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 to the sales hacker podcast. It is your host, Sam Jacobs. We've got a 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 one of the true pioneers when it comes to customer success. So Nick's going to talk to us all about customer success, how to measure it, how to think about it, what phases are important and relevant to your company when you're incorporating customer success. And he's also going to give 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 thank our sponsors. We've got to as usual. The first is air call. It's a phone system designed for the modern sales team. I hope at this point you've taken a look at air call. But it seamlessly integrates into your crm, eliminating data entry for your reps and it gives you greater visibility and to your performance in your team's performance through advanced reporting. When it's time to scale, you can add new lines and minutes, which is we all know is a huge pain in the ass with other services and you can use in call coaching to reduce ramp time for you new Reps. so the website is are called out io forward sales hacker. are called out io forward slash sales hacker. To See why we we're done in Bradstreet, pipe, drive and thousands of others. Trust are call for the most critical sales conversations. Our second sponsor is outreach, that is, outreached, out ioh, the leading sales engagement platform. Outreach triples the productivity of sales teams and empowers them to drive predictable and measureable refinue growth by 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 drives results. Hop over to outreach dot io forward salesacker to see how thousands of customers, including cloud, are, glass door, Pandora and Zello, rely on outreach to deliver higher revenue per sales Rep. Now let's listen to Nick Meta. Thank you. Hi Everybody, it's Sam Jacobs, your friendly neighborhood podcast host. Welcome to another episode of the salesacker podcast. We're incredibly honored today to have, I was just doing some research, the number three CEO and all of Sass, according to a recent study, Nick Meta, the founder and CEO of gain sight, the leading customer success platform and in fact the company and the individual that popularize the entire concept of customer success. Nick is 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 and Semantic Corporation, and I's also a man of many and diverse interests and we're excited to have him on the show. So welcome, Nick Sham. Thank you so much. Really, I don't know where that number three came but I think my mom must have been voting on the website. But inters thousand of 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 view of the customer and I think that's something that we can dive into. So as 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 of the company, why you started the company, and we can go from there. Yeah, totally, so a gain site. We're really passionate about this concept of customer success. Now, just to put in context for the audience here, 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 to really thinking about. Because, you know, we think that in new business models like subscription shafts, cloud etc. Customers have so much power and they can 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 of spending all your energy on customer acquisition and on building a product or service isn'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 is hard, product developments hard. But if you do all that in your customers aren't getting value, they're not using...

...what they bought, they're not seeing our a lie. They're not going to stay with you. They're not going to grow and you're not going to grow and to customer success is all about this idea that you need to have a proactive process after somebody buys to make sure they are getting value and using what they bought and hopefully that they'll stay with you and spend more money over time. And a game site. We're all about 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 part of it is about doing it in a scalable way, and so we build software 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 the speed 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 funny when 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, which is old company back in the S and S, and then he was a CEO 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, because once you get the customer, they're stuck there with you. So it's all about getting customers right. So I kind of grew up with the same mindset I 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 strategic but, as I'll talk about, not enough. And I learned that because in my early career, as do loud to say, I I was at some on premise software companies, Barret toss and Mantech, where we sold stuff where with customers paid a lot of money up front and they installed it and it was really hard to rip out and it was great. But fundamentally, whether they use it or not, whether they got value or not, we got paid right and it wasn't wasn't bad. And me the job of getting value is just on the customer. And then I went to run my first business 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 run it and I was very excited to be in the cloud. You know that with the cloud I was like, Oh, this is awesome, you can scale more 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 for customers kind of can hold you accountable, which is, at the end of the day, you got to work to earn and keep the right to work with those customers. And so, as the CEO of live office, I came in thinking I'm going to spend all my time on sales and I end up spending all my time on existing customers and customer success and building some custom systems and track our customers and understand how they're doing and you understand whether they're going to renew or not and things like that. And so I we sold the company to SAMANTEC and I took some time off and I had been feeling this 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 for game site. There were two guys Jim Emberlyn and shied their pain in any who 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 just sold my last company looking for my next thing and kind of got connected to our two founders and I just fell in love with the idea and so I enjoyed 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 about customer success, but here we are five years later and it's become a bigger thing. Thank you for that. I did not know that you weren't the soul individual founder sets in it. That's a great story. I think five years later it has become a thing and I think gamesite has had a lot to 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 about how to put customer success in operationalize it in a company, what are some of the key tenants in your opinion that help create the perfect or an improve customer success experience? Yeah, it's great. Well, one of the things I'll say up front. I think customer success is a lot like sales and a lot like tract development in that you're always going to be working at it and there's never a point we're going to feel like you're done right. So in the simple analogy would be what are the tenants to being great a sales right? And so obviously, as you...

