Welcome to the DNA and experience podcast from cloud app, where we discuss how and why creating an experience is so important and the psychology behind what makes an experience. So great. Thanks for joining us. Hey everyone. I am thrilled to have Nick Mehta with me from Gainsight. Nick is the CEO over there, and I’m a real big fan of Gainsight. Um, it’s kind of the de facto leader in customer success, uh, and customer sex. Success is such an important piece of the pie right now. What, with what everyone is dealing with, um, keeping your customers close and avoiding churn and, and creating loyalty. Uh, so I’m really excited to have Nick with me today. Nick, if you wouldn’t mind, uh, telling us a little bit about yourself, what kind of brought you to Gainsight, uh, and then we’ll kind of just go from there.
Yeah, Joe, it’s great. Great to meet you. I can give you the background. It can be the five hour version or I’ll do the two minute version probably accordion. So the quick version is kinda, you know, I been around tech, my whole life grew up, grew up in Pittsburgh, which you can kind of, it’s a little bit obvious from what you see here. Uh, and my dad was a tech entrepreneur and never do anything big, but just some kind of small companies that, uh, so I grew up around computers and all that stuff. And I was wanting to go into tech. Um, I started a company in college, uh, which is an internet company back in the first.com long time ago, before many will stairs, uh, were even working or perhaps born. Um, and, uh, that one was kind of a boom and bust. It was actually doing really well then unfortunately, what the.com ended up shutting down.
Um, but then I worked in enterprise software and, you know, enterprise software prior to cloud the model was you sell a customer, they pay you upfront for the software and often that’s a lot of money and then they might pay you a small amount for support later on, but you got most of that money up front. And so in that model, the core thing in those companies was building products and selling those products, right? And then once you sold the product, you wanted to support the customer, but it wasn’t kind of the center of the company. It was just something that you did kind of more of a cost center. And then I got hired to run my first SAS business in 2008. There’s a company called live office. It was a software as a service for storing customers, emails and documents for legal purposes, kind of a niche esoteric area, but a good business.
And we grew at, but our customers didn’t pay us all upfront. They paid us as they went. They could leave at any time, just like we all know now. And in running that company, I realized that as the CEO, I spent way more of my time, not on building the product or selling it, but on our existing customers and with our customer success team, we call them a client services team back then because we didn’t have all this fancy lingo that we do now. Um, I saw that and I was like, wow, this is like total change in the way you run a company. Um, and I also saw that we had great technology at, at my last company for marketing. We’d read technology for sales are great, great technology for billing and product development. And we had nothing to manage our customers. So, um, kinda put two and two together.
I sold my last company to Symantec in 2011. I was taking some time off. I was an entrepreneur in residence at Excel venture partners. Um, and, uh, EIR is one of those, uh, cushy Silicon Valley jobs that you have to do for a while where you get to pontificate what you want to do next. And I actually didn’t, I didn’t come up with the idea for Gainsight. I met there’s two founders who had the idea and they had basically had the same experience I had. They’d been a SAS company. They saw the way things change. And then I met them through our investors and we decided to partner up and launch the company in 2013. And we launched our series a with battery ventures in 2013, and now it’s been about seven and a half years, and it’s still a long way to go, but it’s been fun.
That’s really great. I mean, I feel like you just brought up a whole bunch of avenues that I can go down from. Uh, you know, I, I had some time in Pittsburgh when, as Adobe I worked at, or we worked with CMU projects and I went out there and there’s a pretty cool little tech scene, uh, popping up, which is,
Yeah, my, as my mom tells me all the time, cause she’s trying to convince me to move back to Pittsburgh, Pittsburgh, California. And she says, there’s tech companies here. You can move back.
Yeah. As you know, that’s a long drive from the airport to the city. You talk to the Uber driver, just kind of like here, you know, the history of, he knew really well, the history of like moving from, you know, steel to tech. That’s awesome. And obviously all those schools are, you know, right in downtown Pittsburgh are really great.
