Interview with Nick Mehta, CEO at Gainsight

Gainsight is a Customer Success Management solution. We interviewed Gainsight’s CEO to discuss trends in the space and areas of focus for Gainsight.

How have you seen the CSM industry change in the last couple of years?

The way we think about this industry of customer success is really to think first about the profession of customer success, and then think about the technology. Over the last 10 years, more and more business models have shifted to where the lifetime value of the customer comes not from the initial sale, but from ongoing value. You don’t get paid up front as much anymore, and the customer’s not stuck with you. You’re making a lot of your money over time, and because of that, companies at the forefront created customer success teams.

Some people still call them account management teams, but the new way to think about this role is all about driving success for the customer, driving lifetime value in terms of renewal and upsells. Salesforce came up with this terminology and idea; they created “customer success” a while ago. Almost every SaaS company has a customer success team of some kind. But it’s not just SaaS companies anymore; all B2B companies that have a recurring service or a repeat purchase are realizing that they have to focus more on existing customers.

Over time, customer success as a profession is going to permeate all recurring B2B businesses, and the technology will evolve with the job function. In the early days, mid to large size SaaS companies were thinking about how to solve these problems, and buying or building technology to help their teams scale. Now, lots of traditional software companies, hardware companies, and even non-tech companies are buying software to help with these problems.

How have these changes affected CSM technology?

People are starting to think of CSM in terms of business process, not an analytics problem only. People used to say to us, “You’re about customer analytics and retention prediction.” That is one of the things we do, but actually, the customer success lifecycle is lots of different elements, from the measurement of customer success—which is about analytics—to the workflow, which is just about business process. At Gainsight, we’re moving from analytics to what we think of as “taking action.”

I think in the SaaS world a lot of people thought that the entire answer could be in looking at the data about your customers’ usage. What we’ve found is that that’s a very important element, but actually there are a lot of important elements: your relationship with them, who you sold to, did they leave the company, what’s their support experience, customer stats feedback they gave you… We’re taking a more holistic view of customer health.

Where does customer success management stand in terms of adoption?

At least 50% of SaaS companies or more have a meaningful customer success team. We’ve done some analysis, and probably 10 or 15% of those companies use a technology platform to support their team—a Gainsight, a Totango, or something like that.

Where is Gainsight’s focus in terms of your customer base?

We think the market is segmented by company size. We focus on mid to large size companies that have a set of needs around managing the whole customer lifecycle, from nurturing customer health to managing the workflow. There’s a different market for very small companies just getting started, with very cheap or even free solutions they can use to get an inventory of their customer base. That’s less of a focus area for us.

Where do you see growth opportunities for Gainsight?

There are four vectors of growth for us. Vector number one is growing in the SaaS market in the mid to large size. We have a lot of those—like Box, Workday, Marketo, DocuSign, Cornerstone OnDemand—but we don’t have them all. So there’s an opportunity to expand and increase penetration in that market, particularly internationally and with older SaaS companies who are just starting to think about CSM.

Number two is to participate in the growth of the SaaS market, because the number of companies who are new and growing is huge. We don’t go after the very early stage; we’ve chosen not to market to pre-funding startups.  Some of our competitors do, and it’s a good market. But as those companies mature and hit a growth stage, they become a good fit for Gainsight.

Opportunity number three is all of the other tech-enabled businesses that are trying to be more SaaS-like. For example, this includes companies like Cisco. They want to be more recurring revenue-oriented.

The last one is all of those non-tech companies that are trying to become more tech-enabled. They’re being threatened, so they need to become more SaaS-like. We think they’re a really good fit. but instead of selling technology, they sell subscriptions to childcare. After a successful deployment, they’ve used Gainsight to operationalize customer intelligence and make more informed interactions with their growing client base. Another example is Brazil-based Easy Taxi, a mobile e-hailing application similar to Uber, that’s already expanded globally to 30 countries and over 420 cities. They have a campaign to get corporations to use their services, and they purchased Gainsight to help retain corporate customers.

How does deployment for non-tech companies like Bright Horizons and Easy Taxi compare to your typical SaaS deployment?

At this point, anyone we sell to has a Salesforce automation system. We integrate tightly to Salesforce, Netsuite, and to other systems. Our customers all have a support system and some type of case management system, like Zendesk. They all have a marketing automation system, so we can see whether existing customers are unsubscribing to their email list, or attending webinars, etc. And they often have a survey system. Those are things they have in common.

Usually, the biggest difference is that a non-tech, non-SaaS company will not have traditional product-usage data. But, they usually do have some way to track how people are consuming their service—for example, Bright Horizons literally has a sign-in sheet.

How are your customers measuring success?

