Why Customer Success is Essential for Startups

At one point or another, you’ve probably heard the saying, “The customer is always right.” While this is not necessarily always true, customer success and experience are vital ingredients in the formula for a business’s success — this is especially true for startups. Realistically, most businesses won’t be able to bring in hundreds or thousands of new customers each month. For most businesses, success is directly related to the ability to retain existing customers and create recurring revenue. In fact, investing in customer success can lead to the most sustainable growth for startups and businesses alike in the long-term.

You may be wondering: What exactly do startups have to gain from improving customer success within their business? By focusing on customer success and keeping customers happy, startups can:

• Establish a trustworthy and esteemed reputation: This is a huge win for startups that are still in the early stages of establishing themselves in the market, especially because it takes work to earn the trust of customers who may already be loyal to other companies and their services.
• Keep your customers engaged and active: The most engaged and active customers are those you may not even need to market to, necessarily. They are likely already on the lookout for product updates and additional services, and can even become some of your biggest advocates.
• Lead to referrals and customer testimonials: Speaking of advocates, this is quite possibly one of the best benefits that could come out of your customer success program. Customer referrals are a huge driver of revenue and can serve as a powerful growth engine for your company. For example, let’s say someone has seen a few of your startup’s advertisements online, and maybe they’ve even heard of you in passing, but have never taken the jump to purchase your product or services. At this point, a referral from a trusted friend or family could certainly convince them to take that next step. Keep in mind, however, that referrals are only made by happy customers. Unhappy customers will never promote your startup or recommend it to others.
• Retain your customers: As we mentioned before, the real reward of customer success is retaining your existing customers. While acquiring new customers is always exciting, retaining the ones you already have can actually benefit you more in the long-run, both in terms of your notoriety and financially as well. Unsurprisingly, upselling your existing customers can bring in greater revenue than selling to brand new customers.

If the benefits aren’t convincing enough, there’s also the flip side of what could happen if you are negligent towards your customer success program. When your customers are not satisfied with your product or service, or the process required to use your product or service, they will likely churn. Think about the number of times that a customer has engaged with your startup once but never again, or subscribed to a free trial but never purchased recurring subscriptions. This is what we mean when we talk about churn.

Customer churn is a looming shadow for businesses, as it has both short and long-term consequences. In the short-term, you’re losing customers who could have brought in recurring revenue for you and referred your startup to others. In the long-term, your revenue churn will grow exponentially the more your annual recurring revenue (ARR) grows. In other words, the gap between your ARR and revenue churn gets larger, and it becomes more difficult for your startup to achieve revenue growth. Most of a startup’s revenue is brought in after the first sale is made — which is why it’s crucial to nurture the relationships you have with the customers you are able to sell to.

To maximize your revenue, grow your relationships with customers, and keep your overall customer base more than satisfied, you can partake in any of these three practical steps:

1. Shift your focus from being product-focused to consumer-focused. It’s only natural for startup founders and business leaders to focus the majority of their energy on growing and nurturing their business. After all, bringing an idea to life and keeping that dream alive requires daily commitments and sacrifices.

Don’t get us wrong — channeling your time, effort, and focus towards your startup is necessary to its survival. This only becomes an issue when it is your sole focus, with no room for anything else. In order to meet the needs of your customers and make sure they’re getting their questions answered, you need to be engaged with them. This requires you to shift your focus towards your customers and center your services around not only solving their problems but making sure your startup is adding value into their lives.

A few simple ways to do this is to ask yourself questions about how exactly you’re providing value to your customers, seek out where you could be going above and beyond, and whether or not new features will help them meet their needs better and faster.

1. Make sure you’re talking to your customers: This may sound silly, but forgetting to talk with your customers is actually more common than you’d think. In the hustle and bustle of it all, talking to your customers can get lost in the mix. But how can you know how to provide value to your customers and make sure your product or service is helping them achieve their desired outcomes without actually getting insight and feedback from your customers themselves?

If you’re a small startup and have the resources to do so, you can send out personalized emails, make phone calls to check in on how the onboarding process is going, or even make yourself accessible through chat boxes. Once you start to get bigger, you can provide the same support but at a greater scale. You can also follow up with customers after they’ve purchased a product or service to ensure everything is working smoothly. These little gestures can add up and mean the world to your customers in the end.

1. Track your metrics. Now, we’re not saying go crazy and track every number at every second of the day. However, tracking metrics is one of the most important things you can do to see your results and find out how to improve them. If you don’t track metrics, you’ll never know how you’re standing up against your initial goals, or how to improve certain functions if things aren’t working properly. Some metrics to keep up with include:

• Churn: As we mentioned before, churn is an important indicator of the health of your startup. To get a full picture of how you’re doing with customer retention and customer acquisition, calculate customer churn and revenue churn.
• Net promoter score (NPS): NPS helps quantify customer satisfaction with your startup’s product or service.
• Number of active users: You can segment this out between the number of daily, weekly, or monthly active users to see who is engaging with your startup and how often. You can also leverage certain tools to track the number of unique visitors or users of your startup to get an idea of who you are attracting.
• Onboarding engagement rate: While customers can always sign up to use your product or service, it doesn’t always mean they’ll carry things out to completion. Oftentimes, customers may start your onboarding process, find it too difficult or confusing, and quit. Because of this, it’s important that you look at the percentage of people actually completing the onboarding, and if there’s anything you can do to increase that percentage.

Customer success is an essential part of any startup’s DNA but is easier said than done to achieve. Once achieved, however, customer success can lead to long-term growth, reduced customer churn, and a stronger overall business model. Startups should be looking to constantly improve their customer success and make sure their customers don’t only become happy, but stay happy as well.