Nick Mehta, CEO Gainsight: 10 Things That Are Changing Now in Customer Success | SaaStr 2021

Please welcome CEO at gainsight, nick mehta. How are you guys doing? Excited. Are you actually real people? I'm saying real human beings, not a zoom screen. This is awesome. I am so fired up to be here. So grateful to Jason Lemkin and Saster for bringing us all together again. I don't know about you, but I missed stuff like this. So we're going to have some fun today. I'm Nick Maida, CEO of Gainsight, and we're gonna talk about customer success, which, if you follow me online, is one of the few things I talk about a lot. But we're gonna talk about how customer success is changing. This conference is so inspirational to me. Cause I've been fortunate to be here since the beginning of 2015. And it just shows how much is happening in entrepreneurship, right? Many of you raise your hand if you work at a company that's like less than 50 employees. Awesome. I love that, like, you're the future. It's so awesome. And what's cool is, you know, you don't have to make all the mistakes that, you know, folks have been around for a long time, like me have made in customer success. So what we want to talk about is just like the whole world of tech is changing. Customer success is changing a lot. And we're going to try to share some lessons that we've seen and hopefully leave you with some specific actions you can take going forward. So this all goes back to a PDF. This whole presentation goes back to a PDF. In 2013, we launched Gainsight, and one of the first things we did was built this document called the 10 Laws of Customer Success. Now raise your hand and be honest. If you weren't working in SaaS or tech in 2013, and it's totally fine, right? So some of you missed out on those early days. This is all good. And back in those days, there weren't that many SaaS companies around. Literally, events like this would have been a few hundred people. I see Brian Plaster in the back, one of earlier early CS executives. And you remember what I'm talking about, right? Not many people out there. So we all had to figure it out. And so we built this document that was based on 10 SaaS companies and what they learned about customer success in 2013. And this document actually ended up turning into a book called Customer Success, which is a blue book. Anyone read? The Customer Success book sold about 100,000 copies so far. My mom's very proud of that book, which is very important. And so Customer Success back then was a totally new Thing. And a lot of those principles still apply. But we're going to talk about today is how the world's changed and how we can take all of this to the next level. Because when you think about it, this is from 2013, right? So let's go back in the time machine to 2013. Just think about how far back 2013 was. For me, it kind of blows my mind. So let me share with you a few fun facts about 2013. First of all, 2013, if you were in San Francisco, was the year that Bat Kid stole our hearts and stole our imagination. Some of you probably remember Bat Kid, this little kid that dressed up as Batman. 2013 was also the year that Katy Perry roared for the first time, which is amazing. And I still think that's one of the greatest moments in musical history. 2013 was the year that we saw Frozen for the first time. And it was back when we still liked Let It Go, before our kids had made us listen to it like a thousand times. So back then, Frozen was a new thing. 2013 was actually the year after Saster got started. So this is actually a photo from 2015, the first saster conference. But this concept of an event like this was just a twinkle in Jason lemkin's eye in 2013, right? So just shows you how far back 2013 goes. Now, some things we can agree from 2013 shouldn't be kept for the future. Some things really, we should just leave them in the past. For example, 2013 was when game of Thrones had the Red Wedding episode scarred us all. I think many of us still are trying to get over that getting therapy. 2013 was Gangnam Style, right? That was still pretty good. I think the Guy's really excited. 2013 was when we figured out what the Fox said, which actually we didn't really figure out what the Fox said, but we were supposed to figure out what the Fox said. And 2013 was a year that I misguidedly decided that our first conference, we were going to a gainsight. We just launched our company. Our first conference, I decided to do Movember at Dreamforce. And that was a big strategic mistake I think all of you would agree with. And if any of you control the Internet, if you can delete this photo from the Internet, I would greatly appreciate it. So 2013 was a long time ago, right? But these 10 laws of customer success, as you're gonna see, they still apply. But we can kind of put a fresh coat of paint on them. And that's what we're gonna do today, is A fresh coat of paint on these 10 laws. And by the way, the 10 laws were created originally by a gentleman named Dan Steinman, who actually was one of the authors of the main author on the book Customer Success. So we're gonna revisit dan's laws from 10 years ago. Okay. These are the original 10 laws. I'm not gonna go through them now, but this is kind of the reference frame we're gonna talk about. So law number one back