Since my first company Qualys went public, I have started investing as a business angel in many promising startups, mostly SaaS.
And for the past 20 years, I have had the chance to be a board member of several companies with talented CEOs alongside other enthusiastic investors.
This exposure made me notice a recurring pattern in the way board meetings are handled.
Whatever the topic of the day, the agenda always unfolds this way:
- The CEO starts by presenting numbers and perspectives
- The VP of Sales shows his or her pipeline and opportunities, and often remains silent about delayed and lost deals
- The VP of Marketing shares the branding, lead generation and market education strategy
- The engineering and product team proudly reveals the product roadmap
- And finally, if the board is not overtime and its members don’t have another appointment, we can hear about Customer Success - including support, customer base etc.
=> You may wonder, why is this model wrong?
It only focuses on the future and gives little to no attention to the present, the state of the company, and what’s the most important - the customer base.
How can you know how well the company is doing right now without giving the voice to the VP of Customer Success?
“Upgrades and second order revenue make customer success 5x more valuable than sales.”
– Jason M. Lemkin, SaaStr
Giving the floor to Customer Success
Customer Success concerns the entire customer lifecycle, from onboarding to renewal (and sometimes churn). And a good board meeting should start by presenting some KPIs for each step of this lifecycle. In fact, those indicators give a pretty good understanding of the situation in the other departments too.
Onboarding — it gives some indication about product quality, deployability and sales execution:
- How long does it take? (showing the ease of use)
- How successful is the onboarding process? % of churn during or at the end of the free trial? (Are there some bugs? Do sales commit on available features and convey the right expectations?)
Nurturing — to get a sense of the “health” of the customer base:
- Product adoption: % of users that use your product on a daily/weekly/monthly basis? % of users that use a large part of your features?
- Is marketing spending more time educating the market or the existing customer base? (as we know, more usage means less churn)
- Does the Customer Success team successfully drive product adoption with training and Quarter Based Reviews?
- Support: what is your average number of tickets per month / per customer and the main reasons (product quality, bugs, design…)?
Retention and renewal — is your customer base loyal ?
- For how long does a typical customer use your product on average?
- What is your renewal forecast? (% of customers that should renew their contract?)
- What is your churn rate and what are the main reasons for churn?
“The reality around Customer Churn is that for every customer you lose through attrition, cancellations, or non-renewals — you have to acquire one new customer just to break even… and that’s a tough way to grow!”
– Lincoln Murphy, Sixteen Ventures
- What is your Customer Lifetime Value ?
- What is your MRR and how do you value the health of your MRR ?
- What percentage of your revenue does Customer Success represent? According to Jason Lemkin, the ratio should be one Customer Success Manager every $2M in annual recurring revenue.
- What is your Net Promoter Score? (ratio of promoters vs. detractors)
- Referenceability: do users tell others?
Don’t get me wrong, company perspective is key. But I believe it is paramount CEOs assess more often their customer base.
In a world of consumerization in which churn and the cost of acquisition are continuously increasing, Customer Success is rising within companies - and that should be reflected at Board level too.
Gilles Samoun, Founder & CEO @Salesmachine