Cloud applications, known as software as a service (SaaS), run on a subscription-based model.
That means, unlike the old IT software that cost huge upfront fees for long contracts, SaaS companies bill customers for monthly or annual fees.
Customers may wind up paying more for the software over time, but they save money in other ways, like not having to buy hardware to run it on.
But because of this business model, SaaS companies have to work extra hard to make sure their customers continue to renew contracts. Only if that relationship gets established, can they start counting on recurring revenue, which is when their profits start adding up.
But how do they make sure customers renew contracts and don’t leave its service? Many things play into this, like the product’s quality or cost, but customer service is certainly one of them.
If the service never goes down, if new features are added regularly, if, when problems do arise, they are handled quickly and politely, and so on.
“You have to make sure you deliver value to your customer and earn the business every day. Never let them down,” Mikkel Svane, CEO of the online customer support software company Zendesk, told Business Insider.
Zendesk’s numbers show its customer service software is definitely filling the need of many companies. It is now used by over 50,000 customers worldwide, including Box, Foursquare, and Slack. Last year, it had $72 million in sales and grew another 80% this year. Since going public in May, its stock price has jumped over 2.5 times, and the company is now worth almost $1.7 billion.
Zendesk isn't just a cloud service itself, it also helps other cloud companies with their customers.
“We are one of the platforms that really make it possible for customers to earn and retain that business every single day,” Svane says.
Traditional IT customer service mostly relies on call centers.
Zendesk has created a platform that can track messages that come to a company in many ways like email, phone, or social media.
In fact, Svane has learned so much about customer service that he's penned a book called “Startupland.” Here’s the part that most sticks out:
“The traditional notion of just ‘having’ customers doesn’t make any sense today. Businesses must invest in real relationships with their customers … If you are building a company or thinking about building a company, never forget that relationships are the most important building block.”
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