Audio & Visual
Episode 30: Customer Success as a Revenue Driver
Nick Mehta, CEO of Gainsight, and West Monroe Senior Partner Dhaval Moogimane
November 21, 2023
Audio & Visual
Nick Mehta, CEO of Gainsight, and West Monroe Senior Partner Dhaval Moogimane
November 21, 2023
Nick: It starts out with a company, and transformation could be moving the business model to a subscription overall, to cloud, private equity acquisition, etc. During these moments, management teams are usually defining priorities, and of those priorities is usually to have a world-class proactive post-sales journey—but the question is how to achieve it? Oftentimes people will come up with the concept of customer success, which further needs a strategic case and a business case. As for the business case, there are two parts to it; I would call them mind and heart.
Either way, companies need to think about themselves as differentiators—and the truth is a lot of it is experience. You have metrics that are financial, and then you have this long-term vision of differentiating through experience, which is where a lot of customer success comes in.
Dhaval: It comes down to a few different important criteria. One criterion is from a metrics perspective: Are you actually delivering the kind of metrics the company needs? Most companies today look at net retention rate as a key financial metric. Another factor is looking at upsell or cross-upsell within the base. Are you now extending the number of users? Are you extending the number of products within that customer base?
However, I’d say financial metrics are a lagging indicator of customer success since these metrics indicate that a problem has already occurred. A better indicator of customer success is taking it down to the operational level which looks at metrics like usage, adoption, sentiment, or engagement of customers—and understanding whether customers are actually using the product and getting value out of it. Are they promoting it? These are the metrics that actually indicate that customers are getting value from an operational standpoint and are more predictive of financial metrics.Another piece is related to the organization itself: How are various teams like sales, service, [and] success aligned to drive net retention growth? How are they aligned to understand how the customers are using the products and their value? The teams need to have a common vision in understanding the functions they have in delivering a good experience to their customers.
Nick: While this role may look a bit different across various industries and verticals, there are three things that in general I can share:
Dhaval: The qualities Nick pointed out are primary. Adding to that, it’s also important for businesses to determine what kind of abilities they want their CSMs to have. We see businesses undergoing changes or taking on new initiatives/partnerships, and it’s important to determine where CSMs can step in and help customers. Should they have technical ability and hands-on ability to work with customers on a deeper level along with knowledge of the product? That’s a factor for businesses to decide based on their models and trajectory.
Nick: A big part of this is how easy it is to build software today. So, when you ask a consumer why they want to buy a product from a certain company, while technology is a part of it, and every now and then something is entirely new and innovative, I’d argue the biggest thing customers look for is value. For a customer, value is the experience they’re getting from the vendor, but it’s also talking to other customers who understand different use cases of the product and can talk about it. Over time, community in the general sense, whether it's events online, becomes a major part of the strategy of customer success and a major part of the value of a vendor.
Dhaval: It’s interesting because I’d argue that it’s almost in reverse with subscriptions models in that these businesses cannot be durable without digital customer success. Companies need to engage with customers at scale from within their product and around it. Digital customer success is imperative. As for durability, it needs to be integrated with the human touch. It’s about how you leverage digital touch across your consumer base. What’s the level of integration you have with human touch as your customer base increases, or even strategically, high spend customers vs. low spend customers? The integration between human and digital touch is critical.
Bottom line, integration is what leads to durability.
Nick: I see three things that businesses do:
Nick: If I had to summarize what we talked about, digital is a way to scale your business and deliver great experiences to your customers.
Dhaval: It's about how do we scale? How do you scale your physical self personally? We're all limited in what we can do in our 24 hours a day, but with the digital capability at our disposal, it magnifies the impact we can have.