...know very well say better than I do, 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 be bought over the web. The same is to with customer success. So one tenant is that you really have to understand your situation and figure out which advice applies to you. And that the dimensions I think about or where are you in the stage of the evolution of your company, and I'll give some examples there. And then the second big dimension is what type of product are you selling and how high touches it? A simple way to think about that is what'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 about learning and getting input to help build a better product. It's basically about really understanding that customer and what they're doing and what value they're getting so that you can build a product. It's really part of finding product market fit. I know a lot of friends who have startups that are very early, where the first person starting the company might be an engineer and the second hires a customer success pors, and it's not about renewals or retention or adoption. It's about learning. That's like, you know, one phase right. The next phase you can think about is, okay, now I've got something and I kind of 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 the dollars add up and then it starts the game about how do I actually retain these customers even as their adopting? How do you make sure they stay with renewals, retention, things like that, and then then eventually it can become about expansion. You know, how do I help my customers expand? Right? So one dimension is think about where you are on that spectrum and where you'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 a hundred dollar year contracts, it's got to be totally automated, what we call tech touch, to using technology to provide a high touch experience. So think about those two dimensions of where you're on the spectrum and what size kind of deal you have, and that'll help you figure out the types of play books they're going to be relevant for you. We can share some more, but that's the starting point. Yeah, no, it's very useful. So are there key motions or activities that sort of define, in your opinion, even at an early stage, customer success? I've sort of two questions. That's one question. You know, is it just sort of reaching out to the customer on an ongoing basis or they are different phases and segments across the customer journey me? And then the second question I have, which is sort of related, but maybe two tangential to fuck get into. One. Is Our account management and customer success the same thing, in your opinion, and and to what extent do you always mandate or have a belief about revenue being included in sort of one of the Kepis that customer success is measured against great awesome well, you just ask like all the questions. I love it. These are the big questions, these like you know, you can imagine. I get ask these kinds of questions that kind of every day and there really is a set of ones that people ask a lot. So number one, but talk about process. So customers success as a process shows up in different forms based 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 what I would call inside out processes and outside in processes. So, very simplistically, the inside out processes are about what are your goals as a company and how is customers success helping to drive to those goals? Simple things like who's not adopting the product, how do I get them to adopted? Who hasn'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, you know, 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's not the customers journey, but your journey right now. That's important, but what's really powerful as you mature is the outside in journey. That's a what is a customer trying to accomplish right? What are their goals? Where are they that? You know? I don't think there's ever been a customer that's thinking about the relationship with the vendor and saying I'm in the renewal phase of my relationship when in the adoption phase right,...

...they're not. They're just trying to bring they're trying to get some value, they're trying to drive revenue or make their customers happy, and so I think customer success at a process level is about blending inside out, you know what you're trying to accomplish, an outside 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 in usage of your product. That's a very simple thing. You can do that right and it's important. And outside in is capturing the clients goals up from what they bought and then tracking whether you're achieving those are not. Does that's sort 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. Is Account Management the same as customer success? How do you tie those together? This is probably the most common question. I get it. Maybe a different way 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 the context 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 is about the entire customer experience, bringing everyone together to drive towards this positive outcome for the customer and renewing expansion for Your Business. Right. And in some companies 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 and adoption 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 actual commercial 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 together at CSM for adoption, value and account manager for a non expansion. That that's very common, especially in businesses where there's a lot of commercial complexity after the 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 deal and the CSM manages both the the value and adoption and the commercial aspects of the relationship. Right. So that model, the CSM is a person after the sale doing everything. To go to your question, is that CSM just an account manager? No, absolutely not, because the traditional account management job was purely about the commercial right, it was about making sure the renewal comes in. I was joked that the account manager always seems to magically reach out ninety days before the renewal saying how they've been thinking about you for a long time. 