A Guide to SaaS Customer Success: Reduce Churn & Grow Revenue
Nick Mehta is the CEO of Gainsight, a customer success technology that helps businesses retain customers and drive growth.
Nick joined Gainsight in 2013 and has led the company through multiple funding rounds, raising a total of $156 million. And he's grown the company from a handful of employees to over 700 people around the world.
He's also the co-author of Customer Success: How Innovative Companies Are Reducing Churn and Growing Recurring Revenue'.
In this episode, we talk about the challenges of marketing a new product category where people don't fully understand your product well enough to make an informed buying decision.
This is exactly the challenge Nick faced when he joined Gainsight and he not only talks about his experience but also shares a simple framework to help other companies in that situation.
We also do a customer success 101′ session where we talk about how to implement a customer success strategy when you're an early-stage SaaS company and how to scale your customer success as your company grows.
And Nick shares the common mistakes that SaaS companies make when they start to implement customer success and how you can avoid them.
I hope you enjoy it.
TranscriptClick to view transcript
Omer: [00:00:00] Welcome to another episode of The SaaS Podcast. I'm your host Omer Khan and this is the show where I interview proven founders and industry experts who share their stories, strategies, and insights to help you build, launch and grow your SaaS business. In this episode, I talk to Nick Mehta the CEO of Gainsight, a customer success technology that helps businesses retain customers and drive growth.[00:00:37] Nick joined Gainsight in 2013 and has led the company through multiple funding rounds, raising a total of $156 million. And he's grown the company from a handful of employees to over 700 people around the world. He's also the co-author of Customer Success: How innovative companies are reducing churn and growing recurring revenue. [00:01:02] In this episode, we talk about the challenges of marketing, a new product category, where people don't fully understand your product well enough to make an informed buying decision. This is exactly the challenge Nick faced when he joined Gainsight and he not only talks about his experience but also shares a simple framework to help other companies in that situation. [00:01:26] We also do a customer success, one Oh one session. Where we talk about how to implement a customer success strategy when you're an early stage SaaS company and how to scale your customer success as your company grows. And Nick shares the common mistakes that SaaS companies make when they start to implement customer success and how you can avoid them. So I hope you enjoy it. Nick, welcome to the show.
Nick: [00:01:50] Thank you so much. It's awesome to be here.
Omer: [00:01:52] Do you have a favorite quote, something that inspires or motivates you or just gets you out of bed every day?
Nick: [00:01:57] Yeah. If you saw me live right now, I'm in a, in one of the ribs at our house, they get a poster of Albert Einstein above me, behind me.[00:02:03] And it's the same poster I grew up with. I, my bedroom when I was a kid. So my parents actually saved it from our first house and I love science and he's just a very motivating person. He has a great quote that says, “Not everything that counts can be counted and not everything that can be counted counts”. And I think that's very important wisdom for us in all aspects of life.
Omer: [00:02:24] Something about Einstein, like this was a man who like chose woods very carefully. And when you sort of hear a lot of his quotes. There's like, it's pretty deep stuff. It sounds, it doesn't sound that complicated, but there's pretty deep stuff there. I love that.[00:02:39] I totally agree. All right. [00:02:41] So for people who aren't familiar, can you just tell us about Gainsight? What does the product do? Who is it for? What's the main problem that you're helping to solve?
Nick: [00:02:51] Yeah. At Gainsight, we work with businesses with recurring revenue, business model, primarily SaaS and cloud businesses.[00:02:57] And those businesses realize that you can't just sell customers and move on to the next one. You've got to make sure those customers have onboarded well or adopting your product or getting value and ideally renew and expand, and our value proposition to help our customers drive higher renewal rates, better expansion and better advocacy by driving more success for their clients. [00:03:15] We do that through a suite of products. One we're most famous for is our, customer success product for helping customer success teams, scale, be more proactive and driving better experience. And then we have a product for product managers to drive better analytics and engagement in the product itself. We have a product for salespeople to drive renewals and expansion, and we have product for executives to understand the overall experience our customers are having.
Omer: [00:03:37] What's the typical customer look like for you in terms of size of company?
Nick: [00:03:42] Because the wide range of companies, typically on the low end, they've got, you know, 50 employees plus or minus in, in kind of a SaaS or subscription model.[00:03:50] And on the high end, you know, big, big, big companies like an Adobe or a VM-ware or a Workday and people like that.
Omer: [00:03:57] Okay. Great. So we're going to talk about the story of, of Gainsight and you know, what you've been doing there for the last seven or eight years with the team. And then I want to spend a little bit of time talking about just customer success and how that can apply both to an early stage startup with maybe, you know, five, 10 people on the team through to, as a company grows, what that looks like and where it might make sense to, to use Gainsight.[00:04:23] So. Why don't we start by, like, just give us kind of a background of what you were doing before you joined Gainsight?
