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.
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
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.”
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
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
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
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
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.