Business of Customer Success: Investor and Board Perspective
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The most successful Enterprise SaaS companies know that growing revenue only through new customer acquisition is the less efficient way to scale. Rather, they understand that growing revenue within your existing customer base - through up-sells, cross-sells, and expanded use - is the most profitable way to scale. In fact, Enterprise SaaS companies that grow revenue - and company valuation - by expanding revenue within their existing customer base also know the key to making this work is to focus on - and operationalize - Customer Success. This presentation - Business of Customer Success: Investor and Board Perspective - is focused on how Customer Success must be thought of as much more than just a functional area of a SaaS or Subscription business. Nick Mehta, CEO of Gainsight, and Ajay Agarwal of Bain Capital Ventures, outlined what your board and leadership are looking for at a high-level and how Customer Success plays a significant role in reaching those goals. The reality of Software-as-a-Service (SaaS) is that Customer Success must be a tightly-coupled part of your overall business model, or long-term success is in jeopardy. This presentation shows you how to leverage Customer Success to put the odds back in your favor.
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Business of Customer Success: Investor and Board Perspective
- 1. Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved. June 5, 2014 The Business of Customer Success #custome rsuccess An Investor and Executive Perspective
- 2. Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved. June 5, 2014 The Business of Customer Success #custome rsuccess An Investor and Executive Perspective Grow Faster
- 3. Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved. Agenda Why Is Customer Success A Business? What’s Your Business Plan? How Do You Measure Your Business? How Do You Accelerate Your Business? How Can Gainsight Help? Q&A
- 4. Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved. Agenda Why Is Customer Success A Business? What’s Your Business Plan? How Do You Measure Your Business? How Do You Accelerate Your Business? How Can Gainsight Help? Q&A
- 5. Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
- 6. Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
- 7. Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
- 8. Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
- 9. Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved. “The capital markets are going to change, sometimes they're going to reward growth, sometimes they're going to reward value, sometimes capital's cheap, sometimes it's expensive. The key is how do you build a sustainable business.”
- 10. Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
- 11. Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved. Transactional Economy Subscription Economy Vendor Success Customer Success Vendor Success Customer Success The New Chasm
- 12. Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved. Vendor Can I get a reference? Wan t to buy more ? Ready to renew? Who are you again ? Transactional Economy Subscription Economy Success Retention Advocacy Expansion Onboarding Customer The New Customer Lifecycle
- 13. Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
- 14. Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
- 15. Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
- 16. Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved. Agenda Why Is Customer Success A Business? What’s Your Business Plan? How Do You Measure Your Business? How Do You Accelerate Your Business? How Can Gainsight Help? Q&A
- 17. Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved. Success Maturity Model 17 Revenue SuccessMaturity Adoption Retention Expansion Optimization Transformation $1 - $5 MM $5 - $20 MM $20 - $100 MM $100 MM - $1 B $1 B+
- 18. Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved. Agenda Why Is Customer Success A Business? What’s Your Business Plan? How Do You Measure Your Business? How Do You Accelerate Your Business? How Can Gainsight Help? Q&A
- 19. Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved. MA RK ETING SALES RETEN TION Customer Success for the Board
- 20. Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved. MA RK ETING SALES SUCCESS Customer Success for the Board
- 21. Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved. Nail the Board Meeting 3 Simple Steps Sales Customer Success Past Bookings Renewals / Up-Sell Present Market Share Benchmark Future Pipeline Health Score
- 22. Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved. Past Five Metrics That Matter 1. Batting Average 2. Headwind 3. Tailwind 4. Net Revenue Retention 5. Magic Number
- 23. Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved. Past 1. Batting Average # Customers Renewed In Period ÷ # Customers Renewable In Period Are customers voting with their signature on the value of your product or service? Best-in-class: > 90%
- 24. Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved. Past 2. Headwind ARR/MRR of churn dollars including price decreases and downgrades ÷ Beginning of period ARR/MRR How much drag do you have on your growth? Best-in-class: < 10%
- 25. Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved. Past 3. Tailwind ARR/MRR of up-sell dollars including price increases and upgrades ÷ Beginning of period ARR/MRR How much acceleration do you have to new bookings? Best-in-class: > 20%
- 26. Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved. Past 4. Net Revenue Retention Beginning of period ARR/MRR + ARR/MRR from tailwind – ARR/MRR from headwind ÷ Beginning of period ARR/MRR What’s the net dollar impact from Customer Success? Best-in-class: > 120%
