Where Customer Success goes next in SaaS - with Nick Mehta

About 10 years. 10 years.

Love it, Jason. And I love the play back to physics. Everything is about physics and maths.

So great to be in your guys' company and I really appreciate it. Love what you're doing for the community. And obviously very honored to be on anything that Dan and Adam were on. So, thank you.

Yeah, totally. You did it so well, Jason. I won't elaborate. CEO of Gainsight, been doing this a long time, very passionate about customer success in three levels, really. There's the level of it as a business strategy, there's the level of it as a profession, and then, obviously, we make money by making technology for customer success. And so, I think there's three different levels that I end up spending time at. And to answer your question, I think what's really incredible is over the last 10 years, as more and more companies have moved to these recurring revenue business models, like SaaS and cloud, they always go through the exact same kind of inevitable process. When they come in taking all the ideas they had from the old world of transactional selling, where you sell to a customer, and then after the sale, what you do is you support them. You wait for them to call you. And what you realize is any recurring revenue business, at the end of the day, if you're not getting that customer to value and adoption, they're not going to stay with you, they're not going to grow. And if they don't stay with you and grow, you're never going to make any money. All of the economics in a recurring revenue business comes from your existing customers, from the lifetime value of them. And today, companies think about this in the metric net revenue retention. We'll talk more about it, but that metric has become a real North Star metric for most subscription businesses, and a real way to drive value. So, what's happened is companies have figured out customer success is, indeed, a function, but it's much more than that. It's really the way to drive value in a recurring revenue business.

Yeah, I think that if you look inside technology businesses, I think the why and the what are pretty well defined in most companies. And honestly, if you're a tech company and you don't know what customer success is, you're literally living in a cave and you're not paying attention at all. And so, the why and the what, the why being, okay, you've got a recurring revenue business, it's all about lifetime value, net revenue retention. I think everyone gets that. And then the what of what is customer success at 30,000 ft, I think it's pretty well defined. But I think what the how is where it really comes rubber meets the road, right? 10,000 companies practicing customer success, there's probably 20,000 definitions of how to do it, right? Like literally, there's all these different approaches. And by the way, I've thought about this a lot. I don't think it's wrong that there's different approaches because customer success is so fundamental to a business that because businesses are different, customer success is also going to be a little different. Just the same way, you know, company A, B, and C's products are different, which makes sense because they're different companies. The same way customer success is a little different in each company, right? If you have a consumption-based pricing model or subscription, if you sell to big customers or small customers, if your client's very technical or if they're more business-oriented, if you're an early-stage company or more mature. You have one product, you have multiple products. There's a lot of flavors of customer success. And so, that's why I say customer success today is much more in the how phase of how do I do it for my business and my maturity. And also, one of the things we all make mistakes on is trying to apply the model from a company that's totally different to my model. Maybe I'm a small startup selling a security product and I'm trying to apply Salesforce's customer success model to my company. It doesn't apply at all, right? And so that how of how do I find what works for me, that's where the energy is right now.

Totally. And I think that a lot of it is also over time, you're trying to learn and improve just like with your product. I think product's a really good analogy, right? It isn't static. Nobody's saying, 'Hey, we're done with the product. We don't have to do any more product work.' That doesn't ever happen. Customer success is never going to be done. You know what I mean? People are like, 'Oh, when am I going to be done?' No, you're never going to be done. It's like your product. You're always getting better. You're always changing. Your market's changing. Competition's changing. Your underlying software is evolving. There's new features. Over time, the new features are less mature, but your old features are more mature. Your new customers are less mature. So, it's a constant iteration. And if you're in this field, the only way you'll survive is if you love that. If you love the iteration. If you're looking to be done, and oh, I figured it all out, you should get a different job.

