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 want. Welcome tothe sales hacker podcast. It is your host, Sam Jacobs. We've gota great episode coming up for you. This week we've got Nick Meta,the CEO of Gainsight, Oh very well known SASS CEO and executive and oneof the true pioneers when it comes to customer success. So Nick's going totalk to us all about customer success, how to measure it, how tothink about it, what phases are important and relevant to your company when you'reincorporating customer success. And he's also going to give us his point of viewon why aliens have not yet visited the planet earth, which is very usefulI think. But first we want to thank our sponsors. We've got toas usual. The first is air call. It's a phone system designed for themodern sales team. I hope at this point you've taken a look atair call. But it seamlessly integrates into your crm, eliminating data entry foryour reps and it gives you greater visibility and to your performance in your team'sperformance through advanced reporting. When it's time to scale, you can add newlines and minutes, which is we all know is a huge pain in theass with other services and you can use in call coaching to reduce ramp timefor you new Reps. so the website is are called out io forward saleshacker. are called out io forward slash sales hacker. To See why wewe're done in Bradstreet, pipe, drive and thousands of others. Trust arecall for the most critical sales conversations. Our second sponsor is outreach, thatis, outreached, out ioh, the leading sales engagement platform. Outreach triplesthe productivity of sales teams and empowers them to drive predictable and measureable refinue growthby prioritizing the right activities in scale and customer engagement. With intelligent automation,outreach makes customer facing teams more effective and approves his ability into what really drivesresults. Hop over to outreach dot io forward salesacker to see how thousands ofcustomers, including cloud, are, glass door, Pandora and Zello, relyon outreach to deliver higher revenue per sales Rep. Now let's listen to NickMeta. Thank you. Hi Everybody, it's Sam Jacobs, your friendly neighborhoodpodcast host. Welcome to another episode of the salesacker podcast. We're incredibly honoredtoday to have, I was just doing some research, the number three CEOand all of Sass, according to a recent study, Nick Meta, thefounder and CEO of gain sight, the leading customer success platform and in factthe company and the individual that popularize the entire concept of customer success. Nickis a two time entrepreneur, previously having started a Sass platform called live office, through its acquisition by SAMANTEC, he was vice president at Veritas software andSemantic Corporation, and I's also a man of many and diverse interests and we'reexcited to have him on the show. So welcome, Nick Sham. Thankyou so much. Really, I don't know where that number three came butI think my mom must have been voting on the website. But inters thousandof home votes. Yeah, exactly. Also be great to be here.We are really and truly honored and it's so important that. You know,we talked a lot about sales, but we need to have a holistic viewof the customer and I think that's something that we can dive into. Soas we get started, I think you know, there's to the point.There's probably a handful of people out there that don't know who you are.So give us a little bit of background on the company, the mission ofthe company, why you started the company, and we can go from there.Yeah, totally, so a gain site. We're really passionate about thisconcept of customer success. Now, just to put in context for the audiencehere, we think customers success is the new way to think about sale.So very related to probably what folks on this phone or on this podcast toreally thinking about. Because, you know, we think that in new business modelslike subscription shafts, cloud etc. Customers have so much power and theycan basically vote with their wallet. They can leave when they want to,they can decide not to spend more money, and so therefore the old model ofspending all your energy on customer acquisition and on building a product or serviceisn't enough. The old model is still important. You know, sales honestlyis. I still think it's one of the hardest jobs out there. Marketingis hard, product developments hard. But if you do all that in yourcustomers aren't getting value, they're not using...

...what they bought, they're not seeingour a lie. They're not going to stay with you. They're not goingto grow and you're not going to grow and to customer success is all aboutthis idea that you need to have a proactive process after somebody buys to makesure they are getting value and using what they bought and hopefully that they'll staywith you and spend more money over time. And a game site. We're allabout enabling this transition for companies hard that transition is about people and processes, and so we've created a big community around customer success. And then partof it is about doing it in a scalable way, and so we buildsoftware to help automate and scale customer success and customer experience across your whole company. So tell us a little bit about the German nation. What was thespeed that's sprouted the company? How did you get this idea? Yeah,totally. So give you a little bit of background so that it's it's funnywhen I talked about the customer success I actually do start with my childhood.In the strange way. My Dad was an executive at digital quipment, whichis old company back in the S and S, and then he was aCEO some small companies that I grew up as. Say I'm those in Pittsburgh, Pennsylvania, and go stealers and my dad went to a little kid,you know, eight years old, and he would tell me, hey,if you ever go into business, make sure you go into sales, becauseonce you get the customer, they're stuck there with you. So it's allabout getting customers right. So I kind of grew up with the same mindsetI think most people on this podcast that we've all kind of lived right.And sales, by the way, super important and so critical and so strategicbut, as I'll talk about, not enough. And I learned that becausein my early career, as do loud to say, I I was atsome on premise software companies, Barret toss and Mantech, where we sold stuffwhere with customers paid a lot of money up front and they installed it andit was really hard to rip out and it was great. But fundamentally,whether they use it or not, whether they got value or not, wegot paid right and it wasn't wasn't bad. And me the job of getting valueis just on the customer. And then I went to run my firstbusiness where the customer basically paid us on a monthly or annual basis. Is. Company live office. I didn't found live office to got hired to runit and I was very excited to be in the cloud. You know thatwith the cloud I was like, Oh, this is awesome, you can scalemore