SaaS Capital’s Takeaways from Gainsight Pulse 2016
May 16, 2016
Pulse is the annual Customer Success event hosted by Gainsight. It’s both a users conference and an industry event, and I think it does a good job achieving both goals. It definitely goes on our “recommended list” and you do not need to be a Gainsight customer or prospect to get value.
SaaS Capital participated on a keynote panel. After an introduction to the day by Nick Mehta and Jason Lemkin, Greg Goldfarb, Danielle Morrill, Tomasz Tunguz, David Spitz, and I took the stage to discuss how the public and private markets react to customer success initiatives. The short answer is, they don’t really care at all. What they do care about, more than ever, is churn itself. How the company achieves its churn goals is somewhat irrelevant.
Our takeaways from the event:
- Reducing churn is everyone’s job. The HubSpot CEO gave a great example of going to each department head and saying “How can you help reduce our churn?” The marketing people started scoring leads differently, the product people doubled down on the sticky parts of the product, and the finance people tweaked the pricing. They obviously also invested in customer success initiatives too. Most interesting was sales. HubSpot discovered that there was a wide spectrum of churn rates by sales rep. Some reps consistently brought on customers that were good fits, others didn’t. They stack ranked them by retention and let the bottom 10% go, retrained the middle of the pack, tweaked the comp plan, and now focus a lot more on customer quality pre-sale. Together, all theses changes moved the net churn needle from 20% per year to zero.
- At DocuSign, each employee is bonused on how they help to improve customer engagement (usage). That is a pretty clear message.
- Customer Success is a weapon. Use it to sell more to your installed base and to leverage your installed base to drive sales to new customers (second order revenue). It’s not just about playing defense and reducing churn.
- Reducing churn is no longer enough. Negative churn is the new goal. Negative churn so dramatically changes growth rate and burn rate, that it can have a profound impact on the amount of time and capital it takes to scale a business.
A SaaS Capital portfolio company, ClearCompany, was also represented at the conference (shown above). Sylvie Woolf, Director of Client Service, participated on a panel about how to identify and execute expansion opportunities.
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