical for a minute, this is know as 'negative churn' - the difference in revenue lost from existing people leaving, and gained from existing people increasing their usage. If Voxgig doesn't achieve negative churn, we're dead. It's that simple.

And that's the job of customer success. To find out how our system can provide even more value to existing customers, and help to grow those customers over time. This is no place for hard sells, or short-term gains. It's about the power of a compounding investment in our solution by our customers. Executing this properly will be tough, and we'll be looking to hire a skilled executive, some who's done it before, to help us. I'll return this topic as part of my series on executive hires in a later article.

This is all very well, but we have none of this in place at the moment. And yet our early adopters, who have placed the most faith in us, even before the features they need are fully built, surely deserve the most 'customer success' love. How can we provide this along with our day jobs?

The software still has to be written, the sales process still has to be run, the marketing machine has to be cranked, and somebody still have to pay invoices and do the accounts. Customer success is nobody's job.

The challenge is that you can't just proclaim that it's everybody's job. You can't just say that everyone has to muck in and do customer support. That just makes it nobody's job again.

We are very lucky to have a great team, and team members that understand intuitively that we need to look after our early customers, but you can't live on luck (you can prepare for it, but that's another day's discussion).

This issue has not been a huge problem for us up to now - we've only had the first small batch of customers to worry about. And because we've been using a high-intensity close contact trial process, issues tend to come up directly and everyone needed is already on the call. This, as you can imagine, is very time-consuming, and resource-intensive. We've had to reduce our weekly client meeting to bi-weekly just to manage to have enough time to work on the product. And this has affected our customer success delivery for those clients.

They can all still reach me and our team on WhatsApp in emergencies, and casually, but it's not quite the same as direct weekly face-time. We are now bringing on board a new batch of trial customers, and this problem is about to get much worse.

It's not a technology challenge. We use Slack and Google Hangouts, and all the other distributed work tools out there. (Check out for shared wireframes - it's great.)

This is a process challenge. We have to build a temporary process to support increased trial usage. This process will then be thrown away when we boot up the customer success function. Yes, we can probably reuse some of it, but the core issue that we have to design a process for people who have other priorities.

The customer success team will have a clear priority when they arrive, so the process implementation is not the same. The prioritisation questions are different. Right now we have to figure our how to make it safe for team members to deprioritise their day job to support a customer in need. I'll return to this subject as we try to work out how to do this.

Search engine statistics: Technology conferences are at a count of 2,248, with 6,155 speakers, 4,953 exhibitors, and 987 venues.

Our data migration efforts are underway and the outcome we're looking for is better search result quality. How to measure this is an open question. Ideally we'll want to build an automated process to continue to measure the quality of our search engine over time. We're a startup, so there's no need for anything fancy, but it will be important to maintain quality as we continue to add new features that could impact the search engine. Once again, we face an open problem with no idea how to approach it. I update you over the coming weeks if we figure it out - a perfect solution is too costly so we need to find something "good enough".

Marketing update: speakers newsletter - 6,049 subscribers, open rate 11pc. Back to normal levels - in science this is known as 'reversion to the mean'. Just because you have great week, doesn't meant the world has changed. In a startup it's good to remember that for both the good and bad weeks. EventProfs newsletter - 605 subscribers, open rate of 27pc. The podcast is at 73 downloads.

They don't call it a startup grind for nothing.

Richard Rodger is the founder of Voxgig. He is a former co-founder of Nearform, a technology consultancy firm based in Waterford.

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