Sales & Marketing

Q&A with Gainsight on Driving Customer Success in Recurring-Revenue Software Companies

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Editor’s note:Through its Customer Success Management Solution, Gainsight helps recurring-revenue businesses to reduce churn, increase up-sell and drive customer success. Nick Mehta, Gainsight’s CEO, says his company is transforming “customer success” from an art to a science and revolutionizing the way companies retain and grow existing customers. Nick says he learns from others, so he also shares in this interview his experiences and learnings for other startups. 

How did your company originate? 

Nick Mehta: Our vision is to help our clients gain insight into the health and future revenue of their customer base. Jim Eberlin founded Gainsight in the United States in January 2009 from his experience at the previous company he founded, Host Analytics. Given that Host Analytics is a SaaS company, Jim realized early on that he didn’t have an integrated system to understand his customers’ health and drive more revenue. Thus, he built Gainsight to solve the problems that Host Analytics faced, and in the process, he created a technology platform that is helping businesses around the world. 

How does your platform help your customers? 

Nick Mehta: Our Customer Success Management solution integrates with CRM systems such as Salesforce.com and uses predictive analytics, data visualization and workflow technologies. Through this, we enable companies to have a 360-degree view of their customers, flag customers that are at-risk or are opportunities for growth and manage the workflow involved in driving greater existing spend. 

How does your solution differ from other sales and marketing solutions?   

Nick Mehta: We’re transforming the Customer Success category from an art to a science. Through our unique data science knowledge, visualization, workflow and integration with native CRM platforms like Salesforce.com, we are driving measurable improvements in churn rate, up-sell velocity and customer success team scale for our clients. In addition, with our team’s extensive enterprise SaaS background and our enterprise SaaS customer base (including Marketo, Eloqua, Xactly and Jive) we deeply understand the needs of rapidly growing recurring-revenue businesses. 

Over the last decade, companies have spent a lot of time and money bringing data, analytics and automation to sales and marketing. Most companies can tell you where their customers are coming from, what they’re doing and how to get more. Customer acquisition has advanced far into the 21st century. 

But ask any company what they know about existing customers —  what products they own, what services they actively use, how happy they are, how often they call support, etc. — and it’s often like they’re stuck in the Dark Ages. 

In our effort to revolutionize the Customer Success category, we are in the midst of a massive transformation of business models to a model where the customer has choice and the vendor must deliver customer success. Over the next 12 months we will continue to lead and define the Customer Success category and continue to share the learnings we’ve gained from our customer interactions with the rest of the world. 

Also, in the next 12 months, we will launch our own wearable technology. 

Please describe one of your company’s lessons learned and where it occurred in the time line of your product development. 

Nick Mehta: On my first day, I had to set up the office WiFi; it was by far the hardest challenge so far. 

Beyond that, I think every company has to figure out whether it’s going to be a high-value, high-touch solution or a low-value, low-touch solution. Low-value, high-touch solutions are in no-man’s land. High-value, low-touch solutions are unicorns — they don’t exist. Early on, we figured out that large companies are the ones with revenue bases to protect; thus we needed to design around the needs of the enterprise. 

How did you determine the right pricing for your product? 

Nick Mehta: I’ll tell you when we figure it out. But seriously, pricing is a constant evolution in technology. Today, we sell our solution on a SaaS per-user per-month model, similar to the way Salesforce.com works. But as our clients continue seeing millions of dollars in ROI in terms of reduced churn and increased up-sell, we constantly evaluate new ways to provide attractive business models for our customers. 

What are some of the expectations you had at the outset that you’ve subsequently had to change?

Nick Mehta: I think no matter how many times you’ve done it, you forget what it’s like to be at the beginning. For me, the particular joy and challenge has been how much you not only get to do, but have to do yourself. Sometimes you’ll be working on things that are very tactical, but then you realize you’re making decisions that will shape your company for years to come. In a way, it’s a lot like a craftsman building a house. Though I’m a pretty horrible handyman at home, I love helping to shape the texture of our company. 

How did you convince your first investor or first customer about your product differentiation? What clinched the deal for you? 

Nick Mehta: Our founder, Jim Eberlin, did an amazing job of building a market-leading product and attracting a superstar customer base with limited angel funding. Through this, he was able to attract Battery Ventures as our initial investor. And Battery saw the need for customer success in all of its own recurring revenue portfolio companies. 

