The Sales Hacker Podcast
The Sales Hacker Podcast

Episode · 3 years ago

29. How to Build a World Class Customer Success Organization w/ Nick Mehta

ABOUT THIS EPISODE

Nick Mehta, CEO of Gainsight, joins us to share his keys to building a customer success organization that aligns with the rest of the business to drive revenue and delight customers.

One two one tree: Three FO welcome to the sale hacker podcast. Itis your host Sam Jacobs. We've got a great episode coming up for you. Thisweek, we've got Nickmata the CEO of Ganesite, a very well known, Sasi, Eoand executive, and one of the true pioneers when it comes to customsuccess. So Nick's going to talk to us all about customer success, how tomeasure it how to think about it. What phases are important and relevant toyour company when you'R incorporating customer success and he's also going togive us his point of view on why aliens have not yet visited the planet earth,which is very useful, I think, but first we want to think our sponsorswe've got to as usual, the first Os zerocall it's a phone system designedfor the modern sales team. I hope at this point you've taken a look at ourcall, but it seamlessly integrates into your crm eliminating data entry foryour reps and it gives you greater visibility and to your performance inyour team's performance through advanced reporting. When it's time toscale, you can add new lines and minutes which, as we all know, is ahuge pain in the ass with other services, and you can use in callcoaching to reduce ramptime for Aunew Rep. so the website is air called thatIo folward las sales, tacker air called out io forward five sales hacker to seewhy uwer Don in Brad Street pipe drive and thousands of others trust air callfor the most critical sales conversations. Our second sponsor isoutreach that is outreached out IO. The leading sales engagement platformoutreach triples the productivity of sales teams en empowers them to drive,predictable and measurable refenue growth by prioritizing the rightactivities in scale and customer engagement with intelligent automation.Outreach makes customer facing teams o more effective and ipproves his abilityinto what really drives results up over to outreekstout ile forward, slashsales hacker to see owt thousands of customers, including cloud air glass,Dor, Pandor and Zilo relion out wach to deliver higher revenue for Sales Rep.Now, let's listen to Nick maytop. Thank you. I everybody its Sam Jacobs, yourfriendly neighborhood podcast host. Welcome to another episode of theSaleshocker podcast were incredibly honored today to have. I was just doingsome research, the number three CEO and all of SASS. According to a recentstudy Nickmetta, they founder Nceo of Gainsite, the leading customer successplatform and, in fact, the company and the individual that popularize theentire concept of customer success. Nick is a two time entrepreneurpreviously having started a sant platform called live office through itsacquisition by SAMANTEC. He was vice president at Vertos software andSemantic Corporation and I's also a man of many and diverse interests and wereexcited to have him on the show so welcome neck sham. Thank you. So muchreally. I don't know where that number three came from. I think my mom musthave been voting on thy website, but ts yeah, exacty possibut great to behere. We are really and truly honored, and it's so important that you know wetalk a lot about sales, but we need to have a holistic view of the customerand I think that's something that we can dive into. So as we get started. Ithink you know there's to the point: There's probably a handful of peopleout there, that don't know who you are so give us a little bit of backgroundon the company, the mission of the company, why you started the companyand we can go from there yeah totally, so a gainsite were really passin aboutthis concept of customer success. Now just to put in context for the audiencehere, we think customer success is the new way to think about sale, so veryrelated to probably want folks on the stonor on this podcast ou're reallythinking about, because you know, we think that in new business models likesubscription, SASS cloud, etc, customers have so much power and theycan basically vote buth their wallet they can leave when they want to. Theycan decide not to spend more money, and so therefore, the old model of spending,all your energy on customer acquisition and a building a product or serviceisn't enough. The old model is still important. You know sales honestly is.I still think it's one of the hardest jobs out there, marketing as hardproduct developments hard. But if you do all that and your customers aren'tgetting value they're, not using what...

