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David Abramowski

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What does a happy customer look like?

There’s nothing like receiving a bundle of cash from a customer. Getting recurring monthly payments from your users is a great sign of their happiness (not to mention your happiness). After all, happy customers are ones that stay and pay, month after month.

While receiving a payment from a customer is a great indicator of happiness, the binary nature of “pay”/”cancel” doesn’t give you any additional information. You don’t gain the insight into what’s really going on with your customer. Is their use of your application declining? Are they researching alternatives? Could they be happier? And if they’re paying annually, you have even less information.

In most subscription businesses, customers have two choices to resolve their unhappiness: contact customer support or cancel. Both of these options put the responsibility on the customer. What if there was a way for you to identify unhappy customers earlier, putting the control of customer happiness back in your hands?

At the 2010 Business of Software Conference, Hubspot co-founder Dharmesh Shah outlined the three key metrics Hubspot uses to track customer happiness:

  1. Frequency of product use
  2. Breadth of product use
  3. Sticky product features

By tracking these three key metrics, Hubspot is able to identify potentially unhappy customers before their account comes up for renewal. They use this information to proactively reach out to customers who are unhappy. A a result, they have been able to improve retention of these unhappy customers by 33%.

A happy customer is an engaged customer.

When a new customer first signs up for your service, they’ve shown enough interest to take the time to check your offering out, but they haven’t necessarily invested or committed. You need to engage this customer and make them happy. By knowing how your happy customers use your service, you can gently guide your new customers to behave the same way.

For example, you can compare the average number of logins of of a customer who stayed past a 30-day free trial with the number of logins of a prospect in their free trial. Is the prospect on track to match the number of logins as customers who stay past their free 30 days? If not, you have identified an opportunity to guide the prospect toward happiness.

With good data on what a happy customer looks like, you can not only increase retention of your current customers, you can also improve conversion of prospects during their free trial by guiding them to do the things that you know will make them happy in your service.

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David Abramowski is a technologist turned product leader. David was a co-founder of Morph Labs, one of the first Platform as a Service plays on AWS. He was the GM for Parallels Virtuozzo containers, enterprise business, and most recently he is the leader of the product marketing team for the IT Operations Management solutions at the hyper growth SaaS company, ServiceNow.