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Customer Success Best Practices for SaaS Retention: Metrics and KSFs for Building a High Performing Customer Success Team
Dan Steinman, CCO of Gainsight, presented best practices for building and measuring a customer success team to Insight Venture Partners on April 10, 2015. Key topics included structuring customer success management (CSM), measuring effectiveness, engaging with boards, and fostering a culture of customer success. The presentation emphasized the importance of retention metrics and strategies tailored to different organizational sizes and complexities.
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Customer Success Best Practices for SaaS Retention: Metrics and KSFs for Building a High Performing Customer Success Team
- 1. Dan Steinman, CCO,Gainsight Presented to: Insight Venture Partners April 10, 2015 Best Practices in Building a Customer Success Team and In Measuring Customer Success
- 2. Housekeeping • Q&A atthe end • Question or Chat panel on your right • Recording for colleagues who can’t make it • All attendees will receive slides
- 3. Our Speaker Dan Steinman ChiefCustomer Officer @dantsteinman
- 5.
- 6. Every CEO Claims90% Retention
- 7.
- 8. Retention Goes to11 (> 100%)
- 11. MARKET I NG SALES RETENTI ON Rethinking the B2B Funnel
- 12. MA RK ETING SALES SUCCESS TheB2B Hourglass
- 13. Me Bruises Best Practices 1000+CSM conversations
- 15. Top Questions… 1. Howshould I structure CSM? 2. What should I look for in a VP? 3. How should I measure Customer Success? 4. What should I talk about with my Board? 5. How should I vary my strategy? 6. How can I drive a culture of Customer Success?
- 16. The Perfect OrgStructure CEO CCO Customer Marketing OnBoardingPro SvcsSuccessSupport Training Ops Sales
- 17. 1. How ShouldI Structure CSM?
- 18. 1. How ShouldI Structure CSM? Survey of 100 subscription CEOs – 5/2014
- 19. 1. How ShouldI Structure CSM? Survey of 60 Customer Success Leaders – Jan, 2015
- 20. Business Maturity ProductComplexity Firefighter Sales- Oriented Service- Oriented Integrated Model Partnership Model 1. HowShould I Structure CSM? Own renewals? Own up-sell? Individual comp? Title?
- 21. Business Maturity ProductComplexity 1. HowShould I Structure CSM? Own renewals/upsell? Onboarding? Support? Professional Services Training? # of CSMs Required 1 per $500K 1 per $2M 1 per $8M Variables
- 22. 1. How ShouldI Structure CSM?
- 23. 1. How ShouldI Structure CSM?
- 24. 2. What ShouldI Look for in a VP?
- 25. 2. What ShouldI Look for in a VP? • Responsibilities • Outcomes • Customer Lifecycle • Leadership • Dirty Hands • Activities • Measurement • Effectiveness and Efficiency • Cross-org Success • Background • Sales-oriented? • Support-oriented? • Relationship-oriented? • Analytical? • Technical?
- 28. 3. How ShouldI Measure CSM? • Separating up-sell from churn • Reporting on both dollars and numbers basis • Categorizing avoidable versus unavoidable churn • Analyzing by cohort • Dividing against renewable dollars, not total ARR/MRR
- 29. Lagging Indicators LeadingIndicators Too Late Churn Silence Churn inquiry Late payments No product usage Frustration Low NPS scores Long support TTR Lots of support cases Disengaged Not opening emails Declining adoption Sponsor leaves Success “Sticky” feature usage Proven ROI Increasing adoption 3. How Should I Measure CSM?
- 30. 3. How ShouldI Measure CSM? Survey of 60 Customer Success Leaders – Jan, 2015
- 31. 3. How ShouldI Measure CSM?
- 32. 3. How ShouldI Measure CSM? Comp Survey of 60 Customer Success Leaders – Jan, 2015
- 33. 4. What ToSay To Board?
- 34. 4. What ToSay To Board?
- 35. Sales Customer Success PastBookings Renewals / Up-Sell Present Market Share Benchmark Future Pipeline Health Score 4. What To Say To Board?
- 36. 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% 4. What To Say To Board?
- 37. 2. Headwind ARR/MRR ofchurn dollars including price decreases and downgrades ÷ Beginning of period ARR/MRR How much drag do you have on your growth? Best-in-class: < 10% 4. What To Say To Board?
- 38. 3. Tailwind ARR/MRR ofup-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% 4. What To Say To Board?
- 39. 4. Net RevenueRetention* 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% 4. What To Say To Board? *Best overall measure of Customer Success
- 40. 5. Magic Number ARR/MRRof 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 4. What To Say To Board?
- 41. 4. What ToSay To Board?
- 42. 4. What ToSay To Board? Cohorts
- 43. 4. What ToSay To Board?
- 44. 5. How ToVary Strategy?
- 45. 5. How ToVary Strategy? 45 Revenue SuccessMaturity Adoption Retention Expansion Optimization Transformation $1 - $5 MM $5 - $20 MM $20 - $100 MM $100 MM - $1 B $1 B+
- 46. 5. How ToVary Strategy? High Touch Low Touch No Touch • Revenue or potential revenue? • Including strategic value? • Aligning to sales structure? • Optimizing weightings? • Accommodating effort in weighting? • Handling conglomerates? • Dealing with multiple products?
- 47. 6. How ToCreate A Culture?
