There is a Better Way

In response to the need for remote product support, a number of companies have developed tools that enable a support representative to reach out from their consoles via the Internet and work directly with the customer’s computer system, telephone or other technological product.  The rep can see for themselves exactly what the customer’s system is doing, and can make adjustments as necessary while conversing with the customer about the problem they are working to resolve.  If files need to be updated, or configurations adjusted, the support rep can take the necessary steps quickly and efficiently.  Regardless of the physical distance — across the street or on the other side of the world — using remote support technology brings faster resolution, and a better support experience for both the customer and the representative.

The HotLine Recommends

An appropriate remote support technology product should be a standard component of every well-equipped customer support/service contact center.  To assist companies in justifying the investment and in identifying potential solutions and vendors, The HotLine Magazine has added some free resources to the Contact Center Mgmt. Technology Library.  (Access to the Library and its materials is complimentary; membership registration and login is required.)

The Case for Remote Support Technology
Selecting Remote Support Technology (Includes vendor list)

For Further Reading

• SaaS & The Contact Center Technology Market
• The Contact Center Technology Market Research Project
• The Customer Contact Center Technology Suite
• Contact Center Technology: Unready, Set, Fail.
• Contact Center Technology: Getting What You Ask For
• Contact Center Technology: A New Approach
• The SaaS & Support Project Report
  

Mikael Blaisdell & Associates have been assisting a wide spectrum of clients to increase profitability and customer retention rates through resolving contact center and customer relationship management issues for over 30 years. Specific resources include:

• Services for SaaS/Cloud Firms
• Services for Contact Center Technology Vendors

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Defining “broken”

The typical definition of “broken” when applied to a customer support group is expressed as “the customers are screaming.”  The usual pain point is transactional responsiveness; customers are having to wait unreasonably (in their view) long times before being heard or until issues are resolved.  This scenario is almost always due to a simple lack of resources, or mis-deployment of those that are available.  The support staffing equation is straightforward: if you want calls/cases answered and/or resolved within a particular time frame, the calculation can tell you very precisely how many staff members you must have ready to respond.  Support professionals all know this.  Senior management members typically do not; the business and operational case must therefore be presented to them in order to get the appropriate allocation for staffing.

But the ‘broken“ descriptor may also be applied where the senior management team perceives that the support group is out of step strategically with the rest of the company.  Here, too, the communications issue is often a key factor both ways.  If the CEO and other senior executives do not have at least a basic understanding of how contact centers work to balance demand and resources, their ability to make effective decisions on overall customer retention policy and center budget allocations will be hampered.  If the Support leadership cannot talk comfortably about customer acquisition costs as investments, and show how customer retention costs are factored in to assure a continuing and profitable income stream, they are unlikely to be taken seriously by senior management.  The two sides of the conversation will end up talking past each other, and the probable outcome will not be good for anyone in the long term.

Developing a Complete Resolution

If the immediate problem is about a lack of resources and/or inefficient organizational structure / deployment, there are several available options for easing the pain.  Senior management readers should start with this brief article on staffing levels, and look at this case study (free registration & log-in required) where reorganization had dramatic results.   While there are effective steps that can be taken to bring improvement in the short-term, developing a complete resolution will require comprehensive effort.  The prerequisite is getting an accurate view of the situation, covering both strategic and tactical factors.    With the facts in hand, establishing an appropriate global policy regarding customer retention and profitability is something senior management must do, together with setting a workable budget.  It will then be up to the support team to effectively apply that budget towards fulfilling the retention and profitability goals.

“It’s what you don’t know about your customer relationships that can cause you to lose them.”

–The SaaS Customer Retention QuickStat

It’s Not About The Software Anymore

I set up my first online discussion forum for customer support in 1980, back in the old CompuServe days. I was in good company, on the same platform as dozens of firms like Microsoft, Borland and Autodesk, and there were a large number of very knowledgeable people who were more than willing to share what they knew with the community. Self-service and/or community support is nothing new, technology companies have been using these concepts and tools for 30 years and more. Many years later, any company may now set up a discussion forum on their website for free. The basic functionality of threaded-message forum management has largely become a commodity via open-source software. The same is true of help desk ticket/case management systems, and other support tools. While there is some room for differentiation in features and functionality, such advantages tend to be very short lived. How then should contact center technology vendors expect to compete in the new market realities?

