Survey Says: Want to Reduce Churn? Reach Across the Aisle.
If you work in a B2B business—and chances are if you’re reading this article, you do—churn is a word you never seem to be able to escape. Some churn is inevitable, but the million-dollar question that companies continually ask themselves is, “How do we keep customer retention as high as possible?”
For UserIQ’s 2019 Customer Success + Product Management Alignment Benchmarking Report, conducted in partnership with SuccessHacker and ProductCamp, we surveyed more than 400 SaaS leaders and found that one of the greatest opportunities for companies today is a stronger alignment between their customer success and product management teams.
Specifically, we learned that companies with well-aligned customer success and product teams experience less churn. With the software industry reporting an average churn rate of 5.33% — according to Recurly — 87% of survey respondents whose organizations have a churn rate of less than 1% said these two teams are fully or at least somewhat aligned.
We first explored the software industry’s assumptions about team alignment in our 2017 Benchmarking Report: Customer Success + Product Management Alignment. We learned that there were significant disparities between the perceptions and realities of this alignment in practice. As the conversation around this topic has grown since then, this year we aimed to find out what’s changed since 2017 and what more can we learn about how alignment is evolving.
It pays to have aligned customer success and product management teams
As competition increases in the software world—seemingly exponentially every day—customer success and satisfaction is no longer a nice to have—it’s a have to have. If businesses want to capture and maintain the mind-share (and wallet-share) of their users, customers have to be prioritized above anything else. At the end of the day, your customers are the reason you exist and the reason your business will succeed or fail. The only way to make a company work as an efficient unit in delivering customers to their goals is through organizational alignment.
If you’ve heard about customer success and product management alignment recently, it probably makes perfect sense. One team is focused on the product, while the other is focused on the people using it. Through our learnings over the last few years, we know both sides have to improve the partnership between them.
Similarly to “sales and marketing alignment” of the last 10 years, it may help to think about customer success and product management misalignment as a tug of war. If each team is doing their best work by themselves, they may be unknowingly pulling customers, and the company, in different directions. However, if every department within the company is focused on a singular overarching business outcome, they’ll all use their unique skills and responsibilities to pull the rope in the same forward direction.
You don’t have to take our word for it, though. After surveying customer success and product management professionals across multiple industries and markets, we have the data to support the importance of alignment to the overall success of the business and an understanding of how we can get there. Here are four ways we learned that aligned customer success and product management teams lead to reduced churn.
4 reasons aligned customer success and product management teams experience less churn
1. Aligned teams work with shared knowledge
While churn can sometimes feel like a great mystery to be solved, it isn’t random at all. You just have to dig deeper to understand it. Unfortunately, many teams haven’t taken the first step in controlling churn, which is just knowing where it stands today. In fact, a full quarter of our survey respondents said they do not know their customer churn rate. This is pretty surprising because, as they say, you can’t manage what you don’t measure.
Our benchmark survey exposed misalignment across other processes and metrics, as well. More than half (54%) said that these two teams still have no shared service level agreements (SLAs), which are necessary to establish common ground on when and how customer feedback is addressed. An additional 19% were “unsure” if such performance tracking measures even existed across their teams, and 34% of respondents reported no shared metrics at all.
So how can companies create teams with shared knowledge? First, there must be a priority on collecting user data and sharing it across the organization so that every team member begins their work with the same assumptions of current conditions. Data is the foundation for understanding what’s currently working and what’s not so you can identify what exactly needs improvement.
Shared knowledge also stems from a common set of tools, or a “source of truth.” Our 2017 report uncovered that nearly 55% of customer success and product management teams were using separate applications to access customer data, and that number actually increased slightly to 57% in 2019. In fact, some respondents noted that they’re still using inefficient paper processes that are “very manual” or identified sources of truth as “notes the two of us take” or “myself.” As the tech stacks we use continue to expand and proliferate, integrated tools are critical to achieving team alignment and working toward shared goals.
2. Aligned teams successfully combine skills
The best way to increase customer retention is to help users reach their biggest goals as fast and efficiently as possible. As important as this is, it’s an impossible task if customer success and product management teams work in silos. The product management team needs a CS understanding of user goals, and the customer success team needs help in smoothing the product experience toward those goals.
