Episode Transcript
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You were listening to be tob revenue
acceleration, a podcast dedicated to helping software
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executive stay on the cutting edge of
sales and marketing in their industry. Let's
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get into the show. Welcome to
beat the revenue acceleration. My name is
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Dancy Brook and I'm here today with
another Dan, Dan Steiman, who is
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the general manager of a mayor at
game site. Dan, how are you
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today? Yeah, I'm doing really
well. Thanks for having me down.
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Good. No, no, no
problem too. It's good to have you
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on the show so down. The
topic for today's episode is its customer success,
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a growth engine for recurring revenue businesses. Before we go into that conversation
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down, could you please give us
a little bit of background on yourself and
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your company, which, of course, is game site? Yeah, sure,
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I've I grew up in the technology
world. It spent thirty plus here's
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in Silicon Valley, so I've seen
lots of technology come and go. Almost
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all of my career has been on
the post sales side of the business,
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so I've been managing or dealing with
customers almost all my life and then sometime
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in the middle of the year of
two thousands, that role became named customer
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success. So it's a role I've
done for a long time and now the
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terminology around it has changed and a
few other things have changed as well,
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which will probably talk about. But
along the way I came across game site
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when I was at Marquetto. I
came across game side as a technology to
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help recurring revenue business has managed their
customers and I was in that spot at
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Marquetta where I needed something like that. I was thinking I might have to
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build my own solution. But I
actually, eight years ago now, became
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the insight's third customer because we had
almost a thousand customers and I had for
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customer success managers and there was just
no way to be efficient or effective in
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managing those customers without some kind of
a solution technology like the insight. So
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and then I joined the insight seven
years ago and they've done a number of
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jobs since then. And, as
you mentioned, and now and living in
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London managing our European operation. Okay, now, that makes sense and I
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appreciate it. Background there and just
on that point, around the time you
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spent at Marquetto and now, having
joined against ign seen it from the other
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perspective well, sort of fot or
leg work. Do you think a company
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like markets or any other company that
are thinking about having to go down that
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process of building solution himself to do
what you were trying to achieve? How
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difficult would that be? I guess
how difficult would an organization find it to
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put in place what games I are, of course, doing on a every
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single day? Yeah, it's pretty
challenging. We get kind of asked this
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pretty frequently, like couldn't I build
this myself? And my very cheeky answer
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that question it is yes, if
you have three hundred and twenty engineers who
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are working around the clock every single
day and several thousand years of effort over
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the last seven years, you could
definitely build it, because that's what we
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put into it. Now the non
cheeky answer is you could approximate, you
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know, some reasonable percentage of gain
sight by customizing your crm solution as an
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example, or using a bi tool
and then expanding that. But there's always
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going to be something missing and invariably
when we show our product to someone who's
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tried to build it in whatever solution, they're always like, oh, yeah,
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we wanted that, but that was
really hard to do and that's something
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we haven't ever thought of. And
the rest of it is exactly what I've
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been trying to do. And I
think the bottom line is every single new
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business that has a technology kind of
platform goes through this where you have to
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establish that there's something different and there's
enough difference that you can't build it in
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an existing tool. You actually have
to add something that was built specifically for
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this purpose. And I think we're
almost there. Are Probably in the customer
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success world today, you know,
no one ever thinks about building their own
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crm system. I think in the
next few years will find the same thing.
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No one thinks about building their own
customer success solution either. Yeah,
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that makes sense, and so I'm
as you're talking about your background there and
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as your road is sort of involved, as the terminology for what the road
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in Taiois vot, it sounds if, course, over the years you've become
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an expert really in the voad of
customer success and that's led to, course,
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being a coath or of the book
customer success. How innovative company are
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reducing chant and growing requiring revenue.
