Once every few years, the combination of a couple of macro trends allows for a new software category to emerge. At Lightspeed, we believe such a confluence of macro factors is coming together to create the next big software category: Customer Success Management. And today, I am thrilled to announce Lightspeed’s investment in the leading startup in the customer success management space, Gainsight.
Our investment thesis for Gainsight is pretty simple: As customers increasingly interact with products / businesses online, a wealth of data on the frequency and depth of product usage, customer-vendor interaction (webinars, support tickets, NPS surveys etc.) and background of the customer engagement (size of company, contract, is the primary buyer still at the company?) can be analyzed to identify which customer engagements are going well, and which ones are not. In recurring revenue businesses, these signals manifest themselves in the form of customers that are at risk of churning out, or opportunities ripe for upsell. In other businesses, these signals manifest themselves in terms of whether the customer came back to buy more product/services or not. Additionally, at a time when even a little bit of customer dissatisfaction can travel far and wide through social media and other online forums, companies just cannot afford to drop the ball once they’ve made the initial sale to the customer. In this new world, customer success and account management has gone from being a cost center to a revenue imperative.
As these twin trends of (a) more data to analyze customer engagement and (b) increasing need to keep the customer happy throughout the engagement come together, Gainsight is firmly positioned to be the defining company in the customer success category. Gainsight not only provides its customers the ability to analyze internal/external data to measure customer happiness, it also provides the workflow and collaboration tools to the customer success, customer support and sales teams to act upon the insights being generated by their platform.
When most people think of customer success, or what Gainsight does specifically, they associate it with renewals management in recurring revenue businesses. While that is definitely where Gainsight started, that is only the tip of the iceberg. Gainsight’s vision of customer success is much broader than just enabling annual renewals, and we’re already beginning to see an expansion beyond SaaS/tech companies in Gainsight’s customer base. Gainsight’s vision is to place customer success at the heart of every conversation a vendor has with their customer. In my mind, this is a very important part of our investment thesis here. Every company that intends to have a repeatable engagement with its customers needs customer success. We live in a world where regardless of business model, companies can measure customer satisfaction through social media, NPS surveys, support tickets, online usage of the product, whether the customer is attending your webinars and conferences or not, etc. We also live in a world where one bad customer experience gets amplified through social media and can damage a brand at a global scale within minutes. While social media and customer support solutions provide the tools to react to such scenarios, Gainsight offers the toolkit to be proactive about customer happiness, not just when someone is complaining online or when it’s time to renew a contract. In this day and age, any company that does not have a dedicated customer success team is sending out a clear message to its customers as well as prospects that it doesn’t care about them.
I’ve had the pleasure of getting to know Nick and his team well since early 2013, and have been blown away by their expansive vision for customer success. In the last two years, Gainsight has gone from being an early stage startup that focused on account management to starting a movement around customer success. Nick has put together a great management team around him, and Gainsight is leading this movement from the front. We’re thrilled to be backing Gainsight in this journey, and are looking forward to helping them build the next big software company.