Yeah. So, we actually did this presentation at our Pulse Conference about 6 weeks ago and basically we talked about this idea that the future of subscription businesses is this idea of having a more durable approach to growth. Right? In the last 10 years with all this crazy money that was out there and the funding, it was growth at all costs and companies spent a lot of money on new sales and marketing and burned a lot of money and the economics didn't matter and somehow concepts now like profit and EBITDA are coming back into fashion, right? And so, the question is how do you grow in a more durable and efficient way? And what are the challenges to that? So, starting not at customer success, but let's start with a bigger problem. And so, if you looked at that kind of challenge of durable growth and you said, 'What are the things that people are struggling with right now?' One thing people struggle with still to this day is the idea that unless you really have built your foundation of customer success, you're still surprised too often. That's one of the core emotions in customer success. You guys have probably both been there, too, which is a customer reaches out to you and says, 'Oh, we're thinking about churning.' And you're like, 'What?' And that surprise really shouldn't be allowed now, right? Like, we have all this data, we've got processes, we've got systems. So, the first thing that people wrestle with a little bit is the surprises. Now, that's I think going down over time, but that's something that I think you all if you have that, you've got to fix it. Number two, which is I think extremely timely, is scaling without hiring people. And so, this is the thing that everyone I think every company realized the value of customer success, but they're also trying to get more profitable or burn less money. And so, therefore most companies have really slowed down hiring. But they're bringing on new customers and so, therefore this idea of digital-led customer success, doing things like in-app communications, using community, digital journeys, pooled customer success, self-service, that second area of how do we scale customer success without hiring more people? That's the second thing that people wrestle with a lot. Third is people wrestle with this idea that why is customer success so internally oriented? We talk about gross revenue retention and churn and upsell and net promoter score, those things customers don't really care about those at all. And so how do we have more of an outside-in approach to customer success? How do we bring the customer more into this versus making it just about us? So that's the third. That's things like creating a joint success plan with the customer side by side based on their goals or creating a community where customers are learning from each other. So that kind of involving the customer, that's the third big thing that people are wrestling with. Fourth is this idea that up till now, I think a lot of companies would say customer success, your job is to prevent churn, right? Stop churn, fix the leaky bucket. But the truth is that at some point it's not just about reducing churn. Maybe you've taken your retention rate from 80% to 90%. Now the question is, how are you actually helping customers to expand? And the truth is, it's not as simple as you do focus on churn or expansion, expansion often will reduce churn because if customers are doing more with you, they're going to be more sticky. And so this idea of we call it going on offense, how do you move from defense to offense in customer success? That's our fourth challenge. Fifth is this idea of how do we do more through the product? Right? At the end of the day, customer success is fundamentally about closing that gap between what the product does and what the customers' desired outcomes are. Actually, Allison Pickens, who was our original COO, came up with that idea of closing the gap. And so that concept is so important, but you don't always want to be closing the gap, you want to be extending the product. Getting feedback to the product team, making the product in the app better at driving onboarding and adoption, etc. And then finally, what we talk about at Gainsight is the fact that especially right now, clients are more stressed than ever given everything going on in the world, our teams are dealing with a lot. And so having more of a human-first approach to how we think about our teams and our customers, never forgetting that it's not just a client or an account, but it's actually a bunch of human beings. Each of them have their own goals. They've got career goals, right? Tracking those people and your stakeholders, doing a little bit more of that account management, relationship management. Sometimes you can forget about that when you've got all this great data. So, those six challenges we think are the biggest impediments to durable growth right now.

Totally, yeah. So, I think there's probably three if I'll give one piece of tip for each of the three audiences I think that are really important. So, one audience is your product team. We talked about that. I'll give a little advice there. One audience is your sales team, and one audience is your customers. So, let's talk about each of those three. So, on the product team side, I think every CSM in the world has a list of things that they wish the product would do differently. Every single one, 100% of them. I guarantee if you're listening you have that list in your head. Now, the challenge is that if every CSM just emails the product people independently with okay, here's my list and here's my list, and the product people just get a list of a thousand different things, it's really hard for them to figure out what really matters. And so, what I would a couple pieces of advice from a product perspective. Number one is before you go to them asking for something, try to go to them to help. It's basic human relationship 101. Maybe they need help finding beta customers for a new feature. Maybe they need help getting feedback on a new mock-up or design. Maybe they need help understanding who the best customers to talk to to get research interviews. Be that CSM that's helping the product team, calling them out on Slack about how great the new feature is or a customer loves it, right? Do some stuff to build some relationship capital with the product team before you ask for stuff. And then when you're asking, this is where the leader really comes in, build a process where you're consolidating those requests, you're ranking them, you're providing examples with data. And we actually added a feature of Gainsight that basically does this now where we're like, okay, we actually integrate with product management tools and we're letting the CSM flag features, but then letting the PM see, okay, what customers are affected, how much ARR is affected. So giving more context and prioritization. And then being willing to roll your sleeves up to help. We had a customer event this week and one of the deals said, 'Hey, if you're a CSM and you're complaining about the product, then you don't get to complain if you're not going to go then join the session to give them the feedback and actually talk about it. If you're just emailing into the void, then we're not going to listen to your input, right?' And so that's on the product side. On the sales side, I think one of the biggest things people are doing is building more of an integrated methodology for defining the client's desired outcomes in the sales process. What are those goals, etc. With a bit of a framework, not just open-ended, but here's maybe a checklist of goals. And then having that automatically feed to the CSM team. So for example, a lot of our clients and we do this too, in the CRM like Salesforce, they'll have like when you're closing an opportunity, what are the client's desired outcomes, what are their KPIs, make it pretty structured, and then automatically have that create a success plan. For example, in Gainsight, if you're using that, so it automatically creates a success plan for the CSM with, okay, here's the goals and here's the plan to go achieve them. And so that kind of pre-to-post sales handoff, no-brainer. And then finally, from a customer perspective, I think one of the biggest things that CSMs need to do is be prescriptive while being consultative. And it's a real hard balance, right? So, on one extreme is consultative, I'll do whatever you want. Whatever you want the product to do, we're going to do. But the problem is the customer ends up using the product in bad ways or it doesn't get value, and then they blame the vendor no matter what. Why did you let me do that? And then on the other hand is the CSM, this is the way you do things. The customer's like, 'Well, our business doesn't work that way.' And so, 'No, this is the way you have to do it.' And that doesn't work either. And so, you have to find this balance of being prescriptive. For example, our best clients do these three things with the product. Which of these are relevant to you? Maybe not all three are. And then actually hearing them, having it be a dialogue, but being willing to say things like our best clients do X or our best practice is Y and having some confidence around that. So, those are three sets of tips for the three audiences.