The SaaS Business model has gained ground since the 1990’s wherein a small group of companies, the likes of Salesforce and Netapp started rolling out these services. Since then there has been a massive leap in the size and the scale of the market. As per reports, SaaS is expected to generate close to $141 billion in terms of revenue in 2022 and the trend is expected to pick up in the years to follow. The SaaS model is governed by the product or the solution it provides and is always at the centre stage while being augmented by sales, technology, customer success and other enabling functions. As per Forrester, the SaaS Model is witnessing a product-led growth drifting away from the conventional sales led growth. The heightened awareness of the customers about the product, the experience provided, market feedback, existing user reviews, in-app releases etc. have brought the world of the product and the customers very close.
Success today, hence, depends on how the product is able to solve the current and the future need of the customers, how the product is able to evolve along with the customers, how the product is positioned to incorporate anticipated customer needs and functionalities and how the product is able to make the customers successful.
The two functions positioned to lead the above are Product Management and Customer Success hence success of the organization will heavily depend on how these two functions come together as a team complementing each other. Before we dive into how this will be taking place, lets look at these two functions separately.
Product Management and Customer Success - Key Objectives
Product Management is entrusted with creating and building products that are sustainable, offer great user experience, provide incremental growth and even disrupt the market. The main point of reference for any product manager will be the vision and mission of the company and to ensure that the product roadmap is aligned to the same. From a diagrammatic point of view, the product manager rests in the intersection between Technology, Business and Customer Experience. Their role is more directional in nature and their success lies on how they are able to balance all these realms.
The Customer Success function is entrusted to drive renewals, upsells, cross-sells, product adoption, user engagement, consulting and are always in front of the customers. They are best positioned to understand the customers needs, objectives, desires and sentiments allowing the CSM’s to relay the information back to the organization. This is important since the data is consumed by the sales team to enhance product pitches, customer support for quality of resolution and the product team for product enhancement.
Product Management X Customer Success - The Intersection
The alignment between these Product Managers (PMs) and Customer Success Managers (CSMs) has become exceedingly important since it not only creates efficiencies but also strategic advantages. There are multiple areas and metrics such as strategy, churn, usage etc. where these two complimenting functions must come together and the following areas are the most important:
The strategic intent of a SaaS organization is formalized into its product/solutions and its revenue model. While the PM ensures the product improvement and evolution is in line with the strategic intent, the CSM focuses energies on taking the product to the customers to address their objectives. Success at both ends depends on a number of factors such as a customer-product fit, a clear definition of customer persona /personas, establishing lines of internal communication, strong alignment of the functions, building channels of feedback, metrics tracking, governance etc. A clear alignment of the two functions with the overall strategy is an important precursor to success.
The CSM is a function entrusted with creating successful customer outcomes but “customer success” should be the over-arching objectives of all the functions. In a complex SaaS set-up, sales is looking to maximize revenue, CSMs are focused on ROI of customers, PMs are driven by innovation, improvement and user experience. While these are important functional focus areas, there needs to a strong alignment between all the functions on a strategic level and “customer success” is seen to be an important long term objective. A strong alignment between the PMs and the CSM is hence important to drive new sales, renewals, upsell and advocacy
Product Usage is tracked by product managers since it indicates to what extent the product is accepted by the customers. The CSMs here have a broader view since they would be in a strong position to understand if the product is meeting the customers requirement, if the customers have been able to achieve their ROI, if there are any features missing or functionalities that could be incorporated. Such observations and feedback when relayed back to the PMs, in a data driven approach with SLAs and a governance mechanism, translate into product improvements, features and enhancements.
Net Promoter Score
Perhaps no other question has garnered so much of strategic importance as “On a scale of zero to ten, how likely are you to recommend our business to a friend or a colleague?
The NPS for the product manager allows for decision making in the short term and the long term specifically around the product road map. For the CSM, it indicates a health score in terms of product-experience, engagement experience, ROI etc which could subsequently impacts churn, upsell, cross-sell etc.
The SaaS model allows you to build a product and make enhancements and changes as you go along the product road-map. The model also allows the customers to proceed with their usual course of business while testing new features. The feature usage allows the PMs to enhance, discard or even embed functionalities to enhance user experience and business outcomes. Data also suggests that customer are in the best position to find new uses for the existing products. This allows the PMs to plan their next steps in feature releases and product roadmaps.
As mentioned before, in a SaaS business model, product is at a centre stage augmented by sales, customer-success, marketing etc. A churn scenario is mostly a direct reflection of either the product falling short of clients expectations or a lack of customer orientation (sales, after-sales, adoption, experience etc.). To ameliorate churn, the close alignment of both these functions hence becomes imperative to take necessary actions. Data points gathered around churn scenarios also provide valuable inputs to improve, scale and maximize growth for other clients and in the future
Customer Feedback is the aggregation of all qualitative and empirical inputs obtained through multiple surveys, focused groups, CSATs, product reviews from all viable sources. The data points should be assembled, segregated into dimensions, analyzed and a corrective course of action must be taken. One of the major constraints product faces is the lack of direct facetime with the customers and their heavy dependence on the customer facing roles for inputs. Its hence suggested that both the functions to take part in the articulation of a feedback strategy with multiple touch points, SLA, with definitive outcomes and a governance model.
Analytics and data
There is a great likelihood that, while there are shared metrics between the functions, they would be leveraging different dashboards and data sets for analysis and decision making. Alignment is important all at levels to embed efficiency, faster time-to-value, customer success and a single source of truth or a common premise is an absolute necessity. Alignment of such disparate data sets and dashboards can be investment heavy but organizations and customers are in a position to benefit from it manifold. Its important for both the functions to have an inward (firm based) looking strategy that augments systems, processes, work-flows and output to ensure long term sustainability.
One of the critical components of ensuring success of this collaboration is formalization of this relationship. Formalization would entail an executive sponsor with nominated stakeholders from both the functions leading the partnership with clear defined responsibilities, metrics and a robust governance mechanism. Furthermore, it is recommended that such a structure have clear measures, incorporated in performance evaluation of all stakeholders across levels.