So, you know, you brought up a few different things about customer success and you know, how it, uh, enterprise software and how we’ve kind of moved to these, the SAS models, which I was definitely know firsthand part of it, Adobe, what do you feel like? Um, why customer success is so important? It’s definitely had different names over the years, but you know, we’re kind of going in with customer success at the moment. Um, when, when did it kind of start to explode as the current title that it is and why is it so important?
Yeah, it’s interesting. Cause so just take you through the history a little bit. First of all, Gainsight did not start the concept of customer success by no means it was really started out of necessity by the early cloud vendors. And there’s some dispute about which one’s dead at first. We think it was Salesforce, but you could argue there’s a few other companies in that same era, but the, all those companies basically had the same realization, which was, they’d all come from the older model I was telling you about where you sell software upfront and people pay you. And, um, then they, then they launched these cloud businesses and frankly, they didn’t change anything about the way they ran the business. They just put the software in the cloud. But what they realized was Whoa, if customers pay us on a yearly basis or month to month and they pay us based on the number of seats they’re using, the reality is if they’re not using it, they’re not going to stay with us.
Right? Unlike the old model where even if you bought and you never deployed it, you kind of still stuck with it. And so that was a big wake up call. So companies like Salesforce and others in the, in the sort of 2004, 2005 timeframe created the first customer success teams. And those there’s a handful of them early on, you know, companies like box and Salesforce and Workday and the really early kind of cloud pioneers. And then, then what ended up happening. And when we launched Gainsight in 2013, we kind of looked at the landscape. We said, Hey, we think there’s an opportunity here. And then we looked at LinkedIn and said, how many customer success people are there in the world? And there was like 500 in the whole world, uh, people, not companies, right? And so I was like, that’s hard to build a business, uh, 500 potential users.
Well, our job is not to market Gainsight. Our job is to market customer success and explain to people why it’s critical and this new business model. And so we spent a lot of our time still do today, talking to CEOs, talking to boards, talking to investors, talking to teams about why customer success is existential. And as you probably know, that showed up in things like a conference that we do every year. That like the first year in 2013, we did it 300 people showed up. Uh, the last year we did it in person for the most recent time, 5,000 people showed up this year. We did a virtual 23,000 people. Customer success management now is the sixth most promising job on LinkedIn across all jobs. Um, so it’s, it’s become a real job and he’s not just 500 people anymore. There’s well over a hundred thousand people in the CS world and it’s growing super fast. And so that’s evolved a lot. But the other thing that’s evolved is CEO’s realizing that this is not just a tactical thing. You go need to go do. It’s not just, you go hire somebody and Hey, do you do customer successful? Keep doing all their old job. It’s actually kind of almost a way to reinvent the company around the customer, which we can talk more about.
Yeah, it’s great. It is really interesting that, uh, you know, like one of the first like five hires we made here in the, in, uh, uh, no cloud app after we raised some money, last spring was a customer success person. So it was like, like a customer success. Cause we had enough accounts that it made sense, you know, to have someone and yeah, it’s like, exactly like what you said, it’s, it’s a crucial piece of, you know, a starting company.
Yeah. And if you really look at it in a broader sense, it’s just a crucial part of the disruption playbook. Um, so you think about the disruption playbook, like how is all this innovation happening, right. And there’s just a few things that companies are doing differently, right? And those are the companies that are doing those things differently are succeeding amazingly. Well. One of them is being extremely product oriented and building great products that have sort of great experiences from the beginning, right? Another one is rethinking your go to market to have it be more low friction and more free trial and more freemium, just like you all do it. Right. Another one is having a culture. That’s all about transparency and values and openness, right? That’s another of the playbook. And a fourth one is having the customer experience and customer success be central to the whole company.
And so those things, honestly, as you can, attest are just now second nature. If you’re starting your company, you would not start a company that wasn’t transparent, that wasn’t customer centric, that wasn’t product centric. It’s just not even possible. You wouldn’t get funded, it wouldn’t happen. And so what’s happening is all of the bigger companies are having to wake up and say, we need to adopt those practices. You went your way at Adobe, the poster child of actually making that transition where they are now transparent customer centric, very product centric, changed their go to market and check out the stock price if you want any evidence of the value. Um, and every other company now is having to do the same thing. They’re trying to adopt those playbooks that the younger companies like cloud app are doing kind of by second nature.
