We interviewed Adam Joseph, Director of Customer Success at Gainsight. Gainsight is a Customer Success platform that empowers companies to increase revenue, decrease customer churn, and drive advocacy.
We asked Adam to shed light on the central question of “why do tech startups fail to grow existing accounts?”
With so much at stake at winning often landmark and enterprise deals at tech companies, we often falter as Founders to systematically and consistently grow the adoption, usage and account spend of these hard-fought new customers.
So over to the interview with Adam and the key questions and answers:
- What are the main causes for startups failing to grow existing accounts in your opinion and experience?
(Adam) It’s certainly not one single person. For me it comes down to, do we really understand what the desired outcome of the customer is? So you can go back to that first call with a SDR for example, and understand did we do our due diligence or were we in a rush to make the sale? We have to scope out why our customers are buying, how do you determine your success with us. It’s really key for the handover between Sales and Customer Success. Sometimes you see a real separation, where a Customer Success Manager is picking up a deal for the first time, not knowing who the customer is and needed to build that relationship from scratch. So a lot of information can be lost. It can also be other factors, like a buggy product, poor support experience, lack of understanding of that customer, really understanding the customer journey.
(James) why are teams sometimes poor at really understanding the needs of the customer?
(Adam) Some of it comes down to compensation. For example if your team is purely incentivised by bookings, so your behaviour will follow. In the subscription economy, the risk is more with the software vendor, you need to understand why and how the customer is really using your software. This is very different from the previous transaction economy. Some of the biggest growth opportunities come from becoming a partner to the customer, not just a siloed salesperson.
- Why is there a gap between Customer Success and Sales?
(Adam) Some of it comes down to their interests and compensation. Think what is the ethos of the business? If you want to be centred around enabling the customer. Customer Success is not just a department, or an individual. It’s a culture, a way of working that permeates throughout the business. Every department plays a role within enabling the customer from marketing to sales, to customer success, to finance and billing.
Some of it comes from old-style thinking and lack of process internally. I’d recommend creating a customer journey map – think about the journey from the start all the way to end from first sale to them being a customer for 3-5 years. Think about all the touchpoints, the quarterly reviews, the onboarding experience, your contact cycle before renewal. These things are quite easy to schedule. You might want to track usage and adoption, track a key executives leaving, there are a number of factors.
Sometimes it comes down to the opinion or viewpoints of what a salesperson does and what a Customer Success Manager wants. It’s this shared understanding that needs to be in place. One of the typical mistakes is at the point of handover, when a Customer Success Manager inherits a customer and asks the customer, tell me about yourself, why did you buy from us? The customer first perception is one of thinking, what do you not talk to each other internally?! A Customer Success Manager should be relaying statements that reflect their understanding and validating whether these statements and assumptions are true in the eyes of the customer.
- How can we bridge the gap between Sales and Customer Success?
(Adam) I love how at Gainsight, we all share one office. One of the things, I love, you can visibly see a new deal and customer passing from a SDR, to an Account Executive, who then works with a Sales Engineer, they then work with an Implementation Consultant, who will then onboard the customer, who will then pass it to the Customer Success Manager and then the Account Manager will do the renewal. We have a one team ethos.
How do you create a one team ethos?
It starts with the CEO, then the functional heads of Sales, Customer Success and Account Management. Then when we are reviewing the sales pipeline, we can have a Director of Customer Success reviewing risks of onboarding new customers. Therefore there is alignment so that even sole contributors understand the stresses and strains of the role and heighten their understanding. These could be lunch and learns or a cadence of meetings. We need to ensure there is a collective understanding of the roles and responsibilities of each role within the organisation. The more you can do that, the more you will be successful.
- What functions should be owned by Customer Success?
(Adam) In previous times, Customer Success might be within Sales, Marketing or Operations. I think now it has it’s own department geared towards the enterprise. Normally lead by a Chief Customer Officer (CCO). 80% of your revenue might come from existing customers. So the CCO must have a seat at the table with the CEO. It could include professional services, implementation specialists, customer success managers and account managers. In a mature world, I believe Account Managers align within the customer success domain. They are key stakeholders in their mutual success. We’ve seen new roles being created like Sales Operations and Customer Success Operations, that should be aligned to Customer Success too. You might have customer success renewal specialists, especially if it doesn’t need much negotiation or specialisation.
