We’re thrilled to post an interview with Lincoln Murphy of Gainsight, a customer success management platform based in Silicon Valley. Lincoln worked on growing SaaS companies for more than six years before recently joining Gainsight as Customer Success Evangelist. Lincoln shares with us his extensive experience as a critical driver of growth and value for SaaS and subscription businesses, and how to build an effective customer success team.
Learndot: How did you originally become interested in Customer Success at SaaS companies?
Lincoln Murphy: Everything I’ve done for the past 6 years has been focused on growing SaaS companies. In the early days, it was all about customer acquisition. But starting in about 2011, a lot more SaaS companies were coming to me with churn issues. They were getting good at bringing customers in the front door, but they started seeing too many of those going out the back door and slowing growth and hurting valuations.
So I started doing root cause analysis, looking at the complete customer lifecycle, and some patterns emerged. At the time there wasn’t a lot of thought leadership on how to reduce churn - there’s still not much out there - so I just applied a lot of the same thinking I used to driving customer acquisition, on-boarding, engagement, etc. to reducing churn, and it worked. In hindsight, I’m glad there weren’t a lot of existing ideas out there on churn reduction… it made me get creative.
And that creativity began with one simple concept: really understanding what the customer was trying to accomplish with the product.
Not just what they wanted to DO - the job to be done - but what did doing that job mean to them? What did they get - including personally - by doing that thing? By going through those steps? Rarely was it just “a good feeling that that document was shared”… it was more like “they provided the deliverable to the client faster, meaning they got paid faster and didn’t have to worry about cash-flow this month.”
During my focus on Churn Mitigation and Reduction, I quickly started to realize it wasn’t just about reducing the number of customers or dollars that leave a SaaS company, but you can use the same thinking to actually GROW customer usage and expand revenue over the lifetime of the customer. Amazing!
So, by 2012, whether a SaaS company brought me in to talk about growing through acquisition or to reduce churn, I was looking at the complete customer lifecycle to identify bottlenecks and leaks that would keep a customer from signing-up, using, staying, using more, and telling others.
Once I heard the term “Customer Success” in the context of tailoring the customer’s experience to make them successful, I was immediately drawn to it; it was exactly how I’d been thinking about things to this point, but now it had a name!
Learndot: What is your role at Gainsight, and what do you love about it?
LM: My role at Gainsight is Customer Success Evangelist, which means I get to do what I’ve been doing - evangelizing Customer Success Management as a critical driver of growth and value for SaaS and Subscription businesses - only I get to do it on much larger stage now.
What I love about it is that Gainsight really is Customer Success from the ground up. We have the most awesome team, with backgrounds in all facets of Customer Success: from board and executive level experience where a focus on CSM drove substantial value, to some of the most experienced and awesome Customer Success Managers in the business.
By the way, our customers directly benefit from all of this, right? The better we are, the better they are as we share what works, what doesn’t, etc. In fact, that ongoing, evolving, and improving expertise is the rocket fuel that powers our SaaS product… and what powers our customers toward success.
And of course, the industry as a whole benefits from that deep expertise, too, through our published Thought Leadership, but also events like Pulse, which took place this May and had more than 900 professionals and executives from around the world come together to learn and share about Customer Success. It was absolutely amazing.
But just in case I sound like one of those people that gets overly excited about what a company does after they join, that’s simply not the case here. I’m not into Customer Success because I joined Gainsight… I joined Gainsight because I’m really into Customer Success!
I was already a huge fan of the Gainsight team and company before joining; I believed (and still do) that Gainsight is the company that understands Customer Success best, and that’s why I joined them. Simple.
Learndot: What are your thoughts on customer education management (CEM) as a breakout role, vs. just considered part of customer success? Do you think that it should be a breakout role at SaaS companies, and if so, when?
LM: I think it depends on several factors, but I’d say the bottom line is this… educating your customers almost always leads to them being more successful. Whether it’s industry best practices, tactical ideas to help them do the things they need to do, strategic ideas to move them to where they need to go, or helping them perform functions within your product, education is absolutely a part of Customer Success.
For some companies, customer education is going to be a major part of helping their customers become successful, and for others, it will play a lesser role. Certainly product complexity comes into play, but I’d also say the strategic importance of the product to the mission of the customer also ties to the need for/expectation of high-quality customer education.
Depending upon the requirements of the customer, the complexity of the education and strategic alignment to the success of your customers, I can see breaking out Customer Education Management as a specific role under the umbrella of Customer Success, but bringing with it learnings and input from Product, Professional Services, the rest of the Customer Success team, and even Marketing and Sales (listening for feedback, market trends, etc.).
For our customers, education is super-important, far beyond simply how to use the Gainsight product. From implementing a proper Customer Success initiative within a company, to understanding the strategic importance of that initiative at a business-level, to getting clear on the day-to-day functions of a Customer Success Manager, we’re investing heavily in making education a core part of our relationship with our customers… and their success.
