ArticleUncategorizedAugust 15, 2019
How B2B Can Avoid the Fate of the Music Industry Image

How B2B Can Avoid the Fate of the Music Industry

I’ve always been a pretty big music fan. When I’m at my desk at Gainsight (which these days is less often than my team would like) you could find me wired-in with Spotify almost certainly open on my laptop. Although many can poke fun at my musical tastes, one thing is for sure, the ability to stream even the most embarrassing of music choices from any device, anywhere, for one simple fee is pretty awesome as a consumer. The paradox is that massive wins for the customer are not always wins for the market. Take the music industry for an example: the digital transformation has come at a massive cost to both musicians and record labels. Artists and content creators have responded with strong conviction against the very innovation that’s disrupting their space — many at the displeasure of fans who use digital streaming services. The truth is that B2B businesses are not unlike artists in the music industry. units-vs-dollars-riaa Our customers benefit from services that are constantly updated, easy to setup and administer, and have an extremely low barrier to switching if their desired outcome with our products are not achieved. These benefits to consumers of B2B services may very well come at a cost to the industry as retention is becoming a much harder problem than acquisition. If we’re not able to curtail the leaky bucket, the B2B industry as we know it could suffer the same fate as the music industry. TSIA Consider this — According to leading technology research organization TSIA (above diagram), the 50 largest technology companies have seen product revenue shrink 33% in the last 4 years. By contrast, new B2B upstart SaaS and cloud technology companies are growing rapidly but with much lower profit margins than their predecessors. The old approach to B2B growth through sales and marketing is being disrupted by Customer Success as a new, scalable, and cost-effective growth engine. In fact, the only path to success for B2B is to drive profitable growth in existing customers through improved customer retention and expansion. CERG Source: Pacific Crest 2014 Private SaaS Survey How do we learn the lessons and avoid the mistakes of our friends in the music industry? We need much more than just technology — we need a movement. At Gainsight, we’ve been honored to play a small part in the tailwind behind the Customer Success movement. We are in the fortunate position to learn from the best in the industry, over 250 of the most innovative companies in the world, including:
  • 9 of the top 25 software companies in the world (source)
  • 15 of the top 43 publicly-traded SaaS companies (source)
  • 9 of the 28 “unicorn” cloud companies (source)
Our work in facilitating the growth and expansion of the Customer Success community is only beginning, and today, we’re excited to announce that Insight Venture Partners has joined the movement by leading a $50M Series D investment in Gainsight. The Insight team has a unique depth of experience in scaling technology businesses and will add invaluable guidance as we build an industry-defining product and community in Gainsight. We plan to use the additional resources to continue to scale our Customer Success and R&D programs, as well as continue our investment in the Pulse Customer Success community. We are indebted to our incredible customers and to the faithful members of the Customer Success community for supporting us as we work diligently to evangelize the importance of this job function. We are all in this together, and it’s only by working collectively that we as B2B companies can avoid the fate of the music industry by elevating the focus on Customer Success as the most effective growth lever for businesses. Thank you for believing in us.  We’re excited to show you what’s next.
Picture of Nick Mehta
Nick Mehta Chief Executive Officer at Gainsight Nick Mehta is Chief Executive Officer at Gainsight

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