Shep Hyken is a customer experience expert and New York Times bestselling author. I sat down with him for an interview over at the Amazing Business Radio show. We talked about the importance of customer experience to SaaS success and how companies often rely on the wrong metrics, leading them down a dangerous path. We also touched on:
- The subscription model and what it means for customer service
- How to figure out what your customers are thinking
- Various biases inherent in data and how to overcome them
Check out the full episode right here, or read on for a recap of our chat.
The Rise of the Subscription Model
Can anything be a subscription product? If you go on Amazon, you’ll see the answer to that right now. Everything from razor blades and dog toys to children’s books and snacks has a subscription option.
The rise of the subscription model has been astronomical during the pandemic. Customers love getting stuff scheduled, and companies love the ongoing income.
A subscription bakes a relationship with the customer into the business model. If a company doesn’t provide the right level of service and put the customer first, then guess what? Those customers are not going to stick around next month to renew their subscription.
Are your customers getting value over time? That’s the critical question posed by the subscription model. Take a look at the Dollar Shave Club. They run a DTC shave subscription product service.
One of their tactics is to include a newsletter in their boxes. That keeps them at the top of their customers’ minds and gives them tips for getting the most out of their products. It’s a way for them to deepen their relationship with customers.
Worry About the Metrics Your Customers Use to Measure Success
My core focus is always on the customer. That’s the ethos of the Jobs-to-Be-Done framework. You can read more about that here.
Companies often measure success by metrics like revenue and profit. The problem? They don’t know what outcomes their products are allowing their customers to achieve. It’s essential to have a clear view of your product’s value to customers, based on the metrics those customers use to define success.
“You’re not the center of your customer’s journey. You’re only a small part of their day. You need to understand what they’re trying to accomplish as consumers and try to fit into that.”
Dan Balcauski
You need to put your customer’s success first. And revenue and profit second.
Customers rarely buy what customers think they’re selling them. Brands get too caught up with the cutting-edge technology they’re making and forget what the customers want. Which raises the question—how do you find out what customers want?
Do You Know What Your Customers Want?
Some companies seek these answers from focus groups. I find focus groups tend to get dominated by the loudest voice and merge towards groupthink.
Ethnographic observation is the best for deep insight. But that tends to be very expensive and unnecessary unless you’re at the cutting edge of technology innovation. For example, if you’re developing new surgical tools, it probably benefits you to observe the surgeons in action and fully understand the use context.
It’s not a bad idea to listen to information coming from the front-line—sales reps and customer support. But there’s no substitute for talking to the customer directly.
Bias can be a real problem when you’re talking to customers. All too often, we assume data maps to reality. But everything has a bias. I like to call it the Yelp effect.
“You get a lot of one-star and five-star reviews on Yelp. People are either super happy, or they hate it. People who find your product OK don’t bother leaving reviews. So the non-response rate is just as important as the people who respond.”
Dan Balcauski
The top-level Net Promoter Score (NPS) alone can give companies a skewed view of reality. Plus, companies often implement NPS poorly. Companies might send an NPS to customers just once in their lifetime. A repeated NPS survey will give brands more accurate data to work with.
The Path to SaaS Success
Too often, companies define success by their internal metrics. And those aren’t the same metrics that customers use to define their success. That needs to change. I advise all SaaS companies to implement the Jobs-to-Be-Done theory to articulate the outcomes their customers are trying to achieve clearly.
Jobs-to-Be-Done research involves running intensive customer interviews and validating the data with quantitative analysis. It’s not easy, but it’s necessary. SaaS companies need to think about what problems their product is solving and how to help accelerate customers’ success.