Why Marketers Should Care About Customer Success


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Event: How to be Customer Obsessed in B2B
Presentation by Anthony Kennada, VP Marketing of Gainsight
Presented at 1871 Chicago, August 6, 2014

Published in: Marketing
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  • We are excited to be here and a part of this exciting new movement in not just marketing, but overall business strategy. This notion of the “age of the customer” has been around for some time, but never has it been more critical to business growth, valuation and profitability as it is today.

    So my goal today is to convince a room full of marketers why they should care about Customer Success. It sounds a little weird when put that way – shouldn’t we all care about our customers? Well yes, but there’s been a massive disconnect between marketecture and adherence. We’ve all seen the “Customer is #1” or “Customer is Always Right” motivational posters… but so much of that has been HR fluff, and when it comes to marketing, frankly someone else’s problem to go solve.

    Well that all has changed – let’s talk about why.
  • First, a little bit about me, my name is Anthony Kennada, and I’m the VP of Marketing at a company called Gainsight. We work with hundreds of subscription and recurring revenue businesses to help them drive more growth from their existing customers.
    The logos represented here are actually a subset of Gainsight customers, not in fact, a visual resume of companies I’ve worked at. I would probably have a few more grey hairs on my head if that were the case.
    I actually started my career at a company called Box out in Palo Alto, and then spent a few years at a company called LiveOffice that we sold to Symantec back in 2011. All I’ve known in my years in business has been this subscription or SaaS business model. For those of you over 30, you’re probably a bit shocked hearing those words, or maybe even a little suspicious at this point. While those of you under 30, likely share the same perspective, or maybe you had a brief stint at Oracle or something.

    And the premise is this…
  • The world is changing because of changing business models. Old business models did not hold vendors accountable – vendors would sell something, they’d get a lot of money up front, and whether the customer got value or not, the vendor still got the money. The vendor’s success was fundamentally not aligned with the customer’s success.
    I know that sounds rather obvious, but it’s actually a massive thing that we should all internalize. With the new world of subscription business, pay-per-transaction, increasing freedom of choice for customers… customer success and vendor success are totally interlined.
    What this means is that your growth depends on your customer success. That’s a point that I’ll keep coming back to throughout the presentation today.
  • So in the old economy where you sold something and got all the money upfront, how did your customer lifecycle work? I’m sure everyone had a slide where they showed how it should have worked… but here’s what actually happened.
    We’re at the vendor, right? We got the money up front. So now, when we interact with a customer, it’s to get something. Can I get a reference? Can you do a case study for me? Are you ready to buy more? Do you wanna renew? Oh, and by the way, who are you again? I actually lost track of who you are… you’ve changed so much. But, I care a lot about you actually, because you’re the most important thing to me, because the customer is #1.
    How many people felt like that in past companies? I’m not here to criticize that, because frankly it funded a lot of wealth in Silicon Valley. But the reality is that the world has changed, whether we like it or not, it’s different now.
    And our view, and Influitive’s view, and I think a lot of people here’s views, is that the customer really is at the center now. It’s not just a nice thing that we say anymore or pin up on the wall to make people feel better. They really are at the center, and there’s a lifecycle now from the time you get the customer, to them adopting the service, renewing, growing, etc.
    So you really have to rethink what growth means in that new model.
  • So before we get much deeper into this discussion of Customer Success and why marketers in particular should care, let me take a quick poll of the audience. Show of hands – how many of you have a Customer Success team or Customer Success Managers at your company?
    Ok, let’s quickly define what Customer Success is and isn’t.
    It’s not just about churn mitigation, but a way to drive new sales. It’s not just additional sales to existing customers (although that’s an important part of it), but a way to drive advocacy and net new sales with greenfield customers. It’s not just a way to understand your customers better, but a way to drive overall growth of the company and higher valuations.
  • So, let’s talk about this metaphor – how many of you have seen a B2B revenue funnel? Everyone right? Look at that funnel and tell me what’s the first impression that you get? It looks like:
    Marketing’s job is really hard, because there’s a lot of stuff up there at the top
    And then sales is pretty hard, because you have to catch all those things
    And the bottom just takes care of itself, right? It’s kinda the easy part? It looks very easy.
    I think a lot of companies have been influenced by this metaphor to put more weight at the top than the bottom, and I hope to change that. Visual metaphors do make a big difference.
  • Our argument is that the funnel should be an hourglass. I know that sounds like a dumb, cheesy, idea… I think it’s massive. The idea is that basically you’re going to get as much growth from your existing customers as you are from your new customers. Now if you have 0 customers, that’s obviously not true, right? But as you grow, and as you take more and more of that greenfield customer base, your growth is going to come from your customers. There’s just no doubt about it -- it’s formulaic.
    And yet, we in the past have said, if you’re responsible for customers at your company, your job is that tiny little thing at the bottom. If you’re in Account Manager, Customer Support, Customer Success, Services… your job is that little thing at the bottom, great job, keep going, we’re working on offshoring your job and automating it. But, great job.
    And the people at the top get the glory, they ring the gong, and they’re the people who get paid a lot. And our argument is that really needs to change. The bottom of the funnel, Customer Success, is the key to growing fast.
    Let me hit this home… there’s a lot of research out there that shows that companies that acquire customers and grow within those customer bases grow much much faster. There’s no doubt that if you want to be a high growth company, you can’t just grow by acquiring customers – that’s #1.
  • #2 – Goldman Sachs did a research study about a year ago, and publicly traded recurring revenue businesses that have a higher retention rate have a higher multiple. And so what that means is not only do you grow faster, but you also get valued more. So it’s actually a double value.
    Third thing, which is really interesting, is that if you retain more of the dollars that you acquire, you can actually spend more to acquire customers, because the lifetime of your customers is higher.
    So therefore, not only can you actually grow faster and be worth more, but you can invest more in growth.
  • I talk to a number of executives and ask them what their retention rate is, and they say “oh we’re doing great, 90%, 90% retention rate.” I’m like dude, your retention rate can go much higher than 100%. The best companies retain 120 – 130% of their revenue by upselling into their install base.
    And so retention can be much more than your existing customer base.
  • So this is all great stuff. But I know that some of you here are thinking… um, does this guy know who he’s speaking to? I assure you that I do know, but more importantly, that the new era of marketers are not only well schooled in the principles of Customer Success as a growth driver, but are building their entire marketing program around customer-centricity.