easily. You know it's really the hot part of the market.But I learned the downside, or the challenging part of running a business forcustomers kind of can hold you accountable, which is, at the end ofthe day, you got to work to earn and keep the right to workwith those customers. And so, as the CEO of live office, Icame in thinking I'm going to spend all my time on sales and I endup spending all my time on existing customers and customer success and building some customsystems and track our customers and understand how they're doing and you understand whether they'regoing to renew or not and things like that. And so I we soldthe company to SAMANTEC and I took some time off and I had been feelingthis kind of inch of like wow, I'm surprised that problem wasn't already solved. And you may not know the SAM I didn't come up the idea forgame site. There were two guys Jim Emberlyn and shied their pain in anywho had done another SASS company and they indeffinently come up with this idea.And battery ventures had met them as they were getting it started and I justsold my last company looking for my next thing and kind of got connected toour two founders and I just fell in love with the idea and so Ienjoyed as we were just getting started and and really just saw this problem firsthand. When 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. I did not know that you weren't thesoul individual founder sets in it. That's a great story. I think fiveyears later it has become a thing and I think gamesite has had a lotto do with it becoming a thing. If you're a new you know,if you're a young founder or somebody starting a company or a salesperson thinking abouthow to put customer success in operationalize it in a company, what are someof the key tenants in your opinion that help create the perfect or an improvecustomer success experience? Yeah, it's great. Well, one of the things I'llsay up front. I think customer success is a lot like sales anda lot like tract development in that you're always going to be working at itand there's never a point we're going to feel like you're done right. Soin the simple analogy would be what are the tenants to being great a salesright? And so obviously, as you...

...know very well say better than Ido, that answer changes from when you're a start up to bigger company.Changes based on where they sell a high touch solution or something that can bebought over the web. The same is to with customer success. So onetenant is that you really have to understand your situation and figure out which adviceapplies to you. And that the dimensions I think about or where are youin the stage of the evolution of your company, and I'll give some examplesthere. And then the second big dimension is what type of product are youselling and how high touches it? A simple way to think about that iswhat's your average selling price annual contract value? So let's go through those two dimensions. So if you're an early stage startup, customer success is mainly aboutlearning and getting input to help build a better product. It's basically about reallyunderstanding that customer and what they're doing and what value they're getting so that youcan build a product. It's really part of finding product market fit. Iknow a lot of friends who have startups that are very early, where thefirst person starting the company might be an engineer and the second hires a customersuccess pors, and it's not about renewals or retention or adoption. It's aboutlearning. That's like, you know, one phase right. The next phaseyou can think about is, okay, now I've got something and I kindof have some repeatability. How do I get people to really adopt it?Right? And then you start getting people up to kind of contracts and thedollars add up and then it starts the game about how do I actually retainthese customers even as their adopting? How do you make sure they stay withrenewals, retention, things like that, and then then eventually it can becomeabout expansion. You know, how do I help my customers expand? Right? So one dimension is think about where you are on that spectrum and whereyou're really prioritizing. The second dimension is how high touch is your business.So if you're selling million dollar year contracts, customer success is very customer specific,understanding their objectives, managing kind of their deployment right if you're selling ahundred dollar year contracts, it's got to be totally automated, what we calltech touch, to using technology to provide a high touch experience. So thinkabout those two dimensions of where you're on the spectrum and what size kind ofdeal you have, and that'll help you figure out the types of play booksthey're going to be relevant for you. We can share some more, butthat's the starting point. Yeah, no, it's very useful. So are therekey motions or activities that sort of define, in your opinion, evenat an early stage, customer success? I've sort of two questions. That'sone question. You know, is it just sort of reaching out to thecustomer on an ongoing basis or they are different phases and segments across the customerjourney me? And then the second question I have, which is sort ofrelated, but maybe two tangential to fuck get into. One. Is Ouraccount management and customer success the same thing, in your opinion, and and towhat extent do you always mandate or have a belief about revenue being includedin sort of one of the Kepis that customer success is measured against great awesomewell, you just ask like all the questions. I love it. Theseare the big questions, these like you know, you can imagine. Iget ask these kinds of questions that kind of every day and there really isa set of ones that people ask a lot. So number one, buttalk about process. So customers success as a process shows up in different formsbased on where you are in your maturity curve, like I talked about it, what side of company you're selling to, and you can bucket it into whatI would call inside out processes and outside in processes. So, verysimplistically, the inside out processes are about what are your goals as a companyand how is customers success helping to drive to those goals? Simple things likewho's not adopting the product, how do I get them to adopted? Whohasn't used the new feature? How do I get them to use it?WHO's at risk of not renewing? How do I get them to, youknow, have a higher chance of we're doing that type of thing right,and so that's kind of what I would call the inside out journey. It'snot the customers journey, but your journey right now. That's important, butwhat's really powerful as you mature is the outside in journey. That's a whatis a customer trying to accomplish right? What are their goals? Where arethey that? You know? I don't think there's ever been a customer that'sthinking about the relationship with the vendor and saying I'm in the renewal phase ofmy relationship when in the adoption phase right,...

