Building a SaaS customer success program from scratch - Vertafore did it, but they needed new metrics

Jon Reed Profile picture for user jreed March 2, 2020
My call out for customer success programs got some very interesting responses. This "from scratch" example from Vertafore brings plenty of tips and ideas to apply.

Businessmen working together to build a puzzle, by @alphaspirit, from
(by @alphaspirit, from

In my January 10 piece, If SaaS companies are serious about customer success, they better learn from Coupa's community intelligence approach, I issued a call for other winning examples. I some very interesting responses, though all with a different angle.

Perhaps my best conversation was with Cassidy Smirnow, Chief Customer Officer at Vertafore. Why? Because she built Vertafore's customer success program from the ground up, made the business case, and developed the metrics. Oh, and she's grown the program to 55 employees since launching in May 2018.

But why the new program, and why now? Vertafore has been serving the insurance industry with specialized software and services for about half a century. But the SaaS imperative has forced a shift. Not just in business models, but in the customer relationship itself. Smirnow:

As the evolution of SaaS has come, I think there's been a real transition in software companies, and certainly the ones I've been a part of. When you sold a perpetual license for software in the olden days, customers paid upfront, they got the license and they're on their own.

The SaaS push has changed that:

I think it's caused a lot of companies to change - certainly Vertafore has. We're private equity owned. One of our owners, Vista Equity Partners, has put a huge emphasis on customer success.

Of course, Vertafore always had a customer support division. When something breaks, that's who you call. But a couple years ago, they made a change:

About a year and a half ago, we made a multi-million dollar investment in customer success.

Customers expect a different kind of relationship

And why the shift?

We do a ton of surveys, engaging with our top hundred customers. The number one piece of feedback we got was that our customers didn't feel like they had a good relationship with us. They didn't know us; they didn't know what we were working on; they didn't know what we were doing to help them. And especially in insurance, that relationship really matters. And so we set up our Customer Success Program.

How do you ramp up? With executive buy-in. Smirnow made the case to their executive board and built their business plan. By August of 2018, the initial customer success team was hired and in place. Next up? A six week bootcamp.

But executives don't approve "success teams." They approve financially-compelling proposals. So what was the hook? Smirnow says the focus was on annual recurring revenue (ARR). Bookings are half of the ARR equation, but when you lose customers, ARR takes an unwanted hit.

When we looked at the amount of software that we were selling and the amount of customers that were leaving us every year, it was about a wash. It was like, "Gosh, we're spending all this money focused on selling more, but we're not really focused on retention."

New customer success metrics are needed

Until you put a metric and a multi-year goal around customer retention, it's just a nice phrase without meaning. Smirnow's team proposed to change that, via a five year model to reduce churn. And how did they do?

Our first year in, we hit our plan for year one, which was a percentage point reduction in churn.

ARR is now a discipline:

Obviously it's our churn, and our retention numbers, our ARR. We have a full blown review of that by customer every month.

Yes, ARR is an effective focus, but that's not the only approach Vertafore's program uses. Smirnow walked me through several.

1. NPS promoter score - initiated six months prior to the program launch, this score remains a bellweather:

It's been a really important metric for us. We've been able to grow our NPS about 11 points year over year. Each customer success person is measured on the NPS of their accounts; we survey our customers twice a year.

2. Tiered coverage model - dedicated customer success reps are now in play:

Our top accounts get a named customer success person. We have a long tail of small customers. It's just not economical to give them a named customer success program. 

3. "Tech Touch" to scale - smaller accounts might not get a dedicated rep, but new programs can still "touch" them also:

The other part of the program is customer success at scale - we call it "Tech Touch." What are the things that we're doing on an automated basis, that reach many? There's a lot of programs that we started there that I think are really working.

It's easy to see how dedicated success reps can impact accounts. But scaling a better experience with tech? That path is fraught with peril. However, Smirnow gave me some good examples:

4. Virtual office hours by product - all Vertafore customers can sign up for these monthly events, up to 100 customers a session:

We bring our product experts onto the phone. Customers can ask questions and interact with other customers. They feel like they're getting more one-on-one, but it's definitely something that we can do at scale.

5. "Did You Know" video series - a new, three minute video program, done on a product-by-product basis. The goal? Highlight under-utilized features:

We know there's a lot of features in our products. We've been developing them for 50 years. People who got implemented 20 years ago may not know what we have, right? So we do little highlights. Did you know you can do this in AMS 360? And they've been hugely popular. We get thousands and thousands of hits on our videos every month.

6. Effective newsletters - Emphasis on "effective" here, because so many newsletters are either too boring or to sales-driven to engage readers. Smirnow:

We started newsletters by product, which I know sounds totally 1990s. But we get around 30 percent open rates on our newsletters because they're not coming from sales; they're not coming from marketing; they're coming from our customer success team.

So [our features include] "Get to know our people; get to know what's going on with the product." We do a support highlight every month, like "What's the most common thing people call support for? Guess what, you can fix it yourself this way." Watch this video. So just finding ways to connect with the base without them having to call you directly.

My take

I was struck by the thorough approach taken here, and the combination of the high-touch and "scalable" aspects Vertafore uses. Smirnow isn't stopping there. She has big goals ahead: next up? Adoption metrics.

The thing that I care the most about that I don't have yet is product usage... And so my goal for this year is to get product usage data coming feeding into all of our systems so that we can track, "Okay, I came to this webinar and I'm not using the reporting features of our software. After this webinar I started using it" So how do I start tracking actual usage of our products and start measuring growth in usage? Because I believe if growth in usage happens, we're going to have less churn.

For customer success, user adoption is everything. Finding a way to measure it - and increase it - is clearly a central goal. In turn, that usage data feeds into two more sequential goals:

2. Sharing that aggregated data back to customers in the form of industry benchmarks and reporting.
3. Embedding those benchmarks into the software, giving customers a continual/intuitive view of how they excel from their peers (and where they don't).

A number of SaaS companies have achieved that second goal. Few have made it to the third, though there are exceptions; see: If SaaS companies are serious about customer success, they better learn from Coupa's community intelligence approach.

I told Smirnow I am wary of NPS scores: I believe you have to react in a much faster way to today's customer than just benchmarking against NPS. Smirnow told me Vertafore has moved closer to that real-time reaction, via their use of Gainsight, customer success software that integrates into Salesforce:

We wanted to build a health score, and what Gainsight allows you to do is to take data points from all of your different systems, and build a score of your customer based on the data that you have access to.

Pulling all their data into Gainsight - including survey and NPS data -  sparked discoveries, such as the impact of account manager turnover. As she tweaks how that health score is calculated, Smirnow says they are getting closer to a health score that is "very predictive" of churn. Each month, Smirnow scores Vertafore's customers from red to green and reports out on the at-risk accounts. For those, a "Heal Plan" is created:

So yes, we try to use that as our predictive way to say, "What does the data show us about this customer, and what do we need to do to get them good?"

Smirnow emphasized that customer success also requires great products/services. But she's confident that a dedicated success program makes a difference. Considering all that Vertafore has done so far, it's hard to question that.

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