executive perspective on churn
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Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
January 28,
2014
The Executive Perspective
on Churn
#customersucces
s
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How did that get in there?
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What do we do about it?
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Transactions
Relationships
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#customersuccess
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1. Why is Customer Success important?
#customersuccess
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2. What should be shown at meetings?
#customersuccess
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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?
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Customer SuccessPreparing for the Board Meeting
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Source: David Skok, Matrix Partners
Customer Success for the BoardTake 1
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MARKETING
SALES
RETENTION
Customer Success for the BoardTake 2
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MARKETING
SALES
SUCCESS
Customer Success for the BoardTake 2
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Increase Drive
2% Retention
2% Up-sell
20% Multiple
28% Multiple
Customer Success for the BoardTake 3
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Nail the Board Meeting3 Simple Steps
Sales Customer Success
Past Bookings Renewals / Up-Sell
Present Market Share Benchmark
Future Pipeline Health Score
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PastEvery CEO Claims 90%+ Retention!
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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?
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
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PastFive Metrics That Matter
1. Batting Average
2. Headwind
3. Tailwind
4. Net Revenue Retention
5. Magic Number
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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%
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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%
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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%
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%
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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
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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
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Base: 100+ SaaS and subscription companies
Source: Q2 Customer Success Survey, Gainsight Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
PresentChurn Rate Benchmarks
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Base: 66 SaaS and subscription companies
Source: Matrix Partners & Pacific Crest Survey Gainsight Confidential. 2014 Gainsight, Inc. All rights reserved.
PresentChurn Rate Benchmarks
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PresentCompare Apples to Apples
Source: Matrix Partners & Pacific Crest Survey
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Future
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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
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FutureCustomer Health Scorecard
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Ad
op
tion
Up-Sell / Renewal
Unhealthy Customer
Cohort
Healthy Customer
Cohort
FuturePredictive Analytics
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Sample Board DeckPast: Inputs
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Sample Board DeckPast: Metrics
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Sample Board DeckPast: Top Customers
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Sample Board DeckFuture: Health Score
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Sample Board DeckFuture: Health Score Trend
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Sample Board DeckFuture: Health Score by Customer
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Purchase Renewal
Maximize Up-Sell
Flag Early Warnings
Measure Health
Cu
sto
mer
Healt
h
GainsightDrive Customer Lifecycle
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GainsightCalculate Health Scores
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GainsightAutomate Metrics
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How will you make CSM relevant to
your board in 2014?
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Q&A
Guideaccess.gainsight.com/executive-guide-to-churn/
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Dashboardaccess.gainsight.com/dashboard
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