in 2013 was customer success is a top down, company wide commitment. Raise your hand if you work in the CS function, right? And then many of you, I'm not gonna make you raise your hands again, probably would like the rest of the company to be behind customer success more than they are right now. Right? It's not just a function. Everyone needs to focus on customer success. You've heard this, I'm sure, a million times. Well, how do we revise this law for the new era? What do we need to change about this? What do we need to enhance about this? Well, it's one thing for CEO to say, oh, this is a top down, company wide commitment, but CEOs say things like that all the time, right? And what actually makes it happen? Well, what I'd argue, what we'd argue at Gainsight is you need to figure out a way to build customer success into the core of what you do. It's not just platitudes and all hands meetings. It's not just that you put customer success in your website. It's actually changing the core of what your company does. Right? Because I think all of us, if you work in cs, can empathize with this fact that many companies don't do customer success well. So two months ago, I decided to have some fun on LinkedIn and I put up a question which was, okay, let's start a fun thread. What are the best ways to fail at customer success? If a CEO wants to pretend they care about customer success but don't really, what should they do? And this question was like throwing meat into the sharks in customer success immediately. 160 comments of people talking about what people do wrong in customer success, how they pretend to care about it, how they pay it, lip service. But it doesn't actually turn into reality. And I bet some of you worked in companies like that, right? It's very frustrating, frankly. I bet if you're in cs, you end up leaving those companies. That's the reality of it. Right? And what does that look like? What does lip service look like? Things like customer success. Is buried in the organization, right? It reports to somebody, Reports to somebody, reports to somebody. Whoopsie. Go back one slide. I think this auto clicking. Go back to the last slide if you can. Thanks. Second thing, you have a board meeting and there's no section about customer success. I've seen that. It's ridiculous, right? In the modern SaaS world. And a third example, the ultimate faux pas. Anytime you call customer success customer support, you owe me a dollar every single time somebody does that. But some of you probably heard your CEOs or executives do that. And just to share in each one of these 10 laws, I'm going to share a real story. So in this case, making customer success the core of your company matters partially because you want to recruit great people. I'm going to share a story of one of the top hundred or so ccos out there. She can work at any SaaS company she wants. And she said, when I started my CCO search, I knew I only wanted to work for CEOs who really take their clients seriously. So when it was buried under sales, she didn't even want to take the interview. If you are in a position where you're founder, CEO and you're trying to recruit people, the way you structure it, the way you talk about it, will influence who you can recruit. And you're not going to be able to get the best people if you don't make it part of your core. So this is law number one. Make customer success part of your core. Let's keep going. Law number two, in 2013, we said sell to the right customer. And that's absolutely true. And many of you have experienced, you know, trying to make a customer work where they should have never bought your software in the first place. I'm sure many of you have dealt with that, right? But what we'd argue today is it's not like there's sales and there's customer success. Those are two different functions. What you need is an integrated journey from sales to customer success. Because the truth is your customer is trying to achieve a business outcome. They're trying to generate more leads for their business or make their employers happier or grow their sales. Right? They have a goal, and whether they're talking to sales or CS doesn't matter. Right? And so just to make this tangible, the way we think about it is you need a continuous loop from the sales process where what you're really doing is defining what outcomes does the customer care about. What are they trying to achieve with your technology? Right? That's like the beginning and then you onboard the customer and ideally you're onboarding them not just to set them up, but to get them ready to get those business outcomes. Then you're getting them to adopt your technology, not just to use the features, but to actually achieve those business outcomes. Then you're actually trying to measure, ideally measure what impact you've already had. So when a customer and you are talking, you're not just saying, oh, you're using our software, you're saying, this is the value we've driven for you. And then if you do that right, that's fuel for you to get new customers, right? Because those become references and case studies and all that. So this idea of end to end outcomes from the sales process through onboarding, through customer success, one of the hottest topics right now in the CS field, give an example