...they're not. They're just trying tobring they're trying to get some value, they're trying to drive revenue or maketheir customers happy, and so I think customer success at a process levelis about blending inside out, you know what you're trying to accomplish, anoutside in and thinking about the things you're doing in both dimensions. So,as an example, inside out might be looking for everyone that is declining inusage of your product. That's a very simple thing. You can do thatright and it's important. And outside in is capturing the clients goals up fromwhat they bought and then tracking whether you're achieving those are not. Does that'ssort of the way they think about that. We can come back to that.You go to your second question, because it's a great one. IsAccount Management the same as customer success? How do you tie those together?This is probably the most common question. I get it. Maybe a differentway to state it is who owns revenue and renewals and these recurring revenue businesses? So let me start with a premise that we talked about a game site, which is customer success is more than customer success and management. And thecontext there is there may be a job called Customer Success Manager in Your Company, CSM, and it's a great job and important, but customer success isabout the entire customer experience, bringing everyone together to drive towards this positive outcomefor the customer and renewing expansion for Your Business. Right. And in somecompanies they're going to segment the roles and they're going to say, okay,to achieve customer success we're going to have a CSM that's all about value andadoption but doesn't have a quota. Right, they're just about driving value adoption.We're can have an account manager that drives renewal and expansion, the actualcommercial side of it, right. So that's kind of a segmented role.So maybe a hunting rep closes a deal and then these two people work togetherat CSM for adoption, value and account manager for a non expansion. Thatthat's very common, especially in businesses where there's a lot of commercial complexity afterthe sale and you don't want the CSND A to deal with the renewal.In other companies you go from a model where the sales rep closes the dealand the CSM manages both the the value and adoption and the commercial aspects ofthe relationship. Right. So that model, the CSM is a person after thesale doing everything. To go to your question, is that CSM justan account manager? No, absolutely not, because the traditional account management job waspurely about the commercial right, it was about making sure the renewal comesin. I was joked that the account manager always seems to magically reach outninety days before the renewal saying how they've been thinking about you for a longtime. Right, I've been thinking about Your Business and you bought right.But the reality is is like, Oh wow, it convenient that it's ninetydays to renewal. So the CSN model is much more an evergreen model.You're working at that customers throughout the lifecycle. So CSM's not the same thing asaccount manager, but customer success can certainly include account managers in as partof a larger strategy. Do you have a preference on which model you like? Do you prefer having the customer success team not have a revenant orientation orquota, or do you like tying things ultimately? Maybe it's just one ofthe KPIS, but ultimately tying a customer success team to some kind of retentiongoal? Great Question. So you know, I'm actually writing a block posts ofthis as we speak. So we think over time. There's a questionof what the customer success team owns and meaning like let's say there's a chiefcustomer after or a head of customer success, and then what an individual CSM owns. And let me break down the different models, right. So onemodel is your classic traditional model, which is I've got a chief of anyofficer. They own all revenue. The sales reps own everything from new businessto renewal. You know, there's no hunter farmer. And then CSM's justabout adoption of values. I think that works in very high touch businesses wherethat you let's say a workday right where you got huge contracts, lots ofup cell, lots of renewal, complex renewals, sticky product, and sothat's the traditional model. Sales. Keep doing exactly what you've been doing.No hunter farm or anything else. CSM just about adoption by that. Let'scall that model one. Model to is, okay, I've got a hunter REPand I've gotten account manager up. The hunter does the new business,account manager does renown expansion. They both...

...report into the CRO and I've gota CSM or go over here, responsible production value, and then that's youknow, that's pretty common. I think that's actually probably one of the morecommon models and sets, and some of you in the phone down that podcastmight be in that model. Model three is you say, look, Iwant that sales leader to actually be really focused on new business, so I'mactually going to move the count managers under the CS leader. And I'm seeingthat more and more. If you want to get have your sales lead toreally focused on you, and, by the way, like the CS leaders, the one think about the customers every day. So it sometimes it's morenaturally, you might flip big expansions back to the sales team in that model, but small expansion than renewals would be done by an account manager sitting inthe CS or. And then model four is, Hey, I'm going toactually have the sales to business and maybe big expansion and I'm actually going tohave the the CSM do the renewal and the ad option in value and that'sgoing to sit in the CS or. Right. So you can see thisas some kind of an evolution. What I'm seeing it, what I'm recommendingis, in general, the CS or needs to be able to point tosome part of revenue and say I drove that right, whether they have theaccount managers reporting into them, whether the comeagers report in the sales but theyhave a really tight relationship, or whether the CSN themselves do the revenue.You know that they're different models, but the number one recommendations the CS leaderneeds to be really well tied to revenue. The second thing is I think asyou get bigger and you get more efficient, there is a goal tomove more revenue in the CSM. It doesn't happen overnight and I think we'llstart ups. Probably wouldn't want to do it, but I think get biggerthere's an efficiency to it. So I talked a lot of at scale companiesand they're trying to move more of the revenue into CSM because, frankly,the cross structures lower and it lets sales really focus. So those two trends. Give the CS leader revenue responsibility for existing customers and then eventually consider givingthe CSM, but maybe do that later in the process. And is ita hundred percent of the time that, and your opinion, in the CSfunction is always separate from kind of like then the acquisition sales function and thatCS function is reporting directly to the CEO. Great Question. So there's definitely amix. You know, we see CS leaders reporting into achieve for Avenueofficer, especially if it's a very senior person. You know, that canwork really well. I think that if that happens, that she having alserreally needs to be more like a president. They need to be able to lookat the whole life cycle and not just be the sales leader who happensto also and CEUS. Right. You probably, if you're on this listeningto this, and you've probably in a situation before where you're either the personrunning in an order or you've inherited something that you're not really passionate about,or you the person working for somebody where your that like second party they're notreally passionate about. That's a terrible situation. So if the CS teams can reportto a crow or president, they better be just as passion about existingcustomers as they are about new sales, and I think that model can thenwork. I've seen companies do that well in a model where the sales leadersreally focused on sales. There's a benefit of splitting them out. If hesaid what's the mix, I think it's actually reasonably even between those two modelsin companies. You know, I think that there's some cros and presidents thatare really, really strategic and think about the whole life cycle and they canown the whole thing and there's some sales leaders that really want to focus onsales, which is great to write and I say it's probably reasonably split withinSass between those two models. It resonates what you're saying because sometimes, youknow, my title is chief Revenue Officer and I personally oversee, you know, CS and account management, and when I'm in the meetings with our existingcustomers, I really wish I was called chief customer officers sometimes because I don'twant and that the only thing I care about is their money. I reallywant to give them the impression, which is the truth, that I careabout their success. That's a really good points and because I and I've evenseen some sales leaders literally change their title to something like that, like tocustomer as Sir for that reason. So now I will say one of theother comments that is important to think about is there is some benefit to theseparation of responsibilities in a high growth company focus. Obviously, having a saleleader versus the CS leader. There's a...