So you know the engine out. So
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if customer success and how companies are
using it to their advantage and to accelerate
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their growth objectives. Could you please
sort of give us a little insight into
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that book and what some of the
key take white point so that the reader
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can can learn from it? Yeah, happy to do that. You know,
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we're obviously really proud of the book. We we see the book and
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the and the sales of the book
as a barometer for what's happening in the
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customer success movement. And it really
is a movement. It's kind of an
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industry on to itself, and so
when we see the book, in fact
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it's funny. Or my editor sent
me an email a few weeks ago and
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he said this is the first business
book I've ever seen, ever seen,
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that has sold more copies in the
second year than it did in the first
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year and more copies in the third
year than it did in the second year,
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because most most business books have a
pretty accelerated start and then they kind
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of tapers off. But what's happened
in our world is that the industry of
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customer success has been growing so fast
and it's a result of the movement into
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the subscription economy that the need for
some level of kind of working knowledge about
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what customer success is what it means
is so high that the book continues to
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kind of accelerate in sales, not
so much as an indicator of the fact
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that it's like the best book ever
written. It's probably not, but just
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that the industry is moving and not
only is it moving, but there is
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a need, because customer success is
so new, there's a real need for
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a community aspect, a place to
go, if you will. That confirms
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that I'm not alone doing this and
not stupid. I'm not five years behind
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the rest of the world, and
the book is one solution to that.
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Another solution is the conference that we
do every year, which is really an
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industry conference around customer success, and
we did it for the seventh time in
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May and San Francisco and had almost
six thousand people there. So that continues
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to be a barometer as far as
the whole customer success movement as well.
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Back to the book, I mean
the I did most of the typing of
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the book. People ask me how
long it took me to write it.
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My answer is thirty five years,
because it's a it's an amalgamation of kind
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of everything I've learned during my entire
technology career. The reality is, from
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the moment I sat down till I
finish the final manuscript was about four months
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and the book was written specifically aimed
at CEOS of non technology companies. And
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why did we do that? Well, our business for the most part today
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is technology companies. So they all
kind of get it, because most software
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companies are moving towards the subscription model
and they kind of understand customer success and
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then the rest of technology kind of
follows the software company's lead. So they're
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moving in that direction and we want
to write a book that said, Hey,
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this is bigger than just technology.
Like every company in the world is
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probably going to move towards some kind
of a subscription model and when you do
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that you need to think about Your
Business, in your customers, in a
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very different way and, to the
point of the podcast, primary piece of
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that is that over time your customers
become one of your most important growth engines.
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It's not just about selling new customers, it's about renewing, if you
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have modest subscription renewing your existing customers
and then selling more to the install base.
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And the bigger subscription based companies are
proving that that's a model that works
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really, really well. That make
sense. And in terms of games,
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you mentioned that the book in particular
is focusing on CEOS, or is aimed
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at CEOS of non technology companies,
and then you spoke about the the conference
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that you've just held. For the
seventh year. We have six thousand attend
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days in terms of that conference,
and where the bulk of those attendees are
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coming from? Who you really appealing
to it against what? Who is your
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customers? That were yeah, our
customers today. I think about it as
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concentric circles. The middle concentric circle
is SASS companies. All SASS companies by
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definition have their customers on a subscription
and if you're a BOB SASS company,
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you're developing decks that are, I
would say, at least relatively complex,
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if not very, very complex.
And what every be tob software company has
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found in all of history is that
complex software product does not install itself,
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it does not drive adoption by itself, it's not typically viral, with very,
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very few exceptions, and all the
way from the very beginning, when
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sales force was building their business,
they discovered that customers weren't adopting and then
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ultimately weren't renewing because they weren't getting
any value out of the product and it
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had to be solved with people.
And then alongside those people comes technology.
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So sales force in two thousand and
four put together the very first customer success
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team because they had a major turn
problem and they needed people whose job was,
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by their definition, adoption and retention. Right. So they were needing
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to reduce the amount of churn that
they were having and the way to do
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that was to get more users to
adopt their software, therefore get more value
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therefore be much more likely to renew
their contracts. And that's kind of directionally
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the way the entire business has gone
and I think as as nonchech business has
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moved to subscription, they're going to
find some of those same challenges where you
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can't just assume, no matter how
good your product is, that the rest
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of the world is going to grab
it and use it and use it intelligently
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and get maximum value either. It
just ends up not working that way.
