The subscription economy—where companies shift from selling products to selling services—has skyrocketed over the last eight years and grown beyond just software-as-a-service-based (SaaS) companies to include other sectors such as the Internet of Things (IoT) and telecommunications. Yet while it enables businesses to become increasingly agile and leverage technology in new ways without investing the upfront capital in on-premise software, other challenges have arisen. These challenges have given rise to the need to augment support and customer success to build and retain customer loyalty through better customer training and learner engagement.
Customer Acquisition Costs and Loyalty Now Measured Monthly
While monthly recurring revenue benefits executive budgetary planning, initial deal sizes are typically smaller, and recouping customer acquisition costs (CAC) may take more than a year depending on the products or services sold. Customer satisfaction and realizing customer time-to-value has forced companies to take customer success and support to a higher level at increasing cost. Customers no longer locked into enormous hardware, maintenance, or professional services contracts (or expensive switching costs) can demo and trial competitive products much easier. This flexibility makes it much easier to make a transition if companies feel their purchasing decision is not bringing value to the business.
According to Bond Capital’s Mary Meeker, in the 2019 Mary Meeker Internet Trends Report, “Reality = CAC can’t exceed LTV [lifetime value] for very long,” which emphasizes the importance of two things:
1. Setting guidelines on what is a “good” vs. “bad” customer for your sales force to acquire to help reduce your churn rate from the start.
2. Putting customer retention measures into place to ensure those customers you acquire stay happy and will become your brand advocates to recommend you to others.
Sustaining Continuous Value to Minimize Customer Churn
Building faster, stronger, and sustainable customer relationships has never been more important to reduce churn and ensure customer acquisition costs are offset by long-term retention or lifetime value.
Companies must continually pay attention to and measure adoption rates, customer churn, customer lifetime value, and expansions and renewals in a subscription model scenario to maintain, increase, and predict monthly or annual recurring revenue.
The rise of Customer Success teams to augment support has driven up labor—and in some cases, travel—costs to ensure customers are getting the most out of their purchases. Customer Success Managers (CSMs) can help growing companies deliver more consistent value to their customers and increase repeat purchases through proactive account monitoring and management. However, growing companies reach a size where the CSMs are no longer facilitating account expansion and other strategic functions, but are relegated to glorified and expensive support duties.
According to a Gallup poll, companies that successfully engage their B2B customers realize 63 percent lower customer attrition, 55 percent higher share of wallet, and 50 percent higher productivity.
As companies look for better ways to engage and educate their customers as they grow, customer training platforms have become a vital strategy for scaling how companies educate their customers on their products and services. The technology enables companies to accelerate first time-to-value, scale customer success and reduce their overall support costs and customer churn rates.
Customer Education Becomes a Critical Aspect of Business Success
A survey conducted by Thought Industries in first quarter 2020 for its 2020 State of Customer Training Report indicated that 96 percent of respondents believe customer training was important to, or extremely important to, their company, an increase from 89 percent one year ago.
How Customer Training Delivers Faster Time-to-Value
First, time-to-value can be defined as the amount of time (in hours, days, or weeks) it takes for learners to get a critical job done that they couldn’t have accomplished without the use of a company’s product or service. Ideally, initial time-to-value should happen shortly after activation.
When compared with another metric, time-to-ROI—the time it takes for your technology or service to deliver on a customer’s overall business use case (which can take months or years)—it becomes crucial to design an onboarding and customer training program that delivers critical wins early in the customer journey.
Examples of time-to-value milestones delivered through a customer training program include:
- Consolidating disparate systems into one single learning platform, such as integrating your customer relationship management system (CRM), support ticketing system, and eCommerce tools.
- Migrating your content and learners from your previous learning management system to your new system without the loss of any data.
- Building out actionable reports that deliver critical insights into your learners’ habits to your business.
Providing efficient training at the point of need, or ideally in advance, is a critical aspect of speeding up time-to-value.
Increasing Customer Engagement Throughout the Buyer Journey
Many businesses deliver customer training after the customer signs the contract and starts onboarding. Customer education should begin during the presale phase and continue during the entire customer lifecycle. Training your buyers earlier in the buyer journey enables you to build trust and improve engagement, as well as establish brand authority, identify knowledge gaps, and increase selling opportunities.
Customer training platforms deliver learning experiences that offer deeper engagement than most marketing programs and further nurture educated buyers who tend to be far more agreeable and referenceable than non-educated ones.
Businesses should think of learning course creation with the entire customer lifecycle in mind. Your investment will lead to greater customer retention, negative churn, and reduced time-to-value.
Reducing Customer Churn in the Subscription Economy
Your customer success team can’t go it alone. You must arm them with the tools to help educate customers and help them derive more value from your product or service to reduce the likelihood of a poor experience. As your business grows, your CSMs will have more difficulty predicting which customers may churn. A customer training platform with learner analytics dashboards integrated with your CRM will help identify those customers who have not been properly trained and help CSM teams proactively and efficiently reach out to the right customers. Meanwhile, other customers are educating themselves through moment-of-need learning experiences tailored for different types of learners when and how they prefer to learn. Offering role-based learning paths, or different learning experiences and course content to customers in different stages (beginners, intermediate, and advanced) of learning your product, or within your product directly, also ensures your customers remain engaged as they advance and get more value from your product, making them less likely to churn.
Todd Boes is chief product officer at Thought Industries, a leading B2B customer training platform company, where he leads the development of the platform lifecycle, including planning the strategic roadmap and vision for the Thought Industries platform, market research, ongoing feature innovation, and overseeing the product team.