...they bought they're, not seeing orhythey're not going to stay with you, they're not going to grow and you'renot going to grow hand. So customer success is all about this idea that youneed to have a proactive process after somebody buys to make sure they aregetting value and using what they bought, and hopefully that they'll staywith you and spend more money over time and againsite we're all about enablingthis transition for companies. Part of that transition is about people andprocesses, and so we've created a big community around customer success andin part of it, is about doing it in ascalable way, and so we built softwareto help automate and scale customer success in customer experience acrossyour Ole Company. So tell us a little bit about the germination. What was thesad that sprouted the company? How did you get this idea? Yeah totally, sogive you a little bit of background. So that's funny. When I talk about Ou,know customer success. I actually do start with my childhood in a strangeway. My Dad was an executive at daginal equipment which is old company back inthe S S, and then he was a CEO, some small companies that I grew up at Samnoin Pittsburgh, Pennsylvania and Coteelers, and my dad went was a littlekid. You know eight years old and he would tell me hey if you ever Goin tobusiness, make sure you go into sales, because once you get the customer,tthey're stuck they're with you. So it's all about getting customs right.So I kind of grew up at the same mindset. I think most people on thispodcast that we've all kind of lived, dright, N fils by the way suit superimportant and so critical and so strategic. But as I'll talk about notenough- and I learned that because in my early career as do you Lu to Saav, Iwas at some onpremise software companies, Barita Samantech, where wesold stuff, where we customers paid a lot of money up front and theyinstalled it, and it was really hard to rip out and it was great butfundamentally whether they used it or not, whether they got Vatlue or not, wegot paid right and it wasn't wasn't bad at me was the job of getting value wasjust on the custom, and then I went to run my first business where thecustomer basically paid us on a monthly orandial basis. This company liveoffice, I didn't found live office, I got hired to run it and I was veryexcited to be in the cloud. You know that with the cloud I was like. Oh,this is awesome. You could scale more easily. You know it's really the hotpart of the market, but I learnt the downside or the challenging part ofrunning a business for customers. Kind of can hold you accountable, which isat the end of the day. You got to work to earn and keep the right to work withthose customers, and so, as Te c o live office. I came in thinking I'm Goi, tospend all my time on sales and I end up spending all my time on existingcustomers and customer success and building some custom systems and trackour customers and understand how they're doing and you know understandwhether they're going to rinew or not- and things like that, and so we soldthe company Tho Samantech and I took some time off and I had been feelingthis kind of inch of like wow. I'm surprised that problem wasn't alreadysolved and you may not know this Sam. I didn't come up with the idea forGamesihte. There were two guys jm Emberlyn and Shethe Pedanenni, who haddone another SASS company and Theyd independily come up with this idea, andbattery ventures had met them as they were getting it started, and I justsold my last company. We looking for my next thing and kind of got connected toour two tinders and I just felt love with the idea, and so I joined as wewere just getting started and and really just saw this problem first handwhen we were starting. Obviously not a lot of people were talking aboutcustomer success, but here we are five years later and it's become a biggerthing. Thank you for that Bat. I did not know that you weren't the soleindividual founders. That's an that's a a great story. I think. Five yearslater it has become a thing and I think gangsight has had a lot to do with itbecoming a thing. If you're a new, you know if you're a young, founder orsombody starting a company or a salesperson thinking about how to putcustomer success and operationalize it in a company. What are some of the keytenants in your opinion that help create the perfect or an improvedcustomer success. Experience Yeah, it's great well, one of thethings I'll say up front. I think customer success is a lot like salesand a lot like ti develpment in that you're always going to be working at itand there's never a point where you gon to feel like you're done right so inthe simple analogy, would be hone of the tenants to being grat at salesright and so obviously, as you know...

...very well saying better than I do, thatanswer changes from when you'R startup to Bigg company changes based onwhether you sell a high touch solution or something that can be botter of theweb, the same as to with customer success, so one tenant is that youreally have to understand your situation and figure out which adviceapplies to you and the dimensions I think about are: Where are you in thestage of the evolution of your company and I'll give some example there andthen the second being dimension is what type of product are you selling and howhigh touches it? A simple way to think about that is: what's your averageselling price in Youl contract value? So let's go through those twodimensions. So if you're an early stage, startup customer success is mainlyabout learning and getting input to help build a better product. It'sbasically about really understand that customer what they're doing and whatvalue they're getting so that you can build a product. It's really part ofbinding product market fit like I know, a lot of friends who ave start up setare very early where the first person starting the company might be anengineer and the second hires, a customer success person, and it's notabout renewals or retension or adoption. It's about learning. That's, like youknow, one fans right, but next phase you can think about is okay. Now I'vegot something, and I kind of have some repeatability. How do I get people toreally adopt it right and then you start getting people up to kind ofcontracts and the dollars Gad up, and then it starts micking about how do Iactually retain these customers, even if they're adopting? How do you makesure they stay with renewals, retension things like that, and then then,eventually it can become about extension. You Know How do I help mycustomers expand right, so one dimensions think about where you are inthat spectrum and where you really prioritizing. The second dimension ishow high touches Your Business. So if you're selling million dollar yearcontracts customer success is very customer, specific understanding, theirjectives managing kind of their deployment right. If you're selling ahundreddollar a year contract, it's got to be totally automated. What we calltech touch, gusing technology, to provide a high touch, experience sothink about those two dimensions of where you're in the spectrum and whatsize kind of deal you have and that'll help you figure out the types ofplaybooks theyre Ginn be relevant for you. We can share some more, but that'sa starting point. Yeah. Now it's very useful. So are there key motions oractivities that sort of define? In your opinion, even at an early staagecustomer success, I've sort of two questions? That's one question you know:Is it just sort of reaching out to the customer nd and ongoing Bas, ehis worethereare, different phases and segments across the customer journey and thenthe second question I have which is sort of related, but maybe tooteningential to buck it into one? Is Our account management and customersuccess. The same thing in your opinion and to what extent do you alwaysmandate or have a belief about revenue being incncluded in sort of one of theKPIS that customs success is measured against Great Ossime Wl? You just asklike all the questions I love it Theare, the Quesonthese Lik. You know you canimagine. I get ask these kinds of questions t kind of every day and- andthere really is a set of one- that people ask a lot so number one Wustalkig about process, so customer success as a process shows up indifferent forms based on where Youare, in your maturity curve, like I talkedabout it, what size of company you're selling to and you can bucket it intowhat I would call inside out processes and outside in processings, so verysimplistically. The inside out processes are about what are your goalsas Te Company and ow ways customer success, something to drive to thosegoals, simple things like who's, not adopting the product. How do I get themto adopted? WHO hasn't use a new feature? How do I get them to use itwho's that risk of not renewing how D I get them to you know have a higherchance of redewing that type of thing right, and so that's kind of what Iwould call the inside out journey. It's not the customers Dorny, but yourjourney right now, that's important, but what's really powerful, as youmature, is the outside in Jurney. That's like what is a customer trying taccomplish right? What are their goals? Where are they the you know? I don'tthink there's ever been a customer. That's thinking about the relationshipof the vender and saying I'm in the renewal phase of my relationship winthe adoption pase right, they're, not...

