How to Take Customer Success from Idea to Action from Gainsight, Xactly, Navex and Glint

Please welcome Gainsight COO Allison Pickens, NavX VP of Customer Success Ashley Fryer, Xactly Corp Chief Customer Officer Bernie Cassar, and Glint Chief Customer Officer Mary Poppins.

All right, everybody, super excited to be at SASR and also to close out the day. I think we're the last session before happy hour. So thank you guys for sticking around. Our panel today is how to take customer success from idea to action. I'm Alison Pickens, COO at Gainsight, which helps subscription businesses drive customer adoption, renewals, and expansion. I'm super excited to be joined today by 3 amazing customer success leaders, and together we're going to tackle this tricky subject of walking the talk in customer success. So to start with some introductions, first we have Ashley. Ashley Fryer is VP of customer success at Navex Global, a 1,000-person private company where she's responsible for making 13,000 customers successful across multiple products in the ethics and compliance space. Next we have Mary Poppins, who is Chief Customer Officer at Glynn, which has about 300 employees, raised a total of $8 million from the likes of Bessemer Venture Partners and others, and recently joined the LinkedIn family, actually. Mary previously held exec roles at SAP in SuccessFactors and their global cloud business. And finally we have Bernie Cassar, Bernie is Chief Customer Officer and SVP of Alliances and Business Development at Exactly. So he's responsible for both customer and partner success, which I think adds an interesting perspective to his job. He's run teams at Exactly in the early days when it was venture-backed, when it was public, and also today under private ownership by Vista Equity Partners. So he's been through lots of different stages. So, um, this panel actually has, I think, a really broad range of experiences, having worked at public and private companies, small and large, VC-backed, private equity-backed. So we should have a pretty good discussion today. So to kick this off, I'd love to let the audience get to know you guys on a more personal level. So my first question is, what is your favorite karaoke song? I'd love to start with Ashley.

Well, that's easy. It's actually Valerie. And actually, if anybody was at karaoke Tuesday night at Saster Nights, you could have caught myself and my colleague Valerie Jeffords. Singing ballerina by Amy Winehouse.

Awesome. How about you, Mary?

I have to go with audience participation and Sweet Caroline by Neil Diamond.

Nice. So speaking of audience participation, what do you guys think of when I say, just a small town girl living in a lonely world, she took the midnight train. Come on, everybody.

All right.

It's obviously Journey, Don't Stop Believing. And I gotta say, if you're at SaaStr and you're an exec or a CEO or an entrepreneur, that is one song that you have to say to yourself every single day.

That is true. And we definitely like to have fun in customer success, which I think you can see on this panel. So my favorite karaoke song is actually Timber by Pitbull, and I do the Ke$ha part, which is actually my first karaoke song that I performed when I joined Gainsight a little bit Okay, um, so to get in the business, I'd like to start by referring to a framework from the venture investor David Skok at Matrix Partners. It's called the 3 phases of a startup. You might have heard of it before. Stage 1 in a startup's life is typically the search for product-market fit. Then we go to Stage 2, which is the search for a repeatable growth model. And finally, Stage 3, which is scaling the business. Now interestingly, I find that the changes and evolution of customer success teams tend to map to those 3 stages. So in stage 1, for example, we're figuring out what kind of human help is required to complement the product that we've launched. Because even if we launch the most beautiful product, typically it's not completely perfect in delivering value out of the box, right? So the whole product includes human interactions as well as a feature set. Then in stage 3, we're figuring out what customer success model can I scale right? And how do I know if my model is working? Then in stage 3, we move to actually, you know, executing. So essentially, just summarizing that, stage 1, figuring out the whole product including customer, including the product features and customer success. 2, figuring out if my model is working. And 3, driving execution. So those are the 3 stages that we're gonna talk about today. Let's start with stage 1, figuring out the whole product. Starting with you, Bernie, how should the nature of your product influence what type of customer success managers you should hire?

Yeah, I actually— it's a debate on that specific question. The answer, it really depends on the product that you're launching or trying to support. For us, I've had experience on a number of different products. For us at Xactly, it's actually a heavy lift product. When I, when I say that, it means it needs professional services or a partner to implement it. So really, that whole onboarding stage is taken care of by department and has a process. So our profile is more somebody coming on after the customer goes live, and their onboarding is more about engaging with the business users to figure out how to get them to value as quickly as possible and through adoption and other things. And I've also been at companies like Mixpanel where it was a lighter implementation, and so you really didn't have PS. And it was more of a customer success individual that did the onboarding and could take them through training in some sort of workshop to really deliver the implementation piece of it.