So what is the good, what’s the DNA of a good customer experience and take me inside Gainsight HQ in March. What were you Nick CEO doing with your head of sales or, you know, wherever success lives and saying, Hey, these are, you know, things that we need to immediately do to our customers during this chaotic time.
Totally I’ll answer the first one that kind of more generally than the second one. So broadly an anatomy of a good customer success strategy has kind of three core elements to it. Um, number one is you, you, you do need a team that’s actually focused day in, day out, waking up and thinking about customer success, right? People build those. We can talk about the charter of that team and how you compensate them and what their roles are. But you need a team it’s just like sales. You know, you can’t just say, Hey, everyone’s in sales, you need salespeople, right? But then you need this kind of cross company strategy that says we’re going to make customer success and customer experience part of the end end process, from the way we develop the product, the way we sell it to the way we market to the way we actually service the customer.
And then you need a kind of a culture that supports customer centricity. So those are the three core ingredients, a team, a company wide strategy and a culture. And so have you look at those, let’s say in the micro lens of COVID-19 at the beginning of March, so what was happening? Well, first of all, for our customer success team, obviously this was kind of prime time for every CS team in the world, right? Your job is to protect your customers, make sure they’re successful right now, their customer, you needed to go like 10 X on that. Right? Because a few things were happening. Number one, every customer was thinking, Hey, do I really need this vendor or not? I’m sure. You know, you saw this. Everyone saw like, Hey, CFO’s desk, right? Spreading spreadsheet. Exactly. We had the one, everyone had one, what do we need?
What do we, what can we cut? Second thing is, um, even if they weren’t cutting the vendor, they might’ve been cutting the amount of licenses or the amount of usage or whatever, right. 30 is, um, the customers also needed help. Right? They also needed help to maybe like re implement or maybe some customers to move faster because their business was actually exploding because they’re an ed tech or something. Right. And so for those reasons, customer success became even more important during the downturn. So what did CS teams do at like a Gainsight? What do we do? Well, number one is we operationalize this playbook to reach out to our customers and just be able to kind of categorize them and understand the impact of COVID because we all know that some businesses have exploded because of covenant in a positive way. And some of that’s, it unfortunately a negative way, right.
In both ways and some are in the middle. And so we kind of had this very orchestrated process of reaching out to customers, using hurricane site software and categorizing them. We actually ended up taking those playbooks that we did, and we put them online into our products. Other customers could do the exact same thing. And one of the other tactical things we had to do is understand what’s the financial situation of this customer, you know, do they need a relief of payments? You know, maybe deferring the payment for a few months. I’m sure you dealt with that too. So we kind of orchestrated all that we could see out of all of our AR how much has impacted positively, how much has it impacted negatively? How much is the amount that’s going to be asked for payment relief, et cetera. And so kind of that triage process was the first thing.
The second thing then was kind of getting ahead of the renewals that were coming up, right? So normally you might work 90 days out, 120 days out, how do you get 180 days out and start a process? So we used some of our automation technology plus our grade CST to basically have those conversations about, you know, how are you thinking about renewal? You know, renewal is not until December, but how are you thinking about it? Right. And so get alignment on what that means. What is it going to take to get through renewal done? Third is really focused on adoption. So we used a combination of some of our automated kind of email technology, as well as our in-app technology. That kind of drives basically usage in the application to get people, to use more of the functionality, more of the seats, because the biggest challenge most vendors are facing now is not people leaving all together. It’s them saying, you know, I don’t need to spend as much money with company a, B or C because I’m only using half the seats I bought, I’m using half the functionality. Right? So triage our customers, get those confirmatory renewal conversations, drive up usage and adoption. Those are the three things we focused on.