...they're, just trying to bring they'retrying to get tseme value, they're trying to drive revenue or tanke theircustomers happy, and so I think, tester re successive a process level is aboutblending inside out. You know what you're trying to accomplish and outsidein and thinking about, the things Yau're doing in both dimension. So asan example, insight out might be o looking for everyone that is decliningin usage of your product. That's a very simple thing: you can do that right andthat's important and outside in is capturing the clients goals up fromwhat they bought and then track you, whether you're, chaving thos or not,Hoe. That's sort of the way to think about that, and we can come back tothat. Go to your second question, because it's a great one gams accountmangint the same as customer success. How do you tie those together? This isprobably the most common question I get it maybe a different way to state it iswho owns revenue and renewals and these recurn REVENU businesses. So let mestart with the premise that we talked about a game site which is customer.Success is more than customer success and management and the context there isthere may be a job called Customer Success Manager in your company CSM andthat's a great job and important. But customer success is about the entirecustomer experience bringing everyone together to drive towards this positiveoutcome. Fo the customer and redew one expansion for your business right andin some companies they're going to segment the roles and they're going tosay: Okay to achieve customer success, we're going Ta, have a CSN Hat's allabout th value and adoption, but doesn't have a quota right they're justabout driving valuan adoption, whe're Goin a have an account manager thatdrives reneal in expansion, the actual commercial sign of it right. So that'skind of a segmented role, so maybe a a hunting rap closes a deal, and thenthese two people work together a CSM for adoption value. An Account Managerfor a non expansion that that's very common, especially in businesses wherethere's a lot of commercial complexity after the sale, and you don't want theCSN AV to deal with the renewal in other companies. You go from a modelwhere the sales rep closes. Video and the CSM manages both the value andadoption and the commercial aspects of the relationship right. So that modelthe CSM is a person after the sale. Doing everything so go to your question.Is that CSM just an account manager? No, absolutely not, because the traditionalcount, management job was purely about the commercial right it was aboutmaking sure the renewal comes in. I was joked that the account manager alwaysseems to magically reach out ninety days before the renewal saying howthey've been thinking about you for a long time right. I just thinking aboutyour bisiness since you bought right, but threality is just like Oh wowconvenience that it's nivety days to renewal, so the CSD model is much morean Avegra model, you're working, bat customers throughout the Lisece, soCSM's not the same thing as a caunt manager, but customer success cancertainly include account. Managers as part of is larger strategy. Do you havea preference on which model you like? Do you prefer having the customersuccess team not have a reven orientation or quota, or do you liketying things? Ultimately, maybe it's just one of the KPES, but ultimatelytying the customer success team to some kind of retention going great question.So you know I'm actually writing a blodpust of this as we speak. So wethink over time, there's a question of what the customer success. Team ownsand meaning, like, let's say, there's a chief customer, afcer or ahead ofcustomer success and then what an individual CSAMONS. Let me break downthe different models right. So one model is your classic traditional model,which is I've, got a chief for evenue officer. They own all revenue the salesrepssone everything from new business to renewal. You know, there's no untrefarmer and then csms just about adoptionaf values. I think that worksin very high touch businesses, Wer H, let's say a workdaye right where yougot huge contracts, wats Obout, sell lots of Renoio, complex ere, newaldstinky product, and so that's the traditional model sales he doingexactly what you've been doing, no hunter firm or anything else, CSM justabout adoption Di. But let's call that model. One model two is okay: i'me gota hunter rap and I've got an account manager AP. The Hunter. Does the newbusiness account. Mander does Wer noan...

...expansion, they both reportd into theCro, and I got a CSM orgo over here responsible pro doption value and thenthat's you know, that's pretty common. I think that's Actualy, probably one ofthe more common models and sacts and somebody in the fom down the podcastmight be in that momel model. Three is you say: Look I want that sales leaderto actually be really focused on new business, I' Nata, going to move thecount managers under the CSLEADER, and I'm seeing that more and more. If youwant to get have your salese to really focused on you and by the way like theCS, leader is the one they gave about the customers every day, so it'sometimes fits Mor. Naturally, you might flip big expansios back to thesales team in that Bodel, but small, extansions and renewals would be doneby an account manager sitting in the CSWORK and then model four is hey, I'mgoing to actually have the salesto you new business and maybe be expansion,and I'm actually going to have the the CSM. Do the renewal and the adoption invalue and that's going to sit in the CSWORD right to conciue this, I kind ofan evolution. What I'm seeing in what I'm recommending is in general, theCSOR needs to be able to point to some part of revevue and say I drove thatright, whether they had the acount managers. Reporting in the BEM WetheyTho come in is reportinto sales, but they have a really tight relationshipor whether the CSN themselves do the revenue. You know t theire differentbodels, but the number one recommendations, the CS leader- needsto be really well tied to rabbit. The second thing is, I think, as you getbigger and you get more efficient, there is a goal to move more revenue inthe CSA. It doesn't happen overnight and I think most startups probablywouldn't want to do it, but I think it bigger there's an efficiency to it. SoI talked a lot of at scale companies and they're, trying to move more f therevenue into CSM because, frankly, the constructures lower and it lets salsreally focused. So those two trends give the CS leader, revenue,responsibility for existing customers and then eventually consider giving theCSM, but maybe do that later in the process, and is it a hundred percent ofthe time that, in your opinion, the CS function is always separate from kindof like the acquisition sales function and that CS function is reportingdirectly into the CEO great question. So there's definitely a mix. You knowwe see CS leaders reporting into achief revenue officer, especially if it's avery senior person. You know a d that can work really well. I think that ifthat happens, that she also really needs to be more like a president. Theyneed to be able to look at the whole lifecycle and not just bee the salesleader who happens to also an CS right. You probably if you're on thislistening to this and you', probably be in a situation before, where you're,either the person running an ord where you've inherited something that you'renot really pasted about or you the person working for somebody whereyou're that, like second porty they're, not really passion about that's aterrible situation. So if the CSTEAMS COAN report to a cro or president, theybetter be justas passive by existing customers as they are about new sales,and I think that model can then work. I've seen companies do that. Well, U,in a model where the sales, a theres, really folksd on sales, there's abenefit to splitting thim out. If he said what's the mix, I think it'sactually reasonably even between those two models in companies. You know, Ithink that there's some Cros and presents that are really reallystrategic and think about the whole life cycle and they can own the wholething and there's some sales leaders that really want to focus on tails,which is great too right, and so I say it's probably reason we split withinsaute between those two models: It resinates. What you're saying? Becausesometimes you know my title is chief Revenue Officer and I personallyoversee you know, CS and account management and when I'm in the meetingswith our existing customers, I really wish I was called chief customerofficers, sometimes because I don't e Aan, that the only thing I care aboutis their money. I really want to give them the impression, which is the truth,that I care about their success. That's a really good point am because I andI've even seen some sales leaders literally change their title tosomething like that, like chief customofser. For that reason, so that Iwill say one of the other comments that is important to think about is. Thereis some benefit to the separation of responsibilities in a high growthcompany FOCUS, obviously having a fail.

