Lifesize recipe for SaaS success? 'Smother customers with love'

The story of Lifesize is a microcosm of the transition many enterprises face today, as they grapple with the transformation from traditional one-off product sales to a modern subscription-based services business model. It approaches that change with a philosophy that puts customer success at its heart.

Founded in 2003 as a maker of high-definition digital videoconferencing systems, the business was acquired by Logitech in 2009. Five years later, it was spun out again with venture financing under the leadership of its founding CEO Craig Malloy, with the aim of transforming from a product business into a cloud-based, software-as-a-service company. Today, Lifesize still sells videoconferencing hardware, but its flagship product is a cloud-based video, audio and web conferencing system for internal communications within the enterprise, which at the last count had 4,200 customers.

Realizing that this was would be far more than simply a technology and product transformation, the first new employee that CEO Malloy brought in to help manage the change was Amy Downs, who became Chief Customer Success Officer in advance of the launch of its new SaaS offering in June 2014. She discovered processes and a culture that weren't going to pass muster in the new, customer-first world of a SaaS business:

We had to redesign the entire company. Customer support was like a complaints department. [A customer-centric approach] was not in anyone's DNA at the company in any way. We had to shift the attitude and culture of the company to think with the end user in mind first.

Smother them with love

Customer success is at the heart of the SaaS model, Downs believes. That's because selling a service is all about building a relationship — and often that can start with a small monthly subscription, rather than the traditional product model of trying to bundle as much as possible into one big sale:

The strategy as a SaaS company is, let's get in the door. Then let's go smother them with love.

Once a relationship has formed, the next task is to help the customer maximize the value they get from the service, so that they continue to renew their subscription, and also expand their usage over time. This is the key to SaaS in the B2B space, says Downs, which is why customer success is such a buzzword in the burgeoning world of subscription-based services:

From a retention perspective, for any company that's trying to sell in the B2B space, how do we help them realize value in an ongoing relationship? Customer success teams are becoming more prevalent. It's their job to bring the voice of the customer back into the business and to connect the rest of the business to the customer. We do that throughout the lifetime of the customer.

That's why the first step in preparing for the move to a SaaS model was making sure that employees were in tune with a more responsive, customer-oriented approach.

Make every day matter was tough for us. So was customer obsession. We spent a lot of time educating people on our mission and values.

You also had a lot people trying to hang on to the past while we were trying to move towards the future.

Monitor feedback and usage

Taking a software-first approach means that the new Lifesize service focuses strongly on working with existing systems. Users can join conferences from any device, whether that's using a mobile app, joining via Skype, or sitting in front of a conference room camera. An important differentiation is that, rather than solely being focused around meetings, Lifesize sees its role as connecting people within an organization. In some customers, that has made Lifesize integral to the operation of the enterprise, says Downs.

Our strength is point-to-point. Most of the models out there are meet-me models. We have a directory, you can see who's available.

Companies that have done full adoption, if Lifesize goes down it's like the Internet has gone down. Allowing people to scale video unlimited in the cloud gives the benefit of connecting everybody in the organization.

An essential component of managing an ongoing subscription relationship is monitoring customer behavior, says Downs. Using a combination of quantitative data analysis and qualitative measures, such as monitoring feedback from customers, Lifesize has reduced its already low churn rates by 10% over the past year, she says, and is getting as close as possible to zero churn.

There's lots of reasons customers churn out. We do post-churn surveys but we also do a lot of upfront analysis — we look at what could be early indicators of churn and take action.

Net promoter score (NPS) is a useful tool but it's important to look at it in the context of other factors, says Downs. It's important to collect feedback after closing a support call and after onboarding a new user. Build opportunities into the product to monitor usage, get feedback, and then act on the data, she advises.

Immediately as that data comes in, if we have any negative indicators, someone immediately acts on that.

If we don't get them using at the same rate as other customers, we need to understand why.

This should go beyond frontline customer support and also feed into broader operations and product development, she adds.

Everybody in the business is driving change in the business based on what customers are telling us. It's all about driving that operational change in the company.

My take

Lifesize is an archetypal example of the adage that every company is becoming a software company. Its story illustrates how radically that change impacts enterprise culture and processes.