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 ninety days 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 as account manager, but customer success can certainly include account managers in as part of 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 or quota, or do you like tying things ultimately? Maybe it's just one of the KPIS, but ultimately tying a customer success team to some kind of retention goal? Great Question. So you know, I'm actually writing a block posts of this as we speak. So we think over time. There's a question of what the customer success team owns and meaning like let's say there's a chief customer after or a head of customer success, and then what an individual CSM owns. And let me break down the different models, right. So one model is your classic traditional model, which is I've got a chief of any officer. They own all revenue. The sales reps own everything from new business to renewal. You know, there's no hunter farmer. And then CSM's just about adoption of values. I think that works in very high touch businesses where that you let's say a workday right where you got huge contracts, lots of up cell, lots of renewal, complex renewals, sticky product, and so that'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's call that model one. Model to is, okay, I've got a hunter REP and 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 got a CSM or go over here, responsible production value, and then that's you know, that's pretty common. I think that's actually probably one of the more common models and sets, and some of you in the phone down that podcast might be in that model. Model three is you say, look, I want that sales leader to actually be really focused on new business, so I'm actually going to move the count managers under the CS leader. And I'm seeing that more and more. If you want to get have your sales lead to really focused on you, and, by the way, like the CS leaders, the one think about the customers every day. So it sometimes it's more naturally, 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 in the CS or. And then model four is, Hey, I'm going to actually have the sales to business and maybe big expansion and I'm actually going to have the the CSM do the renewal and the ad option in value and that's going to sit in the CS or. Right. So you can see this as some kind of an evolution. What I'm seeing it, what I'm recommending is, in general, the CS or needs to be able to point to some part of revenue and say I drove that right, whether they have the account managers reporting into them, whether the comeagers report in the sales but they have 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 leader needs to be really well tied to revenue. The second thing is I think as you get bigger and you get more efficient, there is a goal to move more revenue in the CSM. It doesn't happen overnight and I think we'll start ups. Probably wouldn't want to do it, but I think get bigger there's an efficiency to it. So I talked a lot of at scale companies and 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 giving the CSM, but maybe do that later in the process. And is it a hundred percent of the time that, and your opinion, in the CS function is always separate from kind of like then the acquisition sales function and that CS function is reporting directly to the CEO. Great Question. So there's definitely a mix. You know, we see CS leaders reporting into achieve for Avenue officer, especially if it's a very senior person. You know, that can work really well. I think that if that happens, that she having alser really needs to be more like a president. They need to be able to look at the whole life cycle and not just be the sales leader who happens to also and CEUS. Right. You probably, if you're on this listening to this, and you've probably in a situation before where you're either the person running 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 not really passionate about. That's a terrible situation. So if the CS teams can report to a crow or president, they better be just as passion about existing customers as they are about new sales, and I think that model can then work. I've seen companies do that well in a model where the sales leaders really focused on sales. There's a benefit of splitting them out. If he said what's the mix, I think it's actually reasonably even between those two models in companies. You know, I think that there's some cros and presidents that are really, really strategic and think about the whole life cycle and they can own the whole thing and there's some sales leaders that really want to focus on sales, which is great to write and I say it's probably reasonably split within Sass between those two models. It resonates what you're saying because sometimes, you know, 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 existing customers, I really wish I was called chief customer officers sometimes because I don't want and that the only thing I care about is 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 points and because I and I've even seen some sales leaders literally change their title to something like that, like to customer as Sir for that reason. So now I will say one of the other comments that is important to think about is there is some benefit to the separation of responsibilities in a high growth company focus. Obviously, having a sale leader versus the CS leader. There's a...