Weider versus the CS leader, there's afocus thing, and then I think there's a healthy dynamic to you know. This isnot easy stuff right like when you push on the extansion versus driving value.When you do a price increase in some companies, there's a healthy tensionbetween the sales leader and the CS leader that can help get to the rightdecision for their customer. In for the business yeah I mean again and that's Ithink part of the COS job in the organizational design is to createconstructive aligned tension. As I we ask to Atri attension, you wrote a a blog post back in Mayabout how to manage your customer life cycle from the customers perspective,and it was a little bit about what you had sort of touched on briefly, whichis this outside and perspective. There's a lot of folks out there thatare starting to think of about this concept of the customer journey. Thisconcept of moments of truth, which you arearticulate walket through a littlebit of that framework, yeah, absolutely so you're going back to this idea ofoutside in customer success right. So really thinking about that customerjourney from their advantage point again. If your customer journey stagesare adoption expansion renewal, that's probably not what the customersthinking right. So the customer is, you know, there's a lot of differentterminology couple use. You know they're trying to figure out whatBendor to work with and decide whether the'r the right one and start gettingvalue and Ekepand that value Ri, the terminology they might think aboutright, and so what we believe is there's an opportunity to design acustomer journey from their advantage point and really build that as aholistic journey. Let's talk about postsale just to make it simple right,so somebody you know they signed that dockey sign or Echosigne or whateverelse he ise and everyone brings a gon super exciting moment. I was joke thatit's much more exciting for the vendor. At that point than the customer tcatoreason celebrating right. They just agree to spend a lot of money, but nowyou're in this world right where they have got expectation. You know that'sactually one of the biggest things to think about things. Avt theseexpectations, I mean you say, I'm your great sales person, you probably areawesome and getting people excited about expectation with great sales.People have such a good service in this role. Okay, now, how do I make surethose expectations are continued hat they're transferred over to theonboarding team or customer success team? There's not that letdown. I thinkall of us have seen that letdown that happens after the sale, all this en asvendors and customers ave seen it right and then how do you design a journeythat does the following things? Number One looks for the ideal path. Somepeople call that the happy path right. So one of the things I expect thatcustomer to be doing if they're walking down that good pat, they should bedoing these things by ninety days. Ind. You know using the product of this way.You know getting this kind of value. They should have met with us to do aQBR and so you've kind of mapped out this happy path, and maybe automatedsome of it and figured out. Who does why you know build kind ofresponsibility, Chart Etca and then you've identified. When are peopletaking offramps for that journey they bought and they haven't, enabled thelicenses t e. They got an invite to the training class and they never took it.They deployed, but then they never tried up. TFE New features right, sothose are like the offramps if it's like a highway and then how do you figout ways to get people back on that highway when they take those offramsright? That could be through an account meanto reaching out the CSM reachingout an automated email and int message. How are you getting them back on tothat path so design the journey with the customers kind of goal o mind,identify the happy path measure, whether they're on it and then whenthey take an off or him get them back on to that that journey, yeah, it's and, and one of the thingsthat you wrote about, which I think is again it's sort of resonated with me.Is this concept of moments of truth, where sort of the right H, infuctionPonts, along the journey, totally yeah in kind of customer experience. Lingomoment of truth is basically those Ar really critical things that happen,whether it's like the first time you use a product or your first kickoffmeeting or your first quarterly business review, where the person'sbuilding, an impression of who this vendor is and what this experiencegoing to be like. And how do you make...

