SaaS

SaaS Culture: Leveling the Departmental Playing Field

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My dad is a serial CEO. Instead of watching sports and playing video games, I grew up sitting side by side with him watching CNBC and playing the stock market. Yes, I was that cool. 

Though he may not realize it, I was also soaking up my father’s advice the whole time. To this day, I have a vivid memory of him telling me, “Son, in business, you either make the product or you sell it. Otherwise you’re overhead.” The childhood scene is etched in my brain like a black-and-white image of the dad from “Leave It To Beaver.” 

While the details might be a bit fuzzy at this point, his perspective reinforced the philosophy that traditional enterprise technology companies have long since embraced:  it’s all about product and sales. 

I saw the effects of this school of thought early in my enterprise software career — companies celebrated engineering and sales. Other departments were treated as second-class citizens. Many CEOs referred to themselves as “sales-oriented” or “product-oriented,” while some CEOs explicitly called themselves the “Chief Salesperson.” Although this may have been done with the right intentions, CEOs inadvertently sent the message that some parts of their companies were more important than others. Thus, the conclusion they and my father drew was a fair one: product created the supply, while sales drove the demand. 

Years later, when I landed my first role as CEO of a SaaS company, I decided to run the same playbook. I put one arm around my head of sales and another around my head of product and figured the rest would take care of themselves. Surely, I was making my dad proud.  Cue the disaster music. 

Curious what happened? In the SaaS business model, our customers weren’t buying a product from us — they were buying a service. As such, if any part of the service didn’t work, none of it worked. With a subscription-pricing model, customers started letting us know about that with their checkbooks. 

Through some trial and lots of error, I learned how every department  — not just sales and product — needed to work together for the business model to work. 

  • Marketing. In traditional B2B companies, marketing is often a supporting function of sales. You measure marketing by how happy the sales team is. While there is still some value to this, once you realize how much more data driven and analytical marketing can be in the SaaS world, you figure out that you’ve been underutilizing marketing for way too long. In fact, many of the highest-growth SaaS companies place a greater importance on marketing than sales.
  • Customer support. In product companies, customers call support rarely and frankly most of the “support” is work the customers have to do on their end. So when I came in as CEO, I did what a lot of CEOs do — I treated support like a cost center. I was stingy on staffing and didn’t prioritize technology projects to help support.  Then I talked to our customers. Even if the product was working, if support hold times were long or support skills weren’t great, we weren’t doing our job. And support couldn’t do their job without help from engineering, billing and other teams.
  • Onboarding. With most vendors, it’s amazing how stark the customer experience is the day before you sign a contract and the day after. I inherited a passionate onboarding team but they weren’t getting the technology support or staffing that they needed. Worse still, we did a poor job “handing off” between sales and onboarding in terms of customer expectations. This meant customers sometimes started with a bad taste in their mouths.
  • Operations. In the old model, you sold a product and it was the customer’s job to run it. During my first experience in SaaS, I was given a crash course in what “IT” is really all about. I understood SLAs, change management and security as theoretical concepts, and now I was put through trial by fire. It’s amazing how much more you appreciate the importance of good operations after you go through your first outage.
  • Finance and billing. Finance is another excellent example of how simple the “old world” was. You typically got a big check up front and a reliable maintenance payment each year. Once again, when I took the job, I figured finance would take care of itself. With thousands of subscription customers and a long history of varying contracts, our billing turned out to be one of the most complex areas of our business. Further, since we had never raised venture capital into the company, we depended on customers paying us to pay our own bills. I finally learned my lesson when we almost ran out of money due to a billing issue. Though we recovered, the scars stayed with me to this day. 

After a few years of ping-ponging around from one crisis to the next, I realized that the situation was not sustainable. I couldn’t simply choose between being a sales-oriented CEO or a product-oriented CEO. We started bringing the company together on a regular planning cycle to make sure we were busting through issues that were affecting our customers — across the company. We didn’t solve them all, but we made a ton of progress. I didn’t know it at the time, but what we were doing was creating a “customer success-oriented” organization. 

In many modern companies, customer success is a specific role, with the customer success manager responsible for ensuring customers get value from the company’s product or service over the customer life cycle, thereby increasing their chance of renewing and growing spend. More importantly, customer success is a philosophy where the entire company — from marketing to sales to onboarding to support to operations to finance to product — is organized around driving an integrated, high-value experience for customers. 

This is clearly far better for customers — there’s no doubt about that. Anything would be better for customers than the old B2B model. It’s clearly vital for your business model to have a customer success orientation.  If you have to re-earn your customers’ trust and money with each renewal, customer success is not a “nice-to-have.” What I found interesting is that being a “customer success-oriented CEO” is far better for your company culture too. There are no favorite children or sacred cows. Everyone has a role to play in customer success — in a sense, it’s truly united we stand. 

Assuming my young children eschew their currently-planned careers of superhero/astronaut/football player for a business role like their dad, my advice to them is: “Kids, in business, you either invest in customer success or you won’t be in business for long.” I’ll just have to work on my Ward Cleaver impersonation. 

Nick Mehta is CEO of Gainsight, the leading customer success management company. Prior to Gainsight, Nick was an entrepreneur in residence at Accel Partners. Prior to Accel, Nick served as CEO of LiveOffice, where he led the company’s profitable growth to $25 million in revenue and successful sale to Symantec. Nick has also served as vice president at VERITAS Software (acquired by Symantec). Follow Nick on Twitter @nrmehta and Gainsight at @GainsightHQ.

 

Comments

By Craig.LaFrance@dwcc.biz

Very good article. Especially drawing the correlation to the importantance of delivery of value to the customer. Without it, SaaS customers may sign up, but they soon disappear.

By chris roon

Much has not changed. The customer never woke up thinking their problem was “we need more software”. They were funding business outcomes, better efficiencies, and software technologies automated and improved operational outcomes.
Now that software is a service, we no longer can price to the moon and build valuation by managing the “art of the deal”. Where the license ends and the service begins is permanently blurred. So now we must fund delivery of what the buyer woke up seeking… better business outcomes. And every SaaS employee is an agent for the brand and a facilitator who can understand, anticipate and respond… sometimes with code. More often, with service.

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