Say you run a Software-as-a-Service (SaaS) company that offers products for your clients on a subscription basis. Your sales team might be performing pretty well in terms of customer acquisition that gives you the confidence to dream of accelerated growth. It is all going great, but then comes the spoiler — customer retention. No matter how many new customers sign up for your product, as long as the bucket keeps leaking it wouldn’t be of much use. So how do you ensure customer retention isn’t a problem? Gurugram-based CustomerSuccessBox intends to plug this leaky bucket.
As the economy moves from the ownership to subscription-based models, customer churn has become a nightmare for companies — especially for companies who are unsure if customers will renew their subscription. Puneet Kataria, co-founder of CustomerSuccessBox faced the same problem around four years back, when he was heading the sales division at Kayako, a customer service software-based company in London, UK. Kataria and his team were being measured in terms of monthly recurring revenue, instead of the new businesses that were being onboarded. Although they were aggressively onboarding new customers, they were falling below the expected recurring revenue, as customers kept opting out. Realising the problem, he decided to turn the ship around.
In April 2017 along with Amritpal Singh — who was heading the engineering division in Kayako — he decided to address the problem of customer retention at a global level. “Earlier if a company wanted to buy and use a product — say roll out an ERP — they would spend millions of dollars upfront to buy it and then would hope to recover the cost after a successful ERP roll-out over the years. Today, you subscribe to something on the cloud and pay for it every month,” says Kataria. And with this shift in technology, the buyer can opt out of the service at any time. While this might be empowering for the buyer, it could be a huge blow for the seller. According to Kataria, the seller only makes 5-15% of potential lifetime value of the customer when the latter signs up for the product. This is when the company needs to be proactive and ensure the customer is happy — CustomerSuccessBox pitches in here.
The start-up helps businesses with customer retention by monitoring the ‘account health’ of their customers and providing real-time insights. CustomerSuccessBox helps companies understand the number of customers who are going to renew the service and the ones that are not. Till date, the start-up has about 20 clients, mostly from the US and UK, including XebiaLabs, Woowup, WizIQ and Synup.
The product consists of an API script and an actionability component. The script can be incorporated into the client’s offering. Each client has the flexibility to customise the parameters and decide what is good, average or bad for them. The data will be analysed accordingly, in real time to provide overall account health.
The average ticket size is approximately Rs.7.7 lakh per year, which amounts to the current revenue run-rate of Rs.1.5 crore. The clients are charged based on the number of accounts they want to monitor. The pricing ranges from Rs.32,000 a month to Rs.16 lakh a year. The company, which started with an initial investment of Rs.64 lakh is planning to grow to a 25-member team by end of CY 2018. “As the economy moves towards a subscription model, SaaS businesses are only a low hanging fruit for us, we are going after a multi-trillion dollar subscription economy,” Kataria says. While CustomerSuccessBox, has managed to fill a gap in the market, they have a long road ahead when it comes to consistently retaining customers.