of this. So John Sabino, probably some of you have heard of Splunk, Splunk, big public company. And John Sabino runs all post sales at Splunk. So customer success, support services. And he was tired of the same thing that a lot of you have dealt with, which is you get a new customer and you jump on a call with them and you're like, what are your goals that you have with our software? And the customer says, I just spent like three months explaining to sales what those goals were, right? And why do we have to have a separate process for sales versus customer success? What they did was they built a tool that their salespeople use to basically interactively figure out what the client's desired outcomes are trying to, in their case, improve security, posture, reduce downtime, things like that. Each of you has those for your business, right? And that tool automatically then assigns the right services, the right onboarding to the customer, what they call a prescriptive value path to go from those goals to setting up the customer the right way. And from there they then create what's called a success plan to make sure that that customer is achieving those outcomes that they were signed up for. Right? All the way. And then finally, when that customer logs into the product for the first time, they get a pop up personalized guide based on the goals that they had, why they bought. So if they bought for security, they're seeing different stuff than if they bought for operations. How cool is that, right? So they've integrated the sales process, onboarding, customer success and product altogether. Now some of you are in small companies, you're thinking, I can't do this right now. But philosophically you can. Philosophically you can say our goal isn't Just to launch a customer, it's to get them to outcomes. Philosophically, you can say in our sales process, are we asking them what the business goals that they have are and really getting that deep insight. Philosophically, you can make sure that your executive business reviews aren't just about the features and functions your customer's using, but actually the outcomes they're looking for. So this is kind of the really important law as part of this number three. Okay, so this is all about this idea that SaaS is hard. You wouldn't be here if SaaS was easy, right? SaaS is really hard. And one of the hard things in 2013 was the natural tendency is if you do nothing, if you don't meet with your customer, they're gonna churn eventually they will. It's brutal, but it's a reality. What we would say if we revise this now is that customers churn eventually because they always want more value. They always want more, right? They're not buying your technology for a point in time. They're buying your technology so that you can constantly deliver more for them. And that's why you innovate in your product. That's why you have a roadmap. But many, many companies struggle with the fact that their customer gets stuck. They get stuck at that initial value, and they're not achieving more value. And the way I think about this is it's just like a funnel. So in marketing, you've got your funnel, right? So you've got your, you know, leads coming in through marketing. Some of you are getting them at the booths here, right? They turn into sales. That's great. But there's a second funnel that we need to all consider, which is, now I've got a customer, and how am I constantly delivering more outcomes to them, right? And how am I constantly getting them more value such that they become leads for me? Because they become leads, what we call customer success qualified leads, to either buy more stuff from you or in some cases, be an advocate and bring you other leads in other companies, right? And so this idea that customer success is not just about keeping the client, it's about constantly getting them more value is something that's super important. Share an example of that. So Jane Graham runs customer success and renewals at ukg, which is a HR tech company. Jane has run CS for a long time. She started with classic, like, firefighting support. All the stuff that I'm sure you've dealt with. And she said, look, the way to make our customers sticky is to get them to use more of our product. And so what she figured out, there's a good quote here, is that a huge chunk of all their sales were coming from existing customers, right? Selling them new modules, more licenses, whatever. Why shouldn't I incent my CS team to actually generate leads for our sales team, right? And it's not about the CS team becoming salespeople. It's about the CS team getting the customer more value and getting them more sticky. And so sales actually will help you drive customer success. And so this is a good example of what you can practically do even when you're small, to actually drive more stickiness in your base, get your customers to expand and create this concept of csql. Okay? Number four, the customer's expectation when they buy your software is to be wildly successful, right? That's what we wrote back in 2013. And I think all of you get that, right? They sign the docusign, you celebrate or echo sign or whatever, you celebrate. And they're just waiting to get started. They're ready to get started. They want us get the value. And you're celebrating