Mastering Monetized Customer Success: Strategies for SaaS Growth and Profitability
By Omid Razavi
Monetizing customer success can help SaaS businesses improve customer experience and outcome, build stronger customer relationships and generate new revenue streams. By offering additional services, resources, capabilities, and expertise to help customers achieve their desired outcomes, companies can differentiate themselves from competitors, increase customer loyalty and retention, and generate new revenue streams. Additionally, monetization of customer success can help companies recover some of the costs associated with delivering those services and reinvest those funds in additional resources to continue improving their customer offerings.
Standard vs. Monetized Customer Success Plans
The Standard Customer Success Plan provides customers free services, including support, training, and success resources, to help them utilize your products effectively. These services are typically paid as part of the customer's product subscription. The type and level of services offered can vary based on customer spending, growth potential, usage patterns, and industry segment.
On the other hand, Monetized Customer Success Plans are paid offerings that provide customers with more comprehensive, personalized, and impactful resources, tools, and expertise to ensure better customer experience and loyalty and help them achieve their outcomes faster and better. Customers can choose from different tiers of monetized plans based on their needs, budget, and goals, which can be targeted toward specific customer segments.
Monetized Customer Success Plans are often offered as subscription plans that customers can opt-in to for an additional fee. These plans may include services such as personalized onboarding, ongoing product education, and training, access to assigned customer success and support resources, and customized business reporting and usage analytics. They go beyond the basic support, training, and resources typically included with a standard subscription, generating additional revenue for the company.
The Prerequisites
Monetized customer success can work for both startups and established companies, but there need to be certain prerequisites in place for it to be successful.
Well-established customer success function: A strong non-monetized customer success function is essential for successful monetized customer success plans. It allows you to tailor plans to your customers' needs and increase their chances of success.
Understanding customer needs, pain points, and expectations: Your team should deeply understand your customer's needs and expectations, which can be gathered through feedback and analysis. This includes identifying key customer segments and personas, mapping the customer journey, and using data analytics to track engagement and satisfaction levels.
Strong foundation in customer support, training, and professional services: These areas play significant roles in ensuring customer onboarding, user adoption, and usage of your product or service. Continued investment in these areas will also help create monetized plans that align well with customer needs and goals.
Understanding the costs and margin for investment: To offer monetized plans, it's crucial to understand the costs involved and ensure a sufficient margin for the necessary resources. These resources may include staffing, technology, applications, and data services. Partnering with third-party providers can help control costs.
Sales strategy: Plan for who will sell the monetized plans and include sales costs in your monetization strategy. You can choose between various sales options like product sellers, specialized services sales, partners, or self-serve. By defining your sales strategy, incentives, and enabling methods, you can increase conversion among your target accounts.
Marketing strategy: Selling monetized plans involves creating compelling messaging and packaging, conducting market research to understand customer preferences and buying habits, and defining the best channels for reaching your target audience.
Continuous improvement: It's essential to continually improve and evolve the monetized customer success plans based on customer feedback, usage patterns, competition, and impact. This will ensure that the plans remain relevant and effective in meeting customer needs and goals.
Alignment with company goals: Ensure that your monetized customer success plans align with your company's overall goals and contribute to your growth strategy. Your plans should complement your product offerings, enhance customer retention, and generate new revenue streams.
The Offerings
Designing the monetized plan requires identifying the customer segments that could benefit from the plan, paying for additional services, and understanding the customer's desired outcomes and goals. The services covered under a monetized plan can vary depending on the company's offerings and customers' needs.
Personalized Onboarding: Help customers get started with the product, ensuring a smooth and quick onboarding experience.
Premium Support: Provide higher levels of support, including priority response times, dedicated support channels, and access to Technical Account Managers (TAMs).
Training and Workshops: Customized training and workshops to help customers get the most out of their products and to develop best practices for using them.
Assigned Customer Success Manager: Regular check-ins, business reviews, and goal-setting sessions to ensure customers make the most of the products and services and their desired outcomes are met.
New Products and Features: Early access to new products and services, beta testing programs, and additional tools and features unavailable to standard customers.
Advanced Analytics and Metrics: Custom reporting and data analytics services, including benchmarking, help customers understand their usage patterns and value attainment and improve their results.
Guaranteed Service Level Agreements (SLAs): Guaranteed SLAs for support response times, uptime, and other key performance indicators, with penalties.
Consulting and Advisory Services: Access to experts who can provide strategic and technical advice and health check reviews to help customers achieve their goals and outcomes.
Access to a Community of Peers: A closed community of like-minded peers and experts where customers can share best practices, insights, and feedback.
Special Offering: Special offerings to speak or attend the company and third-party events, user groups, and advisory boards.