What was your toughest moment since launching your company?

Nick Mehta: We went to visit a customer prospect and had an amazing sales call with the company’s entire management team. At the end, they were asking for a contract. I described it to my team later (in an ill-fated way) as the “best sales call I’ve ever had.” But when we tried to price the deal, we missed the mark. Because of this, we missed the window for the customer to make a decision. I’m confident we’ll eventually work with this company, but it was a good learning experience about how quickly things can change in a startup. 

What is the best advice you ever received? 

Nick Mehta: In my last startup, our team missed a deadline and I was pissed and showed how I felt in a group meeting, which was unusual for me. The entire team froze and left the meeting with an uncomfortable feeling. Afterward, one of my top leaders pulled me aside and said, “On Star Trek, Captain Kirk can never have a bad day, and you can’t either.” I realized that if I let my emotions show, I should do it consciously because the effect on people is magnified many-fold. One of the most powerful things a leader can do is to control his or her emotions. 

If you could spend an afternoon this month with a top business exec in a well-established company to learn some insights from the exec, who would you choose? 

Nick Mehta: I have something to learn from everyone — from the CEO of a huge company to a first-time company, to the janitor that cleans our office. I value learning from every human being; but if I had to pick one, it would be Herb Kelleher, the founder of Southwest Airlines. The airline business is brutal, but he found a way to build a great business where employees love their work. 

How do you decide what software products to use in your business operations? 

Nick Mehta: First, we prioritize vendors that can get us football tickets. Just kidding. As a SaaS company, we’re clearly all cloud, all the way. We are always open to looking at new technology and want to find ways to be more efficient and effective. We put a priority on integrating with our “centers of gravity,” which are Google Apps, Salesforce.com and Box. 

What challenges have you encountered in recruiting/hiring/retaining the right talent? 

Nick Mehta: It’s sometimes tough to compete with consumer startups.  Luckily the enterprise is “sexy” again. To me, the most important thing in recruiting is to look at it as a sales/marketing activity. As a startup, you are pitching the candidates as much as they are pitching you.

From your observation, what is the most challenging aspect of innovation, and how have you overcome that challenge at your company? 

Nick Mehta: Innovation is tough at all levels, even in a startup. To me, the key to innovation is always understanding the “why” — why do our customers buy, why do they want a certain feature, why do they struggle with a particular issue. Once you understand the why, the what is much easier. 

What have you found to be the most overrated or frustrating aspect of being a software executive? 

Nick Mehta: I don’t find any of it overrated or frustrating. I’m truly blessed to be doing something that I love, that I’m good at and that’s financially rewarding. Most people can’t say that and you have to be thankful when luck rolls in your direction. 

When you encounter challenges or setbacks, how do you pull yourself back up and become inspired again? 

Nick Mehta:  It’s easy for me. I have three young kids and I have an amazingly supportive wife. Whenever I get down, my family brings me back to reality and gets me focused. 

What have you found to be the most fulfilling aspect of being a software executive? 

Nick Mehta: By far what keeps me going is the idea that people in our company will spend a huge part of their days working at Gainsight, and I have nearly infinite power to make that experience joyful, meaningful and successful. It’s daunting, yet also inspiring. My goal is to make everyone at Gainsight feel like this is the best job they’ve ever had. I have a long way to go to get there; but every time I feel like I’m making progress, it’s immensely rewarding. 

What is your top advice for first-time entrepreneurs or startup CEOs? 

Nick Mehta: One of my favorite quotes for startups is from Winston Churchill: “History will be kind to me as I plan to write it.” It’s easy to let the fear of failure drive you to focus on the wrong things, but you’re at a startup because you believe you can shape the outcome. Don’t lose that belief. 

Nick Mehta is CEO of customer success management company Gainsight. Prior to Gainsight, Nick was an entrepreneur in residence at Accel Partners. Earlier he was CEO of LiveOffice (now Symantec) and was VP at VERITAS Software (now Symantec). A huge sports fan, Nick thinks of his job as being head coach. He’s a big believer in the Golden Rule and tries to apply it to everything he does. Follow Nick on Twitter @nrmehta and Gainsight at @GainsightHQ. 

Kathleen Goolsby is managing editor of SandHill.com.  

 

 

 

 

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