Yeah, you know, my own experience, I've often found as well that the, the stage of your product influences what kind of customer success manager you're hiring. So, you know, if in the early days you're launching a product which, you know, has a number of feature gaps, you might need to hire customer success managers who are more on the technical side so that they can fill supplement the gap. It's essentially fill the gaps in your product. So actually on my team, we sometimes call that the CSM of the gaps theory, um, of hiring for customer success managers. Um, now, now turning to executives, um, in terms of what kind of VP you should hire, you know, Mary, I, I noticed that there, there are tons of different types of VPs of customer success. How should your product influence what kind of executive you should hire?

Yeah, I think it really depends on the maturity of your product and your company. Do you need a builder or do you need a leader? Typically in the early stage, you need more of a builder, somebody who can be technical and hands-on, build the delivery model, hire the right team, somebody who's in the day-to-day operations dealing with customer escalations. But in mid to late stage, you can bring on a leader who can set the strategy, set the vision, execute on that strategy, and set operational cadence. But in both of these situations, you need to have somebody who has the skill set to be able to explain the product value of your product to the desired business outcomes of your customers, right? So someone who can build relationships at the executive level and help them understand the value of that partnership.

Awesome.

Now, Ashley, you've actually started a customer success team totally from scratch within the context of a larger company that has many products. Um, so how did your product portfolio, uh, motivate the creation of a customer success team?

Well, product was certainly a significant factor in motivating, uh, our launching and deploying customer success. A little bit of context is that Navix was formed as the merger and acquisition of 4 companies, uh, each with unique product offerings, and then a 5th company shortly thereafter. Um, but all product offerings that were complimentary and all in ethics and compliance space. So as you can imagine, if you've been through a merger and acquisition before, it can be very challenging and it can be disruptive to business. And that's with one company being acquired. You're trying to bring cultures together, teams together, processes together, systems together, and it can get— feel a little bit like organized chaos. So multiply that times 5 companies, and that's kind of where we were. And we started to hear some feedback from our customers, and we started to hear things like, Navex, you're just not that easy to do business with anymore. Or, hey, I don't know who to call anymore. I'm frustrated. I don't know who to talk to, or I've got 6 or 8 different people calling me. So we knew our customers were frustrated. The flip side of it is the endgame in launching customer success has always been about, and is today, it's about retention, expansion, and advocacy. But we knew that after the post-acquisition of 5 companies, We had a customer base of 13,000 customers, but only 14% of those customers have more than one of our product offerings today. So our growth strategy is all about cross-sell in our own customer base. So we knew that while we were trying to work through the M&A challenges and things of that nature, we needed, kind of like you say, Alison, somebody to stand in the gap for our customers so that, kind of shield them from that, from feeling the frustration while we worked through getting to platform because we know from industry leaders that's what our customers want. They want one-stop shopping. They want one vendor to handle all of their compliance needs. So we knew we needed to keep them healthy and help them see the value in the solution that they had while we could work to bring a seamless platform together and offering together so that we then can go capitalize on our strategy for cross-sell.

It seems like in your business, the customer success role is so critical as a quarterback, like for the client to basically navigate your business.

Yeah.

And I, and I see that even actually in single product companies too, that they need that sort of quarterback to advocate for the client. Absolutely. Yeah. Um, now Bernie, um, one of the things that you and I have talked about is, um, our goal in this stage is to create that whole product experience that includes both features and help from customer success. And so, you know, to this end, how should heads of customer success collaborate with their peers in the product management department in order to ensure that great experience?

Sure. So my experience has been you can't, you really have to create a cross-functional group. And we at Xactly, just for the folks that don't know what Xactly does, is we automate, we work in the sales performance management space and we automate sales planning for territories, quotas. Then we also do the execution of actually calculating commissions as well as doing the compliance in that area. And then obviously the analytics reporting and being able to give all that feedback. So you can imagine with the different products and the complexity of having different buyers, you really have to have a cross-functional feel between product management of what your end users want, because it's not the same buyer for every one of the products that I mentioned. But you also want engineering to hear it so that they know what the experience is. So at Xactly, we've instituted a cross-functional meeting that happens weekly, and it has engineering, product management, operations, as well as support and professional services. So all the groups can hear what's happening in the customer base and react accordingly. So I truly believe you can't just talk to one specific group like product management, even though they're one of the key ones. You really have to have everybody on the same page so everybody's hearing the same thing.

Totally.

One of the things I've noticed is that in our area— in our era, customer success and product management are almost like the new sales and marketing, where they have to work just so closely together to create that amazing client experience. And actually, at small companies, I've even seen the role of customer success manager and product manager combined into one person, right? You're sort of thinking about who's that first employee I should hire if it's not, you know, a salesperson or another engineer. And often that person is doing the job of both roles, which shows you just like how integrated those two motions can be.

Absolutely awesome.

