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May 5, 2017

Why Customer Success is a glimpse at the future of Employee Retention

customer success and employee retention

Fire up any HR-focused blog or publication and they’ll ambush you with alarming “Millennials are job-hoppers!” facts and headlines. They’re not wrong. According to a recent Gallup poll, 60% of this finicky generation is open to a new opportunity as we speak, and 21% of them have changed jobs in the past two years — that’s three times the rate of other generations.

So, yes, the sky may be falling. But only because companies haven’t found a scalable approach to development and retention, and they’re in a panic over it (don’t even get them started on Centennials).

Well, there is no silver bullet, but my decade of both building and growing teams and HR Software-as-a-Service (SaaS) businesses has shown me that there’s a fundamental parallel between Customer Success and employee engagement and retention — Employee Success. With fewer assumptions, and a better understanding of each employee throughout their journey, just as we do with our customers in a SaaS company, will provide crucial insights into areas of friction.

Further, viewing strong employee retention as not a destination, but a path you’re on— as we view reducing customer churn in a growing SaaS product — can give us the incentive we need to truly evolve as companies.

And that’s what’s going to keep the sky above our heads.

Customer Success: A brief primer

At a SaaS company, Customer Success is a function of the business designed to maximize customer value through technology enablement, support, and relationship building.

Now, the concept of Customer Success isn’t new. Decades ago, financial institutions recognized that taking customers away from their competitors needed to be a key part of their growth strategy. While hunting for the right tactics to coerce those customers into defecting, smart institutions realized that when their competitors disgruntled customers who didn’t feel they were supported or valued, those customers would seek out alternatives — and eventually leave. These smart institutions doubled down on providing a best-in-class customer experience, and essentially created a product differentiator that would keep their existing customers and also help act as a magnet for new ones.

Today, every successful SaaS company understands this payoff, and knows the concept of Customer Success is a fundamental component of growth. Since 2008, when the term ‘Customer Success’ caught on, it’s grown by over 900%.

Why the jump? By design, SaaS companies don’t have the luxury of hoping someone stays with them out of habit — instead, they need to present their customers with payment renewal option every month or year. With each occurrence the customer will ask the question “Do I really need this service enough to pay for it again?” Successfully navigating these decision points is key to retaining customers and maximizing business profitability, and that navigation gets a lot easier when you’ve built a strong personal bond with them throughout the subscription cycle.

While the precise nuances in execution for businesses managing these perpetual customer retention intersections vary, those who succeed understand the overarching idea: Outstanding customer retention isn’t just about a great product, it’s about building relationships.

At 10,000 feet, the Customer Success lifecycle looks like this:

customer success lifecycle

And that’s the framework for a holistic lifecycle that I think we can apply to our HR departments, as well — Employee Success.

Acquire

The acquisition stage gets a lot of attention in both SaaS and HR. Filling the funnel is a prerequisite to any successful sales strategy and ultimately talent acquisition is all about sales, right?

Of all of the stages in the lifecycle, this is the one HR has the best grasp on right now. Discussion of the importance “employer branding” and “candidate experience” is nearly as common as conversation about Millennials, so I won’t spend any time rehashing what we already understand.

Onboard

This is the stage where HR and Customer Success tactics begin to diverge, as it stands. It’s also where we can start learning.

During onboarding, the primary role of Customer Success team is to encourage ambitious new users in two complementary directions:

  1. Completion of the foundational steps that make them successful users
  2. Entrance into an early relationship with the team and — by extension — the product

Consequently, Customer Success teams provide direction by giving customers:

  1. A plain line of sight to a human resource to help answer questions
  2. Introducing them to some form of open channel for feedback.

Early data shows us that offering low friction, lightweight, in-app chat options like Intercom, plus integrations with internal real-time collaboration tools like Slack, offer a lot value in these areas. They help us improve the quality of relationships early in the process.

It’s also common for onboarding sequences to introduce simple ways to invite friends and/or colleagues to sign up, capitalizing on the new customers’ early sense of excitement. When they work, these social hooks can create network effects — which have exponential growth potential.

The key to this stage is getting through all of it with zero friction and as little effort as possible on behalf of the customer. Once it starts to feel like work for them, you’re already moving in the wrong direction.

Engage

While most companies call this stage engage, I refer to it as nurture. Nurture begins as soon as the customer is up and running, moving through the motions of day-to-day product use.

Effective nurturing involves strategic communication; you’re constantly thinking ahead to make sure you deliver relevant information, at just the right time, at every point in the cycle. What you’re saying can come in different forms — a product update, a feedback request or (even better) just a simple “hello.” But nearly more important than what you say is when you say it.

In Customer Success, we actively look for the perfect when. We find the early pain points of our customers, and we monitor changes in their behavior that correlate with later stage dissatisfaction and/or churn. Using this data, we can jump out ahead of potential roadblocks with a related, proactive message — “Hey, is everything ok? I noticed…”

These tactics, whether you deploy them manually or with an assist from fine-tuned automation, help you build and maintain stronger customer relationships earlier. Stronger relationships have a direct and measurable impact on retention and overall customer lifetime value — why couldn’t the same hold true for Employee Success?

Retain

Leveraging the signals gathered throughout the Engage stage, we can identify customers who are at risk of churn, as well as what’s leading to their possible change of heart. It’s an essential component of the Customer Success lifecycle for good reason; understanding what’s going wrong on a deeper level and taking the appropriate corrective action has a powerful upshot.

When we can discern and react to these signals effectively, we find that they serve as the transformational points for the product. These signals, then, not only help retain existing customers, but they also inform overall product development for future users:

“Hey, we saw you’re using a workaround to accomplish X, just letting you know we added a Y feature, so you don’t need to do that anymore. #ThisIsTheFuture”

By actively looking for patterns and taking dedicated action on customer behavior findings, you’ll find yourself inherently solving the problems that matter inside the product itself. In turn, you’re expanding your product to fit the needs of future customers, and improving on their eventual overall satisfaction in advance.

When I run across those articles proclaiming the futility of retaining talent in the modern workforce, screaming about that falling sky, I’m reminded of the parallels between customers and employees … and just how far behind the mindset is in the HR world.

Customer Success closes the loop. It helps us build and retain customers, but more importantly, it helps us improve and evolve our product or service.

Of course, like Customer Success was to SaaS, the concept of Employee Success is new to HR … but I think it’s going to prove just as critically important. It will provide a new set of signals for a better understanding of the goals and motivations of our employees and will inform the strategies we use to retain them and improve upon them.

In the coming years, the businesses who invest in Employee Success earlier — from start to finish, without clinging to the habits of the past decade to inform the one coming — will be the ones leaving their competitors to trail in the dust.

I suppose it goes without saying, that with the recent explosion in conversational AI and machine learning, there’s a huge opportunity for HR technology companies to create new and innovative product categories here. Breezy HR will be one of them.

Find out how Breezy HR is helping business modernize the recruiting process.