That’s really great. I think those are all so important. Um, and I always love hearing the, you know, Gainsight.
Yeah. Right. Kind of see the company you’re specializing in it and all you’re doing. It’s like the movie, if you like the Christopher Nolan movie inception where it’s a dream room, that’s basically all the time we actually find, in fact, as we call our internal instance of Gainsight Gainsight on gain. So that’s gong G O N G will be more fun trivia. One of our customers is the company gong, which is a call recording software company. We love your views. Uh, and so we sometimes are in our own instance of gone looking at the customer gong. Uh, so it gets a little bit confusing sometimes. Awesome. Yeah. I was always customer
Zero. Was it Adobe? Um, but I like gong, gong.
How can, you know, obviously, uh, we’re talking over video conferencing kind of software, uh, zoom calls have gone through the roof. Obviously blue jeans was bought by Verizon. Those are kind of covering your real time feed. How can kind of like async tools like a cloud app, um, help to connect with your customers and also internally, uh, and, and kind of make sure that that connection is still there when we can’t be together.
Yeah. I mean, you, you, you know, it and hopefully are benefiting massively from it, which is this sort of like digital transformation of the customer engagement process where you’re not able to meet anymore. Um, I think that, that is, uh, I think it’s not just the temporary thing. First of all, we’ll talk more about that. But I think right now it’s become so important. And I, I would argue it’s not just important because of COVID-19 what’s happened is that buying processes have become more decentralized. And there’s a lot of people that you need to talk to in a company. And a lot of those people don’t want to get on a call with you, right. They don’t want to get on an hour long demo for the two minutes that irrelevant to them, which is literally often happens. And they also, um, don’t want to spend like half the time doing the intros for the call and seeing your PowerPoint slides or Google slides or whatever they want to see that one feature.
And so I think even pre COVID, I’m sure you’re, you’re seeing this big way. There’s this move to like show me versus telling me, and video is an awesome way to do that and doing these snippet videos, I’m a massive fan of these like short videos like your company enables. Um, and so that, to me, that’s like pre COVID and then you have with Kobe, it’s like, well, I really need an ability to reach people. And by the way, they’re also kind of tired of doing so many zoom, zoom, great technology, but it’s just no matter what technology, no matter how good is it gets tiring to do this synchronous video, but to quickly kind of consume content. Um, you know, we personally in our company as well as I think for our customers are engaging more and more on that. And then I think that’s not just to pre-sale, but increasingly post-sale in my world where if you’re a customer success person, you want to get that client to engage. You can say, Hey, can we get on a 45 minute call? Or you could say, Hey, here’s a two minute video. I just made of like, how, in your own instance, you can set this up and use this particular feature. Right. And I think that that idea of very, very personalized, short kind of content asynchronous is, is the future of how people are going to sell it.
It’s interesting. Like, uh, so it kind of just started our sales team last summer, you know, hired a head of sales and kind of started bringing people on. So there’s, you know, a little bit of a ramp last Q three Q four last year. And we S in Q four, we started using cloud app ourselves in the sales process. And the conversion rate was 10 X.
That’s a short line and a not
Like, you know, I’m sure you’re getting blasted your whole team, getting blasted, like hope you’re safe and sound ever, right? Like with this massively long email that just, I don’t want to read.
I sent, I sent videos in some money emails to executives, because I’m like, I want to save you time. Like this is going to show you, you know, and I do think it makes the difference. The other thing is, as you all know well, and it’s, I’m sure driving a lot of the foundations of your thinking. I do think as business people, our main mindset is evolved by who we are as human beings and our kind of human connection is evolving more and more to video. And like, I will say that we’ve been infected by ticktock at home as an example, as I’m sure everyone has it. I love it myself too. I got to admit guilty pleasure and my wife and my kids. And like, when you start seeing people consuming short form video content, your original YouTube, now things like tech talk, you can see that that is the future. That’s how people want to consume. And I, so I definitely believe in kind of what you’re doing.