...focus thing and then I think there'sa healthy dynamic to you know, this is not easy stuff, right,like when you push on the expansion versus driving value, when you do aprice increase. In some companies there's a healthy tension between the sales leader andthe CS leader that can help get to the right decision for their customer andfor the business. Yeah, I mean again, and that's I think partof the CEOS job in the organizational design is to create constructive, aligned tension, as it has to tension. You. You wrote a blog post back inMay about how to manage your customer life cycle from the customers perspective andit was a little bit about what you would sort of touched on briefly,which is this outside in perspective. There's a lot of folks out there thatare starting to think about this concept of the customer journey, this concept ofmoments of truth, which you articulate, walk ups through a little bit ofthat framework. Yeah, absolutely. So you're going back to this idea ofoutside in customer success, right, so really thinking about that customer journey fromtheir advantage point. Again, if your customer journey stages our adoption, expansion, renewal, but's probably not what the customers thinking, right. So thecustomer is, you know, there's a lot of different terminology people use.You know, they're trying to figure out what vendor to work with and decidewhether the right one and start getting value and they expand that value, right. They the terminology they might think about, right. And so what we believeis there's an opportunity to design a customer journey from their advantage point andreally build that as a holistic journey. Let's talk about post sale, justto make it simple, right. So somebody, you know they signed thatdocky sign or echo sign or whatever else he used, and everyone brings thegot on super exciting moment. I was joke that it's much more exciting forthe vendor at that point than the customer. The customers and celebrating. Right,they just agree there's got a lot of money. But now you're inthis world right where they have got expectation. You know, that's actually one ofthe biggest things to think about. Think that these expectations. I meanyou say, I'm you're a great sales person. You probably are awesome andgetting people excited about expectation when by sale people have such a good service inthis role. Okay, now how do I make sure those expectations are continueto their transferred over to the onboarding team or customer success team? There's notthat let down. I think all of us has seem that let down thathappens after the sale. All US, as vendors and customers, has seenit. Right. And then how do you design a journey that does thefollowing things? Number One, looks for the ideal path. Some people callthat the happy path. Right. So one of the things I expect thatcustomer to be doing if they're walking down that good path. They should bedoing these things by ninety days in using the product of this way, youknow, getting this kind of value. They should have met with us todo a QBR and see you've kind of mapped out this happy path and maybeautomated some of it and figured out who does want your build kind of responsibilitychart, etc. And then you've identified when are people taking off ramps forthat journey. They bought and they haven't enabled the licenses, they got aninvite to the training class and they never took here. They deployed, butthen they never tried out the new features. Right, so those are like theoff ramps if it's like a highway. And then how do you think outways to get people back on that highway when they take those off ramps? Right though, that could be through an account manager reaching out, theCSM reaching out and automated email and in that message, how are you gettingthem back onto that path? So designed the journey with the customers kind ofgoals in mind, identify the happy path, measure whether they're on it and then, when they take an offer him, get them back onto that that journey. Yeah, it's and and one of the things that you wrote about, which I think is again it's sort of resonated with me, is thisconcept of moments of truth where sort of like key inflection points along the journey. Totally. Yeah, in kind of customer experience, Lingo, moment oftruth is basically those really critical things that happen, whether it's like the firsttime you use a product or your first kickoff meeting or your first quarterly businessreview, where the person's building an impression of who this vendor is and whatthis experience going to be like. And how do you make sure those momentsare really, really great, like maybe...