that you closed the deal, right? We all know about this, but what's changed is today I think we all realize, and all of you have been there, that customer success takes commitment from the client too, right? How many of you have been in a situation where the customer isn't doing the right thing? Raise your hand. Actually been in a situation where the customer's not doing the right things to get value, right? Everyone 100% right? And so customer success is a two way street. And the best CS teams out there are bringing their customers into the customer success process, creating what we call a mutual success plan with that customer, right? Where the tasks aren't all assigned to your company, some of them are assigned to your customer to go through training, to go through change management, to define the KPIs they care about, right? And if you don't do this, it's a losing battle. Sharing a good example of this Klaviyo, some of you know, very hot unicorn startup in the Martech space. Klaviyo Kate Walsh runs customer support and customer success there and she's built this incredible model where they basically work with lots of online merchants, e commerce companies, et cetera. And to get them live on klaybl and getting value, they define what does a customer need to do, what do they need to do from day one, right? In the sales process, they're defining what those shared objectives are. Number five. So in 2013 we talked about the need to relentlessly Monitor and manage customer health, right? Part of customer success is this idea of early warning. It's not helpful to know that a customer is about to churn. It's helpful to know they could churn six months from now. But how do you actually make that happen? So you are your founder, your CEO, your head of customer success. How do you turn this into reality? And this is to me the one no brainer. Everyone should do it part of the presentation. Every single person. Once you get to like 50, 75 employees, you need a CS operations person. Don't just hire CSMs. CSMs are really important. But just like you have in sales salespeople and sales operations people, you need customer success operations to understand the leading indicators to define processes. Because customer success operations is this incredible lever, right? It basically makes every part of your company better because it helps you understand healthy customers who could be advocates for marketing. It helps you understand flaws in the sales process to help revise things for your revenue operations team. It helps you figure out how to make customer success people more efficient and more effective. CS operations is an absolute no brainer, one of the hottest jobs out there and for good reason. John Neuron is the head of customer success at PTC and has done an incredible job of not only building operations at ptc, CS operations, but he's actually built the world's largest community around CS operations. There's actually a whole slack group of people just talking csops. Super nerdy slack group, but definitely very powerful. And if you have people wanna get involved in this, definitely let us know. And he really defines CS operations as being all about operationalizing the vision you have in customer success. You know I talk about all this stuff today, right? Like handoff from pre to post sales and selling to the right customer. How do you do that? CS operations, that's how you do it. You have somebody that thinks about the process and figures out how to make it happen every single time. So law number six, one of the things we said back in 2013 and kind of one of the origin stories of customer success is it used to be that you could just build loyalty through personal relationships. Somebody would buy from you and they would stay with you because you're friends, right? Like you knew each other for a long time and they would stay in the job. I think most of you know that that loyalty in personal relationships is no longer there. Mainly because things change so much, right? Like with jobs changing a faster clip than ever. You know, 56% of Americans plan to switch jobs this year. A as I'm sure, you've heard that stat. Companies being bought at a higher clip, your sponsors change all the time. And another no brainer thing almost everyone can do here is create a great process for when you get that LinkedIn update or you get that email that the person you sold to left the company after your heart sinks a little bit. Because it does for all of us, have a process. What do you do? Who's getting a gift basket? Like the new executive should get a gift basket or a book or you know, material. You should be setting up meetings, sending them information, operationalizing that whole process of the stakeholder change. And this is so easy to do. And frankly, Even if you're 10 people in your company, it's critical. I'd argue it's even more critical when you're 10 people in your company because honestly the reason they're a customer is cause they were excited about your vision and when they're gone, the new person has no idea who you are. None. You've been on those calls, right? You get on the call and the customer's like, so why did we have this software? Why did we buy this? Right? And you've got to be all over this. That means the day they change the