To that end, in June we’re launching Customer Success University, which will help educate Customer Success Managers and Professionals on best practices, while having the side effect of operationalizing and validating through industry certification the importance of this function within an enterprise.
I mentioned how we have the best CSMs in the businesses, which may sound like hype or hyperbole, but isn’t, and our customers actually get access to their learnings through our just-announced Gainsight Go program. Until now that access was more ad-hoc, but as we grow in order to scale that initiative, we need to move operationalize that program, too, and I’m super-excited about that.
Learndot: When do you think SaaS companies should hire CSMs and/or CEMs in their evolution?
LM: As early as possible… and probably earlier than that.
Mark Organ, founder and CEO of Influitive (he also founded Eloqua), said on my panel at Pulse that one of his first hires was for Customer Success. More and more second- and third-time founders are following suit because they realize keeping and growing customers is the key to accelerating growth.
In the early days for most technology companies, the reality is, you’re going to grow mostly through early adopters--those that find your products, figure out that it will work for them, and decide to try, then buy. This all happens in spite of your efforts rather than because of them. And that’s generally because you’re so focused on just getting the product out the door - and not on marketing - that you’re not focused on customer acquisition.
The best SaaS entrepreneurs in 2014 understand this, and are leveraging that by bringing Customer Success into the mix early. They’re investing in making even those Early Adopters as successful with their product as possible (even in non-scalable ways). This has the twofold benefit of accelerating learnings from the current customer base AND creating a solid base of champions and advocates they can leverage to accelerate growth.
I mentioned in an earlier answer that my movement toward Customer Success was all about riding the maturity wave in the SaaS industry, and I think now the entire industry is riding that wave, too. Whether entrepreneurs bringing the learnings from previous businesses to their latest venture, investors bringing those same learnings to their portfolio companies, or seasoned veterans of SaaS and CSM moving on from “mature” companies to newer startups, the DNA of Customer Success is spreading rapidly.
And as all of these folks who are serious about retention, customer growth, and customer advocacy to drive second order revenue (a term Jason Lemkin popularized) talk about this subject, more and more startups are building this into their plans and vision from day 0, which is great for everyone involved.
Learndot: The Forrester report Gainsight released was super informative. In the same vein, what do you think the future of customer success will look like in the next 1-2 years?
LM: The Forrester report, more than surfacing net new learnings, really acted as that big-time, independent validation the Customer Success movement really needed. But to your point, for those of us in the Customer Success industry, it really just validates where we are today.
My hope is that having a company like Forrester put this validation out there, we can move outside of the Customer Success echo-chamber and spark discussions in other parts of the enterprise around CSM.
That said, where I see CSM in 1-2 years is as something that isn’t considered a “department” or that we aren’t part of a “movement” anymore, but that it is just something built-in to the core DNA of SaaS and Subscription businesses, and CSM technology will be a generally accepted part of the SaaS Business Stack, along with CRM, Billing/Subscription Management, Marketing Automation, etc.
I think we’ll see the majority of Boards and Executives look to Customer Success-specific metrics to guide strategic decisions, and we’ll see Customer Success Management tools like Gainsight become the system of record when it comes to customers.
Learndot: You're super active on Twitter. What role do you see social media playing (if any) in customer success?
LM: It depends… you have to know your audience. For me, Twitter is a great way to connect with folks who are interested in what I have to say, and a great way to distribute my content. I’m just a person, and Twitter allows me to be a person at scale. Sometimes that’s good, occasionally it’s not (I might be a bit too transparent sometimes), but there’s authenticity there because, well…it’s actually me.
I think of Twitter as my hub. I’m also somewhat active on LinkedIn and Quora, but if I want traction on my posts or answers, I always bring it back through Twitter.
For others, you have to know your audience. You need to know how your customers and prospects use social media, how they like (and expect) to interact with vendors, how they share information, what kind of content they consume and share, etc. and interact accordingly.
That said, in the past I’ve enumerated 17 elements that define Customer Success, and those range from attracting the right customer in the first place, to handling support issues, to monitoring customer sentiment. I think Social Media - whatever that includes - can absolutely help facilitate all of that.
As an example of this, one of the awesome things we just announced at Gainsight is a deep integration with LinkedIn that will alert you to a change at your customer affecting your internal champion or sponsor. If that person leaves and goes to another company, that’s both a good thing and potentially a bad thing.
It’s potentially bad because that person was probably a big part of keeping your product in that customer and the new person may have their own favorite… you need to act quick as that is certainly a churn threat.
On the other hand, you know that your internal champion has moved on to a new company… that’s a foot in the door for your product at that new company. That’s a big opportunity that you need to pounce on to make sure they know you’re there to help them introduce you into their new company.
So Social Media can play a significant role in Customer Success, but the specifics around types of interactions, what networks, which part of Customer Success, etc. are all very specific to each situation.
Prior to joining Gainsight as Customer Success Evangelist, Lincoln Murphy spent five years helping to grow over 300 subscription economy businesses; mostly software-as-a-service (SaaS) and enterprise software vendors migrating to SaaS.