We did a survey of not only of our customers, but of the CSM industry in general. We asked, “What are the things that you would incorporate into a customer health score?” It definitely varies by industry. For example, if you don’t have a SaaS product, you don’t have the concept of “usage” in the same way. If you’re a SaaS business, product usage is usually #1. Product usage has dimensions: volume, quality and stickiness of that usage are all important. Number two is commonly the relationship with the person that bought the product. This includes tracking who you sold to and whether they’re still at the company—we do that automatically through LinkedIn—and then tracking the relationship with that person (customer stats, promoter score, etc.). Often number three is support interactions. Number four is onboarding time, time to value. Number five is billing data: if they’re paying the bills slowly, it could mean they’re unhappy with the service.

Outside SaaS, almost all of that is the same; they just don’t have the usage data, so they have to look at other factors more closely.

What factors are influencing Gainsight’s product development roadmap?

We work with a lot of large companies, and we’ve been pulled by customers to make the solution work in a large team. So we built a robust workflow for helping a CSM decide which accounts to focus on and what to do with them, using a feature called Playbooks. We built the only automated email capability in our industry; it acts as a virtual CSM. And, like other CSM providers, we integrate with marketing automation systems, but we also have our own built-in system for personalized, fully triggered emails. We also built in the most comprehensive, flexible health scoring system.

In terms of our roadmap, we will continue to double down on features that make us unique for larger customers. In the next few months, we’ll ship a couple of new releases, including Relationships, which we announced at our user conference. When you’re selling to larger companies, there’s not just one customer success relationship at a particular company. One of our customers might have GE as a customer. It’s not just a question of whether GE is happy or not, because they might have many different deployments and relationships with GE. They need a sophisticated multi-level way to model these business relationships. With Relationships, you can look at your risk and health by business unit, by stakeholder, or by department—slice and dice in many ways, and then manage in many different ways. That’s a really big win for our customers.

Another upcoming release is Success Plans. It’s not just about whether somebody uses your product or has a good support experience. The end question is: are they getting the value they bought? We’re focused on business goals. They might buy Marketo because they want to drive more revenue, or Workday to improve employee stats. Success Plans will be the first tool out there to let your capture your customers’ goals in a granular and attractive way. Then you can present the goals back to the customer, and regularly show them what you’re doing to meet those goals. One of our visions for the future is a customer-facing version where a customer could log in and grade the CSM in a survey format.

Relationships and customer Success Plans are coming out in the next few weeks. These are just two of the development highlights.

Have there been any initiatives for more advanced analytics?

Because we target the largest companies, we inherited a complex problem. They already use tools with such different types of data, schemas, frequency, rollups, etc. Many of our competitors, who have chosen to go after the smaller companies, define a prescriptive schema that the companies have to work within. But our approach is different: we had to build a super flexible schema, a customer rules engine to define when to reach out.

This month we’re shifting our backend analytics to Amazon Redshift for complex queries. This allows us to pivot customized data, to be able to do a type of analytics I don’t think anyone else in this industry can really do around comparing totally different types of datasets. For example, we’ve always been able to analyze your product usage and see how it’s trending over time, or analyze your net promoter score, or your support data. Now we’ll be able to pivot all of that. From a database perspective, it will be custom joined, defined by the user and run in real time. It’s pretty geeky, but it will allow us to do custom analytics really easily. Frankly, our customers really needed this.

Besides product development, what is Gainsight doing to support large CSM customers?

We believe that the biggest thing in customer success is not technology. The big issue is organizational transition. We invest almost all of our marketing dollars in trying to drive the customer success profession to be great, to be relevant. Over the last three years, our conference has grown from 300 to 900 to 2,000 attendees. We set up an online university, a European conference, an online career fare, a salary survey, benchmarking data, and even monthly Express classes where people can learn about onboarding together. We’re really investing in the profession. People often work with us not only because of our technology, but because of our knowledge base and huge community. Because we’ve gone after larger companies, we have the resources from an engineering and services standpoint. We have 207 employees, and we just raised $54 million in funding, which is more than everyone else in our category put together. These resources allow us to serve the needs and unique requests of mid to large size companies who want to undergo a transformation.

When is a company ready for Gainsight?

Not everyone is ready, and we’re pretty open about that. There a foundation that needs to be laid before a company is ready for CSM technology. You need a customer success strategy. It could be a team, or, with Gainsight it could be a no touch customer success model that’s all automated. But you need to have either a leader, team or strategy figured out. You also need resources to run the technology. We can train your admin for you, but someone needs to be willing to invest that time in training.  You will also need time in the setup process with your Salesforce admin and product team to get the data. Those are the three main ingredients.

Where does this come in a company’s evolution?

It’s typically a startup in the later growth phase, with maybe 200 employees, or a bigger company that’s trying to re-do the way they think. It’s not a 10-person company that just got seed funding, or a person coming out of Y-Combinator. Gainsight is overkill for that part of the market. If you’re getting started and you just want usage metrics, we would recommend other analytics products (which Gainsight can integrate with later on). If you have a customer success team that you want to scale, then we’re the right fit. Scaling is the pain point that Gainsight most immediately solves.