Let’s use the support forum management software sector as an example. It doesn’t take very long for a company to discover that there is a world of difference between just setting up a forum and actually succeeding in attracting and furthering an effective community. The features and functionality don’t in themselves guarantee success. Anybody can cobble together a collection of features. Good designers can produce a smooth product that works well. But the crucial factor is the expertise of how to use a tool to design, deploy and above all to guide and manage an online community from the beginning.

Beyond Support: Customer Success

In the realm of technology, there will always be something that breaks and needs fixing. But in the SaaS/Cloud era, while fixing breaks may be something that a team does at need, it shouldn’t be their their primary purpose anymore. There are much more valuable things that those expensive human resources could be doing to add significantly to both their own companies’ bottom lines and to those of their customers.

At Lithium, for example, a Customer Success manager will work with a customer to define that customer’s success criteria, then will help them configure and launch their community, oversee usability improvements, provide technical support, and continue meeting with the customer periodically through regular success checkpoints. The focus in on making sure that the customer achieves success according to how the customer defined that objective. To do so, Lithium’s team applies real-time visibility into how the customer is using their application plus a wealth of strategic and tactical wisdom about how a company can maximize the benefit from an online community. And the Success Program doesn’t stop there.

In the past, Customer Support has been about the answer to “how does it work?” Customer Success is about a much more vital question: “How can I use the application to increase my company’s productivity and profitability?” It’s time to get beyond the old reactive role of Customer Support. The key to winning in the SaaS/Cloud era is customer retention, and a successful customer is very unlikely to want to leave the vendor that was integral to achieving that success.

What could a Customer Success Program achieve for your company? Give me a call, and let’s talk.

The Issues survey is still open for participation by CxO’s and/or senior Support executives & managers.  More information about the survey is available in The SaaS & Support Project section.  There are 8 questions in the survey, and it will typically take only 10-15 minutes to complete.  While all participants are asked to fully identify themselves and their companies, all information will be kept in strict confidence.  Neither your identity nor your specific answers will ever be shared with anyone else; only aggregate data will be used for reporting. Companies that fully complete the survey will receive a free copy of the Briefing on the results.

Danger:  The “Guesstimation” of Retention Costs

Over the past 30 years, cost accounting in software companies has always been a troubling issue.  In the turmoil of the startup process, finding the “bandwidth” to do accurate collection and assessment of cost data is understandably difficult.  Unfortunately, this lack at the beginning has tended to set a pattern that perpetuates itself.  How much are we spending to acquire customers?  There is no generally established and accepted methodology for determining customer acquisition costs, nor for how often the process should be done.  As a result, few companies can accurately say how much it cost them to acquire a given customer.  The effect of fuzzy acquisition cost data is compounded by the near-total lack of any authentic methodology or process for measuring actual retention costs.  While there is enough revenue data so that successful companies have a view of their profitability, the lack of a solid cost foundation reduces effective decision-making to “guesstimation” when it comes to retention issues.

The profits-realization strategy of traditional software companies tends to obscure the lack of authentic cost data by the large bursts of profit infusions from new sales.  The connection between retention and long-term profitability is given much less emphasis.  For SaaS companies, however, the importance of customer retention is sharply increased, and the lack of effective cost accounting methodologies and intervals is a serious threat to long-term corporate viability.

Building a Foundation for Success

There have been some good articles on the variables to consider in calculating customer acquisition costs for SaaS companies, and on the importance of doing so both regularly and by customer.  Joel York’s Chaotic Flow blog has an excellent series on financial metrics for SaaS companies beginning here.  He covers the importance of and the how-to for using the major variables of the equation; I think the next step is building a methodology for calculating the costs associated with all aspects of customer service, support and success.

For many years, my standard Assessment procedure for technology firms has included a calculation for the real costs of providing support & service to a company’s customers.  Using that experience as a base, I’m now putting together an initiative to develop a standard methodology and template for SaaS companies to use in calculating their costs for the full spectrum of customer retention efforts and resources.  If you’d like to be a part of that effort, please call or email me as soon as possible.  This topic will also be discussed in The SaaS & Support Forum on LinkedIn.