    We’ve heard about the big data trend and how marketers are using data and automation to both scale and get smarter about lead generation and CRM. Eloqua, Marketo, Salesforce and others have led the industry by developing technology to power this. Now, leading marketers are applying those same principles further down the funnel to manage their customers and drive advocacy behavior.

    Well, why is that important?
  • Take a look at these statistics. 60% of tech B2B customers search for peer testimonials on products. Typically this behavior isn’t completely organic, but influenced by strong advocacy programs. Just a quick footnote about why this is important. Gainsight is a Salesforce.com partner and we spend a good proportion of time enabling the Salesforce field sales organization with the goal of driving net new leads through the partner channel. The first place that a Salesforce AE will look to figure out if you’re a legit company – does anyone want to take a guess? AppExchange reviews. That’s their metric to qualify whether or not they pick up the phone to call you back, or introduce you into their accounts. Obviously a massive focal point for any AppExchange partners.

    Here’s another one: 75% of the buying process is complete before a B2B prospect contacts a company. We’re in the age of the “self-directed buyer”. If you’re doing your job as a marketing team pumping out great content, and distributing that content well, all your sales team has to do is bring in that last 25% every time that contact sales form is filled out. So how are you leveraging testimonial videos, case studies and other mid-to-late stage content items online? How are you mobilizing your best advocates to distribute that content across the social web?

    Finally, 84% of B2B decision makers start their buying process with a referral from a trusted peer. This is key, I want this to sink it for everyone. Do you realize this means that, on average, ONLY 16% of your pipeline was generated outside of advocacy?? That’s crazy! We quickly realize the silliness of that funnel metaphor… the bottom of the funnel, now hourglass, feeds the top. So how do you facilitate those referral leads? How do you cultivate a culture that scales that type of behavior?
  • So to answer the question that I posed in my opening, Marketers should care about Customer Success for two reasons: because of the growth multiplier on pipeline generation and company valuation, and increased deal conversions. It makes a lot of sense, and I think a CEO would be very supportive of investing in a program like that.

