10 Ways To Increase Your Customer Lifetime Value With Data

Big breath, and hit submit. Campaigns go live, the company card is pre-billed for the week’s budget, and almost immediately, we’re paying $6 per click. Giddy about the flood of orders we’re about to take for Metrix, I jump into Slack to tell my startup mastermind group “Hey guys, I’ve just setup a PPC campaign paying $6 CPC for Metrix!”

Cue 11 founders telling me I’m fucking crazy.

Winning in SaaS or any recurring business, requires one simple rule to remain true:

CAC < LTV

Customer Acquisition Cost is less than Customer Lifetime Value.

Spend less acquiring a customer than they’ll pay you (eventually) and you’ll generate a profit and grow. Simple.

You see, I’d already done the math, and while I’m still taking a chance (i.e. predicting future behaviour based on past behaviour is never guaranteed!), I’m confident that our CAC will remain below our LTV.

Because I already have plenty of experience of winning, and failing, at achieving a high LTV. In my previous Web development agency. In my coworking space. In our last SaaS startup. And in our first product version at Trakio.

Here are the 10 tactics that have worked for us in the past, and what we’ll be implementing for our new app, Metrix, to ensure a high enough LTV to make that $6 CPC ad spend pay off!

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The Backpacker’s Guide To Customer Journey Mapping

This is not the Definitive, Ultimate or Exhaustive guide to customer journey mapping. It’s the Backpacker’s Guide. Because today I want you to pack light and leave here with just the bare essentials for the adventure ahead.

Mapping the full customer experience is an exercise I’ve had to redo many times at Trakio. It’s a visual process that’s usually included as part of a customer analytics strategy. But it can quickly become overly complex and capable of stalling even the most seasoned customer experience explorer.

I’ve taken all of the research I did with UX experts on LinkedIn, and the stack of PDF guides and ebooks I read, and condensed it into the bare essentials as I see it.

Here’s my Backpackers Guide to customer journey mapping:

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The Executive’s 60 Minute Survival Guide To Customer Analytics

I’m not the youngest at the table, but definitely not the oldest. There’s 3 of us in our 20’s, and then the rest of the room seems to be spaced between 30-60.

I am however dressed like a child. I should have gone for the safe ‘smart jeans and white collared shirt’. Classic entrepreneur. It quietly whispers “I ironed a shirt today, because you guys are worth it”.

But I didn’t. I’m dressed like an intern, and people have assumed I’m an intern. Or perhaps I’m Grey Fox’s assistant.

Grey Fox is the guy sitting to my left. He looks like he came straight out of an IBM consulting gig. Very senior, with a strong presence. He’s dropping analytics acronyms so fast that he’s borderline beatboxing. He’s pretty much dominated the conversation for the last 2 hours.

To my right is Vendor Vanessa. She’s casually dressed, in her early 40’s, and wearing the largest pearl earrings I’ve ever seen. If it wasn’t for the fact I know which company she works at, I’d assume she was here on sales commission. She’s made it her personal mission to name-drop a vendor into the conversation every few minutes. Never anything useful, but just enough so that we know that she knows who they are.

Sitting directly over from me is someone I’m going to call Copycat Charlie. He’s early 30’s, dressed for business-casual, and has made it his sole mission tonight to try and finish the sentences of Grey Fox, and ends every one of Vendor Vanessa’s contributions with “Oh yeah, they’re great!”

I’m sitting in a private roundtable on “Customer Analytics For Subscription Companies”. There’s 10 of us in the room. Everyone here is an Analytics Director (or equivalent senior position) except myself and another vendor CEO. I’ve been listening quietly and intently for the last 2 hours.

And for the last 2 hours, the 3 people talking have been bullshitting.

Grey Fox has no clue about analytics strategy, he just knows the terminology. Vendor Vanessa has only memorised the names and feature sets of each tool in the analytics space, but has never actually integrated or used one of them. And Copycat Charlie’s only strategy is to align himself with Grey Fox and Vendor Vanessa in the hope of being associated with their thought leadership.

Please don’t be one of those people.

Before you attend your next customer analytics meeting or workshop, please read my Executive’s 60 Minute Survival Guide To Customer Analytics.

(p.s. despite the cute names, the above is a true story and the 3 people who stood out to me as total fraudsters were all from multi-million dollar turnover SaaS companies!)

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5 Steps To Becoming A Data Driven Organisation

It’s a seriously tense atmosphere. Even for an above-average height guy, I’m feeling pretty small right now. Every pair of eyes in the room is either on me, or on the VP of Product’s increasingly flushed face.

