Within the software-as-a-service (SaaS) industry, customer success professionals focus on building customer loyalty, ensuring retention and growing installed-base revenue. As with the change management discipline, promoting adoption and usage of the software solution is critical to customers achieving their intended results and ROI. Given this, why isn’t the people side of change a key part of customer success roles today?
The customer success discipline grew out of the need for subscription software companies to curb runaway churn and increase customer loyalty. Whenever customers decide not to renew their software subscriptions—a problem known as churn―revenue losses multiply. This “leaky bucket” of recurring revenue is a significant issue for SaaS companies because they must acquire more and more new customers just to stay in place. And selling to new customers is extremely expensive. According to the KBCM Technology Group’s 2019 survey, median new customer acquisition costs for SaaS companies were a staggering $1.34 for every dollar of first-year recurring revenue. This means companies must retain their customers for the long term if they want to turn a profit.
The customer success manager’s job is to onboard new customers, making sure the buyer adopts and uses the solution, so they achieve their intended benefits. Along the way, the customer success manager ensures a satisfactory experience, and later, actively works to get the customer to renew and expand their subscription.
If you think the adoption and usage issues in customer success mirror the people-side issues change managers address, you’re right. Yet, change management is not commonly applied in the SaaS industry. Here are three reasons:
The SaaS industry assumes that getting people to use the software on a large scale will produce the business results the buyer intended to achieve, and onboarding includes training to ensure that users know how to use it. In ADKAR terms, they do the K well―but miss the A, D, A and R. In fact, few in the industry know what these letters represent, let alone their importance. When introducing the concept to the software community, customer success managers must first introduce ADKAR to clearly distinguish the people-side definition of change management from other meanings.
Similarly, the customers in functional areas who purchased the software product without involvement from their IT department may not understand the need for change management. For example, the marketing manager buys a new cloud-based application for the department, but employees don’t use it, so they eventually cancel the subscription. They miss the people side of increasing adoption and usage. To resolve this, customer success managers must work alongside the professional services team, as well as the customer’s project manager and executive sponsor to deploy cloud-based technologies while addressing the critical people-side issues.
What SaaS companies are learning today is that there’s much more behind why customers choose to either renew or churn. People must use the product. They must adopt it and get results from it. And they must be satisfied with multiple aspects of working with the company that sold it to them. The mechanics of change from a human perspective is essential to everything that customer success is trying to accomplish.
The ADKAR Model is helpful because it shows customer training alone isn’t enough. The path from buying intention to business results requires a fundamental change in human behavior. Ultimately new software users must have an Awareness of the “what” and the “why.” Why did we buy this? What problem are we trying to solve? Why this? Why now? And what's the cost of not going along with it? That's often overlooked. And building that Desire or “what's in it for me?” How is this going to make my life better or different? And finally, building and reinforcing skills until usage becomes habitual. For SaaS, this creates that magical application “stickiness” all entrepreneurs want: the product delivers its promised value, leading users to avoid switching to something else.
When I talk to people in my community, I frequently describe the need for customer success managers on the front line and customer success leadership to understand the people side of change. Adoption means more than just doing the technical integration, deployment and training. It’s about getting users to change their behavior. There’s a huge opportunity for sellers of software, particularly within the SaaS community, to pay close attention to change management and how it works in tandem with customer success.
Ironically, the SaaS industry must undergo its own ADKAR journey to adopt people-side change management in day-to-day practices. SaaS company executives and investors must become Aware of change management’s contributions, Desire the results it delivers, gain Knowledge of the process, develop the Ability to change their own organization’s processes, and Reinforce the ongoing practice of change management within the customer success ranks.
Ed Powers is Vice President, Client Success for InteliSecure, a global data protection company headquartered in Denver, Colorado. A leading voice in customer success in high tech for more than a decade, Ed also founded Colorado Customer Success, a professional organization that enables customer success professionals to network, learn and share best practices, and move the industry forward. He became a Prosci Certified Change Practitioner this year.
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