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Yeah, yeah, that's very relevant
point. Now, one of the things
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that you mentioned there is are in
sales force in two thousand and four developed
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the first customer success team and of
course, a lot of others have followed
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suit since. That said, I
think there is still a very much the
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trend. At least. What we
see is that organization, particularly in the
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early stage of the course of very
focus on driving acquisition of exist net new
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clients and actually times can that can
be to the detriment of their existing current
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client base, where whereby they're not
necessarily focusing on not only renewing those customers,
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could also expanding those customers into into
larger accounts for them. Recent study
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showed that customer acquisition of net new
clients it costs up upwards of five times
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more than customer retention. But but
we still do see that there's a lot
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of organizations aren't necessarily putting the same
amount of emphasis or focus on keeping or,
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well, I guess, investing properly
in their in their current client base.
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So what? Why do you believe
that happens? And and and do
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you? I mean, it sounds
if you do see a shift happening,
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but you see the shift happening at
a farting that pace, whereby the people
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are really investing as much in their
and their customers success team as they are
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in their new business sales teams.
If you like. Yeah, it's a
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great question. Down by the way, that the research that we use from
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Pacific crest so as that to acquire
a dollar of annual recurring revenue costs about
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a dollar in eighteen cents. Some
things I've seen have that cost is size
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a dollar fifty. Then the the
next two numbers are really stark in contrast,
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and that is the cost of expanding
and existing customer is fourteen cents for
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a dollar and the cost of renewing
and existing customers nine cents for a dollar
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of rr. So it's almost an
order magnitude difference between the cost of getting
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additional money out of your install base
versus acquiring new customers. And I think
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in a recurring revenue business one of
the mantras that you have to just understand
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is that you can no longer acquire
your way to success. You can get
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customers in the front door as fast
as possible and if you aren't, but
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if you aren't plugging the bottom of
the bucket, so to speak, and
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getting those customers to get values so
they're buying more than you just don't have
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the chance. And in fact the
sales force again is the perfect example.
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They had a terrible turn problem.
They were really good at acquiring new customers.
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In fact their number of new customers
was quadrupling in two thousand and three
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versus two thousand and two. But
when are almost every single one of those
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customers was churning until they actually formulated
a customer success plans. So it's absolutely
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critical to the long term viability of
a recurring revenue business. And answer your
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question, I think generally speaking,
most companies are not investing as quickly as
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they probably should be in the in
their install base, and I think the
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main reason for that is that they
they have primarily built into their DNA this
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idea that sales drives everything, and
most of us who grew up in the
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technology industry at least more than fifteen
years ago, always have that on the
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top of our head, like sales
is the only thing that matters. It's
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it's the driver of our business,
it's our quarterly business imperative is to find
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x number of new customers and increase
our selling price to them. And it
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was all about acquisition. And so
every company kind of naturally has in their
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DNA the idea of sales, the
celebration of sales, etc. And only
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in the last I'd say, for
any more than about fifteen companies, only
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in the last ten years, as
the post sales part of the business become
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much more meaningful as far as a
revenue imperative. So it's not a surprise
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because it's still very, very new
and a lot of the change is really
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hard because the people who become successful
in a world where sales was everything have
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to struggle to make the change to
thinking about it very, very differently,
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and almost every every CEO, I'm
that almost is bent towards sales or product
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and not naturally bent towards customers,
and part of this process is forcing them
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to bend towards customers just as much
as they been towards sales. And I
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think it's happening, and it's happening
because it's a hundred percent necessary or your
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business won't survive. But it's still
taking long time and there's still a lot
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of education to be done and I
think there's still a fair amount of frustration
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on the part of people like me, or people who are in customers success,
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who still see companies not driving with
this level of urgency that they probably
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should be. This idea of the
revenue growth that can come from a from
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a good, solid, financially viable
kind of install base. Yeah, yeah,
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and I think well, there's there's
a couple of points in that.