...sure those moments are really reallygreat, like maybe bring in marketing into the brainstorming, how to makethem really positive tracking whether they didn't go well, that's why I thinksales like JAL's job doesn't stop. You know I mean, especially if you have anorm going relatnip with customer. How are you coming in in those moments oftrits o really make them outstanding, make sure the customer doesn't feelleft Bi, and you know things like that, so the other thin I'd say is they say?Is it just about you know, making customers happy it's easy to listen tothis stuff and say Al Thisis Great. I want to make our customers happy and Itas an this- is about acceleritg new power to extansion fenndamentally right.So it's not just about minimizing turn when you think about it as asalesperson, you work so hard to move fast on getting a deal right, I'm sureSam you've man, as many teams hat you've, been around probably in thepath you're just like how do I do something tomorrow and Stea next week?How do I get the customer to do the Demo today? How do I get to Mo thatblockor tomorrow and what ends up happening is after the sale? It's likeeveryone moves into like a slowdown cruise control, you kind of joy ride.You know versus like going full in fanity mode. You know as fast as I canright and how do you actually accelerate that postsale journey sothat there's a faster pass to expanding to buying new products? To being anadvocate, I really think one of the best ways to grow faster is reduced thetime for your customers to get to that initial value and to the point wherethey can expand. So the customer journey isn't just about happiness.It's about growth, yeah. That makes a tremendous amount of sense, anotherblog post and another topic that I'm sure you're asked about a lot and thatI think every company thinks through which is is not just it. Should revenuebe included in the customers, successor account management role. But what arethe KPIS? And you know for time? NDPS was the acronym of the day andeverything wit as about NPS. I think that there's a debate if between grossrevenue, atention and revenue, attention itwoull be interesting firstto get a framing for the possiibilities of what all the different KPIS andmeasurements of the success of customer success could be, and then, as always,we would love your opinion on which one you prefer totalwy. So the way I liketo think about this that we talked about internally, is you have laggingindicators which are the end goals, but the not necessarily things that ceatyou change right away and you the leading indicators, which kind of showyou, whether you're in the right path and that so infails you know, Liidicator might be new bookings. NEW ARR and a leaving indicator might bepipeline generation right. Everyone listen. This is familiar with that. Soin the world of customer success and account management, there basically arethree core lagging indicators, fundamentally hustomer successis aboutdoing three things for the business. You know: improving, rattention, Orenewals, improving expansion and improving new business through bettercustomer Addocay. Those are this to be like really big thing: You're drivingright and I'm going to come back to gross versus Nhat, because that'sobviously a big big discussion there. What we find in general is you want tomeasure your customer success team on a mix of lagging and leading indicators?Let's assume you just measured an ligging right, let's say, for example,renewals the problem Fundimenta you have, that is every quarter. Yourincentive is to work on the things that drive this quarter's numbers, but youhave no incentive to work on the things that drive. You know two quarters out,but the reality is customer success. The biggest lever is being proactive tothose customers, two or three quarters from redewing. So that's why mostpeople in Customer Success Look at a mix of lagging indicators and thenleading and then from a leading perspective. What you're looking at iswhate are those things that directionally tie to retention,expansion and advocacy and, as you said, NPS can be one of those. What we foundis it's important to think about customer health holistically and lookat lots of different datapoints. It's a very, very weak correlation to look atone of these data points and think it drives everything. So an pes some goodexample in the consumer world where NPS is created you and I, when we buy chopon Amazon or we buy, you know sonos music system. Basically, our experienceis tie directly to our likele have to...

...buy again because we are both the user.The decision maker, the economic buyer right, like you know, maybe we're notalways economic bio depend on how your household works, but we're actuallywe're it's a simple sales process right and so therefore, nps work super wellin to be to se business in a Beto D business worch. I think a lot of peopleon this podcast ar are responsible for the challenges that you have lots ofpeople and you might have great promoters, give you a great feedback,but maybe they're, not the decision makers, or maybe they leave during thatprocess, and somebody new comes in, and so many studies have shown. NDPS is noton its own directly correlated to retention or extension ANB to be. We'vedone those studies there's as a good study online about this as well, and sobecause ofthaut, what we find is he need to look at a ballistic view whereyou look at each customend. You score them and you look at things likeadoption on their engagement with you or they coming to your meetings or theycomin o your events, their NPS as an indicator of their support and thatleading indicators. You know with a lot of people. Almost most companies now docone some kind of health score right and you're looking each customer, andin that example, if they give you a really negative feedback on NPS. Thatprobably really is bad for your houthcore right, so people that adetractors are likely to turn, but people a the promoters, doesn't meanthey're likely to renew right. So you're going to look at amultistactorial view and build a score, and then that's what you're optimizing.How do I make my customers more healthy and then that drives retention,expansion and advocaty? Now, let's get back to your other question, Grossernetsuch a great question. Most people in customer success today focus on gross.I believe the trend in the future is more. People are going to start doingthat not everyone! Not. Let me describe how I think about this grossy tensionwhich, if you don't know, is all about measuring as up to a hundred percent.What dollars you retain from your gisting customers, but without thegetting the benefit of existing customers expanding more so the mostyou can get is a hundred percent and in growth it really forces you to focus onsaving customers right, it's all about minivizing kind of leak, age or lobs,and that's great, I think, in the early days of a company, because manycompanies are underoptimized and they have a lot of people that leave. Thatreally should be saying. N, I think for a while. Focusing on gross is reallyimportant, but at some point you get to what I'd call an efficient level ofgrosery tention if you're an enterprise business, if you're in the S, you're,probably reasonably efficient in gross attention, if you'R nesn be Orintobusiness, if you're in the S, you're, probably reasinly a fish, you can stillmove it a little bit. But at some point you know there might be customers thatyou just can save and there's not much more. You can do. Then your energymight be better spent, taking your good customers and making them great andthat's where net retention comes in, because then you y have a opportunityto make more than a hundred percent by expanding your customers, and if youlook at the publicly traded companies, the best publicly traded companies allhave very high netwretention. So we believe that in the early days of scsteam gross is totally where you should focus, but as you grow and think aboutthings, net retension is where you'll end up adding more value over time. Ihave a very specific tactical question before we move on so first thank you.That was incredibly helpful if, when we're thinking about gross fordetention on dollaars, if a customer down sizes, if they go from fifty seatsto forty seats, is that penalized, even though the expansion from fify to sixtyis not credited in the growts calculation, totally grosser tension ispretty gross. It's pretty tough, you get no benefit from the upside and youonly get the downslide. That's WHA, actually, F. If you com, Hor salesbackground like in sales, you can lose a deal and you can make it up bywinning another deal right. Maybe the second yeals bigger than the firstcustumer success is tough because you never make it up on a grocer itentionbasis. In the example you talked about, if somebody goes from fify o forty andsomebody else goes from fio sixty you get no benefit in the gross caculationfrom the F on sixty and you thank the penalty in the gross calculation fromthe Fiftn of the forty. So it's a tough bar yeah seems difficult stil. All of this has been incrediblyhelpful and then and then there's the otheher side of sort of your story,which is you know, there's a thing that...