    But there’s a third factor, and I’d argue it’s the fundamental engine that makes the other two bullet points even work.
  • Marketing has never been in the business of running sprints, but always in the business of hand offs. We rely on Sales to take the leads that we generate and turn them into revenue. Like any good relay race, the outcome is completely dependent on the relationship between the two runners and how clean the hand off is executed. It takes talent, communication and a whole lot of practice.

    And in this new customer-obsessed world we’re discussing today, you get into this new alignment frontier that Mark mentioned earlier, where now the customer advocates are at the center of this relay race. I couldn’t come up with a better graphic so I definitely plagiarized a bit here. Sorry about that Jim. Maybe the three segments are actually a track, and the advocates are standing in the middle on the grass somewhere… I don’t know.

    But anyways, marketing feeds Sales with leads driven through advocate behavior, Sales closes the deal with a little help from advocates, and Customer Success feeds Marketing with great new advocates to start the process all over again.
  • So the third reason that marketers should care about customer success, and arguably the most critical to making all of this work, is that a focus on Customer Success can help expedite time-to-advocacy, or said another way, can actually turn customers into advocates.

    It’s this discussion that I want to spend the rest of the presentation focused on… how does Customer Success and Marketing work together to take a closed won contract and turn them into delighted power users who want to advocate on your behalf and become your loudest champions. I think people have a lot of questions about this since it’s a relatively new concept to embrace.

    So to make this palatable, I’ve got a working model for us to consider.
  • There are three steps that every Customer Success team considers when turning a customer into an advocate. Although not every one customer is the same, the process remains unchanged. You’ll notice as we go through these that there’s a lot of moving parts, so I’ll give a quick example of how our customers use Gainsight to help in each phase.

    So the process begins with building a foundation for value, then validating that value through regular business reviews, then finally, nurturing the relationship to grow your installed base at the customer. These three pieces work together to bring a ton of internal awareness of your company and product.
  • So how do you build a foundation for value? The first metric that Customer Success organizations focus on is product adoption. Now note that product adoption is merely one factor across a myriad of others to consider when building a customer health score – you’ve got a number of different inputs from CRM, ERP, surveys, social media, etc. But for the sake of this discussion, let’s focus on the adoption part.

    From one power user to a department to expanding enterprise use cases, proper adoption can snowball and make your product even stickier with your customers.
    To properly ensure adoption, you must deeply understand the value your customers want to get and the issues they are trying to solve during the sales process. Work with your sales teams to understand the business outcomes that prospects are hoping to achieve with your product and ensure that they’re logged appropriately.
    These specific goals will arm your onboarding team and create helpful milestones for ongoing usage monitoring. For example, Gainsight customers with growth goals get specific playbooks and best practices during onboarding and our CSM team will track very specifically their usage of the product, mapping to those goals.
  • We make this even easier in Gainsight. This screenshot is an example of how Customer Success Managers can use analytics to see across their entire customer base, and identify who is using what features and how that data stacks up against similar customers with the same goals. You see in this example, we’ve employed data science to conclude that reports run, page views and logins are the three usage factors that most accurately contribute to whether a customer is leaning towards advocacy or churn.

    If you are a SaaS company, or a business that delivers a product or service through the web, then this is a great feature for you. If you’re not, there are other “adoption factors” that you can monitor outside of usage that I’d be happy to spend some time discussing afterwards.
  • The next step on the journey to advocacy is to consistently validate the value customers are getting through regularly scheduled “business reviews”.
    For business reviews to be the most effective, you will want to have executives on both sides in attendance.  This is one of the best reasons to create an executive sponsorship program, at least for your key accounts.  The business review will be one of the key points of participation for your executive sponsor.  The participation of an executive on your side will usually make it easier to get the sponsoring executive on the customer’s side to attend as well.
    A business review should be a strategic event, not a tactical one.  This is not the time to discuss the details of a particular issue or how you are going to train the new admin.  These opportunities to get in front of your stakeholders and their executives can be powerful opportunities to reduce time-to advocacy by:
    1. Communicating the ROI to many stakeholders.
    2. Showing best practices and community learnings to find other areas of ROI.
    3. Align to your customers’ changing goals and business initiatives
  • Here’s how we make this easier in Gainsight. After tracking the key metrics that drive your customers’ goals, you can easily automate presentations, reporting, and deliverables that show your customers the results they are getting mapped to their initiatives. My Product Marketing lead loves this feature. He used to get inundated with requests from Customer Success and Sales to put together a deck or help “clean up” a deck to present back to a customer or prospect. Now that it’s automated for Customer Success, only Sales bothers him.