...focus thing and then I think there's a healthy dynamic to you know, this is not easy stuff, right, like when you push on the expansion versus driving value, when you do a price increase. In some companies there's a healthy tension between the sales leader and the CS leader that can help get to the right decision for their customer and for the business. Yeah, I mean again, and that's I think part of 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 in May about how to manage your customer life cycle from the customers perspective and it 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 that are starting to think about this concept of the customer journey, this concept of moments of truth, which you articulate, walk ups through a little bit of that framework. Yeah, absolutely. So you're going back to this idea of outside in customer success, right, so really thinking about that customer journey from their advantage point. Again, if your customer journey stages our adoption, expansion, renewal, but's probably not what the customers thinking, right. So the customer 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 decide whether 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 believe is there's an opportunity to design a customer journey from their advantage point and really build that as a holistic journey. Let's talk about post sale, just to make it simple, right. So somebody, you know they signed that docky sign or echo sign or whatever else he used, and everyone brings the got on super exciting moment. I was joke that it's much more exciting for the 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 in this world right where they have got expectation. You know, that's actually one of the biggest things to think about. Think that these expectations. I mean you say, I'm you're a great sales person. You probably are awesome and getting people excited about expectation when by sale people have such a good service in this role. Okay, now how do I make sure those expectations are continue to their transferred over to the onboarding team or customer success team? There's not that let down. I think all of us has seem that let down that happens after the sale. All US, as vendors and customers, has seen it. Right. And then how do you design a journey that does the following things? Number One, looks for the ideal path. Some people call that the happy path. Right. So one of the things I expect that customer to be doing if they're walking down that good path. They should be doing these things by ninety days in using the product of this way, you know, getting this kind of value. They should have met with us to do a QBR and see you've kind of mapped out this happy path and maybe automated some of it and figured out who does want your build kind of responsibility chart, etc. And then you've identified when are people taking off ramps for that journey. They bought and they haven't enabled the licenses, they got an invite to the training class and they never took here. They deployed, but then they never tried out the new features. Right, so those are like the off ramps if it's like a highway. And then how do you think out ways to get people back on that highway when they take those off ramps? Right though, that could be through an account manager reaching out, the CSM reaching out and automated email and in that message, how are you getting them back onto that path? So designed the journey with the customers kind of goals 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 this concept of moments of truth where sort of like key inflection points along the journey. Totally. Yeah, in kind of customer experience, Lingo, moment of truth is basically those really critical things that happen, whether it's like the first time you use a product or your first kickoff meeting or your first quarterly business review, where the person's building an impression of who this vendor is and what this experience going to be like. And how do you make sure those moments are really, really great, like maybe...

...bringing marketing into the brainstorming how to make the really positive tracking whether they didn't go well. That's why I think sales, like sales, job doesn't stop, you know. I mean, especially if you have an ongoing relationship with customer. How are you coming in in those moments of troops really make them outstanding, make sure the customer doesn't feel left behind, you know, things like that. So the other dad say is they say? Is it just about making customers happy? It's easy to listen to this stuff and sales, which is great. I want to make our customers happy. That's awesome. This is about accelering new path to expansion. Fundamentally right. So it's not just about minimizing turn when you think about it, as a salesperson, you work so hard to move fast on getting a deal right. I'm sure seem you managed many teams that you've been a repp probably in the past. You're just like, how do I do something tomorrow instead of next week? How do I get the customer to do the Demo today? How do I get through that block or tomorrow? And what I'm up happening is after the sale it's like everyone moves into like a slowdown, cruise control, your kind of joy ride, you know, versus like 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's a 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 the time for your customers to get to that initial value and to the point where they can expand. So the customer journey isn't just about happiness, it's about growth. Yeah, that makes a tremendous amount of sentence another blog post and another topic that I'm sure you're asked about a lot and that I think every company thinks through, which is is not just it should revenue be included in the customers successor account management role, but what are the KPIS? And you know, for a time and PS was the acronym of the day and everything that was about MPs. I think that there's a debate between gross for reve new attention and net revenue retention. Would be interesting first to get a framing for the possibilities of what all the different KPIS and measurements of the success of customer success could be and then, as always, we would love your opinion on which one you prefer. Totally. So the way I like to think about this that we talked about internally is you have lagging indicators, which are the end goals but not necessary things that you you change right away, any of the leading indicators, which kind of show you whether you're in the right path. Amount. So in sails, you know, liging indicator might be new bookings, new rr and a leading indicator might be pipeline generation. Right. Everyone listened to this is familiar with that. So in the world of customer success and account management. They're basically are three core lagging indicators. Fundamentally, customer successes about doing three things for the business. You know, improving retention 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 going to 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 on a mix of lagging and leading indicators. Let's assume you just measured on lagging right. Let's say, for example, renewals. The problem, fund enough to you have then is every quarter your incentive is to work on the things that drive this quarters numbers, but you have no incentive to work on the things that drive, you know, two quarters out. But the reality is customers success the biggest lever is being proactive to those customers two or three quarters from renewing. So that's why most people in customers success look at a mix of lagging indicators and then leading, and then from a leading perspective, what you're looking at is what are those things that directionally tie to retention, expansion and 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 at lots of different data points. It's very, very