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Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved. January 28, 2014 The Executive Perspective on Churn #custome rsuccess

Executive Perspective on Churn

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Page 1: Executive Perspective on Churn

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.

January 28,

2014

The Executive Perspective

on Churn

#customersucces

s

Page 2: Executive Perspective on Churn

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved. 2

Page 3: Executive Perspective on Churn

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved. 3

How did that get in there?

Page 4: Executive Perspective on Churn

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved. 4

What do we do about it?

Page 5: Executive Perspective on Churn

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.

Page 6: Executive Perspective on Churn

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.

Page 7: Executive Perspective on Churn

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.

Transactions

Relationships

Page 8: Executive Perspective on Churn

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.

#customersuccess

Page 9: Executive Perspective on Churn

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.

1. Why is Customer Success important?

#customersuccess

Page 10: Executive Perspective on Churn

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.

2. What should be shown at meetings?

#customersuccess

Page 11: Executive Perspective on Churn

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.

3. What are the best doing?

• Are end customers using the product?

• How frequently is each user engaged?

• What is each customer’s Net Promoter Score – is it growing or decreasing?

• Is the customer reference-able?

• Are customers paying their bills on time?

• Has your corporate sponsor left?

• Are customers using your most valuable and differentiated product features?

Page 12: Executive Perspective on Churn

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.

Customer SuccessPreparing for the Board Meeting

Page 13: Executive Perspective on Churn

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.

Page 14: Executive Perspective on Churn

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.

Source: David Skok, Matrix Partners

Customer Success for the BoardTake 1

Page 15: Executive Perspective on Churn

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.

MARKETING

SALES

RETENTION

Customer Success for the BoardTake 2

Page 16: Executive Perspective on Churn

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.

MARKETING

SALES

SUCCESS

Customer Success for the BoardTake 2

Page 17: Executive Perspective on Churn

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.

Increase Drive

2% Retention

2% Up-sell

20% Multiple

28% Multiple

Customer Success for the BoardTake 3

Page 18: Executive Perspective on Churn

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.

Nail the Board Meeting3 Simple Steps

Sales Customer Success

Past Bookings Renewals / Up-Sell

Present Market Share Benchmark

Future Pipeline Health Score

Page 19: Executive Perspective on Churn

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.

PastEvery CEO Claims 90%+ Retention!

Page 20: Executive Perspective on Churn

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.

PastMetrics Questions

• Dollar churn or customer churn?

• Include price decreases and downgrades?

• Include price increases and upgrades?

• Churn on total ARR/MRR or churn on renewable amount?

• Controllable versus uncontrollable churn?

• Churn by cohort?

Page 21: Executive Perspective on Churn

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.

PastSurvey of 100+ Subscription Companies

63% include downgrades in churn

58% include upgrades in churn

46% track on dollars and customers basis

Page 22: Executive Perspective on Churn

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.

PastFive Metrics That Matter

1. Batting Average

2. Headwind

3. Tailwind

4. Net Revenue Retention

5. Magic Number

Page 23: Executive Perspective on Churn

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.

Past1. Batting Average

# Customers Renewed In Period

÷# Customers Renewable In

Period

Are customers voting with their signature on the

value of your product or service?

Best-in-class:> 90%

Page 24: Executive Perspective on Churn

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.

Past2. Headwind

ARR/MRR of churn dollars including price decreases

and downgrades

÷Beginning of period

ARR/MRR

How much drag do you have on your growth?

Best-in-class:< 10%

Page 25: Executive Perspective on Churn

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.

Past3. Tailwind

ARR/MRR of up-sell dollars including price increases

and upgrades

÷Beginning of period

ARR/MRR

How much acceleration do you have to new

bookings?

Best-in-class:> 20%

Page 26: Executive Perspective on Churn

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.

Past4. Net Revenue Retention

Beginning of period ARR/MRR + ARR/MRR from tailwind – ARR/MRR from headwind

÷Beginning of period ARR/MRR

What’s the net dollar impact

from Customer Success?

Best-in-class:> 120%

Page 27: Executive Perspective on Churn

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.

Past5. Magic Number

ARR/MRR of renewals in period + ARR/MRR of up-

sells in period

÷Fully-loaded cost of

Customer Success team + extended team

What’s the cost-effectiveness of

Customer Success?

Best-in-class:3-5X or higher

Page 28: Executive Perspective on Churn

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.

PastOther Factors to Look At

• Same metrics by region, vertical, product, segment

• Churn by reason

• Top churns and up-sells

• Churn and up-sell by cohort

Page 29: Executive Perspective on Churn

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.

Base: 100+ SaaS and subscription companies

Source: Q2 Customer Success Survey, Gainsight Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.

PresentChurn Rate Benchmarks

Page 30: Executive Perspective on Churn

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.

Base: 66 SaaS and subscription companies

Source: Matrix Partners & Pacific Crest Survey Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.

PresentChurn Rate Benchmarks

Page 31: Executive Perspective on Churn

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved. Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.

PresentCompare Apples to Apples

Source: Matrix Partners & Pacific Crest Survey

Page 32: Executive Perspective on Churn

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.

Future

Page 33: Executive Perspective on Churn

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.

Lagging IndicatorsLeading Indicators

Too Late

Churn

Silence

Churn inquiryLate payments

No product usage

Frustration

Low NPS scoresLong support TTRNot referenceable

Disengaged

Not opening emailsDeclining adoption

Sponsor leaves

Success

“Sticky” feature usageProven ROI

Increasing adoption

FutureCustomer Health Indicators

Page 34: Executive Perspective on Churn

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved. Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.

FutureCustomer Health Scorecard

Page 35: Executive Perspective on Churn

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.

Ad

op

tion

Up-Sell / Renewal

Unhealthy Customer

Cohort

Healthy Customer

Cohort

FuturePredictive Analytics

Page 36: Executive Perspective on Churn

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.

Sample Board DeckPast: Inputs

Page 37: Executive Perspective on Churn

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.

Sample Board DeckPast: Metrics

Page 38: Executive Perspective on Churn

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.

Sample Board DeckPast: Top Customers

Page 39: Executive Perspective on Churn

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.

Sample Board DeckFuture: Health Score

Page 40: Executive Perspective on Churn

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.

Sample Board DeckFuture: Health Score Trend

Page 41: Executive Perspective on Churn

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.

Sample Board DeckFuture: Health Score by Customer

Page 42: Executive Perspective on Churn

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.

Purchase Renewal

Maximize Up-Sell

Flag Early Warnings

Measure Health

Cu

sto

mer

Healt

h

GainsightDrive Customer Lifecycle

Page 43: Executive Perspective on Churn

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.

GainsightCalculate Health Scores

Page 44: Executive Perspective on Churn

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.

GainsightAutomate Metrics

Page 45: Executive Perspective on Churn

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved. 45

How will you make CSM relevant to

your board in 2014?

Page 46: Executive Perspective on Churn

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.

Page 47: Executive Perspective on Churn

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.

Q&A

Guideaccess.gainsight.com/executive-guide-to-churn/

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.

Dashboardaccess.gainsight.com/dashboard

Page 48: Executive Perspective on Churn

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.