Customer retention challenges? This company can help with ‘multidimensional’ data listening
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Modern-day software-as-a-service (SaaS) enterprises are racing to acquire new users and convert them into paying customers. The rush is great for the industry, but it has also left many organizations looking at only half of the picture.
Case in point: The extensive focus on gaining new paying customers but not so much on post-sale constructs — including customer success, customer care and professional services — could not only improve customer retention but also help grow the business at the same time.
When organizations are not paying enough post-sale attention, opportunities to upsell or cross-sell to existing customers can be missed. In many cases, they can even fail to notice the risk of churn and end up losing their customers. According to Mckinsey, if an organization manages to handle these aspects to perfection and ensures customer retention, it can see 20% growth every year without having to add even one new customer.
Currently, most SaaS enterprises depend on heuristic rules and human experience (combined with intuition and guesswork) to ascertain customers’ health scores and direct retention and upsell efforts toward them. This is not only unreliable but also prone to bias, leaving a major gap to be filled.
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StepFunction drives customer retention with data
Founded in 2020, California-based company, StepFunction, is working to solve this challenge. The company’s ML engine ingests and learns from a wide range of customer behavior signals — product usage, support tickets, feedback, CRM — and identifies subtle correlations between the data points to provide an overview of customers’ intent in real time. Today, it raised $5 million in post-seed funding.
“StepFunction plugs into any customer success system (Salesforce Service Cloud, ServiceNow, Gainsight, etc.) at the SaaS company and publishes opportunity (upsell) and risk (churn) scores for customers directly into the system. The solution does not disrupt the daily workflow at SaaS operators – the system of intelligence pinpoints customers to target and highly accurate next best action recommendations,” Navneet Singh, CEO and cofounder at StepFunction, told VentureBeat.
The StepFunction tool includes a low-code growth wizard that enables organizations to ingest operational data from systems of record via connectors. It then shows guided screens to help with data clean-up/normalization/time-series creation and the selection of a model for training and inferring customer intent, along with the associated risks or opportunities.
“This level of customization and control enables the SaaS operator to select the optimum [artificial intelligence] AI models for their specific business requirements. The scoring results are then published directly into the customer success system,” Singh noted.
To date, the company has secured five SaaS companies as customers. They are using its offering to retain and upsell to over 2.5 million SMBs, improving the amount and predictability of their subscription revenues.
“StepFunction predictive target hot lists have been a game changer for us,” Marina de la Torre, VP of customer success at Mitel, said while sharing about the product.
“We have reduced costs (including the cost of reach) while greatly improving save rates. Our CSM (customer success management) team uses their explainable AI to directly drive CTAs and proactively reach our long-tail customers. We have even expanded the deployment to all six of our product lines,” she added.
With this funding, which was led by Dallas Venture Capital (DVC), StepFunction will work toward growing the company’s go-to-market capabilities and product development teams. It aims to triple in size and revenue by the end of next year.
“StepFunction is continually innovating on visual growth modeling, hands-free installs, and other business performance improvements. On the back end, the company also releases regular enhancements to action recommendations, the AI model library, automatic management of data drift and business drift, as well as continual machine learning updates,” Singh emphasized.
While a number of companies, including Toplyne and Ocean IO, are leveraging AI to help SaaS players sell more, StepFunction claims to be one of the few focusing solely on driving growth through the existing customer base. The company claims that its advantage is in the number of signals it can ingest, how it prepares the data to be useful, its proven AI models, and the recommended next best actions for customer retention.
Competitive products are overwhelmed by the types of data across systems and the sheer amount of data signals that are available, it adds.
According to Fortune Business Insights, the global SaaS market will surpass $700 billion by 2028. With this kind of growth, enterprises can expect to see the development of more tools like this in the coming years.
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