Over the last few decades, there have been several SaaS players who have helped organizations acquire customers through a cloud-based CRM model. But it is only recently that organizations have realized the importance of managing customer success. Customer success has been defined as the ability of an organization to ensure that their customers are happy with their services so as to retain them for longer and expand their relationship.

Gainsight’s Offerings

Redwood City-based Gainsight is one player in the industry which offers a SaaS-based model to help businesses grow while managing customer churn. It was founded in 2011 by serial entrepreneurs Jim Eberlin and Sreedhar Peddineni. Prior to founding Gainsight, the duo had worked together to set up Host Analytics, a SaaS-based corporate performance management company. While at Host Analytics, the two wanted to ensure that customers continually renewed their subscriptions and bought new services. While trying to meet that requirement, they realized that there were a lot of technologies to get customers to purchase a product, but there was no technology to help them understand existing customers in terms of what they were using, how satisfied they were, and the risk level involved in their leaving. They set up Gainsight to meet that need.

Today, Gainsight’s service helps businesses grow faster by reducing churn, increasing upsell, and driving customer advocacy. By providing the organizations with a 360° view of customers, it improves retention across sales, marketing, and product management. Organizations are able to get in touch with their customers more effectively and can deliver products that meet their customers’ needs.

Gainsight continues to enhance its products by listening to its customers. Its ambition is to provide a single source of truth for customer information across business partnerships and reselling networks. It wants to enable channel partners selling software such as Salesforce to share information back with sales reps at the parent company.

Gainsight’s Financials

Gainsight has been privately held so far and keeps its financials secret. Back in 2015, analysts had estimated the company’s revenues to be around $20 million. Revenues have been growing significantly since. 2016 revenues were estimated at $45 million and revenues in 2017 grew 167% over the year. That translates to revenues of more than $120 million last year.

It has raised $156 million in ten rounds of investments from investors including Founders Circle Capital, Lightspeed Venture Partners, Bain Capital Ventures, Insight Venture Partners, Salesforce Ventures, Cisco Investments, Bessemer Venture Partners, Battery Ventures, Summit Partners, Cultivation Capital, and Capital Innovators. Its last round of funding was held in December last year. It raised an undisclosed sum from existing investors. Terms of the valuation were not disclosed. Analysts last valued the company at $348 million in November 2015. They estimate that it would have crossed a valuation of $600 million by last summer and was ready to break into the Billion Dollar Unicorn space.

Gainsight’s Management Expansion

Gainsight appears to be preparing for an IPO and has been building its leadership team. It recently announced the acquisition of Igor Beckerman as Chief Financial Officer, Jason Stewart as Chief Revenue Officer, Ryan Toben as Vice President of Revenue Operations, and Mike Berger as Vice President of Product Marketing.

Questions for Gainsight’s Board

Customer success was a term that was coined by Salesforce, and it remains among the leading players in the segment. Salesforce does not have a separate customer success product, but it bundles its Sales, Marketing, Service, Analytics and Community Cloud as part of the customer success offering. There are many smaller players in the market today such as Totango, Natero, and Churn Zero to name a few. Besides that, customer success is also run as an internal project in companies like Oracle. When I spoke with Gainsight’s CEO Nick Mehta in 2013, he wasn’t too worried about competition. I would like to know their views about competition today. Is Gainsight looking to consolidate within the space? I would also be interested to see if Gainsight is on Salesforce’s radar as a potential acquisition target.