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The Executive
Perspective
on Churn
January 28,

2014

#custome
rsuccess
Gainsight Confidential. 2014 Gainsight, Inc. All r...
2

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
How did that
get in there?
3

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
What do we do
about it?
4

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

Relationship
s
Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
#customersuccess

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
1. Why is Customer Success important?

#customersuccess

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
2. What should be shown at meetings?

#customersuccess

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 c...
Customer Success
Preparing for the Board Meeting

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
Customer Success for the Board
Take 1

Source: David Skok, Matrix Partners
Gainsight Confidential. 2014 Gainsight, Inc. Al...
Customer Success for the Board
Take 2

MARKETING

SALES

RETENTION

Gainsight Confidential. 2014 Gainsight, Inc. All right...
Customer Success for the Board
Take 2

MARKETING

SALES

SUCCESS

Gainsight Confidential. 2014 Gainsight, Inc. All rights ...
Customer Success for the Board
Take 3

Increase

Drive

2% Retention

20% Multiple

2% Up-sell

28% Multiple
Gainsight Con...
Nail the Board Meeting
3 Simple Steps

Sales

Customer Success

Past

Bookings

Renewals / Up-Sell

Present

Market Share
...
Past
Every CEO Claims 90%+ Retention!

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
Past
Metrics Questions

• Dollar churn or customer churn?
• Include price decreases and downgrades?
• Include price increa...
Past
Survey of 100+ Subscription Companies

63% include downgrades in churn

58% include upgrades in churn
46% track on do...
Past
Five Metrics That Matter

1. Batting Average
2. Headwind
3. Tailwind
4. Net Revenue Retention

5. Magic Number

Gains...
Past
1. Batting Average

# Customers Renewed In
Period

÷
# Customers Renewable In
Period

Are customers
voting with their...
Past
2. Headwind

ARR/MRR of churn dollars
including price decreases
and downgrades

÷
Beginning of period
ARR/MRR

How mu...
Past
3. Tailwind

ARR/MRR of up-sell dollars
including price increases
and upgrades

÷
Beginning of period
ARR/MRR

How mu...
Past
4. Net Revenue Retention

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

÷
Beginning of...
Past
5. Magic Number

ARR/MRR of renewals in
period + ARR/MRR of upsells in period

÷
Fully-loaded cost of
Customer Succes...
Past
Other Factors to Look At

•

Same metrics by region, vertical, product, segment

•

Churn by reason

•

Top churns an...
Present
Churn Rate Benchmarks

Base: 100+ SaaS and subscription companies
Source: Q2 Customer Success Survey, Gainsight

G...
Present
Churn Rate Benchmarks

Base: 66 SaaS and subscription companies
Source: Matrix Partners & Pacific Crest Survey

Ga...
Present
Compare Apples to Apples

Source: Matrix Partners & Pacific Crest Survey

Gainsight Confidential. 2014 Gainsight, ...
Future

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
Future
Customer Health Indicators

Too Late

Frustration

Success

Churn

Low NPS scores
Long support TTR
Not referenceabl...
Future
Customer Health Scorecard

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
Future
Predictive Analytics

Adoption

Healthy
Customer
Cohort

Unhealthy
Customer
Cohort

Up-Sell / Renewal

Gainsight Co...
Sample Board Deck
Past: Inputs

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
Sample Board Deck
Past: Metrics

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
Sample Board Deck
Past: Top Customers

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
Sample Board Deck
Future: Health Score

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
Sample Board Deck
Future: Health Score Trend

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
Sample Board Deck
Future: Health Score by Customer

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
Gainsight
Drive Customer Lifecycle

Customer Health

Maximize Up-Sell
Measure Health

Purchase

Flag Early Warnings

Renew...
Gainsight
Calculate Health Scores

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

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
How will you
make CSM
relevant to your
board in 2014?