Nick: [00:04:32] Yeah. So I work, I I've been working about 22 years and, the early part of my career, I worked in software. That was kind of what people called on-premise meeting. You're selling software to company.[00:04:43] They buy it, they pay up front for the software, just like you buy a physical product and then they install on their server and then they kind of, you know, they use it or don't use it either way you got paid. And so in that model, you know, which was the prevalent model for people that weren't kind of, you know, working during that time, you know, companies really focused on building products and selling them, right. [00:05:01] That was the two big things that people focused on. I got hired after working in the, on premise software world to run my first SaaS company, first cloud-based company. Its company called Live Office. I didn't find it, but I joined the company and basically ran it and eventually we sold it. And in that process, I learned that when your customers are actually have power to switch, when you're there paying you as they go, and when they have multiple choices, you can't just focus on building and stuff, products, you actually gotta make sure they're successful. [00:05:27] So I, as a CEO of that last company, I spent a lot of time on things like. Are my customers are adopting the product? Are they using it well? Are they happy? Are they going to renew with us? Are they advocates? And I realized, wow, there's so much knowledge about how to sell and market and build products, but there was no knowledge. There was no tools around customer success. And so after selling that company, I spent some time as an entrepreneur and residents at a venture firm. It was basically trying to figure out what I want to do next. And in that process of sort of having a lot of free time on my hands, I ended up meeting a couple of founders that had an idea, the, the idea of basically solving the problem I described. [00:06:02] And it was very early stage, just kind of a beta product and you know, maybe about a hundred thousand dollars of sales. But we all just hit it off. And I kind of joined up as part of that original team as a CEO, we raised a Series A from battery ventures and that was February 2013.
Omer: [00:06:17] How big was the size of the team when you joined?
Nick: [00:06:20] Yeah, we are actually kind of jointly founded in India and the US so we have actually a big team in India. And so in the U S has probably three or four people. I guess probably four people and then the India we had about a dozen people as well.
Omer: [00:06:31] Got it. Okay. So tell me a little bit about the product. What was the state of you, you said you had some early customers, what was going on there? That number one kind of got you interested in, in joining that team. And then two, what were the biggest challenges that you faced like on day one of the job.
Nick: [00:06:52] Yeah. So what made me join, as I mentioned in my last company, I'd seen that problem firsthand of like how important it is to understand your customers in a recurring revenue business model, to make sure they're using your product.[00:07:03] And actually in my last company, the only way we did that was just a bunch of spreadsheets. Right. Which is probably what a lot of people listening to. And so I'd seen the pain firsthand. When I saw the idea, I was like, wow, this is exactly what I want to do. The product was super early. It was really more of a demo customer. [00:07:16] Weren't really using it at that point. And kind of, if you've done a startup before, you know, these early customers are more like. You know, references to try to help you raise money versus actually using it. the product was just very, very basic, but the idea it was sound and, you know, it's the same idea today, right? [00:07:30] We kind of, in the early days, if you saw the demo, it was like measure the health of your customers by looking at all the aspects of how they interact with you, from how they use your product, how they're interacting with your support team, to how your relationship is like that drive the right actions for your time team to kind of get the customers to get more value through what we call playbooks. [00:07:48] And then kind of give visibility to executive teams happening across all your customers. Those three kinds of benefits. Now the functionality was almost next to nothing compared to what we do now, but the concept was the same. Then the other reason I kind of decided to partner up with our two founders is I'm very passionate and we can talk about later about company values and they didn't have the values articulated. [00:08:09] I could tell we were, I lined around them. So I came in and very quickly we articulated yeah. Company values and same values we have today.
Omer: [00:08:16] And in terms of challenges when you started and like, I mean, it sounds like the product kind of had the makings of, of a, you know, potential business or, or bigger opportunity.[00:08:30] It was kind of the space that you wanted to go after anyway, and something that you personally experienced, but. What was the biggest challenge ahead of, for you and for the founders?
Nick: [00:08:40] So the biggest challenge, honestly, it's the same one today, which is, you know, there's, I think there are really two approaches to building a company.[00:08:46] One is you take an existing domain of technology, existing problem with technology, and you say, wow, I have a better product to solve that same problem, right. With the probably ultimate example of recent memory is zoom, right? So there's a lot of video conferencing technologies. There's no doubt about the demand for video conferencing technologies. [00:09:05] Most people weren't super happy with theirs. Eric Yuan builds a great product and replaces all those other products and, you know, and then it goes to market even more cause the pandemic, but the reality is it wasn't a question about market. It was a question about product snowflake, same thing. There's no question about whether you needed a data warehouse. It was just a question of how you did it. Most businesses I would argue are actually reinventing existing categories through better products. Some people refer to that as like a better mousetrap, build a better mousetrap every now and then. There's a new category that's created because of some underlying business trend that just didn't exist before. [00:09:40] Right. That was a concept that didn't really exist before. And so in our case, the category of customer success was one that didn't exist when we launched. Right. We people didn't know they need customer success, software, but even bigger. They didn't know they needed customer success as a concept or as people in the company. [00:09:55] And so our biggest challenge from then to now, is, we don't have to just sell a software. We have to convince people on customer success. Right now what's great is over time in the SaaS world, as an example, most people, you don't have to be convinced on the why of customer success. They have to be explained what the, how is, you know, how do you do it? [00:10:13] They need to, it's be convinced on why they should invest more in it? Why they need technology? Why they need Gainsight? But, you know, we don't have to convince someone why customer success, but as we expand into other industries, we have to keep paving that road, you know, to other industries, to telecommunications, to financial services, to healthcare. Why do you need a customer success approach versus the old model of selling a customer and waiting for them to call you?
