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Sales and Customer Success: Where's the Line?

Sales isn’t a funnel, Gainsight chief customer officer Dan Steinman says, it’s an hourglass. And the bottom half is way bigger than the top. 90% of most SaaS companies' revenue comes from after the first deal is closed. Don’t just align sales and customer success, he argues; get them to collaborate. In this panel with Gadi Shamia, Steinman talks about the key metrics for customer service managers, handoffs between sales and CS, and multi-year deals.

DataFox provides summaries of every single panel at SaaStr 2016, all published within a day of the panel itself. If you miss the tactical theater or strategy stage, are networking on the ground, or didn’t get a chance to attend this great conference, we’ve got you covered.

View all SaaStr 2016 panel summaries

Special thanks to Jason Lemkin of SaaStr for putting on this conference and giving us the chance to publish these summaries.

In a nutshell:

  • Don’t necessarily try to maximize initial deal size.
  • Measure your CS team on net retention, but keep an eye on churn.
  • Multi-year deals are risky, since they don’t create the same sense of urgency for customer success.

Q: How should CS influence new acquisitions?

A: Existing customers should be advocates. You should have referenceable customers.

Q: How should you handle sales transactions after the initial deal?

A: If your CS person isn’t also sales-savvy, he or she probably isn’t a good fit for the job.

Q: How do you train CSMs to recognize upsell opportunities?

A: They should know the product inside and out, and be able to ask customers questions that will lead them down the path to a deal.

Q: Should you try to maximize the initial deal size?

A: Not necessarily, as that might turn into a downsell when people lose seats. It’s not good for anyone except the initial sales rep.

Q: What are the key CS KPIs?

A: You should treat them similarly to how you'd treat salespeople. As a result, the key metric is net retention: renewal + upsell – churn. But be careful: net retention can mask other problems. For example, tons of upsell can mask a 40% churn problem. The three KPIs:

  • Gross renewal rate
  • Net retention
  • The gap between the two

Q: What’s your opinion on multi-year deals?

A: They’re dangerous, because they don’t force you to focus on the customer in the same way. If your product takes more than 90 days to implement, though, consider two-year contracts.

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