45

Gainsight Confidential. 2014 Gainsight, Inc. All rights reserve...
Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
Q&A
Dashboard
access.gainsight.com/dashboard
Guide
access.gainsight.com/executive-guide-to-churn/
Gainsight Confidential. ...
Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
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Executive Perspective on Churn

  1. 1. The Executive Perspective on Churn January 28, 2014 #custome rsuccess Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
  2. 2. 2 Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
  3. 3. How did that get in there? 3 Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
  4. 4. What do we do about it? 4 Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
  5. 5. Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
  6. 6. Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
  7. 7. Transactions Relationship s Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
  8. 8. #customersuccess Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
  9. 9. 1. Why is Customer Success important? #customersuccess Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
  10. 10. 2. What should be shown at meetings? #customersuccess Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
  11. 11. 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? Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
  12. 12. Customer Success Preparing for the Board Meeting Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
  13. 13. Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
  14. 14. Customer Success for the Board Take 1 Source: David Skok, Matrix Partners Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
  15. 15. Customer Success for the Board Take 2 MARKETING SALES RETENTION Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
  16. 16. Customer Success for the Board Take 2 MARKETING SALES SUCCESS Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
  17. 17. Customer Success for the Board Take 3 Increase Drive 2% Retention 20% Multiple 2% Up-sell 28% Multiple Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
  18. 18. Nail the Board Meeting 3 Simple Steps Sales Customer Success Past Bookings Renewals / Up-Sell Present Market Share Benchmark Future Pipeline Health Score Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
  19. 19. Past Every CEO Claims 90%+ Retention! Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
  20. 20. Past Metrics 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? Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
  21. 21. Past Survey of 100+ Subscription Companies 63% include downgrades in churn 58% include upgrades in churn 46% track on dollars and customers basis Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
  22. 22. Past Five Metrics That Matter 1. Batting Average 2. Headwind 3. Tailwind 4. Net Revenue Retention 5. Magic Number Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
  23. 23. Past 1. 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% Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
  24. 24. Past 2. 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% Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
  25. 25. Past 3. 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% Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
  26. 26. Past 4. 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% Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
  27. 27. Past 5. Magic Number ARR/MRR of renewals in period + ARR/MRR of upsells in period ÷ Fully-loaded cost of Customer Success team + extended team What’s the costeffectiveness of Customer Success? Best-in-class: 3-5X or higher Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
  28. 28. Past Other 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 Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
  29. 29. Present Churn Rate Benchmarks Base: 100+ SaaS and subscription companies Source: Q2 Customer Success Survey, Gainsight Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
  30. 30. Present Churn Rate Benchmarks Base: 66 SaaS and subscription companies Source: Matrix Partners & Pacific Crest Survey Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
  31. 31. Present Compare Apples to Apples Source: Matrix Partners & Pacific Crest Survey Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
  32. 32. Future Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
  33. 33. Future Customer Health Indicators Too Late Frustration Success Churn Low NPS scores Long support TTR Not referenceable “Sticky” feature usage Proven ROI Increasing adoption Lagging Indicators Leading Indicators Silence Disengaged Churn inquiry Late payments No product usage Not opening emails Declining adoption Sponsor leaves Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
  34. 34. Future Customer Health Scorecard Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
  35. 35. Future Predictive Analytics Adoption Healthy Customer Cohort Unhealthy Customer Cohort Up-Sell / Renewal Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
  36. 36. Sample Board Deck Past: Inputs Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
  37. 37. Sample Board Deck Past: Metrics Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
  38. 38. Sample Board Deck Past: Top Customers Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
  39. 39. Sample Board Deck Future: Health Score Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
  40. 40. Sample Board Deck Future: Health Score Trend Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
  41. 41. Sample Board Deck Future: Health Score by Customer Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
  42. 42. Gainsight Drive Customer Lifecycle Customer Health Maximize Up-Sell Measure Health Purchase Flag Early Warnings Renewal Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
  43. 43. Gainsight Calculate Health Scores Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
  44. 44. Gainsight Automate Metrics Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
  45. 45. How will you make CSM relevant to your board in 2014? 45 Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
  46. 46. Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
  47. 47. Q&A Dashboard access.gainsight.com/dashboard Guide access.gainsight.com/executive-guide-to-churn/ Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
  48. 48. Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
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