Omer: [00:10:34] Yeah. I mean, that's, when you're going into a new product category, that's kind of a pretty tough situation. Number one, as you said, you've got to kind of you're, you're higher up the funnel in terms of explaining to them like awareness of the problem before they even start thinking about your solution.[00:10:52] And secondly, like you're sort of in a place where nobody's going out and searching for a customer success solution or product. So. Tell me a little bit about, like, what did you do to get past that? How did you find customers and how did you get their attention?
Nick: [00:11:10] Yeah, so, you know, it's interesting. We had a sense of like what the overall target market was initially. Cause it was kind of people with SaaS and cloud businesses. So that part was okay. We have some universe, it's not the infinite universe, but we have a place to focus. And what I would give advice to entrepreneurs in general, when you think about those early customers is I actually find that the early customers.[00:11:30] Of many different vendors are actually similar. And it's because companies and actually individuals and companies tend to either be early adopters or late adopters. If you've, if you've never read, Crossing the Chasm by Geoffrey Moore, it's like, it's a great book and talks about this concept that, you know, new markets, there's some people that are just naturally early adopters and those early adopters are motivated, not just because of their business, but because they like being innovators. [00:11:53] They like to speak on stage and things like that. And so what I found and some of this was, I knew in high, in the beginning and some of it's kind of looking at it in hindsight. Is that our early customers were actually the early customers of other technology vendors too, like a Zuora or a Box that I'm saying the customers of Zuora, customers of Box customers of Anaplan, customers of Salesforce, right. [00:12:14] Those companies that were buying those solutions were also buying games. And so what ended up happening is we had some of those early customers as example, one of our first customers of scale was Box, and they basically said, we're going to bet on Gainsight. And you know, it was very early product, but we'll kind of collaborate together and they they're an innovative SaaS company. [00:12:32] And so we found those innovative SaaS companies that fit in our target market, where there are people that are willing to basically co-create with us that wanted to, and one of the ways we did that in which we'll probably talk a little bit about is by having a community. Where we focus, not just on, Hey, we're trying to sell you software, but we actually try to bring people together. [00:12:50] And by nature, the people that show up at your community events tend to be the early adopters. So, that was our, our sort of algorithm for focusing on it with a lot of hindsight, it wasn't as clean when we were doing it.
Omer: [00:13:01] What were some of the main objections you were hearing when you were talking to customers at the time? And I seem some of that was just really around answering the why of customer success. Was that really the main hurdle you needed to overcome?
Nick: [00:13:18] Yeah, so we, we actually, we have a pretty precise way. We talk about this internally, which is, you know, I think I'd argue for a lot of companies, their main focus, if you have an existing market is why you, so like, if I am looking at using a kind of messaging-based collaboration system. Why Slack? Right. Versus let's say, you know, Microsoft Teams or why Zoom versus Webex. That's mostly most of the companies, if it's an existing market, that's like a big part of when you have a new market, there's three additional questions that come up in our case.[00:13:50] Why customer success? Like why should I even care about this area? Not just your, your product. Second question. Why do I need technology? Like, okay, that's great. But can I just do this in Salesforce? Can I just do this in my custom systems? Why do I need it yet? Another tool to work on this? And then obviously why Gainsight, which everyone has to deal with and then why now? [00:14:10] Right. So if it's a new case category, there's not a forcing function. You know, if it's an existing category, the customer probably, yeah. Some software, they've got a renewal, they got to decide if they want to stay with that or go to something else. So those three things of why do anything. Why invest in technology for this area? Why now, in addition to why you, those are the three additional variables of complexity. [00:14:32] Omer: [00:14:32] I really like those and those three probably applied. There's probably a bunch of people listening to this right now who are saying. I have exactly that problem. And when I go out and talk to customers, I'm hearing exactly those things where they don't necessarily understand what we're trying to do here. [00:14:52] Maybe, maybe we need, we know we haven't figured out our messaging clearly enough or our value prop. Or maybe I'm in a, like similar to Gainsight, I'm in a new product category where I have to spend a lot more time educating people. If we take those three questions, just give us your perspective in terms of how you overcame each one of those and what could somebody who's in a similar situation. Take away in terms of strategies or, or ideas, or just some tips that they could maybe think about addressing those three areas.
