Customer Success – The Return of “The Wall Street” – Interview With Gainsight’s Dan Steinman

the force awakens

This is Episode 3 of the “SaaS Wars Trilogy” interview with Gainsight’s CCO (and Skywalker), Dan Steinman. We look at the evangelism of customer success value in business models.

Sue: Let’s look a bit more at Gainsight now as a company. I noticed that a lot of your current clients are B2B software companies such as Box, Marketo (your previous company), Clarizen, HP, etc.  What is Gainsight’s position to attract other recurring revenue model clients who are also thinking about including customer success in their organization?

Dan: Yes that’s a good question. We currently have all sized clients ranging from relatively small and medium sized clients (200 – 300 employees) to larger enterprise organizations. It’s true that we do focus on B2B and have not yet focused on B2C because the B2B market is so different from B2C. SaaS companies are the sweet spot because they are the pure subscription model and we can easily track how they use the product. However, any company doing subscription-based products and services is becoming interested in customer success and not necessarily software or technology companies. Let me give a couple of interesting examples in our customer base.

1) We have a client called Bright Horizons. They’re neither a software nor a technological company and they probably don’t even know how to spell SaaS:)

They build and manage day care centers, offering their services to very large corporations who benefit from having a day care center on site as a perk for their staff. For example companies like GE, Ford and Chevron. What’s interesting is that it’s a B2B business because they’re selling to B2B corporations on a subscription basis with annual renewals. There’s also a bunch of up sell opportunities in addition to selling the usual day care center facility: e.g. the possibility to benefit from other services such as after-hour child care, tutorial services, on site child nurses etc. So from a business model point of view, they function like a SaaS recurring revenue business.

In addition, the product can be measured to follow whether it’s being used or not. For example, how many kids are being dropped off per day and how many hours they are spending at the center. The team that manages those relationships at Bright Horizons is called the “customer success” team. That’s not just because they thought that was a cool sounding name but because they thought this term described exactly what they do.

2) Another example is a company called Fitbit. Everyone knows them as a lot of us are probably wearing one on our wrist. It is B2C for the most part but they also have a partner business activity which is B2B. They sell to large corporations who provide Fitbit watches to their employees, either free of charge or highly subsidized. The idea is that if the physical fitness and health of employees can be tracked, it might be possible to convince their insurance company to lower the rates.

So here’s another great opportunity which has all the makings of the customer success world but which is neither a SaaS nor software business. There’s a B2B relationship which needs to be managed, product usage, adoption and gains to be tracked as well as up sell opportunities with Fitbit upgrades.

Every company in the world is moving towards subscription because the market, Wall Street, the City and investors just love that model so much.

Sue: What is your elevator (I mean “lift”) pitch for Gainsight Software?

Dan: If I was in a “lift” in a London skyscraper with 30 floors, I would probably take about 2 minutes and say something like this…

Gainsight’s technology is designed to help companies more effectively manage their customers. This has become increasingly critical in the subscription economy. Gainsight will provide actionable insights to Customer Success and Account Management teams to allow them to touch the right customers at the right time with the right intelligence, ultimately driving adoption and value. Tangible benefits of doing this will include lower churn rates and improved identification of upsell opportunities. In other words, net retention will increase. Gainsight will also allow scalability that cannot exist without automation – touching long-tail customers that otherwise would not be touched and optimizing the time spent with high-value customers. The bottom line value proposition is critical and simple – maximize customer lifetime value.

Sue: Well I would love to see your technology for myself.

Dan: Yes, I know as a user it does live up to this description because when I was at Marketo, I was actually one of the first users of Gainsight.

Sue: It’s great to be a first-hand advocate. I read that Gainsight was rewarded with a $50 million funding at the end of last year. That’s a tremendous recognition. What are Gainsight’s short term plans?

Dan: It’s funny with your British accent that you refer to that as a reward and yes we really think we earned it:) We’re pleased that Gainsight has now raised over $100 million. This is a testament to our value proposition and which is obviously resonating with investors. We know there’s value for what we’re doing and for what we want to do.

When you raise figures that big, it’s usually associated to growth and indeed we have a growth plan with big goals for our revenue as a company.  We intend to break into new markets, verticals and geographical regions. A decent percentage will also go into marketing and sales because we think we have a good product-market fit and a good execution process on the marketing and sales side.

We hope to reach the point where we can make a decision as to whether we want to be a public company or not.

Sue: What about your plans for here in Europe Dan?

Dan: Well the plans are pretty open for the time being. As you know Sue because you referred to me dressing up as Austin Powers,  we did our Pulse conference in London in October last year. There were 450 very excited people who were totally energized wanting to meet, talk and learn about customer success. It was like an experiment for us as we were asking whether the timing was right. The resounding answer was “Yes it’s time”.

There’s a lot of need, interest and opportunity for customer success in Europe. Sometime this year we will officially make a move into Europe and start actively marketing and selling there with local presence as well.  We haven’t specifically determined what date or month that’s going to happen but it’s definitely this year that we’re going to make a move. We’re going to need a big presence in Europe to be a good global company. So yes Sue, the Americans are coming 🙂

Sue: I’ll look forward to that. Good luck for your future evangelization events, the next Pulse event being on May 10th in Oakland. We’d love to see you here in Paris soon 🙂

Finally and as a sequel to your book, in five years time, what do you think you’ll be writing about on customer success?

Dan: The future of Customer Success is hard to see clearly (the crystal ball is cloudy) but there are some very predictable aspects of it:

1. It will continue to grow in importance and stature as the world moves to subscriptions.
2. It will expand far beyond the core SaaS market into traditional businesses and B2C (where it’s already being done under other names in many cases).
3. The power shift from vendors to customers will continue.
4. The internal power shift from Sales to Retention will continue.
5. The rise of the Chief Customer Officer will continue.
6. We’ll see more leaders of Customer Success ringing the bell on Wall Street on IPO day.
7. Customer Success experience and results will lead some of those involved into CEO roles.
8. Automation will continue to assist in making the people part of the business (which will never go away) more effective.
9. Customer Success technology will become part of the standard infrastructure of virtually all companies – CRM, Marketing Automation, ERP, CSM.
10. Customer Success will continue to be a great career choice and will continue to attract more really talented, high-quality people into the discipline.
Those who understand it and embrace it will thrive. Those who don’t will get passed by.
Sue: I’m excited about the prospect of contributing to this great “awakening force”. Thanks Dan for this awesome interview!

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