What SaaS can teach us about customer service

In the SaaS model, the power is with the customer and vendors need to take a very different approach to both sales and service, here's how to do it says Archie Black, President and CEO of SPS Commerce.

Commentary--Software-as-a-Service (SaaS) is one of the fastest growing segments of the IT industry, as analysts and customers alike have heralded the increasing success of the SaaS model for driving down operating costs and freeing businesses to focus on their core competencies. In addition, SaaS can also result in another key benefit not often recognized or leveraged: better customer service.

Think about it. In the traditional software sales model, the idea is to impress the customer in the beginning, make the sale and collect the big check. While the customer is certainly valued, this is really a model that benefits the software company. Conversely, SaaS is a recurring revenue model where vendors gain maximum value by retaining customers over the long term. With the widespread adoption of SaaS products, vendors are adjusting their compensation models and salespeople are seeing smaller, but more regular, commission payouts. As such, each transaction and interaction with the customer is critical and SaaS providers must work continuously to earn the customer’s business.

In other words, in the SaaS model, the power is with the customer and vendors need to take a very different approach to both sales and service. Based on my own experience at a SaaS company with a customer satisfaction rate of 93 percent, the following list of customer service “best practices” will help to increase customer loyalty, retention and revenue for SaaS and non-SaaS providers alike.

Be Accessible: Track performance metrics such as average response time, or speed-to-answer for inbound customer inquiries. This may seem like a given, but make sure your customer service representatives are responding to each customer in a timely manner. And by timely I mean that if a customer contacts your company via phone, make sure that call is picked up by a knowledgeable professional in 20 seconds or less. If the customer’s channel of choice is email, respond to that email within four hours, or less. Which leads me to my next point.

Be Responsive and Proactive to What Customers Need and Want: Times have changed. It used to be that you could email a customer back within two to three days, and they’d be generally satisfied. Today, customers want and deserve immediate feedback and follow-up. They want to know that you’re listening. Thus companies need to adjust their own service level expectations and shrink their response time.

In addition, strive to go the extra mile to meet customers’ needs and take a proactive role in evaluating customer communication preferences to implement strategies that better serve them. For example, email used to be the least favored form of communication between customers and their service representatives, but that’s no longer the case. Ask customers about their preferred method of contact. Is it email? Chat? Take note. Pay attention to how your customers want to be supported and adapt your mode of communication accordingly.

Do It Right the First Time: First call resolution has been found to be the single most important factor in gaining customer satisfaction. Your goal should always be to resolve the customer’s issue on the first call, so they don’t need to wait hours or days to get back to their business. Measure first call resolution and ask if the customer service representative actually resolved the issue. If they didn’t, make sure that employee has the quality monitoring and coaching they need to prevent customer calls from reoccurring.

Set Expectations Early: While every company wants to meet their customer’s expectations, they should be thinking how they can exceed them. If a customer contacts your company and their issue cannot be resolved right away, provide them with a timeframe of when it will be. For example, if your representative says “I will get back to you before the end of the day,” make sure they honor that commitment.

Escalate Issues: Despite our best efforts, we may not always meet our customers’ expectations on the first try. If your customer service representative is contacted by a dissatisfied customer, make sure that customer’s issue gets escalated to high priority. He or she should get a return call from a supervisor and/or executive in 24 hours – preferably less. Again, speed is of the essence when it comes to quality customer service. Make sure that the customer’s issue has been fully addressed and track your representative’s follow through.

Provide Well-trained and Informed Employees: Best practice customer service programs provide comprehensive initial training and ongoing follow-up training. This includes training in how to engage the customer, establish communication, build a relationship, identify the real need and fulfill this need. Representatives should first be coached on the essentials of basic phone etiquette: how to be polite, how to choose the correct tone of voice, and how to speak with a customer who may or may not be technically savvy. Deliver training programs where your representatives are able to place themselves in the shoes of the customer and apply their own positive and/or negative experiences to the work they’re doing.

Follow Up: Once a customer buys your product or service, your job isn’t over, especially for SaaS providers. Take that customer through the implementation process. Assign them a particular support person or persons to work with and make sure the customer knows that representative’s name, direct contact information, who will be taking them through the testing and implementation process, etc. Have your customer service department call all new customers and ask them a series of questions during each step of the implementation process to find out how comfortable they are with the transition. Then, once your customer has implemented your service or product, allow them to rate their representative and customer service experience overall.

I can’t stress how critical it is to collect and study the feedback you receive from customers regarding their service experience. Every day, my company has representatives making outbound calls to customers, asking them what they think of the service they’ve received, and we collect and apply that feedback to improve our business.

Practice Courteous Persistence: You’ve completed the implementation stage with your customers and things are going well. Now what? Don’t wait for your customer to contact you when something goes wrong, or assume that since you haven’t heard from them, that everything is just fine. Be proactive. Make outbound calls to those customers that are actively using your service but have gone silent. If my company receives little to no response from active customers, we’ll proactively reach out to them with updates, annual satisfaction surveys and do everything in our power to keep the line of communication open to anticipate their needs. Of course you don’t want to pester customers with emails and phone calls, but the point here is to head off potential problems before they actually occur.

Study the Competition: Don’t rest on your laurels and assume you’re providing customers with the best customer service possible. As a SaaS provider, we look around at other companies to see if they’re doing something successfully in the area of customer service from which we can learn. Look at successful SaaS providers such as Salesforce.com, or even non-SaaS companies such as Geiko and Lands’ End that are well-known for providing exceptional online assistance to their customers. Don’t be shy about reviewing other companies’ customer service models.

With the SaaS model, companies have learned to engage customers over a much longer period of time. That’s because if a customer decides not to continue with your service, there is no software to uninstall, or hardware to sell. They are out with the click of a mouse, and there goes one less customer and positive referral. As the technology industry as a whole moves steadily closer toward a SaaS model and the deals became subscription-based versus large license deals, vendors and their service representatives will need to adjust their mindset and implement newer, better ways of providing customer service and support.

Archie Black is president and CEO of SPS Commerce. You can learn more about SaaS by contacting SPS Commerce.