Customer Success and its Business Impact - with Nick Mehta, CEO Gainsight

**Ray Rike** (0:00)
Hello, I'm Ray Reich, founder and CEO of RevOps Squared, and your host of the Metrics that Measure Up podcast. We talk to a wide variety of B2B, SaaS and Cloud thought leaders, executives, investors, and people just like you to discuss the metrics and benchmarks they use to make metrics informed decisions. Now on to today's show. Welcome to today's episode of the Metrics That Measure Up podcast. Today, we are joined by Nick Mehta, CEO of Gainsight, a leader in customer success. Today, we will be covering three main topics. First, customer success, where Nick's vision started for customer success. Second, the untold story of the future of customer success. And third, the metrics and measurements that customer success impacts specifically around company value. Nick, please take a moment to give a brief background overview of your journey to becoming a guest on the Metrics Measure Up podcast.

**Nick Mehta** (1:11)
First of all, Ray, thank you so much for having me on. I really appreciate what you're doing and also some of the amazing guests you've had on. So I'm honored to be in this company. So I'm Nick Mehta, CEO of Gainsight, and I'm very, very passionate about customer success as folks that have already interacted with me know eminently well. Now the way that that happened was I have worked in technology and kind of enterprise technology the last couple of decades, and I saw this evolution in kind of the way that customers have power from the old business models, where customers really didn't have power, to the new models where they have so much power. And think about those old days when companies would sell software and sell products, customers install them or they don't install them, they set them up or they don't, they use them or they don't. But the customer paid all their money up front. And so for the vendor perspective, the success happened when you got the sale. But in these new models where customers are paying you as they go with the SaaS and Cloud models, where they can switch anytime, where the people and your customer turnover all the time, where your customers are getting acquired and they're going public and they're going private, there's so much change, those customers have all the power. In the old world, it was the customer's responsibility to be successful with your product or service. In the new world, it's your responsibility as a vendor. And at Gainsight, we're passionate about helping companies create the processes, teams, systems, to make sure their customers are successful. And in that process, keep their customers longer, get them to buy more products and services from them, and get them to be bigger advocates. The metric we look at to measure our success for our customers is we want to help our customers improve their net retention rate, which means all the revenue that they have from their existing clients, how do they get that to grow without even adding any new clients?

**Ray Rike** (2:57)
Well, Nick, that's a great background, and we're going to talk about that net dollar or net revenue retention rate in a few minutes, especially as it impacts enterprise value multiples. But let's take a step back, and I've spoken to a lot of B2B SaaS CEOs who had to evaluate early on in their journey, whether their company and their product should be the callous for creating a new industry category. Based upon your own experience in building the customer success category, what was the motivation for you to take that risk and build both a category and a community for customer success?

**Nick Mehta** (3:34)
I would say the motivation, being honest, was probably naivete to some extent, because we didn't fully know that we were creating a category until we actually started it. So just to give you a little background, before Gainsight, I ran a SaaS company called LiveOffice, and I had felt the pain first hand of customers where they had the power. And so they would tell us they're leaving, and we didn't even know that they were leaving, and we didn't even know that they weren't even using our product. And we had other customers that were happy and would have bought more stuff from us, but we didn't even know they're happy. We were completely blind to our customers. And I met two gentlemen who had also come out of the SaaS world, Jim Eberlin and Sridhar Patanenny, after selling my last company, and they had run a SaaS business and they had had the same pains and problems. And they'd come up with the idea for Gainsight and brought me on as CEO as we were just getting started. And so 2013, we launched the company and we said, okay, great, this is going to be an amazing new category of software to help companies basically be more proactive with their customers and improve retention and all that. But then we figured out, okay, this is selling to a new job, customer success management. And oh my gosh, in the whole world, there's only like 500 CSMs. There were a few at Salesforce and a few at other companies. And so we realized we actually need to create the category, not because we wanted to, but out of necessity. Because if we didn't create the category, there'd be nobody to sell to. So in the early days, we focused all of our effort on helping companies hire customer success managers, justify the cost for a CSM, decide how to organize their company around customer success. We've written three books on the topic. We run a huge conference on the topic. We've written thousands of blog posts. I've done hundreds of podcasts. So we created a category not because we wanted to, but purely out of necessity. That being said, Ray, after the fact, it's incredibly satisfying and rewarding to be involved in helping to create not just a software category, but a new career.