Building a Data-Driven Customer Success Team: Takeaways from Gainsight & Riverside Acceleration Capital

Riverside Acceleration Capital brought together Gainsight’s Chief Customer Officer, Ashvin Vaidyanathan, with executives from across the RAC portfolio to share best practices, learn from each other’s success and failures, and share some war stories.

Ashvin Vaidyanathan is CCO at Gainsight, leading a global team of more than 150 employees across customer success, professional services, and support. As a part of RAC’s commitment to helping drive value across the portfolio, he was invited to provide some visibility into what some of the most effective customer success teams are doing.

We take these great insights and break down what it takes to build a data-driven customer success team—from strategically understanding what customer success means to your organization, to tactically developing an onboarding plan, and everything in between.

Defining Customer Success

1. Split your team between ongoing customer success functions vs. “billable” professional services (even if you don’t charge your customers)

Whether you’re in the midst of scaling your customer success team or are just starting to consider building one, it’s important to define the purpose of customer success within your organization and whether it’s actually comprised of many very specialized teams.

Ashvin believes that “in your early days, your CSMs are helping you understand product-market fit, quickly translate product gaps to the product management teams, and helping sales close deals faster”. This multi-faceted approach to building a success function is very necessary early on, but quickly becomes untenable. The natural evolution of a success function is specialization and if you’re looking to understand where your first delineation should be, Ashvin recommends “splitting success into ongoing customer success and billable professional services”, irrespective of whether you’re charging for these services.

2. Calibrate your customer success hires to the complexity of your product and maturity of your market.

You might find that your CS team today is a mishmash of backgrounds, ex-account managers, consultants, product operators, etc. So how do you decide who to hire and what background you ought to look for? One proposed method that was resonant with the RAC CEOs asks you to evaluate your product and market across two axes – complexity and maturity.

“How complex is your product to set up and maintain on an ongoing basis and how mature is the industry that you’re selling into?”

If you have a relatively complex product and/or are in a burgeoning market, you’ll need CSMs that can play all the aforementioned roles and should look for product centric and technical CSMs. This doesn’t stop with CSMs either, Ashvin recommends using the same criteria to identify how to build out your sales team as well. As you move along both of those axes you can focus on finding employees with an account management background.

Measuring Success

3. Consider compensating your customer success team on upsells

So, you’ve defined the purpose of your customer success team and are building a great team around that purpose, but that’s only half the battle. Understanding what your team’s going to be measured and incentivized against is equally important.

Many executives might be used to a pretty conventional measurement of success – adoption. If customers are using the product, then the team is successful. Across Gainsight’s myriad customers, Ashvin is starting to see another way of measuring success: looking at growth.

“Increasingly, the language we’re seeing has to do with identifying and compensating on upsell, not just adoption.”

What’s important to notice is that it’s not important to understand growth and identify it, but to make it a core component of your team’s compensation.

Understanding the Customer

Defining success criteria and implementing systems capable of tracking the requisite metrics is critical to effecting change in your customer success organization. Once you’ve built out these processes and systems, it can be helpful to go a level deeper and start to understand your customer base to better inform your sales process. Of course, it’s important to build a CS function that can service your customers effectively, but if you’re selling into the wrong customer it can prove to be an infeasible task.

4. Use customer health scores to help refine your ideal customer profile.

So, what is a poor-fitting client? To understand that, it’s often helpful to identify who your ideal customer is. As Lauren Kennedy, Sr. Manager of Client Outcomes at Gainsight says:

“Your ideal customer should always have a healthy level of tension with you as the provider. They should challenge you to develop product and guidance, and you in turn shouldn’t say yes to everything they want but push back on the why.”

The tactical steps involved with identifying that ideal customer are a little bit more complicated though. Aki Balogh, the CEO of MarketMuse, a RAC portfolio company that helps marketers to create better content, suggests segmenting your customer base around contract value. From there, you can layer on additional segmentation criteria, e.g., customer’s tech stack, etc. to better identify who your highest value customers are.

Tanya Strauss and the Gainsight team think about this by evaluating the sum of a client’s interactions with the business across two axes: customer outcomes and customer experience, with truly loyal customers scoring highly across both and driving growth through advocacy.

To arrive at an understanding of whether the client is achieving their desired outcomes, Tanya suggests asking four questions to develop a scorecard:

• Deployment: Is the customer activated?
• Engagement: Is the customer engaged?
• Adoption: Is the customer using the product?
• ROI: Is the customer seeing value?

This combination of outcomes and experiences should serve as the foundation for a comprehensive health score, helping you better understand who your best customers are and who you should sell to.

5. Don’t just go for the quick sale! Understand which customers stay and which customers churn, and make sure that your sales team is incentivized to focus on the former.

What do you do as an organization if you identify that your best customers only comprise a very small part your total customer base? ExecVision CEO David Stillman had to tackle that very problem.

“We identified that our ideal customers believe deeply in change management…and often that was more established companies with executives that have been around for awhile and express that belief in change management early in the sales conversation.”

Once you’ve distilled all this information, quantitative and qualitative, into an ideal customer profile, you need to instill discipline in your sales team. If you’re not highly focused on selling only these types of deals, you’ll find yourself with a slew of customers that are not a good fit—making it difficult to intelligently grow and scale.

Optimizing Onboarding

6. Don’t be afraid to boss your customers around a little bit.

Although it might be controversial to those who evangelize a high degree of product customization, Ashvin suggests that it’s in the best interest of a CS organization to directly prescribe best practices, at least in the initial onboarding. Jim Toth, RAC Managing Director, agrees: “This may seem counterintuitive, but you almost have to keep parts of your product away from the customer until they’re ready”.

7. Customer success starts way before go-live.

The short answer, early. Mark Kopcha, the President & CEO of Revegy, a technology platform for customer revenue optimization found that the only way that they were able to effect declining engagement numbers was to “find a way to quantify value, beginning with onboarding”. What moved the needle for Revegy was identifying the core activities that drive value within the first 90-days of onboarding and making sure that those were accomplished, quantified, and communicated to customers.

That’s even more relevant in sales processes that involve a proof-of-concept. Garin Hess, CEO of Consensus, says that they’ve built their technology to help other organizations focus more on “proof-of-value” rather than proof-of-concept. One of the concrete ways that Consensus does this internally is to share implementation guides with their prospects during the buying process, before onboarding ever begins. These implementation guides are aimed at helping prospects understand the dimensions of value well-ahead of onboarding. Additionally, they make clear the responsibilities of both parties in making the relationship successful.

In Conclusion

Building an effective customer success team is difficult. Building one in an increasingly data-driven world requires thoughtful planning and diligent execution.

One thing to remember as you grow and scale your CS function is to always take a human-first approach. When the going gets tough, think about the relationship that you’re building with the customer over the long-term.