    One of Gainsight’s customers Gild has cut down their preparation time in half and is able to deliver regularly scheduled business reviews to every one of their 100+ customers.
  • So finally, as customers come on board and begin to recognize the value they are getting from your product or service, what better way to cement advocacy than to grow your relationship. Happy advocates are internal champions that can get more users in their company on board.

    Our research has shown us that the number one indicator to a customer churning is – anyone want to take a guess? It’s when your executive sponsor leaves the company / moves on. This strategy gives you more foothold at a customer should one champion ever leave, and it also makes you an inextricable part of their business operations.

    So as a customer marketer, you can help here by building custom nurture tracks focused on adoption, cross-sell into new departments, or up-sell into new features or packages. Although typically the forcing function for nurturing customers has been to contribute dollars through land and expand (which is still a very good thing), you’re also growing the lifetime value of that account and driving up your advocacy TAM at the customer – all good things.
  • So to help grow these relationships, Gainsight offers white-space analysis to quickly identify who is seeing the most value (via usage and other metrics) at an account or user-level as well as what features have been purchased and enabled. Using data from other comparable companies that we benchmark, you can then recommend to your customer what features and capabilities other teams in their company could use net new or more deeply.

    Quota carrying Account Managers love this feature – makes it really simple.
  • So there you have it – these are the three steps on how Customer Success can turn a customer into an advocate. It’s a process that depends pretty significantly on how you’re stacked from a people and technology perspective.

    On the people side, some companies have dedicated Account Management or Customer Success teams that are responsible for the post-sales relationship with the customer. In this model, Marketing is aligned and the execution of hand offs matter. In other companies, we’ve seen Marketing assume responsibility itself.

    The challenge is that there’s absolutely NO WAY to scale this from a human capital perspective. You can’t just throw bodies at an ever-growing customer list. Box has 34,000 paid business customers and 40% of the Fortune 500 – can you imagine how massive their team would be if they hired an Account Manager to cover even 10 accounts each? And if that were the case, and they called each of their customers every day, by the time they got to customer 10, customer 1 is in a completely different place.

    So the good news is that there’s technology to help with this – and I’ll use the last few minutes here before Q&A to give a quick commercial of how Gainsight can help.
  • Gainsight is a technology platform that sits on top of Force.com. What Eloqua and Marketo are for Marketers, we are for Customer Success. We help subscription companies reduce churn (usually by 5% points or more), increase up-sell (usually by about 3% points or more) and help your team scale about 25% more efficiently by automating a lot of tasks.

    The first step in this process is to aggregate all siloed sources of customer data into Gainsight – usage data from your products, sales data from your CRM system, billing data from ERP, survey data, support data… you name it. Once all of this data is in one place, we analyze it using a combination of both regression and decision tree analysis to help you identify what are your leading indicators to churn or upsell. This takes a lot of the guesswork out of the equation. You might find once correlated that when usage drops below a certain threshold, an NPS Survey comes back with a detractor score and support tickets go unresolved within a certain time structure, that’s a potential churned customers.

    With all of those indicators in place, we will trigger an alert to the appropriate Customer Success Manager when we see this behavior. You can imagine how this works well at scale when one CSM is managing 100+ customers. We would then trigger a recommended playbook, or a series of tasks within our workflow engine, to help either resolve that potential for churn or start the up-sell conversation.

    We’ve got some great customers today, including our friends at Influitive here, who are trusting Gainsight as the foundation of their Customer Success technology stack.
  • So on that note, I also want to take this opportunity to make a little pre-announcement. Gainsight and Influitive have partnered to really pioneer the enabling technology platform for customer marketers. So we are announcing a new integration that should GA later this quarter.

    Gainsight will enable Marketing and Customer Success teams to manage their customers, identify signals of advocacy, and nurture those relationships until they’re ready. We’ll then trigger what we call an advocacy playbook that will invite the customer to the Advocate Hub, powered by Influitive. There the new advocate can engage in a number of different activities such as participating in a case study, speaking at our conference, or referring new business to us. All of that aggregate behavior within Influitive will then push back into Gainsight, thereby adding new context to that customer’s “health score”, and closing the loop.