- 48. 6. How ToCreate A Culture? Do… Meet users Talk to front lines Promote transparent scoreboard Define success Make retention as important as new biz Don’t… Make decisions you’d be embarrassed about Disempower your team Ignore systemic issues Make critical decisions without them
- 51. Top Questions… 1. Howshould I structure CSM? 2. What should I look for in a VP? 3. How should I measure Customer Success? 4. What should I talk about with my Board? 5. How should I vary my strategy? 6. How can I drive a culture of Customer Success?
- 52. Golden Rule Successfor All Child-like Joy
- 54. “Gainsight offers a hugeopportunity for companies looking for a true 360° view of their customer.” Greg Higham Chief Information Officer Public SaaS “We've already identified about 2,500 Alerts that show upsell potential or someone who might advocate for Adobe EchoSign.” Amanda Schmidt VP Client Success B2B Services “We save one customer a year and the application pays for itself. After that first customer, everything is gravy.” Kathy Lord VP Sales & Customer Success Growth Companies
- 55. Tiered Engagement Strategy High Touch MediumTouch Low Touch STRATEGY ENTERPRISE MID- MARKET SMB SEGMENT PRO-ACTIVE (QBR, Best Practices, etc.) JUST-IN-TIME (early warning, adoption, etc.) SEMI- AUTOMATED (nurture, webinars, etc.)
- 56. Pulse Customer SuccessEvent 5/2014: 900+ attendees, 100+ speakers
- 57.
- 58. What Now? • Talkto Dan – dsteinman@gainsight.com • Gainsight Consulting – dsteinman@gainsight.com • Blogs/papers/University – customersuccess.org • Pulse – gainsight.com/pulse
- 59. What Else? • Surveycoming • Please share feedback • Choose which articles you want to receive
- 60. Q&A Dan Steinman Chief CustomerOfficer @dantsteinman
- 61.
Editor's Notes
- #4 Get bio
- #6 And heck – our company claimed a 97% retention rate, so I figured it would be smooth sailing. What I didn’t realize is: Every company claims a 90-something retention rate Customer retention doesn’t just take care of itself Eventually, I learned that sales was only the beginning of the story in SaaS. Managing retention, renewals, references and the rest of what recurring revenue required became a big part of my day, in partnership with our awesome Client Services team. In SaaS, product and sales aren’t enough. For once, I learned that my dad’s advice was wrong. Well, that wasn’t the only time. After a happy ending to the story with the sale of our company to Symantec, I met Gainsight. When I heard about the opportunity to become part of this massive Customer Success movement, it was a no-brainer
- #7 And heck – our company claimed a 97% retention rate, so I figured it would be smooth sailing. What I didn’t realize is: Every company claims a 90-something retention rate Customer retention doesn’t just take care of itself Eventually, I learned that sales was only the beginning of the story in SaaS. Managing retention, renewals, references and the rest of what recurring revenue required became a big part of my day, in partnership with our awesome Client Services team. In SaaS, product and sales aren’t enough. For once, I learned that my dad’s advice was wrong. Well, that wasn’t the only time. After a happy ending to the story with the sale of our company to Symantec, I met Gainsight. When I heard about the opportunity to become part of this massive Customer Success movement, it was a no-brainer
- #8 And heck – our company claimed a 97% retention rate, so I figured it would be smooth sailing. What I didn’t realize is: Every company claims a 90-something retention rate Customer retention doesn’t just take care of itself Eventually, I learned that sales was only the beginning of the story in SaaS. Managing retention, renewals, references and the rest of what recurring revenue required became a big part of my day, in partnership with our awesome Client Services team. In SaaS, product and sales aren’t enough. For once, I learned that my dad’s advice was wrong. Well, that wasn’t the only time. After a happy ending to the story with the sale of our company to Symantec, I met Gainsight. When I heard about the opportunity to become part of this massive Customer Success movement, it was a no-brainer
- #9 And heck – our company claimed a 97% retention rate, so I figured it would be smooth sailing. What I didn’t realize is: Every company claims a 90-something retention rate Customer retention doesn’t just take care of itself Eventually, I learned that sales was only the beginning of the story in SaaS. Managing retention, renewals, references and the rest of what recurring revenue required became a big part of my day, in partnership with our awesome Client Services team. In SaaS, product and sales aren’t enough. For once, I learned that my dad’s advice was wrong. Well, that wasn’t the only time. After a happy ending to the story with the sale of our company to Symantec, I met Gainsight. When I heard about the opportunity to become part of this massive Customer Success movement, it was a no-brainer
- #53 Gainsight has three core values and principles which we are beholded to. Golden Rule – Do onto others Success for all – including Employees, Customers and Partners Child Like Joy – we love what we do and strive to have fun in everything we do This is what sets Gainsight apart from a lot of other tech companies. On a personal note, I recently left the world of strategy & IT consulting to join Gainsight and looked at a lot of great technology companies. What wowed me was Gainsight’s passion and values. We hope to work together and show you firsthand.
- #56 Nick: we know they have “Sales Execs” who cover their enterprise accounts, and Account mgrs cover midmarket and SMB Type of customers are: Institutional healthcare providers (including hospitals, health systems, integrated delivery networks, clinics and alternate site providers). Retail national accounts (including national and regional chains, food/drug combinations, mail order pharmacies and mass merchandisers); Independent retail pharmacies
- #61 Get bio