- 27. Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved. Past 5. Magic Number ARR/MRR of renewals in period + ARR/MRR of up- sells in period ÷ Fully-loaded cost of Customer Success team + extended team What’s the cost- effectiveness of Customer Success? Best-in-class: 3-5X or higher
- 28. Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved. Lagging Indicators Leading Indicators Too Late Churn Silence Churn inquiry Late payments No product usage Frustration Low NPS scores Long support TTR Not referenceable Disengaged Not opening emails Declining adoption Sponsor leaves Success “Sticky” feature usage Proven ROI Increasing adoption Future Customer Health Indicators
- 29. Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved. Future Customer Health Scorecard
- 30. Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved. Adoption Up-Sell / Renewal Unhealthy Customer Cohort Healthy Customer Cohort Future Predictive Analytics
- 31. Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved. Agenda Why Is Customer Success A Business? What’s Your Business Plan? How Do You Measure Your Business? How Do You Accelerate Your Business? How Can Gainsight Help? Q&A
- 32. Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
- 33. Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
- 34. Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
- 35. Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
- 36. Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved. 3+1 CSM Growth Hacks 1. Create a sales pitch for your Success program 2. Develop a scorecard and share with client regularly 3. Define an early warning process +1: Celebrate Customer Success like you do Sales
- 37. Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved. Agenda Why Is Customer Success A Business? What’s Your Business Plan? How Do You Measure Your Business? How Do You Accelerate Your Business? How Can Gainsight Help? Q&A
- 38. Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved. Contract Signature Contract Expiry ProactiveReactive Welcome Call User Training QBR Low User- Level Adoption Detractor NPS Survey New Feature Demo Customer Check-In QBR & Save Play Customer Check-In New Feature Demo QBR Renewal Preparati on Renewal Negotiati on Multiple Support Tickets Executive Sponsor Change Competiti ve Threat Positive NPS Survey Usage @ 70% Usage @ 95% Retention / Expansion RenewalAdoptionOnboard Customer Health Score 100 0 Best Practice Analysis
- 39. Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
- 40. Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
- 41. Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
- 42. Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
- 43. Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
- 44. Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved. Agenda Why Is Customer Success A Business? What’s Your Business Plan? How Do You Measure Your Business? How Do You Accelerate Your Business? How Can Gainsight Help? Q&A
- 45. Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved. Nick Mehta CEO Gainsight Ajay Agarwal Managing Director Bain Capital Ventures Q&A
- 46. Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved. Download Your Free Copy Now
Editor's Notes
- Over the past decade however, we have migrated from this transactional model to a relationship economy. What this means is that the vendor and the customer have shared goals as the customer only pays for the product over time as it works and as they get value. This model should also sound familiar as the SaaS industry is built on this approach. Economically, the vendor only captures a small piece of the economic pie, typically somewhere between 1-10%, when the contract is closed and they collect the rest over 5-10 years as the customer renews their relationship with the vendor. You all know the virtues of the SaaS model so I won’t re-hash them here but suffice it to say. So, what does this mean? Well, since the vendor still has to capture between 90-99% of the customers life-time value, the vendor is highly incented to make sure that customer is happy, that they are using their product, that they are getting real value and that ultimately, that they renew. Because if they are not happy and getting value, they won’t renew and you will lose that customer and the revenue. And that is obviously bad.
- With that, please welcome our panelists. Sitting next to me is Anthony Kennada. We’re joined by our guests from Mainstay Company - an independent analyst firm specializes in building ROI stories. As Gainsight customers mature in their Customer Success investments, Mainstay works with them to quantify and share their stories. Craig LeGrande is the managing director and a co-founder of Mainstay Company LLC. He has served as senior advisor to leading companies in the automotive, retail and high technology industries, helping them identify new market opportunities and develop effective capital investment strategies. The author of more than a hundred case studies and research papers for high-technology leaders such as Oracle, SAP, EDS, BearingPoint, EMC, and Network Appliance, Mr. LeGrande is an expert at proving business value by means of objective, quantitative evidence and analysis. L.Venkatraman (LV) is a Vice President of Consulting at Mainstay and works closely with CIOs and CTOs of large hi-tech companies as well as start-ups to help them articulate the value of technology solutions. LV helps Mainstay’s clients combine the power of the ‘economics of IT’ with creative / compelling communication methods. He has served in senior management positions with well-known IT Systems Integrators, leading large global business units that deliver IT solutions to clients. With that, I’ll hand it over to Anthony.