A thing called churn: Gainsight’s CEO shares his path to customer success
“If you ever go into business, the only job that really matters is sales. Because once you’ve sold the customer, you can move on to the next customer. And it’s all about getting new customers.”
That was Nick Mehta’s, the CEO at Gainsight, first lesson in business back in the 1980s when his dad brought him to the office on Take Your Kid to Work Day. Dressed to the nines in his little kid suit, he was educated into the old way of thinking: sales is the only thing that matters. New customers are the only thing that matters.
At the beginning of Nick’s career, his dad’s advice held true. While running an e-commerce company, and later, as he entered the enterprise software world, retaining customers wasn’t on anyone’s mind. It wasn’t until SaaS stepped onto the scene that focusing only on new customers no longer was a sustainable approach.
“I was running this company called Live Office where we had a great quarter in sales. But our revenue didn’t go up nearly as much as our sales did. A total naivete, I went to my CFO and said, ‘How come our revenue didn’t go up as much as our sales?’ He replied, ‘There’s this thing called churn.’ My response was, ‘Really?’ I literally had no idea what churn was. So on the job in my last company, I learned that when you move to a SaaS business model, you can’t just focus on new customers anymore. You can’t just focus on sales. You have to focus on your existing customers.”
The team started to ask questions like who’s going to work with our existing customers? How can we tell if they’re happy? How can we tell if they’re healthy? Are they using our product? Are they an advocate? Are they ready to buy more? Today, this is what we call customer success. “We didn’t have a cool term for it back then. We called it client services. But the point is, this is when I realized why it’s so important.”
When Nick first joined the company, he expected to work closely with the Head of Sales, a guy named Jim. Little did he know that more than 10 years later it wasn’t Jim’s phone number he’d still know by heart. It was Steve’s – the guy who ran client services.
“I remember meeting him on the first day thinking, ‘Maybe I’ll talk to him every couple of months. The customer stuff should just take care of itself. I’m going to focus on sales.’ But now, his phone number is etched in my brain.”
As Nick learned the hard way, and as we all know today – no, the customer stuff doesn’t just take care of itself. Get your issue of Customer Health Magazine and read the full story on how Gainsight was formed and how the company became synonymous with customer success. (Links straight to file.)
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