One respondent noted “[Our] CEO and heads of each channel ensure and enforce that both client success and product management share data with each other, sales teams, the executive committee and the Board,” which illustrates how all stakeholders—not just customer success and product management—can make customer-centric and data-driven decisions.
The ability of the CS and PM teams to work together is truly put to the test during customer onboarding, particularly with a low-touch model. Think about it: the first time a user actually uses your product is a telltale sign of how intuitive the product is. It’s product’s job to build a smart, useful product, and it’s customer success’ job to align the value of the product with the goals of the user. When customer success and product management teams combine their knowledge and expertise to create a high-tech, product-first onboarding experience, they can scale their customer success resources and foster better retention revenue.
Driving that point home, our benchmarking survey found that more respondents (63%) who said they maintain a low-touch engagement model have attained churn levels under 10% than companies with a high-touch approach (53%). This indicates that a low-touch, product-first experience is what customers prefer—and in today’s self-service environment, that makes sense. Certainly, companies with different types of users may find that high-touch engagement is a better fit for their unique user base, but a data-driven understanding is always necessary.
3. Aligned teams work together to resolve customer issues
Software users don’t think about their issues with your product as a customer success problem or product management problem—the distinction between these teams only exists in the eyes of the company. That’s why teams need to work together to resolve customer issues. Customer feedback that gets assigned to or collected by either team needs to be shared with the other through a common system of record. For 53% of respondents, feedback-sharing is owned by customer success. That leaves another 47% of feedback that’s owned by another department (or in some cases, multiple other departments) within the organization.
Aligned customer success and product management teams also benefit from a common vision of customer health and feature usage, specifically. A shared understanding of churn warning signs or power-user behavior helps both teams deliver the right responses or proactively make changes. Unfortunately, only 7% of respondents said their teams were “extremely aligned” around customer health, and only 9% said the same for feature usage. This is a huge missed opportunity!
Not to mention that issue resolution has a significant impact on churn. 67% of survey respondents who said customer issues are always resolved also said their organization maintained a churn rate of 10% or less, compared to 53% of companies who said they address issues “most of the time.” A customer issue may be only one ticket to your company, but to that user, their entire relationship with your product could be at stake.
4. Aligned teams prioritize actionable communication
Companies have a lot of moving parts, and small daily updates can turn into significant lapses in knowledge if left unchecked. Our benchmark report found that companies that prioritize communication between teams and customers have lower churn. Just over half (56%) of those who said they use email or chat to stay in sync have churn rates of 10% or less, in part because they can stay on top of changing needs, user issues, code red bugs and real-time customer feedback.
Structured updates and consistent follow-up keep customer success and product management teams working in the same direction and ensure that customers feel supported at all times. A quarter of the survey respondents say that feedback is shared between teams weekly, and another 29% share feedback on-demand.
In addition to the frequency of communication, customer success and product management teams should pay attention to the quality of cross-team communication. While many survey respondents said that product roadmaps were a top meeting agenda item, only 10% said their team was “extremely aligned” on this topic. Clear expectations and terms are critical for turning meeting time into actionable alignment. An agreed-upon agenda also helps keep communication on track and gives each team the ability to bring up topics that are important to them.
Agendas don’t have to be complex, either. Here’s how one respondent said they would outline a meeting agenda: “Share what the product roadmap is, give feedback on areas of the product customers would benefit from, share direct customer feedback and address issues.” Seems like an effective strategy to us!
While the day-to-day tasks that your customer success and product management team members tackle are different, it’s essential to remember that they’re complimentary. What our time working with software companies and conducting this benchmark survey has taught us is that if you want to reduce churn, alignment between teams is a mandatory step.
Editor’s Note: Want to uncover more insights from the 2019 Customer Success + Product Management Alignment Benchmarking Report? Download the full report to find out how to create alignment throughout your entire organization. Prefer to listen instead? Check out our webinar on the top takeaways from the report.
Wes Bush explains how you can create a just-in-time onboarding email sequence that converts in Part 3 of his 3-Part user onboarding series.