Nick: [00:15:23] Yeah, absolutely. And one thing I should say upfront is I think there's a kind of a, maybe a starting point of the focus is like literally which companies you're focused on, which personas.[00:15:32] And I think that's where Gainsight had a bit of an advantage, which is. We had a lot of challenges we still do, but we knew that we were selling to people with subscription, SaaS businesses, and we were selling to see it people, CSM teams, right. Largely early on. That was where we focused right? And now it's expanded. [00:15:47] And so I think that's the first thing I would say is I hope that you, got if you're starting and you're selling in some kind of enterprise type a model, not just like a self-service, I hope you've got some sense of what that target market is. I do talk to a lot of entrepreneurs when I asked them, okay, who's your main. you know industry-focused and persona-focused and they're like, well, this is kind of for everyone. And I'm like, I, unless it's a totally self-service product where people just discover it, you know, I don't think, I think that's a hard strategy, a hard road to go down. So let's say start with that. Okay. Now let's go to these questions that I talked about. You know, why?
Omer: [00:16:18] Let me ask you one question before we go on. That's a really good point. And I want to just follow up on that and just say, from what you've already said, there were a number of good reasons why SaaS-cloud companies, were a good target market for solving this type of problem, but just to help kind of clearly lay this out.[00:16:40] Can you just explain what the hypothesis was in terms of why, why these customers? Because I think that that thinking on its own might help people to think about how they can apply that to what they're doing.
Nick: [00:16:53] Great question. So there were probably a few different ways that we looked at that from a first principles perspective, we said, okay, well, why do you need to worry about customers after you sell them?[00:17:04] Well, you know, theoretically part of it is because the customer has power to do something different. If the customer is stuck, you don't. I mean, as, as we all know, from our favorite. Telco or cable company that you might be stuck with, you know, they don't have to focus on anything after they get you because you're stuck. [00:17:19] Right. And so, you know, the first thing was, yeah. Okay. Well, if companies in these subscription models, the customers aren't stuck, they're probably gonna have to focus on them more. That was one first principle. The second person was, okay, to be able to do this and understand how customers are doing. You need to be able to have some data about them. [00:17:34] Like, and so in SaaS companies, Cloud-companies, you have all this data about customers. So that was the second principle that we were playing off of is they have, they have not only the, sort of the need to focus on these customers, but they've got the means to the data, right? So you've got these two different things and then we've got the early indicator that they were hiring these CSMs. [00:17:51] So it was kind of showing up and you had this sort of like lighthouse, a fact where the furthest along SaaS companies were investing in customer success, most notably salesforce.com. So those four ingredients people needed to do it. They had the means with the data. They were starting to take the early steps and sort of like the ultimate ultimate company Salesforce was, was sort of pretty far along and everyone is probably going to follow them. [00:18:15] And so there's probably some version of that for your business of like, what are those first principles indeed kind of concepts. What are the early indicators? And maybe what's the lighthouse company in your industry doing that. Everyone's going to go follow up.
Omer: [00:18:25] That's perfect. Great. So thanks for sending, sending the scene on the context in terms of how you define that, that target customer. So let's yeah. Let's continue on, let's talk about those three questions that we're going to.
Nick: [00:18:39] Absolutely. Yeah. So if I was to give somebody advice since, you know, on those three kinds of questions, which again were. Why is there a problem here altogether? Like why is there something you should even talk about?[00:18:49] Why do I need technology to solve that problem? And why do I need to do something now separately from why your, your company specifically? So let's break those three down and, you know, at least how I thought about them. So, on the why is there a problem here at all? This is where positioning and product marketing and messaging comes in so big, right? [00:19:07] Like how do I convince people that there's something that needs to happen? That's different. Why is the world-changing? Right? This is where, when you see pitch stacks, you see usually at the beginning, the world, we're going from this to that, right. Purchasing, draw and demand or whatever. And so how do you convince people that the world is changing? [00:19:25] And this is where one of the lessons we learned a big part of it is understanding the influencers that people listen to, to decide what's changing. Right? So in our case, we're selling largely to. Yeah. We talked about SaaS companies, right? So they're either private owned by venture PE firms are they're publicly traded, right? [00:19:40] That's that's the universe that we're talking about. And so we really focused early on, on, you know, venture capitalists and board members and private equity firms and yo public investors and why those firms are thinking about things like what's your retention rate? What's your churn. And like a lot of content of that very boardroom level stuff. [00:19:59] And then we kind of went in one click down and said, well, let's talk to like the CEOs and management teams. And so we wrote a lot of content about, you know, CEO's guide to customer success and how CEOs should think about organizing for customer success and why it matters, why it matters to your evaluation. [00:20:12] And as you probably know, we've done, we wrote three books on the topic. Most recently, customer success economy. And basically we kind of focused a lot on why there's a problem here at all. And that's the level that we needed, the CEO, it was on the boards to care about. Cause then, then what they do is they say, why that I hire a customer success, executive, you know, and we did a lot of things like, you know, guide to hiring customer success, executive I, one very tactical thing, which is kind of interesting because the CS profession is, it's a kind of a small worlds quote, grow. [00:20:41] Yeah, I've owned. It ended up meeting almost everyone in the profession. And so when a CEO is looking for somebody, they often come to me, they're looking to hire a CS executive, not search for him. We don't make any money off of it, but I've made hundreds and hundreds of connections and probably my guess is at least a hundred that turned into hires. [00:20:58] And so helping these CEOs understand the why, how do I bring somebody that, that answered that first question? Right? So in your own domain, it's, who's influencing that there needs to be something different. By the way, other examples of influencers for us are like working with McKinsey, Bain, BCG, cause they talked to this to the board room levels as well, and helping do kind of thought leadership with them. [00:21:19] You know, working with the analysts in our case, the analysts like Forrester and Gartner, we're late adopters, so they weren't as important. And now they're a little bit more important. That's kind of bucket one. Why do anything.
