The 3 Things Every SaaS CEO Should Know About Their Service Delivery

The CEO of a SaaS or Cloud Services business can’t and doesn’t need to know everything about Service Delivery in their business.  However there are three things that you, as the CEO, should know about and track on a regular basis.

Service delivery including professional services, operations, customer support and account management may reside in a couple different departments so there may not be one executive responsible for the whole customer experience.  This just makes the need for you to know these key things more important.  I’ve outlined these based on my own experience in service delivery and from conversations with the CEOs of these types businesses.

First is the key metrics for Service Delivery, the desired targets for these metrics, a high level understanding of the plans for any applicable metric improvement plans and the management accountability for these metrics.  I would recommend tracking only three key metrics in this area.  First a metric tracking customer attrition typically referred to as customer churn.  Second, a metric on up selling and cross selling within an account.  Although this metric is not typically a measure purely of the quality of the service delivery, it is a key component.  Third, a profitability measure such as gross margin.  Through these metrics you have a quantitative measure of growth from existing accounts.  It’s not enough to know that revenue is growing, it’s important to know that each piece is growing.  Successful up selling and cross selling could be masked by higher than normal customer churn, etc.  Joel York at Chaotic Flow has examined both the impact and details of customer churn and up selling in some of his blog posts and they are a good resource for the details of these metrics.

Second, you should understand that disaster recovery plans, business continuity plans, and overall security policies are in place.  In addition you should know what the key components are of these plans and policies, how they are monitored, and any significant problems or deviations in their implementation.  Typically these plans are delegated within an organization and the details should be, but these are the major areas where if a significant problem occurs the entire business may not survive.  Although the likelihood of a problem may be small, as a service provider, you won’t easily survive a significant security breach or a problem which takes days to recover from.

Third, you need to know about customer satisfaction and any plans for improving specific customer problems or trends.  Customer churn tells part of this story but a good customer survey process and non filtered face to face conversations tell a broader story.  Qualitative data in this area can be very helpful and often the resolution of recurring issues will require your leadership.

If you, as the CEO, are aware of these three things you have a good high level knowledge of service delivery within your organization.

If you are responsible for all or part of service delivery in your company these are some good areas to make sure that your CEO is aware of on a regular basis.  This is a great opportunity to be a leader and take the initiative to make the information available.

Paul

2 thoughts on “The 3 Things Every SaaS CEO Should Know About Their Service Delivery

  1. David says:

    All good points, Paul. Another metric I would add that SaaS executives (and other service provider companies) are measuring more and more is client referenceability. We measure referenceability on a quarterly basis to determine from the client’s perspective if they could – we understand that there are situations where clients would like to provide a reference but cannot due to legal/competitive situations – provide references to our prospective customers. We have a standard series of questions we ask and capture the results so we can see the changes over time by client, industry segment, and account team. The “best” clients from this perspective are called “raving fans” and they proactively involve us their strategic decision making as well as making it known in the market we are providing vital services to their business. A portion of our management team’s comp is based on ensuring that a percentage of their portfolio are referenceable and raving fans.

    1. Paul Ressler says:

      David,
      Thanks for the comment. I really like the description “raving fans”, that’s what every business needs, right? Having leadership compensation tied to these areas certainly helps with the focus.
      Paul

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