Imagine you run into a problem with a new software platform. You give the business a call, dialing a number to connect with technical support. A specialist answers and asks you to describe your issue.
“Oh,” they reply when you’re finished, “our accounts team is better equipped to help with that. Here, I’ll transfer you.”
A tiny hiccup well-handled, or so it seems.
The person at accounts needs you to describe the issue again. This is tedious, but perhaps bearable if the problem is resolved quickly. But what if it isn’t? What if, instead, accounts needs to transfer you again? How would you feel about explaining your problem a third time?
At this point, another transfer or hiccup might have you thinking about giving up. You may even, understandably, consider canceling your service.
This is just one illustration of what unaligned departments—or departmental silos—look like from a software as a service (SaaS) customer’s perspective. Understandably, experiences like this contribute to churn and cut into a business’s ability to scale.
Poor handling of incoming calls is just one small indicator of dangerous departmental silos in a SaaS business.
To understand the bigger picture, let’s focus on three challenges experienced by siloed SaaS businesses trying to scale.
1. High churn rate, low customer lifetime value.
Without the big up-front purchase prices of traditional business models, SaaS businesses rely on recurring revenue generated by customers who stay subscribed. Without this revenue, they can’t scale, and often struggle even to stay afloat.
What this means is high customer lifetime value (CLV/LTV)—or the average customer spend multiplied by the average customer lifespan—is crucial to SaaS success. And nothing digs into average customer lifespan more than a high churn rate.
In a better version of the phone-call scenario above, team members are able to prevent churn by communicating issues to other departments when transferring customer calls. They also have a clear idea of where to direct each call. In a best-case scenario, automated software could alert the appropriate department to a customer issue.
This would enable the right team to proactively reach out to the customer.
Either of these solutions could reduce the probability of churn at least a little by presenting customers with a unified front. However, really tackling the problem requires a broader application of communication and proactiveness.
Just as sales and marketing often work together, so too should product development and customer success.
Customer success needs to understand the product intimately to do their job well. Product development needs to know about customer experience and desired outcomes. For similar reasons, marketing and product development should be communicating, as should sales and customer success.
The more interdepartmental communication there is, the fewer gaps exist for customers to fall through.
2. Departmental competition vs. collaboration.
If more communication is all it takes, why do so many businesses struggle with it? Why do departmental silos happen?
“Organizational silos form when leaders, and ultimately employees, are allowed to develop more loyalty to a specific group or team than to the employer or company as a whole.” Jeff Erwin at Lighter Capital explains.
As a business scales, adding and growing departments, team member tasks become more specialized. The person who was handling marketing and sales single-handedly is now in the C-suite. The original, lone product developer now oversees a team.
Each department, made up of talented and passionate people, can easily fall into a “my department” mentality. This leads to competing for resources like budget and new hires, losing sight of company goals, and even withholding information to gain the upper hand on other departments.
As Erwin explains, these turf wars can result in barriers that become nearly impossible to break down. And, no matter how talented and efficient each department is on its own, compartmentalized functionality unfortunately punishes customers the most.
3. Fractured data keeps departments in the dark.
Even if SaaS business leaders do put in an effort to avoid departmental competition, fractured data still happens without the right systems in place. Teams need interdepartmental processes, procedures, and documents that enable everyone to see the big picture. Without them, gaps in knowledge lead to gaps in customer experience—and churn.
The problem is exacerbated when each department uses data tools that don’t integrate with systems. Platforms that keep information confined to one department hold back their benefit to the overall business. Depending on the most recent contact with a customer, for example, sales, customer support, and billing may all have conflicting information on an account.
As Matthew Klassen puts it:
There are three core facets to any business strategy—the people who execute it, the process, by which they do it, and the technology they use to succeed.”
Collectively, the members of a business team have most, if not all, of the knowledge necessary to scale. Unfortunately, businesses struggle with finding effective ways to leverage all of that knowledge when siloed departmental technology forms data factions. This means less effective marketing, sales, customer service, product development, and more.
A business’s technology needs to support information sharing as much as its people. This calls for a single source of truth (SSOT) for customer data that unifies departments rather than divides them. This is best done with a platform that integrates with tools used across the organization.
Implementing an SSOT to prevent departmental silos
An SSOT can unify departments, reducing information-based turf wars and customer churn. When choosing business software, consider what tools are already in your departments’ stacks, and whether the options you’re considering integrate with them.
The more you get departments on the same page, the more complete a picture your business has to inform decision-making and scale.
Stax Bill is an intelligent recurring billing platform that acts as a financial SSOT. The software boasts integrations with Salesforce, Netsuite, HubSpot, Quickbooks, and more. The dual entry accounting system support also ensures revenue recognition and billing are simple, making Stax Bill a clear choice for SaaS business leaders ready to scale.
