Metrics that Measure Up
Customer Success and its Business Impact - with Nick Mehta, CEO Gainsight
Being the CEO of a B2B SaaS company that creates a new market category, grows the company to >$100M ARR, and then purchased for over $1B by a top tier Private Equity firm may be the ultimate goal of many entrepreneurs - but for Nick Mehta and Gainsight, it is just the beginning.
Nick Mehta, joined Gainsight as CEO in 2013. Back then, Gainsight had just changed its name, launched its first user conference, and initiated the strategy to build a new market category for B2B SaaS - Customer Success Platform and a community for the recently created profession of Customer Success Manager (CSM).
The decision to create a new category + a community was necessary because the evolving role of CSM's were not only the Gainsight users but also the target buyers. Building a category is associated but different from building a community.
Creating a community of future platform customers was a core requirement to increase the target addressable market of potential buyers. Pulse was the Customer Success community, and it had to go beyond "customers". It became a forum and community for customer success professionals to discuss topics of interest including compensations, roles/ responsibilities, and best practices for Customer Success professionals.
Nick highlighted that building a new category is probably not the best approach if a category currently exists (think Snowflake and Zoom Video). If the market category does not currently exist, think carefully about the steps, and resources required to build a new category and how a community can amplify the category.
When I asked Nick about how Product-Led Growth (PLG) would impact Customer Success , Nick started with his belief that PLG will fundamentally change the B2B Cloud Go-To-Market motion. The control and power will accelerate its shift to the customer, and as a result Sales and Customer Success alignment, even integration will be even critical.
The Cloud infrastructure companies are the most advanced in the PLG + Customer Success model. Their Customer Success (CS) team works very closely with the customer to ensure they are receiving maximum value and expanding their use of the product.
Nick highlighted two approaches to sales and customer success alignment: 1) relay race model where sales hands off the customer to CS to ensure they are successful; 2) Sales and Customer Success work collaboratively across the entire customer journey to ensure engagement, adoption, value, customer satisfaction, expansion and share the related goals and measurements.
When asked the top metrics to measure Customer Success, Nick highlighted both leading and lagging indicators. For Customer Success, Nick highlighted the top lagging indicators as renewals (GrossDollar Retention Rate) and expansion (Net Dollar Retention Rate).
In fact, recent research conducted by both Gainsight and by RevOps Squared independently, showed that NDR was the number one factor impacting Enterprise Value:Revenue multiples.
The Gainsight framework for leading indicators is called DEAR: 1) Deployment; 2) Engagement; 3) Adoption; 4) ROI. Next is the experience side including Net Promoter Score, Customer Satisfaction, and even support case trends.
Lastly, we discussed the role of product analytics in the PLG model, in concert with how Customer Success will require deeper and broader insights into the customer's product utilization. Insights including which paths most customers follow, which paths end in user frustration and abandonment, and in the WOW category, how to build Customer Success directly into the product!
Nick Mehta is a great listen for any founder, CEO, and/or operating executive who shares the belief is that customer value = customer success and the added vision of building a "Human First" company!
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