Nov. 21, 2023 | Podcast

Episode 30: Customer Success as a Revenue Driver

Nick Mehta, CEO of Gainsight, and West Monroe Senior Partner Dhaval Moogimane

About the episode

How do you define a strong customer success mindset and what are the benefits? Nick Mehta, CEO of Gainsight and Dhaval Moogimane, Senior Partner and High Tech and Software Industry Leader at West Monroe, discuss how digital businesses prioritize customer success for Net Revenue Retention gains. The discussion also touches on the challenges of adopting a customer-first mindset and the significance of digital tools in enhancing customer success efforts.

Featuring

Nick Mehta

The CEO of Gainsight, Nick helps companies of all sizes and industries drive durable growth through customer-led and product-led strategies. He works with a team of over 1,400 human beings who together have helped create the Customer Success category that's currently taking over the SaaS business model worldwide.

Dhaval Moogimane

Leveraging decades of consulting experience, Dhaval specializes in helping software, technology, and IT services companies capitalize on emerging trends and drive growth. Prior to joining West Monroe, Dhaval was a managing director with the Waterstone Group that was acquired by West Monroe.

Q&A

Nick, how do you help your clients make the case for customer success internally and help the teams understand the importance of it?

Nick: It starts out with a company, and transformation could be moving the business model to a subscription overall, to cloud, private equity acquisition, etc. During these moments, management teams are usually defining priorities, and of those priorities is usually to have a world-class proactive post-sales journey—but the question is how to achieve it? Oftentimes people will come up with the concept of customer success, which further needs a strategic case and a business case. As for the business case, there are two parts to it; I would call them mind and heart.

  • The mind part is more like, “We have financial metrics. We’re trying to improve our ability to retain existing customers and the dollars they’re spending with us. We want to sell more in a cost-efficient and scalable way. So, without having to throw an army of people, how do I identify customers in this subscription world who might not naturally renew automatically and do the right thing, so they stay with us long term?”
  • The heart part of it is, “What’s long-term success for our business? How do we differentiate ourselves?” 

Either way, companies need to think about themselves as differentiators—and the truth is a lot of it is experience. You have metrics that are financial, and then you have this long-term vision of differentiating through experience, which is where a lot of customer success comes in. 

Dhaval, how do you assess the sophistication of a customer success function with your clients?

Dhaval: It comes down to a few different important criteria. One criterion is from a metrics perspective: Are you actually delivering the kind of metrics the company needs? Most companies today look at net retention rate as a key financial metric. Another factor is looking at upsell or cross-upsell within the base. Are you now extending the number of users? Are you extending the number of products within that customer base?

However, I’d say financial metrics are a lagging indicator of customer success since these metrics indicate that a problem has already occurred. A better indicator of customer success is taking it down to the operational level which looks at metrics like usage, adoption, sentiment, or engagement of customers—and understanding whether customers are actually using the product and getting value out of it. Are they promoting it? These are the metrics that actually indicate that customers are getting value from an operational standpoint and are more predictive of financial metrics.Another piece is related to the organization itself: How are various teams like sales, service, [and] success aligned to drive net retention growth? How are they aligned to understand how the customers are using the products and their value? The teams need to have a common vision in understanding the functions they have in delivering a good experience to their customers.  

 

I’d assume that the role of customer success managers is critical. Can you share what makes a good client success manager (CSM)?

Nick: While this role may look a bit different across various industries and verticals, there are three things that in general I can share:

  1. Curiosity
  2. Executive presence
  3. Grit

Dhaval: The qualities Nick pointed out are primary. Adding to that, it’s also important for businesses to determine what kind of abilities they want their CSMs to have. We see businesses undergoing changes or taking on new initiatives/partnerships, and it’s important to determine where CSMs can step in and help customers. Should they have technical ability and hands-on ability to work with customers on a deeper level along with knowledge of the product? That’s a factor for businesses to decide based on their models and trajectory. 

Nick, you've stated before that the community around a product vendor is a huge part of the value proposition and that without the community, a product is just another piece of software. Could you elaborate?

Nick: A big part of this is how easy it is to build software today. So, when you ask a consumer why they want to buy a product from a certain company, while technology is a part of it, and every now and then something is entirely new and innovative, I’d argue the biggest thing customers look for is value. For a customer, value is the experience they’re getting from the vendor, but it’s also talking to other customers who understand different use cases of the product and can talk about it. Over time, community in the general sense, whether it's events online, becomes a major part of the strategy of customer success and a major part of the value of a vendor. 

Digital enablement is a moving target. How can companies ensure that they're building a durable business that scales with digital customer success?

Dhaval: It’s interesting because I’d argue that it’s almost in reverse with subscriptions models in that these businesses cannot be durable without digital customer success. Companies need to engage with customers at scale from within their product and around it. Digital customer success is imperative. As for durability, it needs to be integrated with the human touch. It’s about how you leverage digital touch across your consumer base. What’s the level of integration you have with human touch as your customer base increases, or even strategically, high spend customers vs. low spend customers? The integration between human and digital touch is critical. 
 
Bottom line, integration is what leads to durability. 

Nick: I see three things that businesses do:

  1. Remembering that part of the value proposition is of course being more scalable and durable. Part of it, though, is the customer wants the option for that, too. It’s not that small customers want digital touchpoints and big customers want human touchpoints, or vice versa. So, it’s this idea that digital access to experts—all that kind of stuff—is one big principle. It's not just for your scale. It's for your clients, too.
  2. No matter how big or small a client is, there are a lot of stakeholders involved: The bigger the client, the more stakeholders.
  3. The last thing is digital has to be integrated into the journey and it must be multi-channel. Oftentimes when companies start their digital journey, lack of integration in turns makes their customers tune them out. However, an integrated strategic digital initiative is what businesses need to do for better customer success.

What does digital mean to you?

Nick: If I had to summarize what we talked about, digital is a way to scale your business and deliver great experiences to your customers. 

Dhaval: It's about how do we scale? How do you scale your physical self personally? We're all limited in what we can do in our 24 hours a day, but with the digital capability at our disposal, it magnifies the impact we can have. 

This is Digital

West Monroe's team of experts and guests pull back the curtain on how to build digital throughout an organization. Through real-world examples, you will learn how to spot digital transformation in real life, and how to make small decisions every day that make a big impact on growth.

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