LinkedIn, you got to get a message out to them, you got to figure out a way to get on the radar network through common connections, right? Just like you do in sales. My opinion, this is a very high value activity. One thing people do is they really map out who are all our sponsors in the organization. So you don't just have one. One of the common concepts in account management is you never want to be stuck with single threading, right? Just one person. So who are all the people we're talking to? Who's an advocate, who's a detractor? How do we build up that map of the people in our organization? Give you a fun story of this one from Gainsight. So Meg Sorokal is the head of customer success today at HP Enterprise, a great leader. Meg's actually used Gainsight years and years and years ago, right? And he used it and then he moved on to a new company and he was trying to buy Gainsight. He did. He wasn't able to buy it and moved on to a new company and tried to buy Gainsight, wasn't able to buy Budget, whatever, right? Six years later he goes to HPE and like the first thing he does is do a huge deal with Gainsay, right? And so this isn't just about defense of like preventing your customers from churning. It's about building relationships that allow you to grow over time. It's so, so critical. So we talked about the fact that product must be priority number one in customer success. If you're a software company, at the end of the day, it's about the product. It's about building the right product, making sure it's driving value. And sometimes customer success people are like almost like kind of duct tape over product issues. I'm sure many of you felt that, right? And so that's still very much true. And some of you probably feel that today, right? But the way to make this happen is make customer success people and product people best friends. You have to find that way to build those relationships. And it's not like that today for most companies it's not like that because they kind of speak different languages, right? Customer success people really excited about their customers. The product people are excited about their technology. Both want shared objectives though, right? If you think about it, think about like a Venn diagram, right? CS people care about retention, expansion, their clients. Product people want to make sure their stuff is getting used. Adoption is an example of something that's right in the middle of those two. But what I find practically is sometimes a CS team is using different metrics for adoption than the product team. Right? The product team is thinking about daily active users. The CS team is thinking about a health score. You've gotta find a way to link it all together between CS and product. And if you're 100 people, 150 people, I recommend potentially even having somebody in your CS team who's kind of that interface point with the product team. Super valuable. Okay, so number eight, sorry, go back one slide number eight. We talked about the fact that in customer success there's a ticking time bomb all the time, which is time to value. You close a deal and the customer is looking at their watch about how long it's taken to get to value. And one of the things we said in 2013 is you have to constantly improve time to value. What I would say today in 2021 is the best way to do that is the product. Right? It's one thing to send customers emails and get on calls with them and zoom meetings, it's all great. But the best way to do it is in the product. So one of the most popular things now is just using the product to guide the customer. This is actually an example of Adobe where they're guiding the customer through a guided onboarding in the product. It's a no brainer, like everyone should do it in some way. Right. And there's lots of different ways you can do it. But trying to do it offline when the product itself is online is just kind of old school. So do your onboarding in the product as much as you can. Example of that, Glassdoor. I'm sure all of you know Glassdoor, right? Whether you post on it or use it as a customer, Glassdoor has this interesting kind of business challenge where they've got all these candidates, all these people on the Glassdoor site, reviewing companies and all that. Then they sell to the HR people and marketing people trying to use Glassdoor to brand their company. So Glassdoor is kind of B2B. Part of their company has a customer success team and has actually done CS for a long, long time. But they were doing it kind of in hand to hand combat, talking to individual customers, sending them emails. And then last year they decided, let's do more of this in the product. Let's actually do more to drive the customer to adopt new features onboard all that. What that did was gave their CS team a lot more time to be more strategic. Right. They're not just talking about the new release or getting a customer to adopt something. They're talking about the business value they've achieved. So the product can be your best friend if you're a CS person. Law number nine. So we talked about the idea that in 2013 you should deeply understand churn and retention. What we would do in 2021 is rephrase that to deeply understand net revenue retention. I think most of you know net revenue retention is includes. I'm