Omer: [00:21:30] Got it. Okay. Let me just recap that. So make sure I've understood that. So what I heard you say was the why you, you really focused on identifying the problems that existed. If this doesn't get solved, what they could be doing about that. So it wasn't necessarily, Hey, you need to use our product, but if you aren't doing customer success, these are the problems you're having. And this is how you could start to implement something. And then to sort of amplify that.[00:22:02] Rather than trying to get that message out to the entire market, you got more focused and said, let's find the influencers and let's focus on them as a way to get this message out.
Nick: [00:22:13] You got it.
Omer: [00:22:14] Okay. Perfect.
Nick: [00:22:15] The second kind of question was, okay. Why technology? Nick? You've articulated a business problem. Why is there a need for technology? Right? Why isn't this? Just the meetings I have, I hire an executive and they go figure it out. We do it ourselves. And so that's where you have a different set of influencers, right? It typically is, the practitioner. So in our case, the person running customer success, who for us was trying to go fast.[00:22:37] Was trying to not reinvent the wheel. They themselves are learning. They wanted our expertise. And so really marketing to them about, you know, expertise and best practice. And it's built into the product and why reinvent the wheel and stuff like that. Right. That was kind of one bucket. And then you got like, the people in the company who manage the technology in a bigger company, that's an IT department and a smart company that just can be your operations people. [00:22:59] And, you know, talking to them about the cost of doing something yourself versus, you know, using a third party, how this integrates with everything you do already, you know, things like that, those types of thing, messages are really important in our case. You know, Gainsight, Hey, we've got, you know, 300 people in R and D here's how much effort it would be to reproduce it by the way, to integrate super tightly with your CRM, like Salesforce already. [00:23:20] So you're not taking a step back in terms of integration and so on. And so we had to kind of have a message of why technology again, not necessarily why Gainsight it to that point we would even write. And we have today a guide to buying CS technology. You know, you can go to our website and see, what are the steps you should go through and what are the things you should look for? [00:23:39] And admittedly, it's written by us so there's some bias, but actually I think you could use it to do a process with any, any vendor. And so that was kind of that second leg of the stool.
Omer: [00:23:48] I think that's so important because it's so tempting. If you want to answer the why technology to start talking about the benefits of features or benefits or the features of your product.[00:23:59] And I think that that often. Lacks authenticity, because you're not really telling them why technology you're, you're answering, why us, what you just described in terms of, Oh, here's a guide to picking a customer success product. Yeah. It's written by us, but let's just try to be as objective as we can and help you understand and make the right decision. [00:24:22] And if at the end of that, you decide. Yeah, I want to go with, with these guys. That's great. If not, you know, we've, we've still try to do a reasonably objective job in, in educating you and helping you.
Nick: [00:24:33] That's exactly right. You nailed it. And then let's quickly do the third one, which is okay. Why now? And that's such a big thing for entrepreneurs.[00:24:40] Why now? And I would just say it's hard. It never, it never goes away. It gets easier in numbers because you have more deals. So statistically people opt in to why now the two lessons I've learned that I think are actually, you can move it a little bit, not too much, but a little bit. One is quantifying the business value. And actually I'll give you three things, quantify the financial value. So what's the financial ROI. You should have your return on investment model that you build on how this software is helping the company. And, ideally you almost phrase it like every day you delay you're costing yourself X dollars, right? [00:25:13] That's a very powerful argument that you can kind of make to a buyer assuming it's credible. That's one strategy. A second one is really trying to understand what is on that company's priority list already independent of you. Cause you know, honestly, you don't matter, no matter our company doesn't matter in the grand scheme of things to our customers and it's a tool, right? [00:25:31] Like it's just one thing. And so what is on their white board, their list of priorities, their goals for the year. And how do you actually attach this to an existing goal? If you don't know the goals of your customer. If you're a large one, then you're really not deep enough with them. The goal is independent of you, not the goals about your software, the goals that they have. [00:25:48] And I think if you attach to a goal, it just has more momentum. It's easier to say why now? Well, why now? Because we want this goal to be achieved. We all agreed that this is a company goal, and we need the software to help achieve a goal. That's a much more compelling pitch. And then the third thing I would, I would do on the why now is we talk about internally this idea that.