So let's move to stage 2, right? This is about figuring out if your customer success model is working. Now, Ashley, how do you know if you're not investing enough in customer success or making it a big enough priority?

Well, I love that question, Alison, because I will tell you, I'm a firm believer in go big or go home. But while that doesn't always apply to everything in life, I think certainly when you're looking to launch a customer success program, it is— it does. I've seen a number of organizations, you know, customer success has been a trending buzzword in the SaaS arena for a number of years now. And I've seen a number of organizations want to jump on the train and use the name, but really just slap the name customer success on existing teams and not really invest in change, and it fails. So I can tell you for us at Navex, we literally spent 9 months putting together a go-to-market strategy and getting our entire C-suite executive team on board, committed, and dedicated to this because it's really a paradigm shift and it's really a methodology that you embrace about how you do business. And so we spent that time up front and it was critical. We had early alignment between our chief financial officer and our chief customer success officer. And then when it came time, we put a 5-year model together that looked at investment and then return, and our senior vice president of sales was more than willing to sign up for an increase in a, frankly, already aggressive growth, you know, target, because he believed in the program that much. So I think, you know, at the end of the day, you do have to define and rigorously track metrics, key metrics. You know, you're gonna look at net retention and churn and expansion, And that's gonna tell you what the levers are of whether you're being successful or not and if your investment strategy is working. But I think it's key to get the commitment and the dedication up front.

It really resonates with me, the importance of tracking certain metrics to know if you're investing enough. For example, there are lots of industry benchmarks out there now about how much people are investing in customer success. There's a report that comes out every year released by PacWest and They, they've said over the past couple of years that the median level of investment in customer success in the SaaS industry is about 10 cents per dollar of annual recurring revenue managed. And interestingly, I mean, that is the median, and I continue to see lots of companies that are underinvesting and have high churn rates, right? It's, well, you know, if you don't, if you're not spending enough, like, you're not gonna get that, that return. I also see a lot of companies actually committing to higher gross retention retention rates as targets in order to fund customer success managers, right? And you know, the downside is that puts you on the hook to actually deliver, but it shows your CFO that, you know, you believe that there's a return in it.

Absolutely. Great.

So Mary, turning to you, if your churn is high, how do you diagnose what's causing it?

So first of all, churn is like a swear word, right? I guess the first thing you need to understand is what is the expected churn for your organization based on your product and your business model to know if your churn is really high, you know, what is the baseline? And so taking a look at, do you have a monthly subscription business? Do you have an annual subscription business, right? The churn expectations for both of those business models is different. Also, who are you serving? Are you serving the mid-market, the SMB space, the enterprise space, or all of the above. And each of those segments comes with different expectations for churn as well. So you need to really understand what is a realistic expectation for your organization. And then because we absolutely hate churn, we want to put in a process and systems as early as possible to track that churn. And then to what Bernie was saying before, to Take that information back to the organization, to your partners, to help action and mitigate that churn, right? If it's cost that's driving up churn, then let sales and finance know what's going on. If it's product gaps, talk to your product team and get those gaps on the roadmap, right? And just one other comment that I wanna make is to take it to the next level, you could take your customer satisfaction scores and your net promoter scores correlate that with your churn data, and all of a sudden now you've got predictive insights that you can leverage in order to mitigate that churn.

Yeah, I think that diagnosis process is just so important and can't be shortchanged. You know, I, I notice a lot of earlier stage customer success teams so embarrassed when, honestly ashamed and guilty and scared when a customer doesn't renew, I, that they tend to be very quick to kind of sweep it under the carpet, right? Well, it was, it was due to an uncontrollable factor, right? Like, you know, they had a layoff, the exact sponsor left, they left for a competitor, it was a pricing dispute. You know, there's a whole list of things that you can sort of blame the client for, right? And I think we miss a learning opportunity when they do that, when we do that, particularly because even when there are uncontrollable factors, there are always things that we can do better. And so we should learn, you know, how to improve our model based on it. Um, in particular, one thing I noticed that can be really harmful to startups and, and growth-stage companies is they see high churn in their small business segment and they assume that that's not a good market for us. We should just abandon that segment, move up market. I hear that a lot when actually if you took the time to diagnose exactly what was going on for small businesses, you might figure out how to execute better and how to scale. Um, I've seen teams actually have 20 percentage point gross retention improvements serving their small business segment by making changes in hiring and other sorts of execution. So, um, now coming to you, Bernie, so, um, what metrics should you use to determine if your customer success model is working?

