Customer Liability: Going Above & Beyond without Going Out on a Limb
June 12, 2014
As more SaaS companies adopt customer success initiatives that improve user experience and drive customer retention, it’s creating a customer-centric ecosystem in which everyone wins. But as OpenView legal advisor Jeremy Aber warns in this post, if SaaS businesses aren’t careful, those initiatives could also expose companies to potentially liability issues.
On the surface, customer success programs seem like a no-brainer.
In addition to allowing software businesses to facilitate proper product implementation and usage, customer-centric initiatives — like the one that backup and disaster recovery solution Intronis rolled out last year — also help companies better understand who their buyers are, what they care about, and what they want to see in future product releases. Collectively, all of that can lead to companies building better, smarter, easier-to-use software, and customers converting into enthusiastic adopters ready to sing a brand’s praises.
Then again, there’s no such thing as a risk-proof strategy. In fact, as OpenView senior advisor and software licensing attorney Jeremy Aber points out, customer success programs can sometimes be a double-edged sword when it comes to legal liability.
“If the software customer isn’t getting to value quickly enough, then the relationship will suffer and the account will probably churn,” Aber says.
“On the other hand, if your business gets too active in product implementation and customer usage, or takes on more responsibility for customer success than a contract calls for, then you begin to expose yourself to legal liabilities you might not have considered.”
— Jeremy Aber, Aber Law Firm
The Potential Liability Exposure of Customer Success Programs
Aber wants to be clear about one thing: He’s all in favor of software companies implementing customer success initiatives that help their customers better leverage product features and get to value more quickly and efficiently.
But that increased involvement also requires SaaS businesses to set clear parameters that let customers know exactly what the vendor is responsible for doing and what the customer must do themselves.
“Your job as the software provider should be to educate, communicate, and draw the lines,” Aber explains. “That might manifest itself in proper documentation or instructions for implementation, or it could be warnings or notices to let customers know what they can do to prevent some bad things from happening.”
A Tale of Caution:
Aber says a 2012 Utah Supreme Court decision illustrates that point perfectly. In that case, a dentist sued a software vendor after it lost all of its data during a practice management software upgrade. The dentist argued that the vendor was to blame for that data loss because it was responsible for transitioning the practice to the new platform. The vendor, however, countered by arguing that it had told the dentist office to back up its data prior to the migration, and warned of the risks of failing to do so (by the way, the dentist office had not backed up its data, even though it told the vendor that it had).
Ultimately, the Utah Supreme Court sided with the software vendor.
“The lesson is that the legal system tends to reward software companies for adequately warning customers of risk and responsibilities,” Aber explains. “Regardless of how involved you are with a customer or how much effort you put into making that customer successful, you have to protect yourself by documenting the parameters of that engagement, wherein you explain what you are responsible for and what the customer is responsible for.”
Don’t Let Liability Concerns Keep You from Creating Happy Customers
The bottom line, Aber says, is that if you spend all of your time worrying about customer success liability issues, you’ll never do anything productive or innovative, and your customers won’t stick around for very long.
The key is to find a happy medium between what your customers want you to do and what you feel comfortable (and capable of) doing.
“If you don’t provide enough support because you’re paralyzed by what that could expose you to, then you won’t be in business for very long,” Aber explains. “At the end of the day, you need happy, successful customers to build a viable, sustainable business. So, by all means, invest in building a customer-centric organization. But as you do that, make sure you establish parameters and procedures that protect you from taking on things that your customer should be doing for themselves.”
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Photo by: Moyan Brenn