Is there, what we call an IDate, which is like, needs to be implemented by this point for something going on in their company independent of us. So as a simple example is Gainsight is often launched. Not always, but often launched kind of, you know, sales meeting, right? And many companies have like a sales kickoff in the beginning of their year.[00:26:26] A conversation. I might have a client is, Oh, you want to launch with momentum, right. So I'm guessing you want to walk at your sales kickoff cause that's when you have everyone together, your CSMs or salespeople, right? Oh yeah, that sounds great. Okay. So if you want to launch, then your implementation takes, you know, four weeks or six weeks or whatever it is. [00:26:41] So we need to actually like start implementing by this date. Okay. And so you build this kind of plan, these salespeople call it the mutual close plan or a mutual success plan. Working backward from that date that the client needs, not your date, not your close date, but it just so happens that like, hopefully, that day on when you need to sign is aligned to your quarter or whatever. [00:27:01] And so that's a value, very important tactic, a lot of sophisticated sales organizations do.
Omer: [00:27:06] That's great tips. I think it's a great way to think about answering that question about why now the one thing that I wanted to get your view on is when you are starting out, when you're in earlier stage, you're trying to close these type of deals.[00:27:25] Where do you think this thing of potentially discounting the product can come in as a, as a way of driving a sense of urgency or answering that why now question?
Nick: [00:27:37] Yeah. Great question. You know, so at a high level, be very careful about discounting. If you were trying to build a high value product, you know, so there's two kinds of product that they ended, the high value or high volume, right?[00:27:47] So high value products. It's about, you're trying to convince them about business value. And, usually you need to get lots of people bought in and sometimes senior people. And so I believe discounting high value to get products sold it at time is not a good idea. In discounting, if you want to be like, if you're selling at a lower level and the, and the budget's constrained, sometimes it's a good way to get your foot in the door, but it's very dangerous because you can actually commoditize your product. [00:28:14] And if it's a high volume product, and then I wouldn't discount, I'd actually just make the pricing cheap in general. So that it's just cheap, no matter what. So I wouldn't in a high volume world, you want transparent, cheap pricing. That's easy and stuff like that, more Amazon style. Right. But if you're in a high value area, I would be very careful about discounting. [00:28:34] I might do it. But if you have what people would call a disempowered champion that you think is going to be just an amazing champion for you and this one deal they're going to help you get it, get out of these other deals. You know, you can talk yourself into it. But what I found in general is you just throw discount out to get a deal and the deal doesn't happen. [00:28:52] And you're stuck with that discount the next quarter. Like you never can roll it back. You never get to say, Oh, well, you know, I promise you said you'd signed with this discount. They don't, you'll never get it back.
Omer: [00:29:03] So it sounds like you did a lot of content marketing to educate the market, potential customers, answer these questions, take them through that process.[00:29:14] You also mentioned community and events. So can you tell me a little bit about how did you use those as well? A way to attract customers?
Nick: [00:29:25] Yeah. So what the biggest observation I have in business is that there's all these people in different roles that on their own, in their own companies are kind of on their own, but actually collectively they're quite similar across different companies, right?[00:29:38] And customer success and extreme version of that, where you've got this job. That's showing up in lots of companies. And actually when you look at across the companies, the job's quite similar, but in those companies, it's a new job and it's not sales, it's not marketing. And you know, people don't always get what the job is and so on. [00:29:52] And so there is an opportunity and when have kind of an underserved. Buying segments to build a community and to basically get those people together across companies. And actually it's funny, cause we've done thousands of events and you know, virtual in-person, et cetera. We do a big conference every year called Pulse. [00:30:08] The first year we did it, 300 people showed up, you know, last year, 6,000 people in person in San Francisco this year we did virtual 23,000 people showed up. And yeah, and, and in those commands, we've done tons of other events. I just did one last night as a virtual happy hour, small one, you know, 12 people. [00:30:22] And in every event from the beginning to now, Hey ask people, what do they feel? Leaving these events, these community events, it's this feeling of not being alone, that they're not on their own and that you're connecting them together with peers. And what happens is you build this connection. They are more inspired to go do stuff, right? [00:30:40] And hopefully that's helping your own software. They appreciate you for building the community. They trust you. They feel like, okay, this vendor must know a lot about this area. And so it really creates a relationship that's almost irreplaceable
Omer: [00:30:51] Love it,. So let's talk about what is actually involved in implementing customer success? So if I'm I'm listening to this and you know, I'm, I'm probably not big enough, you know, maybe I have five, 10 people on my team, so maybe Gainsight isn't quite there for me yet, or a product like that. And maybe I'm not even doing anything with customer success. Maybe it's something I think about it in the back of my head.[00:31:20] I understand what it is, but you know, I'm not really doing much with it or I don't have anybody dedicated to it. What would be your advice? What are the steps that that person could take to start to implement some type of customer success strategy?