The spectrum, you’ll have a generalist. A CSM could wear four different roles. On the other side, you have a laser-focused solitary function. In the SaaS world when you have 6 customers, you probably won’t have specialisation. It does depend on your stage and the complexity of your product.
(James) what other factors would mean that you need to reorganise your structure?
(Adam) certainly how technical your product is, your number of customers. You have reactive and proactive behaviour types. For example, you have high-touch, mid-touch – human beings and automation, low-touch – automation, videos, workflows, emails. If you know have your segmentation and engagement model sorted. Now you have an opportunity to reorganise. Customer Success sits in the middle between technical and sales, it sits in the middle ground. It’s hard to find someone who is good at both. It comes down to your definition of the role, how technically proficient they need to be? What are you expecting your Customer Success to achieve?
- What are the main metrics or KPIs that we should be tracking for onboarding, retention and expansion?
(Adam) For example gross retention, how much are you going to renew? It can never be more than 100%, so is it 90%, 95%? You could also look at net revenue retention, you could look at the best organisations in the software world, normally they have 100%+ net revenue retention. I.e. if you didn’t win new customers, you would still have a growing business. You could also look at customer advocacy, how many of our customers are willing to hold a reference call? How many are willing to share their logo? If we are doing our best, every customer should want to be an advocate for us.
How often are we engaging with our customers? Are we tracking the amount of business reviews? Are we tracking usage and adoption?
At Gainsight, we have the ‘DEAR’ framework.
- D-eployment: how many licenses have actually been deployed?
- E-ngagement: how often are we engaging with executives at that company? The silent customer is one of the biggest factors of churn, I’d rathe
- A-doption: how many people are logging in? Are they using the key features?
- ROI: do we understand their success criteria? What are their success plans?
(James) what are your recommendations for usage and adoption?
Customer Experience x Outcomes = Customer Success.
If you look at usage alone, it doesn’t tell you about the experience of the customer. If you just look at if customers login, if you know what their desired outcomes you can match that against their usage. I’ve known customers who have relatively low usage and renew and grow every year. I’ve had other customers who have high usage who churn and downgrade. Why? The numbers are just the numbers? It’s the context of those numbers which is important.
- What’s the link between Customer Success and Marketing?
(Adam) There should be a very close link between these two teams. Marketing can help to scale up the customer success efforts. Customer Success can be of huge importance to Marketing to understand what messages are really resonating. Secondly, think about the segmentation of your customers, it could be done by ARR for high-touch to low-touch. It could also be the maturity of your customers. For example new customers compared to long-term customers. Marketing are the experts of the delivery and design of communications, Customer Success can ensure that the power of the message is really high. We spend a lot of time presenting, Marketing can help ensure that our comms are clear and on brand, They can help with our events ensuring attendance and drive engagement. The most important thing is aligned. The last thing we want to see is that Marketing sends messages out to customers that don’t align with their expectations and desired outcomes.
Another area is the release of new features. Customer Success needs to be good at talking about the benefits of those features. We have to match a benefit to every feature and solution we have. They have to be aligned and that starts from the top.
- What are some of the best practices for linking Product and Customer Success?
(Adam) It can be really dangerous if these three departments don’t align. Product are responsible for our product and what it will be going forward (product roadmap). Customer Success need to collect all the feedback from the customer and able to prioritise those improvements. And on the other hand, Product need to be open and transparent on what’s coming down the track so Customer Success can enable customers with more benefits. I also think it’s important on occasions that Product have representation on key customer meetings, for example they can discuss why and how we built the product the way we did. You can form beta programmes and key customer councils for early releases.
Any final thoughts, Adam?
(Adam) Customer Success needs to be the beating heart of the business. Customer Success is an ethos. It’s not just a siloed business. If you are doing that the customer will be the beneficiary. If the customer is the beneficiary, it will really drive the growth of your business.
Over and out from the team at Sales for Startups. We’ll be interviewing other successful CS leaders, Tech Founders and even recruitment leaders to see why we are missing the mark when it comes to growing existing accounts at tech companies.
If you’d like to be interviewed please comment below or feel free to connect with me on LinkedIn or submit a request on our website.