Yeah, so I think, um, it's been said a few times here with churn and then being able to tie yourself to either revenue saving activities or revenue-growing activities. So when we look at our customer success group and the metrics that I like to look at, it's definitely churn, gross churn, why it's happening, discounts, non-renewals, those types of things. Retention, so revenue retention, which is slightly different when you start looking at attach rates of add-ons. But then the classic customer sat, whether it's through MPS or other customer sat types surveys. And so as you start looking at those different metrics, they each tell you different things on what you're trying to accomplish. But one key score, and we use Gainsight, is the health score, is really understanding what is the health score per customer, and then breaking it out and trying to build out a health index. And you can do it for all of your customers, but then if you also are more practical and build it out by the segment. So we service enterprise, mid-market, and SMB. You start getting different stories based on the different segments. And a lot of this is like, yeah, it's obvious, but it takes time to build the right criteria for the health score that's important to you. But that's one really key metric that helps us with all the others.

Awesome. So, so let's say you've tracked all of your metrics, you've diagnosed your churn, you figured out if you're investing enough. And so you've kind of got your model. Now we're turning into the execution phase where you're going to scale that model. Mary, I'd love to turn to you. You know, I often find that building a services effort to cover the cost of your investments in your clients is one of the keys to scaling. But I also notice a lot of founders of software companies saying, wait a minute, we're software people. Why do we need services? That seems antithetical to what we're doing. And so, you know, what do you say to those people?

Yeah, it's a great question. I've, I've heard it a lot. My response is, is usually that the best people to be able to take your product and turn it into business value and success for your customers are the ones internally who know the product inside and out. They know the customer use cases, and they can marry that into what's the best delivery strategy, what's the best optimal configurations to meet your customer's business needs, right? And then taking that information back from the customer and feeding it back to product. So without that sort of internal services loop, you're missing out potentially on a lot of innovation and differentiation. And having an internal services team doesn't mean that you have to have a huge services team or a lot of services revenue. There's, there's ways to mitigate that by self- service in your product or automation or leveraging a partner ecosystem to help deliver, right? But having at least the gold standard services team in your company to, to get things going, it's really, uh, gonna help with that. Again, differentiation and innovation.

Yep.

Yeah.

One of the metrics that we tend to use on the services side of our business is attach rate, right? Which means dollars of services revenue that you charge per dollars of subscription. Subscription revenue. Now Ashley, I know you've done actually some really interesting analysis to figure out, you know, what attach rate is right for your business. Can you tell the audience about that?

Well, first the disclaimer is I did not do the research. Our finance team did. Okay, fair. So no, so I, you know, our finance team did an analysis of 5 years of customers, net new customers, with PS attached, but you know, professional services attached. and we operated about a 30%, um, uh, attach rate. So 30% of the total ARR for each net new customer. And what the data showed us was that for those customers with PS attached, first year spend was 46% higher and a year over year, uh, growth trend including cross-sell of around 20%. And then the kicker for me is that they stay 5 times longer. So I think you have to know, you have to look at in your business what are the net results and how does professional services impact your business and your bottom line, and then track those metrics. We, we follow GAAP accounting rules, so we're always looking at the balance, right? Got to figure it out. But, you know, it, it's the right model for us at 30%.

Awesome. That's incredible justification, I think, for selling services, right? It shows up in your subscription metrics. Yes, it makes a difference. So, um, you know, the same time that we're selling services to cover the cost of human help, we still want to automate, right? Because we are software people, like, we want, we want to be much more efficient, use tools to help us. And so, you know, Bernie, I'm curious to know, like, you know, what, what initiatives should you launch during this stage to reduce customer effort in the product so that you can scale?

Well, it's Depending on which phase you're in, if you're in early days, I'd highly recommend building usage software, or excuse me, usage metrics built into your software so you really understand where your customers are going, what path they're taking in your application, so you can understand where the drop-off rates are, where they might not be as engaged. But on top of that, if you can add any sort of inline training so it's a a lot easier to use, whether it's an enterprise app or an SMB app. You see it in a lot of SMB apps that are really designed for low touch from a services standpoint. So they want to guide you through that. And then online training. If you can, early days, build out your training programs on some sort of platform that can be delivered in masses and one-to-many type format, I think that All those things start helping you and help your customers be more successful without that heavy engagement of the customer success person doing the training so that they can focus their attention more on the adoption and unlocking the value of your software versus going through the how to use, how to use the software.

Awesome.

All right.

So a final question for the group. This is the most hotly debated topic in customer success. And I love to go rapid fire. Who should own renewals? Customer success or sales? Bernie, kick us off.

Customer success.

Customer success.

No comment.

No comment. Got to put a stake in the ground. All right. No, but there's maybe there's no universal answer. It looks like customer success wins. All right. So everyone, if you'd like to learn a lot more about customer success, do the deep dive. You can join us at our annual Pulse conference, which Gainsight is hosting on May 21st in the Moscone Center here in San Francisco. Thank you so much, panelists, and thanks everyone for joining us.