Category Archives: Email Marketing

What an Overnight Camp Can Teach Us about Managing the Customer Experience

Note: Since this involves a personal anecdote, I deviate from normal EMI blog practice and include my name at the bottom of this post. What follows is a cautionary tale about how an organization can destroy customer satisfaction and ultimately threaten revenue by not adhering to these simple rules:

  • View your CRM approach and communications through the lens of the customer.
  • Understand that satisfaction = reality – expectations: if you set expectations properly through communications, then satisfaction will benefit.

This summer, for the first time, my 11-year-old daughter decided that she really wanted to go with a friend to overnight camp. The camp we selected was one that the friend—and my wife—had attended in the past and enjoyed a great deal. For anyone familiar with overnight camps these days, it will not come as surprise to learn that the cost for a month of camp was not insignificant. My wife and I wanted our daughter to be able to have the experience, though, so decided to sign her up.

About a month before camp was to start, we received a communication that detailed all of the clothes that our daughter would need during her stay. All of a sudden, we were now on the hook for several hundred dollars more, but we appreciated the level of organization that enabled us to ensure that our daughter had what she needed.

But things took a turn for the worse, as detailed below:

  1. We were informed that in addition to the clothes on the list, we would also HAVE TO purchase several shirts and pants from the camp. No option to opt-out, no mention of that when we signed her up.
  2. Then, immediately after dropping her off, we were told that in order to communicate with her we had to sign up for an emailing service for which, yes, there was a fee.
  3. Now, with the end of camp approaching, we have received another communication: on the day we pick up our daughter we must—before we actually get to see her—settle up her “Canteen tab”, which comprises items (e.g., batteries, candy, soft drinks) she “purchased” from the little on-site store as well as the costs associated with day trips (e.g., to a nearby amusement park) planned by the camp.

All these additional costs took us by surprise. Maybe they were buried somewhere in the material provided about the camp, but they certainly weren’t prominently displayed. Moreover, we had no control over the expenditures. I’m confident that opting-out of the amusement park trip was not an option, nor would I have wanted to deprive my daughter of the experience, but since the camp knew it was going to charge me for these things, why didn’t it clearly tell me upfront…or better yet, why not build the charges into the cost of the camp?

And that brings me to what this whole experience should teach us about the importance of thinking strategically about the relationship between poor customer experience and lifetime value. My daughter might come back from camp having had so much fun that alternatives will not be an option next summer, and the camp will retain us as customers. However, the camp’s poorly considered pricing and communication decisions mean that even if my daughter loves it, I don’t. The next time another parent asks me how it was, my answer will be “Well, my daughter thought it was great, but it aggravated me like crazy….”

That’s called negative word-of-mouth and it should be a cause of concern for any business—but especially ones like this camp that relies on referrals for most of its marketing. Now, not only am I on the fence about sending my daughter, but I’m sure the parents I talk to will have second thoughts about sending their children. Avoiding this problem wouldn’t have involved any loss of profit for the camp; all it needed to do was follow the rules laid out at the top of this post.

Anthony Nygren

A Look Inside Sales and Marketing at SaaS Companies, Part 2

In a previous post reviewing some of the data from the Pacific Crest SaaS company survey, we highlighted some of the sales and marketing strategies that distinguished higher growth companies from their slower-growing peers. This time, we’ll look at other data from the survey that reveals that for all SaaS companies, there are significant areas of missed opportunity.

The chart below speaks to the ability – or inability – of SaaS companies to upsell existing customers.

Across the entire sample population, the mean percentage of new annual contract value dollars coming from upselling existing customers is only 19%. Larger companies (20%) are no better than small companies (23%) who are themselves not much better than mid-size companies. With a business model that depends on future revenues to payback initial sales and service costs, there seems to be a significant missed opportunity for maximizing lifetime customer value. In addition to needing that upsell revenue to maximize profits, SaaS companies have a wealth of usage data that can and should be used to target upsell offers based on actual customer behavior.