...bringing marketing into the brainstorming how tomake the really positive tracking whether they didn't go well. That's why I thinksales, like sales, job doesn't stop, you know. I mean, especiallyif you have an ongoing relationship with customer. How are you coming inin those moments of troops really make them outstanding, make sure the customer doesn'tfeel left behind, you know, things like that. So the other dadsay is they say? Is it just about making customers happy? It's easyto listen to this stuff and sales, which is great. I want tomake our customers happy. That's awesome. This is about accelering new path toexpansion. Fundamentally right. So it's not just about minimizing turn when you thinkabout it, as a salesperson, you work so hard to move fast ongetting a deal right. I'm sure seem you managed many teams that you've beena repp probably in the past. You're just like, how do I dosomething tomorrow instead of next week? How do I get the customer to dothe Demo today? How do I get through that block or tomorrow? Andwhat I'm up happening is after the sale it's like everyone moves into like aslowdown, cruise control, your kind of joy ride, you know, versuslike going full insanity mode, you know, as fast as like that, right. And how do you actually accelerate that post sale journey so that there'sa faster path to expanding, to buying new products, to being an advocate? I really think one of the best ways to grow faster is reduce 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 aboutgrowth. Yeah, that makes a tremendous amount of sentence another blog post andanother topic that I'm sure you're asked about a lot and that I think everycompany thinks through, which is is not just it should revenue be included inthe customers successor account management role, but what are the KPIS? And youknow, for a time and PS was the acronym of the day and everythingthat was about MPs. I think that there's a debate between gross for revenew attention and net revenue retention. Would be interesting first to get a framingfor the possibilities of what all the different KPIS and measurements of the success ofcustomer success could be and then, as always, we would love your opinionon which one you prefer. Totally. So the way I like to thinkabout this that we talked about internally is you have lagging indicators, which arethe end goals but not necessary things that you you change right away, anyof the leading indicators, which kind of show you whether you're in the rightpath. Amount. So in sails, you know, liging indicator might benew bookings, new rr and a leading indicator might be pipeline generation. Right. Everyone listened to this is familiar with that. So in the world ofcustomer success and account management. They're basically are three core lagging indicators. Fundamentally, customer successes about doing three things for the business. You know, improvingretention and renewals, improving expansion and improving new business through better customer advocacy.Those are the three like really big thing you're driving right, and I'm goingto come back to gross versus net because that's obviously a big discussion there.What we find in general is you want to measure your customer success team ona mix of lagging and leading indicators. Let's assume you just measured on laggingright. Let's say, for example, renewals. The problem, fund enoughto you have then is every quarter your incentive is to work on the thingsthat drive this quarters numbers, but you have no incentive to work on thethings that drive, you know, two quarters out. But the reality iscustomers success the biggest lever is being proactive to those customers two or three quartersfrom renewing. So that's why most people in customers success look at a mixof lagging indicators and then leading, and then from a leading perspective, whatyou're looking at is what are those things that directionally tie to retention, expansionand advocacy and, as you said, MPs can be one of those.What we found is it's important to think about customer health holistically and look atlots of different data points. It's very, very weak correlation to look at oneof these data points and think it drives everything. So MPs a goodexample. In the consumer world where MPs was created. You and I,when we buy, shop on Amazon or we buy, you know, sonosmusic system, basically our experience is tied directly to our likely had to buyagain, because we are both the user,...

...the decision maker, the economic buyer, right, like you know. Maybe we're not always economic quired,depend on how your household works, but we're actually we're. It's a simplesales process, right, and so therefore MPs works super well to be Tocbusiness in a bet, be business for, I think a lot of people onthis podcast or responsible for the challenges that you have. Lots of peopleand you might have great promoters give you a great feedback, but maybe they'renot the decision makers are. Maybe they leave during that process and somebody knewcomes in and so many studies have shown and PS is not on its owndirectly correlated to retention or expansion in day to be. We've done those studies. There's as a good study online about this as well, and so becauseof that, what we find is you need to look at a holistic viewwhere you look at each customer and you score them. Mean, you lookat things like adoption, their engagement with you, or they coming to yourmeetings or they come in to your events, their MPs as an indicator their support, and that leading indicators, you know, with a lot of people. Almost most companies now do, because some kind of health score. Right, and you're looking each customer and in that example, if they gave youa really negative feedback on MPs, that probably really is bad for your helpscore right. So people that are detractors are likely to turn the people arethe promoters doesn't mean they're likely to renew. Right. So you're going to lookat a multi factorial view and build a score and then that's what you'reoptimizing. How do I make my customers more healthy? And then that drivesretention, expansion and advocacy. Now let's get back to your other question.Grosser net such a great question. Most people in customer success today focus ongross I believe the trend in the future is more people going to start doingnet not everyone. Now let me describe how I think about this grosser tensionwhich, if you don't know, is all about measuring as a up toa hundred percent, what dollars you retain from your existing customers, but withoutthe getting the benefit of existing customers expanding more so the most you can getis a hundred percent and in gross it really forces you to focus on savingcustomers. Right it's all about minimizing kind of weak edge or last and that'sgreat, I think, in the early days of a company, because manycompanies are under optimized and they have a lot of people that leave that reallyshould be staying. I think for a while focusing on gross is really important, but at some point you get to what I'd call an efficient level ofgross retention. If you're an enterprise business, if you're the S, you're probablyreasonably efficient, and grosser tension if you're in ESSMIB being to business,if you're in the S, you're probably reasonably efficient. You can still moveit a little bit, but at some point you know there might be customersthat you just can't save and there's not much more you can do. Thenyour energy might be better sped taking your good customers and making them great.And that's where net retention comes in, because then you see have an opportunityto make more than a hundred percent by expanding your customers. And if youlook at the publicly traded companies, the best publicly traded companies all have veryhigh net retention. So we believe that in the early days of a CSteam, gross is totally where you should focus, but as you grow andthink about things, net retention is where you'll end up adding more value overtime. I have a very specific tactical question before we move on. Sofirst thank you. That was incredibly helpful. If, when we're thinking about grossfor detention on dollars, if a customer down sizes, if they gofrom fifty seats to forty seats, is that penalized even though the expansion fromfifty to sixty is not credited in the gross calculation, totally grosser attention isis pretty gross. It's pretty tough. You get no benefit from the upsideand you only get the downside. That's why I see if, if youcome from a sales background, like in sales you can lose a deal andyou can make it up by winning another deal right, or maybe the seconddeals and bigger than the first. Customer success is stuff because you never makeit up on a grosser tention basis. In the example you talked about,if somebody goes from fifty to forty and somebody else goes from five thousand tosixty, you get no benefit and the gross calculation from the five to sixtyand you take the penalty in the gross calculation from the fifteen of the forty. So it's a tough bar. Yeah, seems difficult. So all of thishas been incredibly helpful. And then and then there's the other side ofsort of your story, which is, you know, there's a thing thatgain site does, but then there's you...