    This is incredibly exciting, and as a user of both Gainsight and Influitive, I’m thrilled to be able to have these two critical systems for my job working together, and providing valuable ROI data points for this alignment between Customer Success and Marketing.
  • So that’s it – for those of you who want to learn more about Customer Success, we’ve built an online knowledge base on Gainsight.com for all things best practices. You can become certified at our Customer Success University or even look for a career in Customer Success if that should become of interest.

    I’ll now turn it over to Q&A if there are any questions from the audience.
  • Why Marketers Should Care About Customer Success

    1. 1. Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved. Why Marketers Should Care About Customer Success Anthony Kennada August 2014
    2. 2. 2014 Gainsight, Inc. All rights reserved. Anthony Kennada Vice President of Marketing Gainsight @akennada
    3. 3. 2014 Gainsight, Inc. All rights reserved. Transactional Economy Subscription Economy Vendor Success Customer Success Vendor Success Customer Success The New Chasm
    4. 4. 2014 Gainsight, Inc. All rights reserved. Vendor Can I get a reference? Want to buy more ? Ready to renew? Who are you again ? Transactional Economy Subscription Economy Success Retention Advocacy Expansion Onboarding Customer The New Customer Lifecycle
    5. 5. 2014 Gainsight, Inc. All rights reserved. Customer Success is…
    6. 6. 2014 Gainsight, Inc. All rights reserved. Rethinking the B2B Funnel MARKET I NG SALES RET ENT I ON
    7. 7. 2014 Gainsight, Inc. All rights reserved. MA R K ETIN G SALES SU C C ESS The B2B Hourglass  Higher Growth Rate  Higher Multiple  Higher CAC Frontier
    8. 8. 2014 Gainsight, Inc. All rights reserved. Valuations go up…
    9. 9. 2014 Gainsight, Inc. All rights reserved. Retention Goes to > 100%
    10. 10. 2014 Gainsight, Inc. All rights reserved. BTW, WE’RE MARKETERS…
    11. 11. 2014 Gainsight, Inc. All rights reserved. 75% of the buying process is complete before a B2B prospect contacts a company 60% of tech B2B customers search for peer testimonials on products 84% of B2B decision makers start their buying process with a referral from a trusted peer.
    12. 12. 2014 Gainsight, Inc. All rights reserved. Why Should Marketers Care About Customer Success? • Growth multiplier on pipeline generation • Increased sales conversions
    13. 13. 2014 Gainsight, Inc. All rights reserved. The Next Frontier: Marketing – Customer Success Alignment
    14. 14. 2014 Gainsight, Inc. All rights reserved. Why Should Marketers Care About Customer Success? • Growth multiplier on pipeline generation • Increased sales conversions • Turn customers into advocates
    15. 15. 2014 Gainsight, Inc. All rights reserved. Turning Customers into Advocates Build a Foundation for Value Business Reviews Nurture Growth
    16. 16. 2014 Gainsight, Inc. All rights reserved. Ensure Adoption
    17. 17. 2014 Gainsight, Inc. All rights reserved. Engagement Analytics
    18. 18. 2014 Gainsight, Inc. All rights reserved. Validate Value
    19. 19. 2014 Gainsight, Inc. All rights reserved. Success Snapshots
    20. 20. 2014 Gainsight, Inc. All rights reserved. Grow LTV
    21. 21. 2014 Gainsight, Inc. All rights reserved. White-space Analysis
    22. 22. 2014 Gainsight, Inc. All rights reserved. Turning Customers into Advocates Build a Foundation for Value Business Reviews Nurture Growth
    23. 23. 2014 Gainsight, Inc. All rights reserved. Matrix Data Architecture Reduce Churn “Headwind” Increase Up-Sell “Tailwind” Scale Team Efficiently Source: Measuring the ROI of Customer Success Management Solutions - Mainstay Company What? 5% points 3% points 25%Why?* How? Aggregate Gainsight Customer360 Analyze Gainsight 4-D Analytics Automate Gainsight Predictive Playbooks Gainsight Drives Growth
    24. 24. 2014 Gainsight, Inc. All rights reserved.
    25. 25. Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
    26. 26. 2014 Gainsight, Inc. All rights reserved. Q&A
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