Customer Success Best Practices for SaaS Retention: Metrics and KSFs for Building a High Performing Customer Success Team
Insight Venture Partners and Gainsight presented a webinar on customer success best practices for SaaS retention, including the crucial metrics and Knowledge and Skills Frameworks (KSFs) for building a high performing Customer Success team.
The most successful Enterprise SaaS companies know that growing revenue only through new customer acquisition is the less efficient way to scale. Rather, they understand that growing revenue within your existing customer base - through up-sells, cross-sells, and expanded use - is the most profitable way to scale.
In fact, Enterprise SaaS companies that grow revenue - and company valuation - by expanding revenue within their existing customer base also know the key to making this work is to focus on - and operationalize - Customer Success.
Customer Success Best Practices for SaaS Retention: Metrics and KSFs for Building a High Performing Customer Success Team
1. Dan Steinman, CCO, Gainsight
Presented to: Insight Venture Partners
April 10, 2015
Best Practices in Building
a Customer Success Team
and In Measuring
Customer Success
2. Housekeeping
• Q&A at the end
• Question or Chat panel on your right
• Recording for colleagues who can’t make it
• All attendees will receive slides
15. Top Questions…
1. How should I structure CSM?
2. What should I look for in a VP?
3. How should I measure Customer Success?
4. What should I talk about with my Board?
5. How should I vary my strategy?
6. How can I drive a culture of Customer Success?
16. The Perfect Org Structure
CEO
CCO
Customer
Marketing
OnBoardingPro SvcsSuccessSupport Training Ops
Sales
21. Business Maturity
ProductComplexity
1. How Should I Structure CSM?
Own renewals/upsell?
Onboarding?
Support?
Professional Services
Training?
# of CSMs Required
1 per $500K
1 per $2M
1 per $8M
Variables
25. 2. What Should I Look for in a VP?
• Responsibilities
• Outcomes
• Customer Lifecycle
• Leadership
• Dirty Hands
• Activities
• Measurement
• Effectiveness and
Efficiency
• Cross-org Success
• Background
• Sales-oriented?
• Support-oriented?
• Relationship-oriented?
• Analytical?
• Technical?
26.
27.
28. 3. How Should I Measure CSM?
• Separating up-sell from churn
• Reporting on both dollars and numbers basis
• Categorizing avoidable versus unavoidable churn
• Analyzing by cohort
• Dividing against renewable dollars, not total
ARR/MRR
29. Lagging Indicators Leading Indicators
Too Late
Churn
Silence
Churn inquiry
Late payments
No product usage
Frustration
Low NPS scores
Long support TTR
Lots of support cases
Disengaged
Not opening emails
Declining adoption
Sponsor leaves
Success
“Sticky” feature usage
Proven ROI
Increasing adoption
3. How Should I Measure CSM?
30. 3. How Should I Measure CSM?
Survey of 60 Customer Success Leaders – Jan, 2015
35. Sales Customer Success
Past Bookings Renewals / Up-Sell
Present Market Share Benchmark
Future Pipeline Health Score
4. What To Say To Board?
36. 1. Batting Average
# Customers
Renewed In Period
÷
# Customers
Renewable In
Period
Are customers
voting with their
signature on the
value of your
product or
service?
Best-in-class:
> 90%
4. What To Say To Board?
37. 2. Headwind
ARR/MRR of churn dollars
including price decreases
and downgrades
÷
Beginning of period
ARR/MRR
How much drag
do you have on
your growth?
Best-in-class:
< 10%
4. What To Say To Board?
38. 3. Tailwind
ARR/MRR of up-sell dollars
including price increases
and upgrades
÷
Beginning of period
ARR/MRR
How much
acceleration do
you have to new
bookings?
Best-in-class:
> 20%
4. What To Say To Board?
39. 4. Net Revenue Retention*
Beginning of period ARR/MRR +
ARR/MRR from tailwind –
ARR/MRR from headwind
÷
Beginning of period ARR/MRR
What’s the net
dollar impact
from Customer
Success?
Best-in-class:
> 120%
4. What To Say To Board?
*Best overall measure of Customer Success
40. 5. Magic Number
ARR/MRR of renewals
in period + ARR/MRR of
up-sells in period
÷
Fully-loaded cost of
Customer Success
team + extended team
What’s the cost-
effectiveness of
Customer
Success?
Best-in-class:
3-5X or higher
4. What To Say To Board?
45. 5. How To Vary Strategy?
45
Revenue
SuccessMaturity
Adoption
Retention
Expansion
Optimization
Transformation
$1 - $5 MM
$5 - $20 MM
$20 - $100 MM
$100 MM - $1 B
$1 B+
46. 5. How To Vary Strategy?