Nick: [00:31:37] I think step one, assuming you haven't, you're not too far along the curve is. Understanding, what's the problem you're trying to solve from a business perspective. And usually, there's some combination of the, one of these three problems or more. Number one is you want to keep your customers longer. That's retention. Number two, who is you want your customers to expand and spend more money that's expansion.[00:31:55] And number three is you got your customers to be bigger fans, so that tell other people, and you know, you get new customers through it. That's advocacy. Those are the three real at the end of the day end goals of, of customer success. Now then let's assume you pick one or more of those. Maybe you want all of them. [00:32:09] Then the question is, okay, what are the leading indicators that you think give you a sense that a customer is on the road to achieving those, right? So it could be, you know, they were onboarded. Well, they adopting the product. They they're happy with us. They have a good experience with our support. We have a good executive relationship and there's a lot of different things you can think about your best clients or your worst ones. [00:32:33] What are those things. Okay, great. Now, so that's what we call leading indicators. So you've got your kind of desired business outcomes. You've got your leading indicators and now you say, okay, well, what are the activities I need to be doing to drive those leading indicators? It could be, you know, in the product of built in wizard to onboard people better, it could be like a high touch onboarding service. [00:32:52] It could be better executive check-ins with customers. And then from that, those activities, then you say, okay, well, let's look at the organization today. Maybe I have some salespeople. I have some engineers. You know, can we do all that with the existing org? Do we need a customer success team? Usually the answer is, yes, I need to need a customer's testing, but not always. [00:33:09] And you know, what's that customer success team's responsibility. What do they need to do? How do we measure them? You know, we've written some books on the topic that can give you kind of a starter on all this stuff. Customer success economy kind of walks through a lot of this. And then from there you start thinking about things like okay, how do I scale this? And how do I get more proactive and how to get more data driven? And, you know, over time, things like Gainsight technology can help. But that's kind of the rough outline of how I'd approach it.
Omer: [00:33:33] Will you think of some of the main mistakes that you see companies making when they're trying to implement something like this?
Nick: [00:33:42] Yeah. So, so number one is just like throwing people at it. So just hiring a bunch of people and kind of saying, Hey, go talk to the customers and let's go figure it out versus approaching it a little more scientifically. It's kind of like when you build your first sales team, and then you're later on, you're like, Oh, we should have been tracking like the stages of the deals and you know, what people are doing and, you know, did the demo convert to a deal.[00:34:03] And so approaching it, not, not scientifically enough, I think you really should approach it a little bit like you might be approaching sales and marketing. That's number one, number two. Is not getting a definition of what the customer, what the C if you build a CS team, what value they're adding for the customer cause for you, you know, maybe you're trying to retain the customers or, you know, expand them or whatever. What value-adding for the customer, you know, am I, is I CSM really technical and helping the customer with the product. Did they come out of the same domain, the customers in, you know, maybe you're selling HR software and your CSMs have been HR professionals, right? [00:34:34] Or the CSMs like great project managers, are they very consultative, really having a profile for what value the CSM is adding to the customer, so you can build like a hiring profile. That's a second mistake people make. And then a third mistake is not figuring out how to scale it so that you build an uneconomical model where everything is very manual. Those are the three most common mistakes.
Omer: [00:34:55] Perfect. Okay. Let's take upper level. And if somebody is sort of beyond that, and they're saying, okay, well, yeah, like I'm ready for something, something like a Gainsight. What are some of the questions that they should be sort of thinking about to help them make the right decision about what type of product they should use?
Nick: [00:35:22] Absolutely. Yeah. There's six business challenges our customers have usually wrestle with, which led them to technology decisions. And by the way, what I'd recommend, if you're thinking about your own businesses, you should be able to articulate. The answer to your question is in a way, like, I'm going to say, because you should get to the point where you can really say, okay, these are the reasons people buy versus a much more generic kind of version of that. Right?[00:35:44] So, so we have these six, we call them the six pains, the six things that people wrestle with. So number one is retention. So, you know, do you feel like you are sometimes surprised that customers are leaving you, you know, given this new world of data and sort of like understanding of customers, you should never be surprised. [00:36:02] It's not like you should never have customers leave you. The question is, are you surprised or not? And that's something that you can totally get ahead of through technology and also process. Number two, do you feel like you're getting your customers to adopt your products? Not just like at an aggregate level, but like actually fully adopt all the functionality, the new releases, things like that. Number three, do you feel like you don't always understand everything happening about your customers? Like different people are talking to them in the company and you don't have a full picture of what's going on. They'll call that visibility. [00:36:28] Number four, you feel like you're having to throw people at the problem. You haven't figure out how you can scale and be more efficient and. Yeah. And kind of like automate and things like that. Number five, do your customers have a great end to end experience with you or they feel like the left hand and right hand are, aren't talking to each other and number six, do you feel like you're under optimizing the ability to expand your customers to sell them more? [00:36:47] And so those six things are kind of the litmus test for when we think you need technology. Obviously, we have a bias that you think you need Gainsight. That's kind of how we would help a customer diagnose where they're at. And just as an example, and you could do this for your business. We built like a maturity assessment. [00:37:02] So you can go online and take a test and say, how mature are you on those eight areas? And whether you work with Gainsight or not, it can be helpful, but for us, it helps us tailor our message to you then.