...gainssite does but then there's you asan individual. I think it's always inspiring to hear Ake heare the storyof a CEO when you think about the success that you've had. What do youattribute it to you know d. You have sort of lessons or guiding principlesthat that you share with colleagues. Is it the values that are part ofgainsight like childlike Joyce, so that how do you think about you know you,your success in your career and what advice would you give to the folkslistening yeah, I mean well. One thing I wouldsay is we believe we just start started a gainsite, so I don't think any of usever intertally talk about. What's the reason for success, we talked about howwe could be much bigger, have a bigger impact and really achieve our mission.So it's funny how things look on the outside versus the inside. We want todo something very substantial, but I think that you know what's allowed usto get to wear rab the last five years and more important, I think, what'sallowed the whole customer success community to get to where it's Ais, Ithink a few things like which probably transfer bit to any company number one.I do think that having a tail win in your area, business is massive right.Some companies don't have a TL win. They don't souin to something that'sgrowing or or new, but having the fact that you know more companies are becomedin and Chass and therefore they need customer success and it's clearly beensomething where the timing couldn't have been better for what we're doing.They were really really fortunate and Lucky to be in that situation. TBATnumber one number two. I think that what's comding unique with gainside andcustomer success, is it's not only a business trend? It's a new professionas we alluded to write, customer success, leaders customer successmanagers almost every day from CEOS and BCS. I get questions about you know.Can you help me find a customer success meader for my company? Can you help mefind a chief Testin rapter, so it's a growing profession linked in actuallylicit as a third most promising job in America in two thousand and eighteen.So I think the second thing we've been really fortunate about is a this is agroing profession and then I think what we did, which one of these we did,which I think is really helped. Is We focused our company not just onsoftware right? We do build Sofdere and we think it's great and really oddvalue, but our main mission is to enable companies to make thistransition o customer success and make the profession of customer successrullysuccessful right. So we run MISA successful lot by the way we run thisconference on custmer success. Calle Pulse is, you know Sam and it's notabout gamesite. In the early days we nated about the industry- and we talkedabout you- know compentation and customer success and career pathing andmaking your employees happy and working with sales and all these differentthings. So we really nated about the job, not about us, and I think that'ssomething that we just been fortunate to make the right Bhat there. You knowwe wrote a book on Customer Success. We created an online university to teachpeople customer success. We taught thousands of people CSWE, we have a jobboard to help people find jobs. So the thing I think we did within this opportunity is reallyfocused on the job and the profession, not just the software and then finallyis uelluded to we're very values. German company. We talked about ourcompany's values as being what we call human first is sort of the kind ofumbrella over everything really trying to think about business, not just like.If you remember the godfather quote that it's not personal, it's business,we flip that we say it's not business. It's personal! I personally don't thinkthat that the mindset that like taking everything, is business and notrealizing, there's human beings involved. I think that's a veryreductive, minset and frankly, people spend so much of their lines at work,and I can think of no bigger impact. You can have an co than having thepeople that you work with getmeeting out of their jobs, and so we have thisconcept of human first business and we apply that both to our employees rightin our teammates and their families and the values that we run, but also tourcommunity. We're real big fans that you need a holistic, integrated viewbetween your company and your customers are a community and we think of havinga human vote. First approach to everything. As an example, all of usagainsite spend a ton of time trying to help people in their careers, find jobs,figure ut. The next step get mentored and I spend probably an hour day onthat with one CS leader, one CSM or...

