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Why customer success should be your business’ next investment

Georg Ell, CEO of Smoothwall, explores how he reorganised the business around customer success, reduced customer churn and improved net revenue retention in just one year.

If you’re the same age as me, you probably remember buying software and getting a disc and licence key. Consumers and businesses had to install and configure the application in what wasn’t a very customer-friendly process. As a result, lots of software was badly configured or never installed.

Once Software as a Service (SaaS) companies emerged, they evolved to put customer success at the heart of their operations. During my time at Yammer, I gained first-hand experience of the power of customer success. This informed my decision to strategically invest in customer success at Smoothwall. And the results have been pretty amazing.

What is customer success?

Customer success is about investing time, money and resources into maximising customers’ enjoyment of their software investment. 

It’s also an efficient approach to business. There’s no point in cold calling and sending prospective emails to unhappy customers. That’s just going to make them more unhappy. Instead, customer success programmes solve the root cause of unhappiness and keep customers content. Making it far more likely that they’ll renew and hopefully buy more from you. A great customer success programme also feeds back into product and marketing too.

Identifying the indicators of good customer health

At the start of our customer success journey, we asked: “How can we build a really good system to score our customers’ health?” We debated 50 or 60 potential customer health indicators. Then we built a spreadsheet to model and weight them. And then carried out a retro-analysis to assess their correlations with historic renewals.

We found that customers flagged:

  • Red were about 80% unlikely to renew
  • Amber were about 60% likely to renew
  • Green were about 90% likely to renew

To systematise this spreadsheet and deliver additional efficiencies, we contracted a software provider called ChurnZero. You can find out more about how we developed the spreadsheet and chose and implemented the software.

As soon as the platform was up and running, we could see each customer’s traffic light status. Plus, the reasons for that status across our entire customer base. 

Some really interesting feedback emerged from the data. We found that when customers did not raise any support tickets at all they were far from being happy. In fact, they were completely disengaged with our product. This is actually very obvious when you think about it. But until the data showed us, we were most focused on those customers who were raising support tickets. And not really giving any attention to the ones that weren’t. 

This kind of insight transformed our business. Because it empowered us to think about what we could do to improve our customers’ lives.

Data-driven customer service

ChurnZero not only offered data analytics but also built-in automation based on a range of sophisticated triggers. These automated emails let customers know that we’d seen their high-priority support ticket. And that we were keeping a special eye on it. The platform would also email the relevant employee to help them stay on top of the ticket and follow up.

Suddenly, our business was being – and being seen to be – really proactive. We got great customer feedback, and our employees loved the superpowers it gave them. Our team had the ability to look at the status of the entire customer base. They could dig into customers that might previously have been overlooked. And they knew exactly where to focus their attention, thanks to the proactive alerts. 

Reorganising the business to optimise customer success

To capitalise on this insight, we needed to adjust our organisation’s design. Before introducing a customer success model, we had a new business sales team whose job was to find new clients. Our client development team managed all renewals, upsells, cross-sells and customer relationship management.

This set-up encouraged a culture of being very hands-on at the start of the contract with a big gap in support. Suddenly, two years later, when it was time to renew again, the sales team would be in touch. This resulted in reactive client support, mainly for those who shouted loudest and left little time for anything else. 

So we moved most of the client development team into a new customer success function. This was headed up by someone we promoted internally into a director role. Those people in the client development team with the right skills and aptitudes moved into the new Customer Success Manager role. We also changed how we paid them by increasing their base salary. And we also reduced their commission which was paid solely on the basis of renewals and customer happiness. 

This adjustment has freed up the customer success team. Now they have the capacity to look at our real-time health scores. And identify and support customers that are unhappy and at risk of churn. By making sure our customers love our product, our Customer Success Managers build relationships based on enjoyment. Making it easier to ask if existing customers want to look at our other solutions. If they do, we introduce a colleague from the sales team to close a warm referral. 

“Ultimately, I expect the customer success team to build up a body of knowledge based on customer conversations about how they use our technology. This will help us develop best practice and will feed into marketing materials and product development.”

Georg Ell, CEO, Smoothwall

Bigger benefits for our business

Our new business team continues to grow our revenue base with new logos. And our customer success team picks up the customer relationships as they’re handed over. This is a much less transactional approach that has generated really good feedback from customers and employees. Plus, in the space of a single year, we’ve also substantially improved our renewal rates:

  • We moved from renewing about 80% to around 97% of our customers. 
  • Net revenue retention has increased from about 101% to 114%.

Large scale change is always tricky, and this is one of the hardest things we’ve done so far at Smoothwall. But it was also one of the most critical. With customer success at the heart of our strategy, our ability to retain more customers and increase revenue has laid the foundations for an even more profitable future.

ABOUT THE AUTHOR

Picture of Georg Ell

Georg Ell

Georg is CEO of Smoothwall, a dedicated safeguarding technology provider in UK education. Prior to joining the business in 2018, he was Tesla’s Director for Western Europe and served as General Manager, EMEA for Yammer, acquired by Microsoft for $1.2B. Smoothwall was our first investment from Fund I. In August 2021, we sold our stake to Family Zone, an Australian headquartered cyber safety software provider, generating a return of 5.6x invested capital and a 56% IRR. During the investment cycle, Georg led on multiple acquisitions and delivered many product innovations, whilst his team were awarded Three Stars in the Sunday Times’ “Best Companies to Work For” and recognised as a Top 100 Employer.
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