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The first one is that I think
it's probably companies struggle so or find it
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tricky to at least measure customer success, and whether that's just because of the
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sort of Kpis or metrics that they
do indeed use internally to do so.
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The second piece is, despite the
the stats that you described around it being
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much more cost effective to expand or
renew existing customers as it is to acquire
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new customers, I believe organization struggle
to attribute revenue back to investments in customer
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success, whether that's building a team, whether that's investing in technology, but
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it is probably a challenge to at
least so that internally, if they're if
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they's of methodology or or, I
guess, process it. Internally, I've
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always been driven towards sales or product. It's tricky to build that business case
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internity. From your perspective, being
now within a technology company in a Customer
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Success Road, how do you see
the technologies can help companies to measure it?
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Number One, and what are the
real key metrics or KPIS are you
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believe companies need to use to truly
measure the success of that customers and,
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of course, then generate more revenue
from that install base. Yeah, to
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to use an old analogy, history
tends to repeat itself and I think what's
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happening today is is a very,
very close analogy to what happened over the
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last fifteen years. The difference between
what part of the customer life cycle are
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we talking about for this? So
for the last fifteen or twenty years there's
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been literally billions and billions of dollars
spent in creating and selling and buying technology
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to help optimize the funnel. Right, everything was about the funnel, the
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funnel meeting the top part of the
sales process. So, can we get
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more leads into the top of the
funnel? Can we get better leads into
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the top of the funnel? Can
we convert them at a higher rate every
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step down the way and ultimately,
can that lead to more customers being acquired?
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And every CRM system and every marketing
automation tool and every lead optimization product,
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this was the goal, right,
and literally, I mean just think
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about sales force plus marquetto plus,
Microsoft Dynamics, plus eloqua, plus,
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you know a few other companies.
I mean literally billions and billions of dollars
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were spent and at the end of
it, the reality, the reality of
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what that money was being spent on, was getting a better understanding of our
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prospects, not customers, but prospects. So what we think is happening now,
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it's clearly happening by the way,
is that the same mentality, in
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the same processes are happening with regard
actual customers versus prospects, and that is,
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if we understand more about our customers, will we not be more successful
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in giving them value, delivering Roy
to them, being able to sell them
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more, renewing them at higher rates? Right? So I think the process
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that happened on the prospect side whereby
we as companies became like really, really
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intelligent about our prospects. Like,
think about today's world. If you ask
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to seem, Oh hey, what
do you know about your prospects, the
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answer is a lot. I know
every time they've meant to our website,
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I know exactly how many minutes they've
spent on our pricing page. I know
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every meal email that we've sent to
them, whether it bounced to, whether
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it got opened up, whether they
downloaded what was in it. How many
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behind the paywall things have they looked
at our website, downloading white papers,
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etc. ETC, etc. So
there's all of this information about prospects that's
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happ there. It's helped us to
be much smarter about how to deal with
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those prospects and our argument, I
think in arguable, is there's way more
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information about customers than there is about
prospects and if we can tap into that
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other load of information and use it
to our advantage, we can have tremendous
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success with customers that we haven't been
having because think about the amount of stuff
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that as SASS company knows about their
customers and versus their prospects. We know
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every single click they've ever made in
our application. We know every invoice they've
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ever received and when they paid it. We know every support case they've ever
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opened and how long it was open
and what priority it was, and every
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email we've ever sent them and whether
they opened it, etcetera, etc.
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The Plethora of information, and if
you can pull that all together and mind
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through it in an intelligent way,
you can understand how healthy your customers are,
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and that's the heart of customer success
is how healthy are my customers?
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And depending on how healthy they are, I want to intervene. And this
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is what drives, ultimately drives bottom
line revenue, I think, because if
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you've done cut, if you've done
a SASS company, as sales force did,
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without a customer success team, you
know that's a turn rates are really
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high and that you're up cell is
impossible, because if you don't have a
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satisfied customer, there's no way you're
selling them. More so, if we
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can pull that data together and say
we know how healthy our customers are,
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we know which ones are likely to
buy our next product when we have one
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to sell, we know which ones
are in trouble and we should intervene with
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them to help get them back on
the right track. So they are going
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to be good advocates for us.