“It’s what you don’t know about your customer relationships that can cause you to lose them.”

–The SaaS Customer Retention QuickStat

A Learning Moment

The HotLine Magazine is an Industry Partner for the event, which takes place in San Francisco on May 10-12, and I’ll definitely be there myself.  Currently, there are over 400 confirmed attendees; you can review the list online by clicking here.  The agenda for the event is available at this link.

http://siia.net/aatc/2010/schedule.asp

Please let me know in advance if you’d like to schedule some time at the conference to talk about The SaaS & Support Project for 2010 or your company’s issues in customer retention and the ownership management of your customer relationships.

To Register

A $100 discount is available for non-SIIA member registrations through The HotLine Magazine.  Just enter the code PRMHTLN when you register online.  Here’s the link for registrations:

http://www.siia.net/aatc/2010/register.asp

The Accelerating Process of Change

I’ve been writing about the effects of SaaS on Support for several years now, examining both the driving forces and specific pressure points in articles here on The HotLine Magazine and elsewhere.  The SaaS & Support Project, which formally began last year with an in-depth online survey and focused follow-up research, has revealed a number of serious issues that ought to be of concern to senior management teams and support professionals alike.  (Information about the results of that 2009 research may be found here.)  The first TSSP 2010 online survey is now ready for response.  The focus of this survey is to identify the most important challenges now confronting both Support teams and their companies as well.  (Click here for more information about the new survey.)  The process of the change to our profession is far from over — and it’s not limited to just those who work the customer contact centers for software manufacturers.

What are the specific effects on the IT Help Desk when the business applications used by the company employees every day are moved to the cloud?  Do the number of calls go up or down?  How about the categories of those calls?  Are the issues more or less complex?  With what effects on the average handle time per call?  Has the maker of the application offered to extend their definition of Support to include the kinds of on-demand training that often is the province of the customer’s own help desk?  If you’re working or managing an internal IT help desk where the company’s applications have been moved to a SaaS solution, I’d like to hear from you on this either by e-mail or in The SaaS & Support Forum on LinkedIn.

There was a mixed audience of various levels of Support/Service management from both SaaS and traditional vendors at the session.  The reaction to my views on the flaws in the current definition of the profession and to the  vision of that something new — was mixed as well.  Some agreed with what they heard, while others were disturbed by the implications of the shift towards SaaS.  The important outcome, however, was the beginning of a conversation about the future of the profession of Support.

A Problem From the Beginning

The industry definition of Support from the very first customer call has always been about Break/Fix, a necessarily reactive and limited role.  The quality of the reaction and the satisfaction of the customer has always been highly variable.  But the overall reputation of Support as a profession in the eyes of senior management teams and the public has consistently been poor.  While WordPerfect had once stood head and shoulders above the pack of their competitors, primarily because they offered “free” support via an 800 number, and played music to soothe people left waiting on hold, there is no company today that is generally acknowledged as being superior in support quality.  Shevock’ words are as true today as they were back then: everyone is doing the same things when it comes to Support, but nobody is really winning.

One of the audience members challenged me back:  “I don’t believe that there isn’t at least one firm out there doing it right in the new world you describe. When I think about [Company X, Y or Z] there HAS to be at least one you can hold up and say, “These guys are good”. Or at least O.K.“    It’s true that we all know of companies that have inspired us to think ”these guys are good!“ in the course of resolving a problem.  But every time I or someone else talks about our good experience with company X, someone else will counter with an example of bad service that they received from the named company.   There is no company that stands out in the industry as a consistent and generally accepted exemplar of quality support.  Increasing the speed of the reaction to complaints and/or shifting the handling of incidents to different/cheaper resources isn’t going to change that unpleasant reality.  To win, we need to recognize that how the industry has defined Support is inherently flawed.  And beginning from that recognition, to come up with an entirely new definition and role.

