We all live in a subscription economy today. We are no longer in the ownership economy, which basically means that you don’t have customers who are purchasing your product but rather you have subscribers who are renting or subscribing to your product or service.
For SaaS companies today, there are many aspects of their business to consider when creating and measuring success. What Saas businesses do not realize is that excelling in Customer Success (CS) can be a key component to low churn rates and successful business growth.
Hence, Customer Success Management together with a solid strategy results in a decreased customer churn, increased upsell opportunities, and renewals.
These are Top Customer Success Statistics in 2021
# Customer success is the top priority
Most successful companies today are committed to understanding the outcomes desired by their customers, and they’re designing experiences to help their customers achieve those goals. In other words, they’re focused on customer success.
According to Forrester Research, Over 72% of the businesses say that improving customer success would be their number one priority
# Investing in new customers is between five and 25 times more expensive than retaining new ones
In light of the pandemic, each industry had to make pertinent adjustments in their operations, and SaaS companies had to initiate measures that would ensure their survival – one of them being customer success. Since attracting new customers may seem out of reach right now, retaining old ones is a key ingredient in boosting customer retention rate.
# Churn is on the rise
SaaS churn rates represent the rate percentage at which your customers terminate their subscriptions in a given period of time.
The study shows 30% of SaaS Companies reported their churn rates have increased in the past year.
- Source: 99Firms
# Does NPS matter?
As per a survey by SurveySparrow, although only 8% of the companies’ KPIs were NPS, 63.16% of companies use NPS as a success metric.
An NPS is a method that uses a single survey question to gauge customer satisfaction with a product. This is how NPS is calculated, customer satisfaction surveys are done across the country and will ask people to rate from one to ten how likely they would recommend their company’s services or products to their family or friends.
# LTV(Lifetime Value) > CAC(Customer Acquisition Cost)
Studies done by Forentreprenuers show that LTV should be about 3 x CAC for a viable SaaS or other forms of recurring revenue model. Most of the public companies have multiples that are more like 5 x CAC.
# More than 70% of customers feel loyal to a brand or a company
Consumers’ loyalty towards a brand is not easy to achieve and is a complex process that includes many things like prices, overall success, marketing, support, etc. Providing an experience that will make them ignore your competitors is the desirable result of any interaction.
# Only 4% of unhappy customers actually bother to take up customer feedback surveys
This essentially means 96% of your unhappy customers would not bother to let you know they’re unhappy. It is just easier for them to take their business elsewhere.
# Increasing customer retention rates by 5% can increase profits by up to 75%.
One of the salient customer service facts is that while it might be common sense that high customer retention has a direct impact on the bottom line, many executives do not realize how significant of an impact it can make. Only a 5% increase in retention rates can increase your profits by 75%. The data indicates that investing in customer service makes great sense, even if evaluated only from the perspective of monetary gains.
# Technology Adoption – CS tools
The survey results stated that surprisingly, 38% of companies still don’t have a Customer Success tool.
Customer success increases the likelihood that customers will stick around and hence prevent drop-offs by ensuring customers are successful with using your product.
This also explains why 44% of companies haven’t been able to implement health scoring for their customers successfully.
# A good customer experience means your customers will spend more.
Study shows that 86% of buyers are willing to pay more for a great customer experience.
According to research from PWC, The more expensive the item, the more they are willing to pay only if your product helps them achieve what they came for.
# Companies using chatbots are 60% more likely to improve resolution times.
Chatbots serve consumers in multiple ways, the first and the most important being 24/7 service. People can get immediate answers due to the constant availability and also resolve the problem they’re having.
# The bulk of enterprise organizations have Customer Success Teams that cost 10% of ARR or less.
It’s true, large enterprise organizations are going to have more money to play around with compared to small and mid-sized companies, but it’s still shocking to see that an entire Customer Success team could cost less than 10% of a company’s ARR (Annual Recurring Revenue). For SMBs, a better benchmark range would be 10 – 20% of ARR (know that this percentage will decrease when your Customer Success program really begins to take shape).
# Change in Customer Health Score
A study was conducted asking, based on changing business conditions, have the businesses changed their customer health score. Only 30% of respondents said yes. Whereas 70% of the businesses do not change their customer health scores.
Suggested Reading: Why do customer health scores set up by CSMs most often fail?
#The need for CS strategies
It is amusing to see that 37% of the companies don’t have a clearly defined CS strategy.
The survey results indicate that many businesses and companies are still stuck with just guided tours of software, & generic manuals, rather than building paths to success. Customer success in its truest sense cannot be treated as an add-on or be limited as a simple strategy.
Additional Read: Customer Success trends 2022
This pandemic has had a great impact on the customer success industry. But this is our “new normal”. As organizations continue to shift their focus towards these customer outcomes, CS professionals will continue to gain more responsibility for business revenue.
These statistics are proof that customer success has been of great importance over the last few years and with years to come, it’s importance only increases.
P.S. – The main image has been taken from pexels.com