By the way, advocacy is another component
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of this. We live in this
connected world where prospects are calling customers all
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the time without going through our reference
program so we better make sure those customers
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are are actually getting value from us, so that those conversations with our prospects
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that are kind of blind reference checks, if you will, are positive conversations
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because it actually drives a new business
sales as well, not just retention.
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So at the end of all of
that is this concept that customer success,
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much like the prospecting part of our
world, has to become a process driven,
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data driven organization in order to deliver
the results that we want, which
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is higher retention rates and more and
more upsell absolutely, and there's a lot
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of interesting points there and I guess
what it comes down to is not on
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need from Games are, at least
from your perspective, not just selling them
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a technology, but helping oping customers
perspective or opinion on where they should be
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investing them on a start to shift
a little bit. I don't think it's
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going to be an easy to ask
to completely shift the mindset of a way
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from new business sells to customer success
and, of course, as driving acquisition
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of new clients if vital. But
it sounds as if it's a shift happening,
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but it needs to sort of probably
accelerate in terms of the pace of
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that shift. That's that's well said. There is a shift happening, for
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sure, but I think there is
a need to accelerate the pace of that,
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especially as more and more companies move
into the subscription economy or beyond.
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Absolutely, absolutely so. Damn,
I think we're moving towards the end of
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our time today. Really appreciate your
insights and for taking the time to speak
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with with us. I know I've
certainly started to think about our own customers
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and how we can get more knowledge
from them and and understand them better.
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If anyone wants to learn more about
gainsite or continue this conversation offline or know
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more about you and your book as
well, what's the best way for them
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to get in touch with you and
the company? Yeah, anybody wants to,
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00:22:22.539 --> 00:22:26.980
certainly can connect with me on Linkedin
and easy to find down Steinman.
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The book is online. You can
buy that Amazon. Just search for customer
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success. It will typically be the
first thing that POPs up. And if
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you're interested in Gainsay, go to
the website. Obviously againsaycom, request to
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be contacted or requested demo or what
most people would do when they go to
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00:22:42.410 --> 00:22:48.400
gainsaycom is actually go to our resources
page and just start absorbing some of the
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part leadership. Right if you haven't
bought the book or you want more than
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00:22:51.759 --> 00:22:57.000
the book. There are literally hundreds
of blogs and webinars and sessions from pulse
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that will give people a really good
education in the world of customer success,
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and most of that is not bent
towards trying to sell our product. It's
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just trying to educate people on what
customer successes and why it's important. And
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we believe if we do that,
if we educate the world on how importness
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is, then obviously some of those
companies are probably going to need some software
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at some point. It will be
there to help if that time comes.
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Absolutely great. So well, many
thanks once again. Done for Im you
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on the charts today, and that's
to look forward to hearing more from from
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Denis and itself in the future.
Yeah, my pleasure, Dan, thanks
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00:23:30.410 --> 00:23:37.210
for having me. operatics has redefined
the meaning of revenue generation for technology companies
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00:23:37.410 --> 00:23:44.359
worldwide. While the traditional concepts of
building and managing inside sales teams inhouse has
318
00:23:44.400 --> 00:23:48.000
existed for many years, companies are
struggling with a lack of focus, agility
319
00:23:48.200 --> 00:23:55.789
and scale required in today's fast and
complex world of enterprise technology sales. See
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00:23:55.829 --> 00:24:02.630
How operatics can help your company accelerate
pipeline at operatics dotnet. You've been listening
321
00:24:02.670 --> 00:24:06.869
to be to be revenue acceleration.
To ensure that you never miss an episode,
322
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subscribe to the show in your favorite
podcast player. Thank you so much
323
00:24:10.859 --> 00:24:11.460
for listening. Until next time.
