Customer success: What we learned at Gainsight Pulse 2014 Conference

More and more SaaS companies are implementing customer success strategies and hiring dedicated customer success managers (CSMs). We recently attended Gainsight Pulse, the preeminent gathering for customer success professionals. Here are some of our takeaways from Pulse 2014.

Umberto Milletti, CEO of InsideView

Most important question you need to ask yourself:

• How does the customer define success? What metrics/revenue does the customer consider a "success"?
• The goal is to move all the customers to the top and right in that chart.

InsideView scores customers on a chart:

• X axis: how well are customers adopting the product?
• Y axis: how good is the relationship between us and the customer?

How to quantify customer success?

• Identify measurable customer success metrics, and share them with your customers.
• Example: one customer success metric for Close is how many minutes our customers save each day/week/month because they use our app.

Tien Tsuo, Zuora CEO (Employee #11 at Salesforce)

• The term customer success was coined at Salesforce by Marc Benioff
• Ask yourself: What does a customer need to setup a successful process? What are the typical needs of the customer to become successful in the general area where you are offering your service?
• Zuora has identified 9 keys to customer success
• Customer success at Zuora = helping customers achieve these 9 keys. They track the progress the customer is making towards these nine keys over time. They measure the value they provide based on this progress.

Roger Lee, Battery Ventures

• Focus on reducing revenue churn instead of customer churn.
• Revenue churn is what matters most.
• When doing cohort analysis, look at revenue, not number of customers. What matters is how a given cohort's revenue expands over lifetime. This helps you understand whether you had positive or negative churn within a particular cohort.
• Your goal should be to achieve net-negative revenue churn within each cohort.

Harrison Miller, Summit Partners

• Net revenue churn is the most important metric.
• Investors care about dollar expansion.
• Don't try to close accounts that don’t expand. Sales should be compensated on accounts that have expansion revenue.

Jason Lemkin, Storm Ventures

• You can hire your first CSM as soon as $1 million in ARR (annual recurring revenue).
• You should have one CSM per $2 million in ARR. So if your SaaS is making $10 million in ARR, you want to have five CSMs on your team.
• Customer success is 5x more important than sales.
• 80% of EchoSign customers came from word of mouth. The CSMs are your advocates for creating that word of mouth.
• Visit your customers. Your CEO should visit your biggest customers. When he was CEO at EchoSign, they never lost a customer that Lemkin personally visited.
• Visit 5 customers every month (more than 1 a week).

Mark Organ, Co-founder of Eloqua and Influitive

• Customer success is underfunded.
• Find out what the customers' goals are. Track their progress towards these goals.
• Reward CSMs based on the long-term goals their customers achieve.
• The CSM wins when the customer wins.

Customer success is still in it's early days, but there's a lot of upside potential for SaaS startups. Many operate with a myopic focus on pouring more prospects in the top of the funnel. They fail to notice a giant opportunity for growth in their own backyard: their existing customers.

Systematizing and measuring customer success is hard, but well worth the effort.

If you provide great customer support, your customers will view you as a great vendor. If you help them to succeed, they will view you as a business partner with aligned interests. Which would you rather be?