...as an individual. I think it'salways inspiring to hear to hear the story of a CEO. When you thinkabout the success that you've had, what do you tribute it to? Youknow, do you have sort of lessons or guiding principles that that you sharewith colleagues? Is it the values that are part of gain sight? Likechildlike joy? So how do you think about, you know, your successin your career, and what advice would you give to the folks listening?Yeah, I mean. Well, one thing I would say is we believewe just started started a game site. So I don't think any of usever internally talk about what's the reason for success. And we talked about howwe could be much bigger and have a bigger impact and really achieve our mission. So it's funny how things look on the outside versus the inside. Wewant to do something very substantial, but I think that, you know,what's allowed us to get to where around the lost five years and, moreimportant, I think what's allowed the whole customer success community to get to whereit's at is, I think, a few things like which probably transferable anycompany. Number One, I do think that having a Tailwin in your areaof business is massive. Right. Some companies don't have a tie when theydon't sell into something that's growing or for new but having the fact that youknow more companies are become dead and Shass and therefore they need customer success andthat's clearly been something where the timing couldn't have been better for what we're doingand we're really, really fortunate and Lucky to be in that situation. Butnumber one. Number two, I think that what's kind of unique with gamesite and customer success is it's not only a business trend, it's a newprofession, as we alluded to write, and customer success leaders, customer successmanagers. Almost every day from CEOS and BC's I get questions about can youhelp me find a customer success leader for my company? Can you help mefind a chief customer robster? So it's a growing profession linkedin actually list itas a third most promising job in America in two thousand and eighteen. SoI think the second thing we've been really fortunate about is a this is agrowing profession. And then I think what we did, which one of thesewe did, which I think is really helped, is we focused our companynot just on software, right, we do build software and we think it'sgreat and really odd to value, but our main mission is to enable companiesto make this transition to customer success and make the profession of customer success reallysuccessful. Right. So we run my say successful out by the way,we run this conference on customer success called Pulse is, you know, Sam, and it's not about game site. In the early days we made itabout the industry and we talked about, you know, compensation and customer successand career path thing and making your employees happy and working with sales and allthese different things. So we really needed about the job, not about us, and I think that's something that we just been fortunate to make the rightbet there. We wrote a book on Customer Success. We created an onlineuniversity to teach people customer success. We've taught thousands of people sees. Wewe have a job board tell people find jobs. So the thing I thinkwe did within this opportunity is really focus on the job and the profession,not just the software. And then, finally, as you alluded to,we're very values German company. We talked about our companies values as being whatwe call a human first, as sort of the kind of umbrella over everything, really trying to think about business not just like, if you remember theGod for other 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 think thatthat the mindset that like taking everything is business and not realizing there's human beingsinvolved. I think that's a very reductive mindset and frankly, people spend somuch of their lives at work. I can think of no bigger impact youcan have a CEO then having the people that you work with get meeting outof their jobs. And so we have this concept of human first business andwe apply that both to our employees, right in our teammates and their familiesand the values that we run, but also toward community. We're real bigfans that you need a holistic, integrated view between your company and your customersare your community and we think of having a human first approach to everything.As an example, all of us a gain site spend a ton of timetrying and help people in their careers find jobs, figure out the next step, get mentored, and I spend probably an hour day on that with oneCS leader, one CSM or another,...