Awesome. I want to, I want to spend the last little bit of our conversation has been great. Uh, chat, first of all, um, talking about your book, uh, I just got myself, I’m excited to kind of dig in
The customer success economy. Uh, so it’s out and I want to kind of talk about, first of all, you know, your inspiration to kind of put some pen to paper and get something out and kind of unload your brain. Um, and then let’s go into kind of some key insights. I’m sure you’ve already touched on a few along the way, but you know, what can we learn from
Totally. Yeah. So the inspiration, um, first of all, uh, if you’re running a company and thinking about some point doing a book, I was happy to chat about it. It’s been amazing for us. So we’d done three books. So we did a book in 2015 called customer success, which kind of the become kind of like the authoritative, like intro guide to CS. And, you know, actually it sold like 70,000 copies has been translated. It crazily enough into like Mandarin Portuguese, Spanish, Japanese it’s really nuts. And so, and that was just like, literally, if you can believe it, literally in 2014, we got a call, an email from our publisher Wiley. And they’re like, do you want to write a book? And we were like, Dan Steiman, who did a lot of the writing. And I helped, uh, who was one of my executives. We, we were, we were both like, why do they want to start a book?
Is this a scam? Is this like one of those things where you put in money? And like, they take it as this, one of those wire transfers to like some other catchy. And, but then we get on the phone and they’re like, yeah, we actually really want you to write a book. So we were like, okay, we’ll do a book. And it turned out customer success was a hot topic that was getting a lot of executive attention. And so that first book I kid you not, it’s been one of the biggest things we’ve ever done. Our company’s history, executive team has made it mandatory reading. Some companies made like everyone in the company has to read it. Um, so it’s really driven our sales cycles, our customer engagement, the movement, people getting into the career. And then basically we said, okay, let’s do some more books.
So we actually did a second. And a third, the second book was called customer success, professional handbook. And that’s really for like a day to day CSM that wants like really tactical advice about like executive business views and writing emails and things like that. And then we wrote this third book customer success economy, because what ends up happening is our thinking on the space evolved a lot from, you know, when we wrote the first book in 2015, and now things have changed a lot. And we said, okay, let’s write a new book, Allison Pickens, who was my COO at the time she, she just stepped down, but she’s been with us a long time. And she, and I wrote this together and we basically said, let’s take all of the conversations we’ve had and turn them into a book because I mean, you probably know Joe, like I love talking to customers.
I probably have maybe a thousand per year of customer prospect conversations, CEOs and executives. Let’s take all that put into a book and basically cover three themes. So the three things we’ll cover in the book. Number one, let’s take the kind of random experimentation that was done in CS early on, which is what naturally happens, you know, around things like, do you give people a quota or not? Do they report into sales or be a separate org that let’s put that into standard kind of a decision tree of how you make the decisions on those things? There’s not one answer, but there’s kind of a framework for making decisions. That’s number one, number two, we called it customer success economy because we show that customer success. Isn’t just for tech companies anymore. It’s we interview companies across lots of different industries from healthcare to manufacturing, to financial services, telco, and talk about how this is going in lots of different places. And then number three, we talk about how it’s not just a function anymore. It’s not just a CSM team, it’s a company wide mindset and it changes the way you build products, the way you sell them, the way you market them. And we have a chapter on each department and how that changes in the world of CS. And so that’s why we wrote it. And yeah, it’s gotten some pretty good reception so far.
That’s really cool. Uh, what are some of the kind of key insights from the book, um, that you would want to dig a little deeper on? You kind of did the broad overview. Um, let’s, let’s talk, maybe let’s talk a little bit about some of the keys to setting up the framework for setting up a CS team.
Yeah, totally. So I think that in creating a CS team, if you’re creating one for the first time, one of the big things is like, what is that CSM going to do? And I know that sounds pretty trite, but your success is too broad to raise a great umbrella, but it’s too broad. Right? And, um, I’ve talked a lot of clients of CSMs, meaning like for example, CEOs and people that buy software, and they’ve said, Hey, the CSN needs to have like a real value add. Um, you know, sometimes CSMs can end up being the nice person that helps route my email to the person that can really help me, which is not a very efficient or effective, uh, situation for anyone, including the CSF. So I kind of want one best practice is I define that there’s kind of four ish paradigms for being a great CSM and you don’t need to do all four, but yet typically at least one of these four.
