How did you handle customer adoption and renewal challenges?

Answered by: Tien Tzuo, CEO, Zuora

Category: Marketing and Sales

With software-as-a-service (SaaS) companies, you are forced to focus on your customer. The customer is not going to renew on an ongoing basis unless they're successful. Probably every SaaS company has faced down a customer success adoption renewal challenge. It's a rite of passage which is why we believe the subscription business model is going to take hold because once you go through that it makes you a much stronger company. It makes the customer relationship stronger as well. When you start, you have a rough idea of what the need is but it is not clear. Our knowledge was anchored on two companies’ experiences. We set out to build a horizontal system that could work for any company. And what we didn't want to build is a niche solution that just serviced SaaS companies. For example, 50 percent of our customers right now are technology companies – it used to be 100 - but now it's 50 percent because we work in a lot of other industries including media, manufacturing, auto and so forth. At the start, you don’t really know. You've got to rapidly learn from your initial customers and you need a point of view. But then you have to be able to change that point of view really quickly.

One of the things we discovered was that we had a point of view that companies shouldn't have a lot of professional services revenue. It’s an inherited view from Salesforce. So we said let's push all this stuff to partners but then we realized the complexities of what we do – it’s not just the technology but also how we help companies think through business processes and architecture integration. We quickly realized we really needed to help our customers.

In hindsight, we learned that one of the big things we had to face down was how to build a professional services team that could actually take our technology and make it successful with customers. But we also wanted to build a bi-directional bridge so we could learn from the issues that our initial customers were facing and follow that learning – in a very tight circle - all the way back to engineering. We had to build a system that allowed us to learn while we went along. But it’s important to balance that because you can’t over promise the customer and then find out that your product actually doesn't meet your use cases either. That's not going to create customer success. It’s all about learning how to build a company block by block. It's not just about technology. It’s about how you have to wrap the whole thing -including professional services in our case - around your product to make it successful.