weak correlation to look at one of these data points and think it drives everything. So MPs a good example. In the consumer world where MPs was created. You and I, when we buy, shop on Amazon or we buy, you know, sonos music system, basically our experience is tied directly to our likely had to buy again, 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 simple sales process, right, and so therefore MPs works super well to be Toc business in a bet, be business for, I think a lot of people on this podcast or responsible for the challenges that you have. Lots of people and you might have great promoters give you a great feedback, but maybe they're not the decision makers are. Maybe they leave during that process and somebody knew comes in and so many studies have shown and PS is not on its own directly 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 because of that, what we find is you need to look at a holistic view where you look at each customer and you score them. Mean, you look at things like adoption, their engagement with you, or they coming to your meetings 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 you a really negative feedback on MPs, that probably really is bad for your help score right. So people that are detractors are likely to turn the people are the promoters doesn't mean they're likely to renew. Right. So you're going to look at a multi factorial 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 advocacy. Now let's get back to your other question. Grosser net such a great question. Most people in customer success today focus on gross I believe the trend in the future is more people going to start doing net not everyone. Now let me describe how I think about this grosser tension which, if you don't know, is all about measuring as a up to a hundred percent, what dollars you retain from your existing customers, but without the getting the benefit of existing customers expanding more so the most you can get is a hundred percent and in gross it really forces you to focus on saving customers. Right it's all about minimizing kind of weak edge or last and that's great, I think, in the early days of a company, because many companies are under optimized and they have a lot of people that leave that really should 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 of gross retention. If you're an enterprise business, if you're the S, you're probably reasonably 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 move it a little bit, but at some point you know there might be customers that you just can't save and there's not much more you can do. Then your 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 opportunity to make more than a hundred percent by expanding your customers. And if you look at the publicly traded companies, the best publicly traded companies all have very high net retention. So we believe that in the early days of a CS team, gross is totally where you should focus, but as you grow and think about things, net retention is where you'll end up adding more value over time. I have a very specific tactical question before we move on. So first thank you. That was incredibly helpful. If, when we're thinking about gross for detention on dollars, if a customer down sizes, if they go from fifty seats to forty seats, is that penalized even though the expansion from fifty to sixty is not credited in the gross calculation, totally grosser attention is is pretty gross. It's pretty tough. You get no benefit from the upside and you only get the downside. That's why I see if, if you come from a sales background, like in sales you can lose a deal and you can make it up by winning another deal right, or maybe the second deals and bigger than the first. Customer success is stuff because you never make it 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 to sixty, you get no benefit and the gross calculation from the five to sixty and 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 this has been incredibly helpful. And then and then there's the other side of sort of your story, which is, you know, there's a thing that gain site does, but then there's you...

...as an individual. I think it's always inspiring to hear to hear the story of a CEO. When you think about the success that you've had, what do you tribute it to? You know, do you have sort of lessons or guiding principles that that you share with colleagues? Is it the values that are part of gain sight? Like childlike joy? So how do you think about, you know, your success in your career, and what advice would you give to the folks listening? Yeah, I mean. Well, one thing I would say is we believe we just started started a game site. So I don't think any of us ever internally talk about what's the reason for success. And we talked about how we 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. We want 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, more important, I think what's allowed the whole customer success community to get to where it's at is, I think, a few things like which probably transferable any company. Number One, I do think that having a Tailwin in your area of business is massive. Right. Some companies don't have a tie when they don't sell into something that's growing or for new but having the fact that you know more companies are become dead and Shass and therefore they need customer success and that's clearly been something where the timing couldn't have been better for what we're doing and we're really, really fortunate and Lucky to be in that situation. But number one. Number two, I think that what's kind of unique with game site and customer success is it's not only a business trend, it's a new profession, as we alluded to write, and customer success leaders, customer success managers. Almost every day from CEOS and BC's I get questions about can you help me find a customer success leader for my company? Can you help me find a chief customer robster? So it's a growing profession linkedin actually list it 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 a growing 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 on software, right, we do build software and we think it's great and really odd to value, but our main mission is to enable companies to make this transition to customer success and make the profession of customer success really successful. 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 it about the industry and we talked about, you know, compensation and customer success and career path thing and making your employees happy and working with sales and all these 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 right bet there. We wrote a book on Customer Success. We created an online university to teach people customer success. We've taught thousands of people sees. We we have a job board tell people find jobs. So the thing I think we 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 what we 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 the God 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 that that the mindset that like taking everything is business and not realizing there's human beings involved. I think that's a very reductive mindset and frankly, people spend so much of their lives at work. I can think of no bigger impact you can have a CEO then having the people that you work with get meeting out of their jobs. And so we have this concept of human first business and we apply that both to our employees, right in our teammates and their families and the values that we run, but also toward community. We're real big fans that you need a holistic, integrated view between your company and your customers are 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 time trying 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 one CS leader, one CSM or another,...