sorry, go back one slide. Net revenue retention includes both churn but also expansion. Right. It's not just about keeping customers, about growing them. And this slide shows that if you improve your net revenue retention, your company multiple goes up. So sorry, go back when I think there's some kind of auto clicking happening. So the horizontal axis is company's net retention rate. The vertical axis is their multiple as a kind of a factor of revenue. Right. So companies that hire higher net retention rates have higher enterprise multiples. If you are 110% net retention rate, getting to 120 massively increases your company's value. If you're 120 getting to 130 and so on. Now you're, you might look at your business and be like, I'm 110, I'm never going to get to 180 like Snowflake. Right. Don't worry about that. You'll. You probably will never be able to get there. But getting to 115 or 120 makes a big difference. Give you an example of this. So GitLab, I'm sure many of you use GitLab. It's software for engineering teams. Awesome company, incredible culture. And GitLab has David Sakamoto and Sherrod patching the two kind of leaders of customer success at GitLab. And they from the beginning decided that they didn't want to just focus on retaining customers and firefighting and saving them. They wanted to focus on how they can actually drive more growth in their base. Because the way GitLab works, much like your products, it's a set of products, right? They have lots of different products that help engineering teams. And so what they did was that, okay, our job is to get customers to value, but our measurement is how much they're expanding. And if you check out GitLab's S1, they just filed last week, 154% net retention, second highest public SaaS company out there in terms of net retention law number 10. So if I wrap it all up, you know, if you kind of think about everything I've Talked about in 2013, we thought customer success needs to be more metrics driven. It's not just about feelings and meeting customers and what activities you did. It's about the numbers. What are the numbers? But I'd argue the first seven or eight years of customer success, things are a little squishy. If somebody asked you, what's your value? Some of you have seen office space. What exactly do you do here? I think for a lot of CS leaders, it was hard to answer that question. But the best companies are getting customer success to be totally metrics driven in their organization. And I'm going to go back home for this one. I'll talk about Kelly Capote, our chief customer officer. Kelly runs customer success and post sales at Gainsight. She's incredible. And one thing she did was made an incredible board deck that's super numbers oriented. And actually we publish it online. You can go find this if you Google making customer success less squishy. And actually she did this board deck she presented to our investors. Our investors were like, that's one of the best board presentations I've ever seen. And honestly, they think way more highly of Kelly now. So if you want to be like Kelly, definitely make an amazing deck and make it be about numbers. So I'll give you an example. This is just one slide from the deck. This slide shows our top 20 customers, kind of early indicators of health. But then like, what's the Contribution of that to our renewal rate. If we maximize the renewal, what, how much can we increase our renewal rate by? Right. Very numbers oriented versus just stories or feelings or bullet points. So I would encourage you to say, how do we get more numbers around customer success? So with that, what we've done here is we've looked at the 10 laws from 2013, right? And they still all apply, they're still great. But we've kind of realized those laws were all about defense. They were all about firefighting, keeping customers, and it was really important. But how do we add in a new vector? How do we think of customer success in 2021 as not just being about defense? How do we think about it as being a growth engine? Right. I think all of you recognize it's one of the best growth engines out there. Net revenue retention is the most important metric in your business. How do we rethink what customer success is? But I've got one bonus one, so my bonus one. It's not just about numbers. I lied. It's also about people. And so at gainsight, if you followed us over the years, one of the things we talk a lot about is human first business. The idea that amidst all these companies and logos and boots and adwords and all that stuff are human beings. Human beings at your company trying to move up in their careers. Human beings at the customer trying to get their job done. I think a lot of us lose sight of that in the process of running tech companies. What should you take away from this? Three big things. Number one, customer success is changing a lot. And you have the benefit of doing it right from the start if you're a young company and you have the benefit of reinventing yourself if you've been around for a while like us. Number two, customer success is about data, but it's also about human beings, about building those human connections. Never lose sight of that. And number three, whenever in doubt, if nothing's working, do a rap battle. Thanks so much everyone. Sam.