The HotLine Magazine Archives
For The Profession of Cloud/SaaS Product Support
Cost justifying a customer success management team's budget can be a challenge, especially in the beginning. The key tasks of the first phase of a CSM team’s development are to understand and categorize your interactions with the customers (type, duration, volume, cost & effectiveness) and to begin to define the statuses of the customer relationship health measurement graph. You have to be able to use this data to prove the truth of that old adage "An ounce of prevention is worth a pound of cure." Ultimately, you need to show that you are directly associated with an income stream and that you are making a strategically significant contribution to the company's overall profitability.

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SaaS/Cloud company management teams have always recognized the economic necessity of spending a certain amount of money to acquire a customer.  Customer Acquisition Cost (CAC) is a standard part of the business plan.  What is not so readily acknowledged is that spending money to retain customers is also a necessary aspect of the new business model.  It’s unfortunately very common…

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Customer Lifetime Value is one of the essential management metrics for any SaaS/Cloud application vendor.  CLV is what remains after the CAC, Customer Acquisition Cost, and the CRC, Customer Retention Costs, are subtracted from the revenues of the relationship.  The actual duration of that relationship, therefore, is of paramount importance — far too vital to be left unattended. …

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The SaaS & Support Project research into the common causes of lost customer relationships showed that the most commonly identified “departure driver” was Divorce. Either the management of the customer company had changed, resulting in the loss of the internal champion, or the relationship had become distant. One SaaS company CEO described this scenario as a loss of contact "at the top' of the food chain, with upper management either leaving or forgetting why the system was implemented. Three significant questions come immediately to mind: 1) Why are SaaS vendors being taken by surprise? 2) What can be done to save the relationships? 3) How can CEOs stop setting their companies up for churn?

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