The next chart, which shows the distribution of respondents based on contract renewal percentage, also points to missed opportunities for maximizing lifetime customer value.

While this data isn’t segmented by size or growth attributes, the sheer fact that fewer than half the respondents achieve a 90% or greater renewal rate – and that 25% don’t even reach 80% – suggests a widespread lack of execution. Often, sales and service efforts are entirely focused on closing the deal and getting the customer up and running; ongoing support, nurturing, and engagement are neglected. To help correct this neglect, consider a service like Totango, which enable SaaS companies to monitor usage behavior and thus identify underutilization (which can lead to a lack of value recognition on the customer’s part at renewal time). Then create email campaigns that target the areas of underutilization with news about training and support options. Greater utilization leads to greater value recognition, which should have a significant positive impact on renewal rates.

The Six Triggered Campaigns Every SaaS Marketer Should Try

Almost any business can benefit from the strategic implementation of triggered campaigns (see: http://www.emiboston.com/wp-content/uploads/2012/03/Triggered-Campaign-Field-Guide.pdf) to increase mindshare, walletshare, and lifetime customer value. For SaaS businesses, though, the benefits can be even more powerful as success depends on the optimization of the ongoing revenue stream from existing customers and prospects in trial. In a SaaS business, there is a proliferation of customer “moments of truth” – points in the customer lifecycle when the customer experience can significantly affect the business decision-making process. Because services are often paid for as-you-go, a change in usage volume, a service experience, training attendance (or lack thereof), and the degree of understanding of the product features can all lead to decisions to increase or decrease contract levels. As a result, marketing based on usage behavior and lifecycle rises significantly in importance as there is a strategic imperative to influence and/or drive interactions.

With that in mind, the following is a list of triggered campaigns that any SaaS marketing team should think about putting into circulation:

  • Free trial conversion. Once a prospect is in trial, that is the opportunity to communicate the value of the product – to reiterate the benefits and make it an easy decision for them to move from trial to paid. The conversion campaign should be planned as a series of communications, ideally including sales scripting. Customer testimonials and cautious use of incentives (e.g., discount offers) can be effective.
  • Win Back. You win some; you lose some. Having invested in getting the prospect to trial or even to a paid subscription, you shouldn’t sit back and simply accept the loss of a customer. A campaign based on common reasons for cancellation and/or non-purchase, potentially featuring incentives to entice the customer back, is vital to ensuring that you are maximizing the return on your acquisition costs.
  • Onboarding. Immediately after a customer has agreed to a pay is not the time to sell, but it is definitely the time to reaffirm the customer’s decision and the value of the product, as well as preparing the customer for future communications. The Onboarding campaign can be a single email, a series of emails, or even a multi-channel/multi-touch effort.
  • Training attendance. Even if it’s the greatest software in the world, customers won’t use more, expand their user base, and spend more unless they really understand how to use it. A triggered campaign targeting training attendance is therefore vital to maximizing lifetime customer value. The campaign can target individual users or a point-person/advocate who has a stake in training attendance.
  • Cross-sell and up-sell. After the onboarding campaign has laid the relationship groundwork and the training attendance campaign has ensured initial satisfaction, it is time to begin trying to increase walletshare. Cross-sell and up-sell campaigns should not apply a “hard sell” approach; they should be informative rather than overtly promotional. Again, customer testimonials (e.g., “see how customers like you are getting the most out of the software”) can be a powerful messaging element.
  • Feedback. Nothing enhances satisfaction like being asked for feedback. Any important point of contact (e.g., service call, initial implementation, training session attendance) should be seen as an opportunity to solicit opinions. But beware: if you don’t take action on the feedback, asking can be worse than not asking at all.

The good news for marketers is that not only is lifecycle information available for triggers, but now, through companies like Totango (www.totango.com), one can easily create and execute triggered campaigns based on software usage.