Omer: [00:37:11] I love how you went through so much complexity and pains in six, relatively simple questions pretty quickly. And I think that that's not only is, is something that is helpful if somebody's thinking about, you know, a customer success solution, but as you said, this is a great lesson here for anybody thinking about how do you go and have that conversation with customers. And what I really liked about here was what you've really done is you've, you've identified like the top six pains.[00:37:46] That your target customers are likely to have, and then sort of the way you've articulated in terms of asking those questions is like, you know, there's going to be a lot of alarm bells going off, like just, Oh my God. Yeah. I kept that. I didn't even, we don't even think about that that much, but yeah, that's been, that's been a major problem for us in the past. [00:38:07] And I think that on its own is a great way to. Help them move to the next stage in terms of the buying process. And in many ways it can also be a good way to sort of qualify or disqualify customers, right. Because if people say no, no, no. Okay. Well, you don't need to waste more time talking to them.
Nick: [00:38:23] That's it you nailed it. Nailed it.
Omer: [00:38:25] Love it. Alright. You know, I feel like we could just like, you've covered so much stuff here and. We could keep talking for for hours and, and, I could just keep making tons of notes. Yeah, well better. We could probably just get your book.[00:38:44] Love that. All right. But we should, we should wrap up. So I'm going to go into the lightning round. Can I ask you seven quick-fire questions? So you ready to go?
Nick: [00:38:53] I'm ready to go. Excited.
Omer: [00:38:55] All right. What's the best piece of business advice you've ever received?
Nick: [00:38:58] My first boss, a guy named Mike Speiser who's actually now the first investor is Snowflake. He's become well known. And I was, I was a product manager at a company and I was kind of very focused on just being inside the company. He said, take a day once a week and go meet somebody outside the company and go get to know the world outside of our business and build your network. And that definitely led to making many connections over time.
Omer: [00:39:19] What book would you recommend to our audience and why?
Nick: [00:39:22] I I'm a big reader. I read a ton. I love books. One I love recently that I think is very powerful is, Shoe Dog. Some of you probably read it. It's about the story of Nike and it's inspirational in terms of what we, we think it was just so easy in hindsight, it was actually so hard. It's very inspirational.
Omer: [00:39:40] What's one attribute or characteristic in your mind of a successful founder?
Nick: [00:39:44] Self-awareness understanding who you are and what type of. Approach works for you, not just one type of approach works for other leaders.
Omer: [00:39:54] What's your favorite personal productivity tool or habit?
Nick: [00:39:57] I have a very strange habit, which is, I really like disconnecting on the weekends and, and not feeling connected to work, but also like feeling really connected to my family and things outside of work.[00:40:08] So I actually go on to my iPhone. I delete all the work apps every Friday night and I go into email and disable it. So I don't even have the temptation to check anything cause it's not possible.
Omer: [00:40:20] Wow.
Nick: [00:40:21] And I reset it up on Sunday. Very inefficient.
Omer: [00:40:26] What's the new, crazy business idea you'd love to pursue if you had the extra time?
Nick: [00:40:30] This is such a challenging time for the world, but it's, the world is being reinvented. I'm in the camp of like, most of these changes are not temporary, they're permanent. And so I think that in this world of like, how do you replicate some of the feeling of the office and serendipity in the office, in a virtual world there's so much to do there. So I think there's opportunities abound.
Omer: [00:40:51] What's an interesting little fun fact about you that most people don't know?
Nick: [00:40:54] I am extremely nerdily obsessed with rewriting songs. Some people know this, but not at all. I have this weird thing where I can take any song and very quickly rewrite it. And I've rewritten dozens and dozens and dozens of songs, including many on YouTube. Now that we've done, like, you know, rewriting Taylor Swift for customer success, make you a rap song about it, things like that. So I have something weird in my brain where I can take legitimately creative work and destroy it by rewriting it into a parody.
Omer: [00:41:22] I love it. And finally, what's one of your most important passions outside of your work?
Nick: [00:41:26] And again, another weird thing I am, you know, going back to Einstein where we started the video, I, I do love Science. I'm kind of obsessed with it. And so at night, I, I read things like, analyses of quantum mechanics, analyses of what consciousness is history of the theory of what infinity is. So the world of Science and Math, I'm just obsessed.
Omer: [00:41:45] I love it. And we didn't even get down to a Hogwarts and all that stuff, but
Nick: [00:41:50] Oh yeah. Next time.
Omer: [00:41:53] Next time. It's not an inside joke. It's just, I, I watched a video of Nick wearing a Hogwarts sweatshirt and, it led to all kinds of conversations. Great. Well, thank you for joining me. It's been absolute pleasure.[00:42:05] I feel like we covered so much in a relatively short space of time. If people want to check out the book. It's the Customer Success Economy: Why every aspect of your business model needs a paradigm shift. That's that's I think your third book?
Nick: [00:42:21] That's our third book. Yeah, exactly. Third book.
Omer: [00:42:23] So you can go and check that out.
If you want to go and check out Gainsight, go to gainsight.com and if folks want to get in touch with you, what's the best way for them to do that?
Nick: [00:42:32] Yeah. I find me on Twitter, @nrmehta or on LinkedIn, Nick Mehta.
Omer: [00:42:37] Awesome. Nick, thank you so much. It's been a pleasure, wish you all the best
Nick: [00:42:42] Same here. Thanks so much.
Omer: [00:42:44] Cheers.
- Shoe Dog: A Memoir by the Creator of Nike by Phil Knight