These are just a few services that can be included in the monetized plans. You only need to have some of these services to start. It is better to start with a few services and test them with a limited number of customers to gather feedback and make improvements before offering them to a broader customer base. It is crucial to regularly evaluate your customer success plans based on feedback, usage, and impact.
The Packaging and Pricing
Below are a few suggestions for pricing and packaging monetized success plans:
To effectively price monetized plans, it's crucial to show significant customer value relative to the plan's cost, typically ranging from 2 to 5 times greater. This demonstrates the worth of the plan and justifies its pricing.
Bundling the services into a comprehensive package, rather than offering them a la carte, is recommended. This strategy allows for lower costs because not all customers will use all the services all the time. Additionally, bundling minimizes friction and delays associated with customer Statements of Work (SoW), which can impact delivery times.
Common pricing strategies for monetized plans include a percentage of the product subscription cost. These typically range from 15% to 35% for different tiers, depending on the level of services offered. Setting a floor price is important to maintain the necessary margins. SaaS Controllers and CFOs typically expect a 40% to 70% margin, which should be considered when setting the price.
It is a good approach to start with a lower margin and gradually increase it as proficiency and efficiency improve. This allows the company to test the monetized plan's effectiveness and refine it over time while maintaining a reasonable margin.
The minimum term for monetized success plans should typically be 12 months, with 3 to 6-month trial periods for early adopters. This allows your early-adoptor customers to experience the value of the plan before committing to a longer-term contract.
Co-terminating the monetized plan with the product subscription is recommended. It streamlines the sales process, eliminates the need for separate agreements, and ensures the plan is always available to the customer during the active subscription period.
The Success Metrics
The primary metrics to track and manage the monetized plans are:
1. Monetized success revenue: It's essential to track the revenue from the monetized plans to ensure that the plan generates enough revenue to cover the costs of delivering the services and produces a profit margin for the business.
2. Monetized Success gross margin: A healthy gross margin (i.e., the difference between the revenue from the monetized plans and the cost of delivering the services) is crucial to the success of the plans, as it indicates that the plan is generating enough profit to justify the investment in resources.
3. Monetized success attach rate: This measure tracks the percentage of accounts subscribed to the monetized success plan compared to the total number of target accounts. A higher attach rate indicates that the plan resonates with your target customers for the value it promises to them.
4. Retention of customers under the monetized plan: This measure tracks how long customers stay subscribed to the monetized plan. A high retention rate indicates that customers find value in the plan and are more likely to renew their subscriptions.
5. Health of customers under the monetized plan: This measure tracks the overall health of customers subscribed to the monetized plan. This includes usage, adoption, customer satisfaction, and advocacy metrics. A higher health score indicates that customers are satisfactorily utilizing the plan's services to achieve their outcomes.
The Results and Impact
A successful monetized success plan can lead to several positive outcomes for both the customers and the company. Some of the likely results include the following:
Faster time-to-value for customers: Monetized plans can help customers realize the product's full value more quickly by providing access to additional resources and services.
Increased adoption and usage of the product: Monetized plans can provide customers with additional training, success, and support, which can increase their adoption and usage of the product.
Improved customer satisfaction and loyalty: Monetized plans can provide customers additional value and support, improving their overall satisfaction with the product and increasing their likelihood of remaining a customer.
Reduced churn: By providing customers with more comprehensive support and resources, monetized success plans can reduce the likelihood of churn and customer defection.
Increased revenue streams: SaaS providers can generate additional revenue beyond their core product offerings by offering monetized success plans.
Please share your ideas and experiences with monetizing customer success in the comments below. Also, sign up for the CCO Perspectives weekly newsletter for more insights.
Resources:
Here are a few good resources on monetizing customer success, in reverse chronological order:
1. "How Effective Are You at Monetizing Service Offers" and "Monetizing Customer Success" by Hal Stanley and Stephen Fulkerson, TSIA, March 2022 and June 2021.
2. "The Do's & Don'ts of Monetizing Customer Success," Vitally.io, Oct 2021.
3. "Premium Packages," Chapter 14 in Onboarding Matters book by Donna Weber, May 2021
4. "Should you Charge for Customer Success," by Irit Eizips and Jennifer MacIntosh, May 2021
5. "Monetizing Customer Success: What You Need to Know Before Taking the Plunge" by Sheik Ayube, ESG July 2020
6. "Monetization," Chapter 23 in The Customer Success Economy book by Nick Mehta and Allison Pickens, April 2020
7. "The Case for Billable Customer Success," by Mikael Blaisdell and ChurnZero, May 2019
8. "Monetising Customer Success," by Dave Jackson, March 2019
9. "Introducing Customer Success 2.0," By Charles Atkins and Paul Roche, McKinsey & Company, Jan 2018
10. "Charging for Customer Success," by Omid Razavi and Nick Mehta, Jan 2016 bit.ly/3Khxho2
