Why Failure To Provide Great Customer Service Is A Risk To Company Success

Dropbox, Shopify, Atlassian, and Mulesoft recently joined the ranks of startups that have reached an oft-dreamt-about milestone for founders everywhere – the IPO. But that’s not the only thing these companies have in common.

They all listed the failure to provide great customer service quality as key risks to the success of their company.

As I read registration statements (S/F1s) of these Software as a Service (SaaS) companies that went public in the past several years, I kept coming across the same section:

From Atlassian and Dropbox:

"Any failure to offer high-quality customer support may harm our relationships with our users and our financial results."

From Shopify:

"If we fail to maintain a consistently high level of customer service, our brand, business and financial results may be harmed."

From Mulesoft:

"Any failure to offer high-quality customer support may adversely affect our relationships with our customers and our financial results."

Why?

The world has become too complex and competitive to rely on just product or price to compete. Consumers and businesses have more choice than ever and switching costs continue to fall. The brands that win are the ones that create the best experiences.

Some industries like hospitality and luxury goods have been competing on experience for a long time. Yet, this is a new concept to many enterprise software players.

Saas companies are coming to realize every customer touch point matters. Each one represents the opportunity to strengthen the relationship with the customer. Periodic customer success efforts alone are not enough to build differentiated brand affinity.

All Companies Benefit From High Quality Customer Support

For companies like Dropbox and Atlassian with a freemium offering, customer support is often the first human touch point. Beyond providing the critical first impression, the best teams deepen the relationship, dive into the company’s problems and offer proactive solutions, which helps drive teams toward greater adoption.

On the other side of the spectrum, SaaS companies like Mulesoft, with larger contracts and higher touch sales processes, also benefit from investing in their customer service. Goodwill built up through hours of demos, onboarding, and presentations can be quickly undercut by bad support experiences. Customers that just paid $100k+ and staked their professional reputation on the purchase feel betrayed when they are passed off to an underqualified or unprepared agent when they first hit signs of trouble.

The day-to-day help and touches from the support team are necessary to reinforce the positive feeling companies work so hard to instill in their customers. This constant engagement is critical to driving upsells and referrals, and reduces churn.

Some argue that these metrics – upsells and referrals – are more important than sales in the effort to reach escape velocity.

With that in mind, it is clear that having high quality customer support was key to the rise of these companies. It's also no surprise that maintaining that quality has been identified as a key risk to continued growth in the future.