...another, because we do think this isabout human beings. It's not just about business. Some of the decisions thatyou've made like putting you know, values in articulating those values, asyou scale is that intuition. Is it learned from lessons at live officelike? How did you figure all this out? How To be a CE? A? I don't think I figured it out yetthere's so much more! Every time you think you figured it out like a fewyears later, you grealized you DIDT, didn't. have it figured out I'll Tan,you the two things that for the Valu, specifically that Im Dravin it numberone for us and for me specifically in our threat company, it's actually notthe how it's the lie. Basically, at the end of the day, you have to have somereason that you work and do what you doing. Werll many people Listeng tothis ar fortunate dend multiple options of what they do and for us doing a jobwithout having some sense of meeting and purpose just wouldn't be fulgilling,and since we're not flying rockets on Tomars or like hering cancer, you knowhow do you find purpose in your work in kind of a enterprise, dofter businessand Prus? It's been the purpose around how you work with people and treatpeople and that's like if we didn't have that, none of us would really findTok them in our jobs. We just wouldn't do it right Si it's actually for somecompanies. I think values become like the how or the what and that's fine, Ithink for os its the Wy, which makes it really powerful. Then the second thingis in my first company I've almoyst had this feeling like. I need some greatertatisaction from work beyond. Just you know, making money and selling stuffand all that alltof. Those things are great, but I think I wasn't asconfident about it. So we had values at live office. I think I'd more confidentthat you can pick your own path as a Co. That's like one of the biggest thingsI've learned. I actually really respect. You know the CEOS that are hundredpercent about making money. I think that's very authentic. They are whothey are right. I feel like as a CEO. You can pick your pop ind, yourapproach and for me we want to make money. We want to be a successfulbusiness. We want to be around a long time, but or why is our values in ourpurpose? And I think, as a CEO, you have the right to choose your Wy. The Yis not handed own from you from like the Capialus scod Bu. Why could bewhatever you want it to be, and we've gotten confident in what our Wy is? Ithink that's aspiring we're Comingi to the end of our time, and I have a fewmore questions. One of them, as I alludeded to over email, is not goingto be about customer success or sales at all, but before we get there, isthere an ITP for gainspite? You know you've got people listening if theywant to big astmers they're, a specific type of firm. You know when I've talkedto Ou guys in the pastes as a potential customer. It seems like it's anenterprise first business, but tell us you know if we're out thereerelistening and we want to be become a customer of gaineside who is sort ofthe perfect sit yeah. It's interesting. We started probably more enterpriseorianted and got lots of great yoow customers like box and workday and OFTA,and many others lots of like kind of traditional companies like IBM andCisco and Adobe, and but now it's actually expanded a lot. So when wethink about it, the first thing is what type of business you are, and thesecond thing is where you are in your maturity, curb so type of business. Nowwe think of three kinds of businesses what we sell to born in the cloudcompanies. Probably many people listening that the SAST businesses thatstarted that way reborn in the cauge companies right. Those are companiesthat might have tra started with hardware softer and moving to cloud andfast movels and then company's going to digital transformation that you know,for example, gs the custom of Aurs as they've gone through their digualtransfomation, a d: That's the type of company now the size. In the early dayswe were more kind of Bin, mid market and enterprise. You know hundredemployes and higher kind of thing, and now we've actually figured out ways toboth intrerms on boarding and kind of o lighter version of of product to beable to serve companies. You know typically starting about fiftyemployees and usually it's somebody that y has some kind of customersuccess. Initiative. Maybe has the inkling of the CFM team and I's tryingto figure out how they think about scaling that one of the other things wefind is our relationship with clients is not just about the SAUSTER. You knowwe have a great community. We have lots of tiny startups that come to eventsand learn and obviously overtime, hopeully, some of them Al becomecustomers as well. But you know we...

...think anyone in the customer successAtourney we love to engage with them and typically with their software. Youknow kind of fifty and higher interms employees. That's fantastic to lastquestion. So if we we have a little part of the podcast where we like topay it forward a little bit to the plint of helping other people and sortof following the bread com trail, if you're thinking about key influences orkey pieces of content that you want us to know about whether it's books,you've read that have really influenced you or sales leaders or other founders,that you really respect your investors. What are some ways that we can sort offigure out what made Nickmeta Nickmetta Yeah? It's interesting. I don't knowwha how you're like, but I kind of feel like feel so lucky that there's so manyamazing people that work in business and technology that I learned from onThi almost like. Where do you start, but I'm going to just I'll rattle offsome? Just that t inspired me and you know. I think that this is just apartial listinif im forgot anyone. So you know one person that actually Iremembered meeting Aron Levy who's, a founder to box when box ar just gettingstarted and his passion to build something- that's kind of built to lastlong term and that, like he's, gonna, always be shooting to do somethingbigger and you culd just see how much he believes in this company. I thinkthat's super inspiring. I was Fortuntou to meet Tan Zog WHO's, the Co Zra andfounder Zora, which is obviously very relevant to Ganesie because they alsosell them in the subscription based world and kind of coin. The termsunscription comedy Hen was, I think, in plany six at sales fors, so he pickshim pretty well and he sort of bad at the world assass from the verybeginning and provide a lot of guidance to be overtime, which I reallyappreciate. Another pro person, maybe semple to me not know Jennifer TahanaWos, the Co of a coming called PAG or duty, which is a really cool IPoperation software product. But the way Jennifer runs. Er Company, inparticular, commitment to diversity and inclusion and values, is somethingthat's very, very inspiring to me in terms of just how she thinks about herbusiness and how she runs it, and things like that. So those are threepeople that that kind of jump to mind and like I can probably think of more.If you give me more time any great books that you think we should readthat you now yeah what', you Yeaheso, we rtabcstomer se, which is obviouslythe best one ever no, but it's good if you're trying to fall asleep a nightsGreata Lese days, but it's actually got it'sinteresting,it's Sol fiftyzand copies, which is a lot for businessbook. We have no idea,it would take off and it's really become very popular, so I do thinkpeople find a lot of value fror reading it. Besides that, you know, I think thefirst time I read the hard thing about hard things: Byt Ben horrowit he's afamous central capitalist Formercio. It's a really really good book toexplain how business isn't all glory and rainbows and UNICORSS. It'sactually pretty hard and there's some greediness to the stories in that book.That makes hat at least for me, help help me get through some of the tougherdays. So that book is in particular an thing really really good. There's a vok!Actually, that's, probably less one known called nonviolent communication.It's actually a book that I heard that Saxinandalla I've never met Sankibefore, but CEO Microsoft recommended to his team and it's about. Basically,how do you actually build a team that can communicate in ways bat reallyreally constructive? You know some people know Microsoft used to be veryconfrontational back in the day, and I do believe that there's not tertain todrive constructive interactions and then Il give a plug for one, because Iam I'm very popassionate Te reciclusion in amly change book Brotopi. I think ifyou work in technology, understanding kind of how we got to the world we'reat and we opportunity to change that we were fortunate hat amily come, do atalk at game site and she's amazing she's, a reporter of Bloomberg, and shewent this amazing book just talking about how much work we have to do todrive inclusion in technology, and I think that's an important book forpeople to read. That's fantastic! Okay! Here we are the last non work, reelatedquestion. We talked about this over email, so firmy parodvox. What is youranswer for those? Not In the note it's the paradox that the drake equationwould imply that aliliens would have...

