customer success best practices for saas retention: metrics and ksfs for building a high performing...
TRANSCRIPT
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
Housekeeping
• Q&A at the end
• Question or Chat panel on your right
• Recording for colleagues who can’t make it
• All attendees will receive slides
Our Speaker
Dan SteinmanChief Customer Officer
@dantsteinman
5
3 Learnings
Every CEO Claims 90% Retention
Retention Takes Work
Retention Goes to 11 (> 100%)
M A R K E T I N G
S A L E S
R E T E N T I O N
Rethinking the B2B Funnel
M A R K E T I N G
S A L E S
S U C C E S S
The B2B Hourglass
Me
Bruises Best Practices
1000+ CSM conversations
Top Questions…
1. How should 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?
The Perfect Org Structure
CEO
CCO
CustomerMarketing
OnBoardingPro SvcsSuccessSupport Training Ops
Sales
1. How Should I Structure CSM?
1. How Should I Structure CSM?
Survey of 100 subscription CEOs – 5/2014
1. How Should I Structure CSM?
Survey of 60 Customer Success Leaders – Jan, 2015
Business Maturity
Pro
du
ct
Co
mp
lex
ity
Firefighter
Sales-Oriented
Service-Oriented
Integrated Model
Partnership Model
1. How Should I Structure CSM?
Own renewals?
Own up-sell?
Individual comp?
Title?
Business Maturity
Pro
du
ct
Co
mp
lex
ity
1. How Should I Structure CSM?
Own renewals/upsell?
Onboarding?
Support?
Professional Services
Training?
# of CSMs Required
1 per $500K
1 per $2M
1 per $8M
Variables
1. How Should I Structure CSM?
1. How Should I Structure CSM?
2. What Should I Look for in a VP?
2. What Should I 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?
3. How Should I 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
Lagging Indicators Leading Indicators
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?
3. How Should I Measure CSM?
Survey of 60 Customer Success Leaders – Jan, 2015
3. How Should I Measure CSM?
3. How Should I Measure CSM?Comp
Survey of 60 Customer Success Leaders – Jan, 2015
4. What To Say To Board?
4. What To Say To Board?
Sales Customer Success
Past Bookings Renewals / Up-Sell
Present Market Share Benchmark
Future Pipeline Health Score
4. What To Say To Board?
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?
2. Headwind
ARR/MRR of churn 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?
3. Tailwind
ARR/MRR of up-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?
4. Net Revenue Retention*
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
5. Magic Number
ARR/MRR of 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?
4. What To Say To Board?
4. What To Say To Board?Cohorts
4. What To Say To Board?
5. How To Vary Strategy?
5. How To Vary Strategy?
45
Revenue
Succ
ess
Mat
uri
ty
Adoption
Retention
Expansion
Optimization
Transformation
$1 - $5 MM
$5 - $20 MM
$20 - $100 MM
$100 MM - $1 B
$1 B+
5. How To Vary 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?
6. How To Create A Culture?
6. How To Create 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
Top Questions…
1. How should 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?
Golden Rule Success for All Child-like Joy
“Gainsight offers a huge opportunity 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
Tiered Engagement Strategy
High Touch
Medium Touch
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.)
Pulse Customer Success Event5/2014: 900+ attendees, 100+ speakers
MalcolmDan
PULSE 2014
What Now?
• Talk to Dan – [email protected]
• Gainsight Consulting – [email protected]
• Blogs/papers/University – customersuccess.org
• Pulse – gainsight.com/pulse
What Else?
• Survey coming
• Please share feedback
• Choose which articles you want to receive
Q&A
Dan SteinmanChief Customer Officer
@dantsteinman
Thanks!