...because we do think this is abouthuman beings. It's not just about business. Some of the decisions that you've made, like putting, you know, values and articulating in those values asyou scale. Is that intuition? Is it learned from lessons at live office? Like how did you figure all this out? How to be a CEE? I don't think I figured it out yet. There's so much more.Every time you think you figured it out, like a few years later you realizeyou did didn't have it figured out. I'll say you the two things thatfor the value, specifically that I'm driven it number one. For us, and for me specifically in our fur company, it's actually not the how, it's the why. Basically, at the end of the day, youhave to some reason that you work and do what you're doing. Well,many people listening to this or fortunate and multiple options of what they do,and for us, doing a job without having some sense of meeting and purposejust wouldn't be fulfilling. And since we're not flying rockets onto Mars or likehearing cancer, you know, how do you find purpose in your work andkind of a enterprise software business, and for us it's been the purpose aroundhow you work with people and treat people, and that's like, if we didn'thave that, none of us would really find foot film on our jobs. We just wouldn't do it right. So it's actually for some companies,I think values become like the how or the what, and that's fine.I think for us it's the why which makes it really powerful. Then thesecond thing is, in my first company. I'm all had this feeling like Ineed some greater satisfaction from work beyond just, you know, making moneyand selling stuff and all that. All of those things are great, butI think I wasn't as confident about it. So we had values that live office. I think I'm more confident that you can pick your own path asa CEO. That's like one of the biggest things I've learned. I actuallyreally respect, you know, the CEOS that are a hundred percent about makingmoney. I think that's very authentic. They are who they are right.I feel like as a ceo you can take your path and your approach andfor me, we want to make money, we want to be a successful business, we want to be around a long time, but ore why isour values and our purpose and I think as a CEO you have the rightto choose your why. The why is not handed down from you, fromlike the capitalist Gods. The why could be whatever you want it to be, and we've gotten confident at what our why is. I think that's aspiring. We're coming to the end of our time and I have a few morequestions. One of them, as I alluded to to over email, isnot going to be about customer success or sales at all. But before weget there, is there an ICP for gain spite? You know, you'vegot people listening if they want to become austomers. They're a specific type offirm. You know, when I've talked to you guys in the pass asa potential customer, it seems like it's an enterprise first business. But tellus, you know, if we're out there listening and we want to becomea customer of gain site, who is sort of the perfect fit? Yeah, it's interesting. We started probably more enterprise oriented and got lots of greatcustomers like box and work day and often and many others, lots of likekind of traditional companies like IBM and Cisco and Adobe and but now it's actuallyexpanded a lot. So when we think about it, the first thing iswhat type of business you are on. The second thing is where you arein your maturity curve. So type of business. Now we think of threekinds of businesses that we sell to. Born in the cloud companies. Probablymany people listening the SAFT businesses that started that way reborn in the cloud companies. Right. Those are companies that might to try started with hardware software andmoving to cloud and fast models and then companies going to digital transformation that youknow, for example, Gee's a customer of ours as they've gone through theirdigital transformation. So that's the type of company now the size. In theearly days we were more kind of mid market and enterprise, you know,hundred employees and higher kind of thing, and now we've actually figured out waysto both interms on boarding and kind of the lighter versions of product to beable to serve companies. You know, typically starting about fifty employees and usuallyit's somebody that you had some kind of customers success initiative. Maybe has theinkling of a CSM team and it's trying to figure out how they think aboutscaling that. One of the other things we find is our relationship with clientsis not just about the software. You know, we have a great community. We have lots of tiny startups that come to our events and learn andobviously over time, hopefully some of them will become customers as well. Butyou know, we think anyone in the...

...customer success journey we'd love to engagewith them and typically with our software. You know, kind of fifty andhigher in terms employees. That's fantastic. Two last questions. So, ifwe have a little part of the podcast where we like to pay it forwarda little bit to the point of helping other people and sort of following thebread come trailer, if you're thinking about key influences or key pieces of contentthat you want us to know about, whether it's books you've read that itreally influenced you, or sales leaders or other founders that you really respect forinvestors, what are some ways that we can sort of figure out what madeNick Metta Nick Metta? Yeah, it's interesting. I don't know how you'relike, 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. It's almostlike where do you start? But I'm going to just ull rattle off somejust that have inspired me and you know, I think that this is just apartial list. If if I forgot anyone. So you know one personthat you actually I remembered meeting Aaron Levy, who's the founder and CEO box,when box are just getting started, and his passion to build something that'skind of built to last long term and that like he's going to always beshooting to do something bigger and you can just see how much he believes inthis company. I think that's super inspiring. That was fortunate of to meet TeenZo, who's the CEO Zora and founder Zura, which is obviously veryrelevant to gamesycause they also sell them in the subscription based world and kind ofcoined the term subscription economy. Teen was, I think, employee six at salesforce, so you pick some pretty well, and he sort of beenat the world as Sass from the very beginning and provide a lot of guidanceto me over time, which I really appreciate. Another person, maybe something'smay not know, Jennifer Tahata, who's a CEO of a coming called pageor duty, which is a really cool IIC operation software product. But theway Jennifer runs our company and in particular commitment to diversity and an inclusion andvalues as something that's very, very inspiring to me in terms of just howshe thinks about her business us and how she runs it and things like that. So those are three people that like kind of jump to mind, likeI can probably think of more if you give me more time. Any greatbooks that you think we should read that you know? Yeah, what's youyeah, any so book. So we wrote a book tell Customer Success,which is obviously the best one ever now, but it's a good if you're tryingto fall asleep and night's great plays, but it's actually got it's an interestingit sold fiftyzero copies, which is a lot for business book. Wehad no idea they would take off and it's really become very popularus. Ido think people find a lot of value from reading it. Besides that,you know, I think the first time I read the hard thing about hardthings. By then Horwitz is a famous venture capitalist or Mer CEO. It'sa really, really good book to explain how business isn't all glory and rainbowsand UNICHORDS. It's actually pretty hard and there's some greediness to the stories inthat book that makes that, at least for me, helped helped me getthrough some of the tougher days. So that book is, in particular,and think, really really good. There's a book actually that's probably less wellknown, called non violent communication. It's actually a book that I heard thatsoot in Adella, I've never met talking before, but CEO of Microsoft recommendedto his team and it's about basically how to actually build a team that cancommunicate in ways that are really, really constructive. You know, some peopleknow, Microsoft used to be very confrontational back in the day and I dobelieve that there's an opportune to drive constructive interactions. And then I'll give aplug for one because I am I'm very pre possible the recclusion and Emily ChangeBook Protopia. I think if you work in technology, understanding kind of howwe got to the world we're at and the opportunity to change that. Wewere fortunate that emily come do a talk at game site and she's amazing.She's a reporter of Bloomberg and she wrote this amazing book just talking about howmuch the work we have to do to drive inclusion in technology and I thinkthat's an important book for people to read. That's fantastic. Okay, here weare at the last non work related question. We talked about this overemail. So family paradox. What is your answer? For those not inthe know it, it's the paradox that the drake equation would imply that alienswould have already visited the earth, but...