...already visited the earth, but theydon't seem to have nick. What do you think? Oh my God, thisis great so ththis is p. can we do another hour on this Houson this but eandent intophysics and philosophy and tot experiments like this, and you knowbasic thing to the context: N W the universe is huge, there's hundred andhundred billions of stars and hundred hundred billions of galaxies. So if youdo the probability, there's probably life somewhere and it probably y nowhasbeen around for a long time. So how come we haven't, seen it yet, and andactually it's puibly there many answers. If coan go, Google, the witkyTetiooaticle, this is hilarious. There's so many answers to what couldwhy we haven't met aliens. Yet one of them is actually that they've alreadybeen here, but we just can't see them. So I do think that in the future, it'spretty mind bogging how much things could change and you know how peoplecould travel and learn about the universe and how much broader it isthan what we know experience today and including the theory that from stringtheory, there's many dimensions to the universe. It's possible, there's alien,they're, hidden, inother dimensions, so maybe I'll vote on that one with thelittle I inan chanse a good one. I think I like it. My Standard answer isthat it's a simulation and we are live. Ol Gead, that's a great one to that's that to on, and you can hang outnattand h and thee, lase thing I'll say about it. Then we can partways, butfirst of all, thank you so much for your time today. The last update on thefirmy thing is that there's been some new paper. It basically says all f thevariables and the drake equation are way overstated and the reason that wehaven't been visited is because it doesn't exist, which is which for me isnot is incredibly depressing, but that's no thank you so much for coming on theshow. We really really appreciate it and candidly. We appreciate youremphasis on customer success. I think the business world appreciates that. Ialso every time askd you a question just now about you, individual. Youalways said we and you brought it back to the people that you work with in thecompany and that's thet makes the value seem incredibly authentic. So thanksfor coming on the show, if people want to get in touch with you,are you? Okay with that? Is there a preferred mechanism or is it you know,follow you on twitter, which is perfectly acceptable. ANCER, Oh yeah,there's like a billion ways, certainly twitter like then I'm actually it'seasy. I'm just n Mehta Gameypecom, and you know just another person, just likeyou, SOS always haping to that with other folks. Wonderful, well, nickthanks! So much for coming on the show. We really appreciate it. Thanks Lot,toim have a great day everybody. This is SAM's corner. Wewere honored to have Nick Maka on the show couof gamesite. It was a greatconversation and you can tell when people are really really effectivepublic speakers, because every one of his thoughts was sort of delivered inparagraph perfectly articulated, coherent and and insightful a couplethings that take away. One of them is a semphesis on grossattention versusnetretention gross is essentially all of the dollars that you keep, but notincluding any of the dollars that you expand and thet is including expansiondollars at the beginning. You want to focus on gross, is what Nixk said andthen, as you grow, you need to demonstrate that expansion, and I thinkwe probably all know some of the stats, but we're looking for a hundred andtwenty percent hundred and thirty percent in that revenue. Pretensionmany, including expansion for a great, a SASS company and we're looking atninety percent plus for a gross revenue attension, which is not exactly thesame thing as a unit renal rate, but it's pretty close nick is also talkingabout having Customer Success Organization Report Directly T Co.Sometimes it includes revenue responsibility, sometimes it doesn'tbut you're looking for the leading indicators and the lagging indicators.So the leading indicators are product adoption, not promoter, score customersatisfaction, understanding the roles of the company that they're filling outthose surveys and then, of course the lag mudicator is money. Mony typicallyhappens at the end of thinks. Not The...

...beginning. Final thing is just if youheard him talk- and I mentioned duing the interview, the values shine throughand if you're thinking about growing your company, one of the things nickmentioned was there's A. Why, which is you know the Framou, Simon cynic peopledon't care what to do they? They want to know why you do it, and so a lot ofpeople say start with why? What is your? Why? But I think, that's reallyimportant for companies to figure out. Why do you exist- and I think is nicalso mentioned it's okay, if the answer is just to make money just be true toyourself when you're answering that question now to check out the show,notes, see upcoming guests and play more episodes from our incredible lineup of sales leaders, visit sales, hackercom and head to the PODCAST TAB,hey'll find us on itunes or Google play or anywhere that you enjoy podcasts. Ifyou enjoyed this episode share with your peers on like din, twitter orelsewhere, and if you want to get in touch with me, find me on twitter, atSam of Jacobs or at Linkdoncom slashand Sam f Jacobs, once again, big shout outto our sponsors for this episode. AIRCALL onr advance call centersoftware, complete business phone and contact center, one hundred percentnatively integrated into any serum and outreach a customer engagement platformthat helps ufficiently and effectively engage prospects to drive more tipelineand close more deals. I will see you next time.

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