I’m suddenly aware of how much noise the struggling AC is making. The whir of the fan in the overheating windows laptop at the end of the conference table is especially loud. I try not to look at it. I can’t break eye contact with everyone in the room. Stand tall.

I know I’m correct. I need to stand by what I’ve just said. We need to accept it so we can move forward. Everyone else in the room, apart from her, knows I’m correct. It’s all over their faces. All I’ve done is guide them down a discovery path to answer a few questions – I didn’t actually tell them anything they hadn’t told themselves.

How Naive I am…

2 minutes ago, I called out the VP of Product in front of her entire team. Through a series of questions, we established they aren’t a data driven organisation. Something the VP of Product passionately protested. So I went on to point out all of the previous product decisions they made, and how all of the data available to them at that time actually pointed to a different path to the one they followed.

I’m here to try and help this company integrate data into their decision making process. But I’ve just unwittingly accused a self proclaimed “Data Driven Evangelist” of ignoring her data at every major decision.

(I will later learn from an inside contact that the VP of Product was previously responsible for planning and implementing the organisations “Data Driven Strategy”, a project which contributed to her promotion to VP Product.)

Unsurprisingly, I’m swiftly (but politely) removed from the board room due to ‘an early end to the meeting’. In less than 5 minutes of declaring this organisation is not currently data driven, I’m in an Uber and on my way back to the office!

You wont be surprised to hear I didn’t make a sale of our Predictive Analytics platform. But I did leave with a strong validation for my questioning framework to uncover if an organisation is really data driven!

Here is a condensed version of the questions I asked in that boardroom, and what to do about each point.

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SaaS: How To Predict Customer Churn With App Usage Data

Churn kills SaaS companies. No matter how many growth hackers you hire into the marketing team or how many hustlers you hire into your sales team, eventually a ‘leaky funnel’ will at best, cause your company growth to plateau and at worst, cause your revenue to actually decline.

This is because eventually, you saturate out your niche markets and distribution channels. People begin to ignore your marketing messages as they’ve already “been there, done that, didn’t work for me…”.

There is also the reality that for most SaaS companies, the cost to acquire a new customer is not returned until the customer has been a subscriber for a few months (or longer). Most companies invest big into customer acquisition because they hope that the customer will stay around for years to come, paying their fees each month with the minimal of costs or effort involved.

But if we don’t solve churn, growth stalls. And to solve churn, we need to intercept before it happens.

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How To Use Automated Emails To Onboard Low-Value SaaS Signups, Profitably

There’s SaaS, and then there’s Enterprise SaaS.

Charging annual contracts upfront. Big setup fees. Big multi-seat license fees. If you’re charging the big bucks for your SaaS offering, then by design, you probably have big bucks for your customer onboarding program.

A dedicated account manager, multiple Webex’s between your engineers and theirs, maybe even an onsite visit from the VP of Customer Success. You can spend the big money to ensure that one account is going to be successful and have the best experience possible because, after all, this is big tickets. Big game. Big wins.

But what happens if you’re selling a product for $9.99 per month?

You can’t assign a dedicated account manager. You can’t afford to have a call with every signup. You definitely can’t afford to go and have coffee with their CEO!

Some might dismiss you a tiny startup. You need to get into the enterprise game to make any significant money. It’s small tickets. Small game.

But what if you have 100,000 of those customers paying you $9.99 per month?

That’s the situation for a lot of companies such as Buffer, Sendgrid, Mailchimp, Basecamp… They make a huge portion of their business from low value, zero touch accounts. And they’ve still grown to millions in dollars of revenue each year.

Sure, they have enterprise arms as well. But they manage to profitably sell and deliver their product for only a few bucks a month. How are they doing this, while still creating a high conversion onboarding experience, for hundreds of thousands of accounts?

The trick is they’re using clever email automation. Here’s how to introduce the same tactics to your SaaS company.

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What Does “Customer Success” Mean For SaaS Startups?

Customer Success, if you haven’t heard, is a pretty big deal for SaaS companies. It’s a recently adopted term to encompass a new function within recurring revenue businesses. Unlike Growth Hacking however, everyone is taking Customer Success very, very seriously!

Because customer success, or the failure to implement it, is already costing SaaS startups millions of dollars in revenue.

Customer Success is the recurring revenue business’ answer to churn. A newly discovered weapon against a problem that had previously being accepted as a fact of SaaS life. Just as the sun rises and sets every day, so must 2.5% of all customers churn every month. That’s just the reality of subscription business models, right?

Well not anymore. Customer Success is here to kick churn’s ass!

In this post, I’ll discuss:

  • An introduction to Customer Success as a basic concept
  • What functions does Customer Success cover?
  • An introduction to the important metrics of Customer Success

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