...because we do think this is about human 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 as you 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 realize you did didn't have it figured out. I'll say you the two things that for 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, you have 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 purpose just wouldn't be fulfilling. And since we're not flying rockets onto Mars or like hearing cancer, you know, how do you find purpose in your work and kind of a enterprise software business, and for us it's been the purpose around how you work with people and treat people, and that's like, if we didn't have 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 the second thing is, in my first company. I'm all had this feeling like I need some greater satisfaction from work beyond just, you know, making money and selling stuff and all that. All of those things are great, but I 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 as a CEO. That's like one of the biggest things I've learned. I actually really respect, you know, the CEOS that are a hundred percent about making money. 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 and for me, we want to make money, we want to be a successful business, we want to be around a long time, but ore why is our values and our purpose and I think as a CEO you have the right to choose your why. The why is not handed down from you, from like 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 more questions. One of them, as I alluded to to over email, is not going to be about customer success or sales at all. But before we get there, is there an ICP for gain spite? You know, you've got people listening if they want to become austomers. They're a specific type of firm. You know, when I've talked to you guys in the pass as a potential customer, it seems like it's an enterprise first business. But tell us, you know, if we're out there listening and we want to become a 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 great customers like box and work day and often and many others, lots of like kind of traditional companies like IBM and Cisco and Adobe and but now it's actually expanded a lot. So when we think about it, the first thing is what type of business you are on. The second thing is where you are in your maturity curve. So type of business. Now we think of three kinds of businesses that we sell to. Born in the cloud companies. Probably many 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 and moving to cloud and fast models and then companies going to digital transformation that you know, for example, Gee's a customer of ours as they've gone through their digital transformation. So that's the type of company now the size. In the early 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 ways to both interms on boarding and kind of the lighter versions of product to be able to serve companies. You know, typically starting about fifty employees and usually it's somebody that you had some kind of customers success initiative. Maybe has the inkling of a CSM team and it's trying to figure out how they think about scaling that. One of the other things we find is our relationship with clients is 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 and obviously over time, hopefully some of them will become customers as well. But you know, we think anyone in the...

...customer success journey we'd love to engage with them and typically with our software. You know, kind of fifty and higher in terms employees. That's fantastic. Two last questions. So, if we have a little part of the podcast where we like to pay it forward a little bit to the point of helping other people and sort of following the bread come trailer, if you're thinking about key influences or key pieces of content that you want us to know about, whether it's books you've read that it really influenced you, or sales leaders or other founders that you really respect for investors, what are some ways that we can sort of figure out what made Nick Metta Nick Metta? Yeah, it's interesting. I don't know how you're like, but I kind of feel like feel so lucky that there's so many amazing people that work in business and technology that I learned from. It's almost like where do you start? But I'm going to just ull rattle off some just that have inspired me and you know, I think that this is just a partial list. If if I forgot anyone. So you know one person that 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's kind of built to last long term and that like he's going to always be shooting to do something bigger and you can just see how much he believes in this company. I think that's super inspiring. That was fortunate of to meet Teen Zo, who's the CEO Zora and founder Zura, which is obviously very relevant to gamesycause they also sell them in the subscription based world and kind of coined the term subscription economy. Teen was, I think, employee six at sales force, so you pick some pretty well, and he sort of been at the world as Sass from the very beginning and provide a lot of guidance to me over time, which I really appreciate. Another person, maybe something's may not know, Jennifer Tahata, who's a CEO of a coming called page or duty, which is a really cool IIC operation software product. But the way Jennifer runs our company and in particular commitment to diversity and an inclusion and values as something that's very, very inspiring to me in terms of just how she 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, like I can probably think of more if you give me more time. Any great books that you think we should read that you know? Yeah, what's you yeah, 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 trying to fall asleep and night's great plays, but it's actually got it's an interesting it sold fiftyzero copies, which is a lot for business book. We had no idea they would take off and it's really become very popularus. I do 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 hard things. By then Horwitz is a famous venture capitalist or Mer CEO. It's a really, really good book to explain how business isn't all glory and rainbows and UNICHORDS. It's actually pretty hard and there's some greediness to the stories in that book that makes that, at