So either, you know, the product inside now and you’re going to help the customer get from their idea of what they’re looking for to value, right. Not just supporting them, but actually helping them figure out how to do what they want with the product. Right. Really understanding number two. Um, sometimes the CSM has walked in the shoes of the customer, meaning you sell HR software and they used to be an HR practitioner, so they can empathize with the customer and connect to them. Now, sometimes the CSM is a great consultant where they can go into a big company, understand the whole landscape, understand their processes, figure out how to fit in the software into their world. That works really well in enterprise type customers. And then number four, sometimes the CSM is a great kind of almost like an account manager or sales person, but with a little bit more of a value empathy kind of side as well.
And so they can kind of drive commercial and, and the, the adoption as well. So one of those four, but if you don’t see any of those four, if you’re not, you know, product knowledgeable and you’re not a consultative and you’re not in the domain of a customer and you can’t do the renewal and expansion as, as to quote office space, which one of my favorite movies of all time, what would you say you do? And it seemed like that idea that like you have to have some value add, that’s kind of one big thing. And then you can define your comp model based on that value add, are they a product person that’s trying to drive adoption? Are they a consultative person that’s trying to drive like executive alignment, you know, really understanding the role and then kind of what’s the way to measure that role. Basically.
That’s really great. I mean, this, this conversation chock full of great insights and tidbits really appreciate your time today, Nick, I always like to kind of have you look into a crystal ball at the end and make your, make your bold predictions on experienced business customer success. Uh, what is, what does the future look like?
All right, let me find it. I think the crystal light. So I love it. I love I’m sure like you and a lot of people, I kind of, you know, read every single Jeff Bezos thing and it’s like, it’s such amazing wisdom about business, right? And so he has this like famous quote about like, uh, don’t just think about the things that will change radically over the next 10 years, thinking about the things that won’t change or we’ll just keep, keep going on the trend that they’re on now. And I’d argue, there’s two things that are almost indisputable that will happen over the next 10 years, five years, whatever you want. Number one, customers will get more power in every business model. So they’ve gotten more power over the last five, 10 years because of more choices, they can try things out. They can leave, they’ll get more power even than they have enough.
Number two vendors will have more data about their customers than ever the more information about their customers to be more proactive with them. So there is no doubt that given those two things, customer success will become more and more important because it’s just essentially the union of two things. It’s using data to be more proactive with your customers because they have more power. That’s what customer success is. Right. And what that, what that means is if you look at a pie of all of the stuff in a company and each wedge is like sales or marketing or product, right, right now the websites, the website for a CS might be maybe the smallest slice for some companies. That’s just going to get bigger. And at some point maybe five years from now, it’ll be as big as sales because more and more of the kind of actual life cycle of a customer will happen after the sale. Think about a free trial model. You think about consumption based model, like an Amazon or Google. Like it doesn’t the sale doesn’t mean anything. It’s about actually getting the customer to use it, you know, with AWS, I can sign up for an account and they sold me. But until I turn on my AC two incidents, like they’re not making any money. Right. So we believe, and I believe firmly that it’s just pure kind of physics that the world is going to get more focused on customer success in the next five years.
Yeah. You can definitely see a future similar to like where we’re in now, where CIO and the CTO kind of like own a lot of the purchases.
Yeah. Where customers,
Like you said, grows and becomes equal, if not more powerful than so.
Totally. Yeah. That’s what I think it’ll happen at the end, I think will happen is we’ll reinvent sales because sales is also important and you kind of reinvented for this new world as well. Awesome.
Nick, I really appreciate your time today. Uh, definitely hope that we all get an NFL season.
Yeah. And great talking to you. Thanks to you. I really appreciate it. Thanks to all of you. Thanks Nick.
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