High
Touch
Low Touch
No Touch
• Revenue or potential revenue?
• Including strategic value?
• Aligning to sales structure?
• Optimizing weightings?
• Accommodating effort in weighting?
• Handling conglomerates?
• Dealing with multiple products?
48. 6. How To Create A Culture?
Do…
Meet users
Talk to front lines
Promote transparent
scoreboard
Define success
Make retention as important
as new biz
Don’t…
Make decisions you’d be
embarrassed about
Disempower your team
Ignore systemic issues
Make critical decisions without
them
49.
50.
51. Top Questions…
1. How should I structure CSM?
2. What should I look for in a VP?
3. How should I measure Customer Success?
4. What should I talk about with my Board?
5. How should I vary my strategy?
6. How can I drive a culture of Customer Success?
54. “Gainsight offers a
huge opportunity
for companies
looking for a true
360° view of their
customer.”
Greg Higham
Chief Information Officer
Public SaaS
“We've already
identified about 2,500
Alerts that show upsell
potential or someone
who might advocate
for Adobe EchoSign.”
Amanda Schmidt
VP Client Success
B2B Services
“We save one
customer a year and
the application pays
for itself. After that first
customer, everything
is gravy.”
Kathy Lord
VP Sales & Customer Success
Growth Companies
And heck – our company claimed a 97% retention rate, so I figured it would be smooth sailing.
What I didn’t realize is:
Every company claims a 90-something retention rate
Customer retention doesn’t just take care of itself
Eventually, I learned that sales was only the beginning of the story in SaaS. Managing retention, renewals, references and the rest of what recurring revenue required became a big part of my day, in partnership with our awesome Client Services team.
In SaaS, product and sales aren’t enough.
For once, I learned that my dad’s advice was wrong. Well, that wasn’t the only time.
After a happy ending to the story with the sale of our company to Symantec, I met Gainsight. When I heard about the opportunity to become part of this massive Customer Success movement, it was a no-brainer
And heck – our company claimed a 97% retention rate, so I figured it would be smooth sailing.
What I didn’t realize is:
Every company claims a 90-something retention rate
Customer retention doesn’t just take care of itself
Eventually, I learned that sales was only the beginning of the story in SaaS. Managing retention, renewals, references and the rest of what recurring revenue required became a big part of my day, in partnership with our awesome Client Services team.
In SaaS, product and sales aren’t enough.
For once, I learned that my dad’s advice was wrong. Well, that wasn’t the only time.
After a happy ending to the story with the sale of our company to Symantec, I met Gainsight. When I heard about the opportunity to become part of this massive Customer Success movement, it was a no-brainer
And heck – our company claimed a 97% retention rate, so I figured it would be smooth sailing.
What I didn’t realize is:
Every company claims a 90-something retention rate
Customer retention doesn’t just take care of itself
Eventually, I learned that sales was only the beginning of the story in SaaS. Managing retention, renewals, references and the rest of what recurring revenue required became a big part of my day, in partnership with our awesome Client Services team.
In SaaS, product and sales aren’t enough.
For once, I learned that my dad’s advice was wrong. Well, that wasn’t the only time.
After a happy ending to the story with the sale of our company to Symantec, I met Gainsight. When I heard about the opportunity to become part of this massive Customer Success movement, it was a no-brainer
And heck – our company claimed a 97% retention rate, so I figured it would be smooth sailing.
What I didn’t realize is:
Every company claims a 90-something retention rate
Customer retention doesn’t just take care of itself
Eventually, I learned that sales was only the beginning of the story in SaaS. Managing retention, renewals, references and the rest of what recurring revenue required became a big part of my day, in partnership with our awesome Client Services team.
In SaaS, product and sales aren’t enough.
For once, I learned that my dad’s advice was wrong. Well, that wasn’t the only time.
After a happy ending to the story with the sale of our company to Symantec, I met Gainsight. When I heard about the opportunity to become part of this massive Customer Success movement, it was a no-brainer
Gainsight has three core values and principles which we are beholded to.
Golden Rule – Do onto others
Success for all – including Employees, Customers and Partners
Child Like Joy – we love what we do and strive to have fun in everything we do
This is what sets Gainsight apart from a lot of other tech companies. On a personal note, I recently left the world of strategy & IT consulting to join Gainsight and looked at a lot of great technology companies. What wowed me was Gainsight’s passion and values. We hope to work together and show you firsthand.
Nick: we know they have “Sales Execs” who cover their enterprise accounts, and Account mgrs cover midmarket and SMB
Type of customers are:
Institutional healthcare providers (including hospitals, health systems, integrated delivery networks, clinics and alternate site providers).
Retail national accounts (including national and regional chains, food/drug combinations, mail order pharmacies and mass merchandisers);
Independent retail pharmacies