least for me, helped helped me get through 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 well known, called non violent communication. It's actually a book that I heard that soot in Adella, I've never met talking before, but CEO of Microsoft recommended to his team and it's about basically how to actually build a team that can communicate in ways that are really, really constructive. You know, some people know, Microsoft used to be very confrontational back in the day and I do believe that there's an opportune to drive constructive interactions. And then I'll give a plug for one because I am I'm very pre possible the recclusion and Emily Change Book Protopia. I think if you work in technology, understanding kind of how we got to the world we're at and the opportunity to change that. We were 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 how much the work we have to do to drive inclusion in technology and I think that's an important book for people to read. That's fantastic. Okay, here we are at the last non work related question. We talked about this over email. So family paradox. What is your answer? For those not in the know it, it's the paradox that the drake equation would imply that aliens would 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 is a 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 and thought experiments like this. And you know, basic thing to the context of the universe is huge. There's hundreds and hundred of billions of stars and hundred and hundreds of billions of galaxies. So if you do the probability, there's probably life somewhere and it probably, you know, has been around for a long time. So I'll come. We haven't seen it yet and and I see it's flight. There's many answers. If you go google the wikipedia article this, it's hilarious. There's so many answers to what could why we haven't met aliens yet. One of them is actually that they've already been here but we just can't see them. So I do think that in the future it's pretty mind bogging how much things could change and you know, how people could travel and learn about the universe and how much broader it is than what we know experience today and including the theory that from string theory. There's many dimensions for the universe. It's possible there's aliens, they're hidden another dimension. So maybe I'll vote on that one with a little I think it Chi's a good one. I think I like it. My Standard answer is that it's a simulation and when we are living. Yeah, that's a great one to that's that's the Elan Elon and you can hang out. That's time and the last thing 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 the FERMI thing is that there's been some new paper basically says all of the variables in the drake equation are way overstated and the reason that we haven't been visited is because it doesn't exist, which is which for me is and is incredibly depressing. But that's not let's exactly. Thank you so much for for coming on the show. We really really appreciate it and, candidly, we appreciate your emphasis on customer success. I think the business world appreciates that. I also every time asked you a question just now about you individually, that you always said we and you brought it back to the people that you work within the company and that's it makes the value seem incredibly authentic. So thanks for 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's you know, follow you on twitter, which is perfectly acceptable answer? Oh yeah, there's like a billion to it's certainly twitter like then. I'm actually it's easy. I'm just an EMHTA Gamesidecom and you know, just another person just like you. So always happy to chat with other folks. Wonderful. Well, Nick, thanks so much for coming on the show. We really appreciate 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 tell when people are really, really effective public speakers because every one of his thoughts was sort of delivered in paragraph, perfectly articulated, coherent and an insightful a couple things that take away. One of them is a symphasis on gross retension versus 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 expansion dollars. At the beginning you want to focus on gross, is what Nick said, and then as you grow you need to demonstrate net expansion. And I think we probably all know some of the stats, but we're looking for a hundred and twenty percent, hundred and thirty percent net revenue retention, meaning including expansion, for a great a SASS Company, and we're looking at ninety percent plus for a gross revenue retention, which is not exactly the same thing as a unit renewal rate, but it's pretty close. Nick is also talking about having Customer Success Organization report directly to the CEO. Sometimes it includes revenue responsibility, sometimes it doesn't. But you're looking for the leading indicators and the lagging indicators. So bleating indicators are product adoption, net promoter score, customer satisfaction, 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 at the end of things, not the beginning.

Final thing is just if you heard him talk, and I mentioned in the interview, the values shine through and if you're thinking about growing your company. One of the things nick mentioned was there's a why, which is, you know, the famous Simon cynic. People don't care what you do they get, they want to know why you 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 figure out why do you exist? And I think is nick also mentioned. It's okay if the answer is just to make money. Just be true to yourself when you're answering that question. Now to check out the show notes, see upcoming 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 itunes or 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 you want to get in touch with me, find me on twitter at samf Jacobs or at linkedincom slash slash Sam f Jacobs. Once again, big shout out to our sponsors for this episode. Air Call, your advanced call cent our software complete business phone and contact center, one hundred percent natively integrated into any crm and outreach, a customer engagement platform that helps efficiently and effectively engage prospects to drive more pipeline and close more deals. I will see you next time.

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