JBara becomes Gainsight, raises $9M to help SaaS vendors manage customer success

By Michael Carney , written on April 17, 2013

From The News Desk

There are an abundance of software tools that help companies acquire customers, including marketing automation (Marketo, Eloqua, etc) and CRM (Salesforce, SugarCRM, etc.) platforms. But once customers are acquired, there are few, if any tools that help manage and optimize customer retention, or what many companies call customer success.

Gainsight, which until today was known as JBara, is a four year old customer success management platform that aids B2B companies in reducing customer churn, increasing up-sell, and driving overall customer success. The platform acts as a system of record, centralizing data from all customer interactions, monitoring satisfaction and product usage, and predicting customer behavior. Gainsight's early customers include a who's who of SaaS companies such as Marketo, Jive Software, Informatica, and Eloqua, among others.

Today, Gainsight is announcing $9 million in Series A funding led by Battery Ventures and the addition of former LiveOffice CEO Nick Mehta as its new chief executive. In conjunction with the news, founder Jim Eberlin will become Gainsight’s president, while Battery’s Roger Lee will join the company’s board of directors.

“Far too many companies ignore the wealth of data available to help them understand their existing customers and proactively manage their success,” Mehta says.

Gainsight leverages big data analytics across sales data, usage logs, support tickets, surveys, and other sources of customer intelligence to arrive at a customer health score, and preempt customer churn. For example, a company may receive alerts when a customer’s usage drops by 30 percent, when it is regularly late paying its bill, when it leaves a series of negative help desk comments, or amid a combination of such events. The inverse is also true, in that thriving customers can be identified as potential candidates for up-sell opportunities, or as likely to provide a positive reference.

The key in all cases is that this data be made available across all departments, including customer success, sales, marketing, product management, and finance to enable more informed decision making.

Battery recognized a shift to recurring revenue business models that was taking place in its portfolio and across the software industry. With this shift came an increased emphasis on customer retention and success. When the firm looked to make an investment in the category, it found that a number of its portfolio companies (including Marketo) were already using Gainsight.

“As most industries are migrating to a ‘X as a service’ model, and are no longer being paid in full upfront, there is more incentive than ever before to ensure customer success and in turn a long term, durable relationship,” Battery’s Lee says.

The timing couldn’t have worked out better. The firm proactively approached Eberlin at a time when he was finally confident his angel funded company had achieved product market fit and was ready to step on the gas. Further, the founder was willing to bring in a professional CEO to manage that process. At the time, Mehta was an entrepreneur in residence at Accel Ventures.

The round closed in February and Mehta immediately began assembling a team and a strategy to bring the Gainsight product to the broader market. His first hire was former Marketo head of customer success Dan Steinman, an avid Gainsight user, who is now the company’s chief customer officer.

Together, the two men have architected a thought leadership-based strategy for introducing the category of customer success management to the masses. Later this spring, the company will host Pulse 2013, its first annual customer success conference, an event featuring speakers such as Box founder Aaron Levie and dedicated to creating discussion around industry best practices.

Gainsight is available as a SaaS solution, with pricing based on a per user, per month model. The onboarding can range from a few days to a few weeks, depending on the size and complexity of a company’s business. The process typically constitutes integrating the company’s existing SaaS tools, such as its marketing automation, CRM, and help desk software, and then establishing rules around Gainshight alerts.

With Eloqua selling to Oracle for $871 million and Marketo filing its yet-unpriced IPO earlier this month, there’s evidence that the opportunity to build a big company in this category is real. Competition in the category could come from a number of directions, including existing marketing automation, CRM, and help desk players, as well as other upstarts. But Gainsight has given itself a sizable head start in terms of developing its product and understanding the market.

The company's biggest challenge, according to Battery's Lee, is continuing to attract the right team to execute its ambitious vision, and further educating the market as to the value of customer success management. Eventually, this is likely to include moving beyond the SaaS market to other B2B industries, but the company’s current focus is on cloud-based software vendors.

The SaaS model has fundamentally changed the alignment between software companies and their customers. No longer are vendors paid upfront. Rather they collect only a few percent of the lifetime value of a customer upon sign up, and the balance over multiple years. The result is that it is more important than ever to ensure customer success, and thus retention.

It may have taken longer for the industry to deliver the caliber of tools in this category that have long been available for customer acquisition, but expect this to be an incredibly hot sector in the coming years. Similarly, expect Gainsight to have play a large role in dictating where the category goes.