A New Vision for Support

What would your team look like if this were your mission statement?  ”We directly contribute to making more sustainable profitability faster/better for your company and ours — and we can prove it!“  Do you think that a successful group with this mission would have to worry about seeing their jobs outsourced offshore?  I don’t.  But it will take more than pretty words on a wall to effect the change that’s needed.  Every metric applied to the operation of the team needs to be directly connected back to the mission statement.  Every member needs to understand how their functions fit into the larger role.  The challenge is huge — are you willing to engage? If you’d like to be a part of the redefinition effort, join us in The SaaS & Support Forum on LinkedIn, or email me directly.

The 2009 Report of The SaaS & Support Project described alarming vulnerabilities in on-demand company organizational structure and operation for profitability in the SaaS era.  Who really “owns” the ongoing customer relationship?  What metrics should be applied to measure performance?  Which revenue conduits are most appropriate, and how can they be made scalable?  Which roles should be assigned where in the overall organizational process for maximum effect?  In 2010, the Project will continue its research into these and related issues through the methodology of online surveys, in-depth assessments, online forum conversations and direct interviews.

The findings of the Project in 2010 will be shared in a series of Executive Briefings and covered by articles here on The HotLine Magazine over the course of the year.  A comprehensive Report will be published in late fall.  There will also be several webinars and professional conference presentations along the way.  Advisory clients and sponsoring companies will receive direct updates on developments as the research proceeds.  Individuals who join the Project will have access to the special Member Library here which will include resources such as example job descriptions, organizational charts, case studies, compensation plans, process maps, etc., as they are developed from the research.  (For membership information, click here.)  There are ongoing discussions in The SaaS & Support Forum and in the private Project members area on LinkedIn.

Three leading professional groups, The Association of Support Professionals (ASP), the Software & Information Industry Association (SIIA) and TechAmerica have returned along with OpSource, a major cloud operations company, as continuing sponsors of The SaaS & Support Project for 2010.  (Other companies interested in participation and sponsorship opportunities are invited to contact Mikael Blaisdell.)

Questions

The various search engines of the Internet bring visitors to The HotLine Magazine around the clock from locations all over the world.  The search strings / questions being asked show a lively interest in all things SaaS, and often are added to the research efforts of the Project.  Direct questions about issues of concern are welcome, and may be submitted via Letters to The Editor.  While an individual reply isn’t possible in every case, your input will help shape the course of the Project and may well inspire future articles.

Why are SaaS Vendors Being Taken by Surprise?

It’s a widely accepted business and leadership premise that in general, you get what you pay for or reward people to do.  While in theory, everyone in the SaaS vendor organization should be focused on preserving customer relationships, the actuality can be quite different.  The “relationship” may have many definitions.  To the Support and/or Training personnel, whose job performance metrics tend to be very specific and incident/result related, the relationship that counts is the human connection between individuals rather than the economic one between the companies.  This can easily result in a scenario where the employees of the customer company are very pleased with the day to day relationship they’re receiving from their SaaS vendor even as their senior management is making the decision to end it.  How did this happen?  Assumptions were made, went unquestioned and the result was neglect.  The only people that had a connection to the customer’s senior management were the Sales team — who have long since turned their attention elsewhere in pursuit of new sales.

But isn’t Sales measured on renewals, and therefore incented to keep relationships fresh in anticipation of the day when the contract comes up again?  Although technically correct in theory, in actuality there is often an assumption that Support will be looking after the customer from day to day and that all Sales will have to do is to come back into the picture to finalize the renewal.  The stage is set for failure, because the crucial message to the customer’s Management about the value they are receiving from their relationship with the SaaS vendor is simply not being addressed.  When the anticipated renewal doesn’t happen, when the customer declares their intention to leave, the pressure is suddenly on to Re-Sell The Sale.  And, of course, to pay the Customer Acquisition Cost all over again.

Is this happening in your company?  Are you sure?  How much are you willing to bet on your answer?

What Can Be Done to Save the Relationships?

When the customer’s intention/decision to leave has been announced or discovered, it’s necessarily time to play catch-up, with all of the increased customer re-acquisition costs of that game.  Send in the Sales pros, perhaps assigning talent by amount of revenue potential, and hope for the best — while watching very closely to learn every possible lesson you can from the exercise.