...they don't seem to have nick.What do you think? Oh my God, this is great. So this isa can we do another hour on this? Six hours on this,but definitely nerdy college say I'm here. I'm definitely into physics and philosophy andthought experiments like this. And you know, basic thing to the context of theuniverse is huge. There's hundreds and hundred of billions of stars and hundredand hundreds of billions of galaxies. So if you do the probability, there'sprobably life somewhere and it probably, you know, has been around for along time. So I'll come. We haven't seen it yet and and Isee it's flight. There's many answers. If you go google the wikipedia articlethis, it's hilarious. There's so many answers to what could why we haven'tmet aliens yet. One of them is actually that they've already been here butwe 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 people couldtravel and learn about the universe and how much broader it is than what weknow experience today and including the theory that from string theory. There's many dimensionsfor the universe. It's possible there's aliens, they're hidden another dimension. So maybeI'll vote on that one with a little I think it Chi's a goodone. I think I like it. My Standard answer is that it's asimulation and when we are living. Yeah, that's a great one to that's that'sthe Elan Elon and you can hang out. That's time and the lastthing I'll say about it. Then we can partways. But first of all, thank you so much for your time today. The last update on theFERMI thing is that there's been some new paper basically says all of the variablesin the drake equation are way overstated and the reason that we haven't been visitedis because it doesn't exist, which is which for me is and is incrediblydepressing. But that's not let's exactly. Thank you so much for for comingon the show. We really really appreciate it and, candidly, we appreciateyour emphasis on customer success. I think the business world appreciates that. Ialso every time asked you a question just now about you individually, that youalways said we and you brought it back to the people that you work withinthe company and that's it makes the value seem incredibly authentic. So thanks forcoming 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'syou know, follow you on twitter, which is perfectly acceptable answer? Ohyeah, there's like a billion to it's certainly twitter like then. I'm actuallyit's easy. I'm just an EMHTA Gamesidecom and you know, just another personjust like you. So always happy to chat with other folks. Wonderful.Well, Nick, thanks so much for coming on the show. We reallyappreciate it. Thanks a lot to have a great day. Hey everybody,this is Sam's corner. We were honored to have nick met on the show. CEO of gain sight. It was a great conversation and you can tellwhen people are really, really effective public speakers because every one of his thoughtswas sort of delivered in paragraph, perfectly articulated, coherent and an insightful acouple things that take away. One of them is a symphasis on gross retensionversus net retention. Gross is essentially all of the dollars that you keep,but not including any of the dollars that you expand and net is including expansiondollars. At the beginning you want to focus on gross, is what Nicksaid, and then as you grow you need to demonstrate net expansion. AndI think we probably all know some of the stats, but we're looking fora hundred and twenty percent, hundred and thirty percent net revenue retention, meaningincluding expansion, for a great a SASS Company, and we're looking at ninetypercent plus for a gross revenue retention, which is not exactly the same thingas a unit renewal rate, but it's pretty close. Nick is also talkingabout having Customer Success Organization report directly to the CEO. Sometimes it includes revenueresponsibility, sometimes it doesn't. But you're looking for the leading indicators and thelagging indicators. So bleating indicators are product adoption, net promoter score, customersatisfaction, understanding the roles of the company that they're filling out those surveys,and then, of course the Lam indicator is money. Money typically happens atthe end of things, not the beginning.

Final thing is just if you heardhim talk, and I mentioned in the interview, the values shine throughand if you're thinking about growing your company. One of the things nick mentioned wasthere's a why, which is, you know, the famous Simon cynic. People don't care what you do they get, they want to know whyyou do it, and so a lot of people say start with why.What is your why? But I think that's really important for companies to figureout why do you exist? And I think is nick also mentioned. It'sokay if the answer is just to make money. Just be true to yourselfwhen you're answering that question. Now to check out the show notes, seeupcoming guests and play more episodes from our incredible line up of sales leaders,visit sales hackercom and head to the PODCAST TAB. You'll find us on itunesor Google play or anywhere that you enjoy podcasts. If you enjoyed this episode, share it with your peers on Linkedin, twitter or elsewhere, and if youwant to get in touch with me, find me on twitter at samf Jacobsor at linkedincom slash slash Sam f Jacobs. Once again, big shoutout to our sponsors for this episode. Air Call, your advanced call centour software complete business phone and contact center, one hundred percent natively integrated into anycrm and outreach, a customer engagement platform that helps efficiently and effectively engageprospects to drive more pipeline and close more deals. I will see you nexttime.

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