Guest Post from Techstars alumni company, DigitalOcean.
One of the most critical elements your company can invest in early on is a holistic focus on the success of high-growth customers – starting from the moment they sign up for your product.
Customer Success is a hot topic. In this post, I will share introductory knowledge on how we approach Customer Success at DigitalOcean, tools we’ve created to monitor customer health, and our engagement mechanisms. If this is your first foray into Customer Success, I hope you’ll be able to apply our concepts to help shape your process as you scale your startup.
So…what is Customer Success anyway?
Customer Success (CS) is an organizational approach to cultivating high-growth customer loyalty. Customers won’t stick with you if you don’t have the team, processes, and tools to ensure they continually find value in your service quality and product. This is not to say you shouldn’t value every customer, because you should. However, your high-growth customers are likely to have more stringent support needs, and in many cases, a larger footprint utilization of your services.
A “high-growth customer” means something different for every organization; it could be the highest spending customers, potential partners, or even a customer that will bring in consistent revenue.
Below is a recent quote from Dusty Davidson, CEO of Flywheel, that illustrates the impact Customer Success can have on your customer life cycle:
“We’ve worked with DigitalOcean since very early on in their life – I think they had launched something like 8,000 droplets at the time (vs 7M+ today). To say that the support we’ve received over the years has improved is a tremendous understatement, and I can almost pinpoint the inflection point to when they brought on a dedicated Customer Success team to deal with large customers like Flywheel. Today our teams interact regularly – on support, new features, upgrades and more – and we know that they’re deeply invested in our success as a customer and are dedicated to helping us grow.”
Outreach efforts at time of sign-up
In most organizations, Customer Success gets involved with a high-growth customer after a hand-off from the Account Executive team. At DigitalOcean, our CS team is a hybrid of inside sales and account management. We reach out to potential high-growth customers at time of sign-up.
Our CS team created an internal tool that tracks real-time information to segment potential VIP customers.
(Note: client contact info is removed as well as a few internal metric columns)
From the moment a customer signs up to DigitalOcean, our Customer Success Engineers can see how much funding they’ve raised, who their investors are, and how quickly they are growing in terms of company size and social media presence. We complement this private company data with a few internal product usage metrics to predict end of month spend.
After we’ve defined a core set of target customer indicators to build our CS funnel, we implement ongoing KPI metrics to continue honing in on our high-growth customers. A few examples of ongoing CS KPI metrics include: conversion rate, spend percentage increase, and total month over month revenue increase.
There are great tools out there that can provide your company with private growth indicators. One of tools we leverage is Mattermark. I recommend signing up for their trial if you want to learn more about their proprietary mindshare and growth score metrics.
Once you’ve created a funnel of high-growth potential customers, it’s time to reach out!
The more technical your product is, the more your customers will appreciate outreach efforts up front. At DigitalOcean, a Customer Success Engineer will be responsible for reaching out to offer assistance around cloud architecture planning, product overview, cost spend analysis, and more. Even just offering a more direct contact for them to reach you goes a long way.
Summary: Automate the ability to segment who’s signing up to your product, reach out to your high potentials early in the funnel, and see an increase in not only conversion, but also revenue spend of those conversions.
Identify a VIP health score
You have excellent relationships with all your customers and a pulse on every single one of their needs, right?… It’s nearly impossible to stay on top of this –
A Customer Success management tool comes in handy by tracking customer spend, feature requests, product feedback, and utilization trends. It’s a no brainer: the earlier you reach out to a churning customer, the better. It all comes down to building a comprehensive customer health score that makes the most sense for your product and customers. At DigitalOcean, we look at items like Droplet creates vs. destroys, sentiment of last interaction with customer, and how deeply integrated the customer is with our various services.
(Client information is removed as well as a few internal metric columns)
The “guardian” feature of our tool allows us to directly send re-engagement emails to our VIP customers. If we get no response, we know it’s probably time to pick up the phone; the customer may be ready to churn, and we need to avoid churn at all costs!
This leads me to emphasize how necessary it is to have real-time indicators. Below you can see one of our bots that reports in real-time to the #customer-success Slack channel when a user begins to destroy servers (and more importantly if that type of action is out of ordinary for the customer).
Cultivate a “customer first” mentality
All of this funnel building and health score data should support the most crucial mission of your Customer Success team – preventing churn. At DigitalOcean, we do this by providing great technical support, managing customer expectations, looping feedback to the product team, and most importantly ensuring our team goes above and beyond for customers in every interaction.
Below you’ll see the churn data of our high growth customers in the past 6 months; it’s something that DigitalOcean is very proud of. While we’ve gone to great lengths to build technological tools to funnel potential VIPs and nurture their health and loyalty, a tool means nothing without the effort of a strong CS team.
There are many aspects of the business that your CS team will have little control over. At DigitalOcean, it’s at the core of our culture is to go above and beyond for our customers in every interaction, and find ways to proactively fight for their best interests. If your customers know this about your team, they will be your biggest champions in the field!
Build the right Customer Success team
Rather than hiring traditional “Technical Account Managers”, DigitalOcean’s Customer Success Engineers comprises of linux sys admins and developers with experience in Python and Ruby on Rails. Due to the technical nature of our product, it was critical for us to cater the positions around the needs of our customers.
Not only do our CS Engineers roll up their sleeves to problem solve technical issues with customers, but to our benefit, they have actually built the very tools that we use internally to manage customer success.
Build vs. buy is a whole other topic, so we’ll focus on why building our own tools significantly helped our Customer Success initiatives. The initial time investment needed was roughly about 1 month, if you focus only on building “what works” vs. something that will be featured on Dribbble. Our tool simply WORKS. It’s fully customizable, dedicated features that actually mean something to us, and immediate changes can be made as needed.
Having a customer management tool gives you the ability to map your customer’s entire journey, which will allow your team to focus more on impact(rather than spend time figuring out how to make a difference).
From first-hand experience, I understand that building a Customer Success team from scratch at a start-up can be daunting. Where do you start? Balance the pressure to accelerate from 0 to 60 MPH, and take the time to build your foundation: define high-growth customers, build your outreach process from time of sign-up, identify health score metrics, promote a “customer-first” mentality, and then focus on building the right team around you.
I spent my first 3 weeks on the job just talking to customers and learning from their experience with DigitalOcean’s product. What were we doing well? What were the opportunities for improvement? Above all else it is critical to tap into the voice of your customer. Empower your customers to help define what Customer Success means to your organization.
I hope this post will be useful to you as you build out your own Customer Success team and startup. If you have any questions, ideas, or feedback, feel free to reach out to me directly at edward [at] digitalocean [dot] com or on Twitter @edwardchiu