Don’t, however, let a disaster take you by surprise by assuming that it can’t happen to you — it can.  It will.  The sooner you design and implement corrective action, the less it will cost and the more effective it may be.  The first step is to identify the at-risk companies and relationships.  For each and every customer on your list, ask yourself: “If a renewal contract was submitted today, how likely would they be to sign it?”  Pay close attention to how the answer is justified.  How do you know that the customer’s senior management is clear about the value they are receiving from their relationship with you?  Are you giving that information to them on a regular basis, making sure that it’s appreciated and understood, or are you hoping that they’ll realize it on their own?

For each at-risk customer, develop a specific action plan for improving the relationship and the likelihood of renewal of the contract when it comes due.  Track the accomplishment of the objectives, and have a designated & accountable owner for the goal.

The CEO’s Role in Reducing Churn

The roots of churn are systemic; to address them effectively requires access to the authority of the CEO to re-structure across the organization.  The SaaS & Support Project research strongly indicated that SaaS companies are frankly lax when it comes to accountability for the ownership of the ongoing customer relationships.  There is no connection between the supposedly designated “owners” (where they even exist!) and the metrics used to measure the performance of individuals and departments.   This lack sets the stage for increased levels of churn and failure.

The key factor is the awareness of the customer of the level of value they are receiving from their relationship with you as a SaaS solution/vendor.  If that information is not readily available to the decision makers, the result may be a perception that the relationship represents a cost that can be cut. This is the vital aspect of ReSelling The Sale, that it needs to be a regular and on-going activity rather than a tactic used only in desperation.  With that in mind, ask yourself who in your organization is specifically responsible for developing that value information, and for consistently reinforcing that message in the customers’ minds?  How would you prove your answer?

“It’s what you don’t know about your customer relationships that can cause you to lose them.”

–The SaaS Customer Retention QuickStat

Where The Risk Begins

Before the contract has been signed, and the revenues collected, the conversation is all about potential value. When Sales speaks to the customer, the key theme is the potential gains in productivity and profitability to be realized through purchase and use of the application. Behind the scenes, Sales is keenly aware of the profit potential of the deal for both themselves as individuals and for the company, and is accordingly very insistent on being the clearly designated owner of the relationship until that potential has been realized.

In the aftermath of the close, however, the ownership picture quickly becomes much less clear, and subtle, but important, changes happen. Perhaps the Implementation team takes the lead for a time in companies that offer such services, or the Training department has temporary control while the customer is being familiarized with the application’s functionality. While both of these groups will be doing their best, a shift in the performance metrics being applied inevitably occurs. More specific and short term Project Management concerns come to the fore so that the contracted work will be done on time and budget, with the specified requirements met and delivered. By the time Support gets involved with the customer, the metrics and focus have become entirely transactional and reactive. Between company and customer, there is now a gap in the ownership of the relationship itself.

As the different functional groups move in and out of the picture, and the gap widens, there is an important change in the conversation between company and customer after the close. The previous topic of the potential value to be gained from use of the application is no longer being directly discussed by the company. The entire responsibility for getting value from the purchase has been quietly but firmly moved to the shoulders of the customer. The unfortunate result of the lack of a designated owner in the company and the shift of responsibility for getting value from the relationship to the customer is ever increasing risk of loss.

Towards Closing the Gap

Customer retention and profitability are too important to be left unattended; it’s time for a new approach. Both the ownership of the continuing customer relationship and the metrics by which the role is measured need to be clearly established. In the process, the issue of getting sustained value for both parties needs to be brought back into the conversation.

The path towards closing the gap starts with a strategic decision about the customer relationships that have been begun by Marketing and Sales. A new group is needed, one chartered and equipped to carry the responsibility and accountability for maintaining them on a profitable basis. The continuing work of The SaaS & Support Project in 2010 will be about design, formation and operation of that new group. To find out more, call me.

Webinar Invitation

“Customer Success: The Key to SaaS Company Profitability”
Thursday; January 14th, 2010 – 0900 PST / Noon EST

In this OpSource-sponsored webinar presentation, I will lead the discussion around how to organize for Customer Success, the skills and knowledge that will be required for the new team and its Management, and the metrics that matter in the ownership of ongoing customer relationships. There is no cost for attendance, but pre-registration is required. To sign up, click here. [ http://tinyurl.com/yctcno5 ]